Talent Bank

We had a very close family over at Montgomery. And we all went into the NationsBank merger optimistic that it was going to work out well. But it didn't take more than a few months before signs of substantial friction began to show up. Dozens of Montgomery people kept coming up to me and saying, "Look, it doesn't look like this thing is working the way that we thought it would. If you're thinking about anything else, just make sure that you keep me in mind when you do it."

When I left in 1999, I had to get this firm cranked up fast. We mapped out a strategy to put the basic infrastructure in first. Then we had to cut an agreement with NationsBank to allow certain people to leave and come here. David Readerman, our top Internet analyst (and a former Montgomery colleague), was one of those people, and he has been incredibly helpful right from the beginning. He has mapped the entire Internet space from an investment-research perspective. But he also has Web-ified many of our analysts who were in the old economy rather than in the new economy, so that they could make the transition to doing much more of their own business via the Internet and email.

So you had a core of Montgomery colleagues that you could draw on. But to build up the new firm, you still needed to recruit from the likes of Merrill Lynch, Morgan Stanley, and Salomon Smith Barney. How did you persuade talented people at such big and established firms to join your upstart team?

Mark Shafir, our coleader of investment banking, is a good example of the approach we've used. We'd known him for quite a while, and we regarded him as one of the great talents in the mergers-and-acquisition business. He was very intrigued with our model, especially our private-equity program. He was in charge of global-technology investment banking at Merrill Lynch, and he was enjoying that responsibility. But he continued to be fascinated by our entrepreneurial approach.

We almost had him at the end of last year. Then Merrill kept raising his pay and giving him more responsibility. It was a tradeoff. Finally, by the second quarter, he could see that we were pulling way ahead of our original business plan for that year. He just couldn't stand it anymore. Mark felt as if "the train is leaving the station, and I'm not on it."

In Mark's case, his wife -- who works on Wall Street too -- is very much his equal. She was a Goldman Sachs investment banker. So we had to convince both of them that it made sense for him to come here. And she was the tougher of the two. They both came to my house for dinner -- the whole nine yards. And if you talk to Mark today, he'll tell you that this situation has worked out far better than he ever thought it would.

How much does turmoil at other firms help you recruit?

A lot of the people who came here were caught in the crossfire of our industry's consolidation during the past three years. Obviously, that's true for all the Montgomery people. We also attracted many talented people from Robertson Stephens after it was sold to BankAmerica and then to BankBoston. And we attracted people from Hambrecht & Quist after it was sold to Chase, and so on.

Tim Heekin, our head of trading, was a by-product of the Smith Barney - Salomon merger. Tim had been running Salomon Brothers's global-equity trading in London. But when Smith Barney took over Salomon Brothers, he got caught in the crossfire. Well, I'd been trying for 10 years to recruit him when I was at Montgomery. The day that I saw the merger announcement, I called him in London. I said, "The bad news, Timmy, is that I know you just moved over to London, and now you've got to look at your strategic alternatives. The good news is that you're going to come to San Francisco, and you're going to work with us."

Tim was a very careful guy. It took him a little while to get to "yes." He had just gotten married, had just moved to London, and he was very happy living there. But he had the ability to do exactly what we needed: build a world-class trading operation. And since he's joined the firm, he's done that for us.

Who are your models for hiring and recruiting?

In investment banking, Goldman Sachs and Morgan Stanley have always done a very good job of attracting and maintaining high-quality talent. They're good role models. And in the high-tech sector, we would love to emulate a number of companies in terms of how they attract great people and how they build a culture. Cisco and Yahoo! come to mind. Siebel Systems comes to mind too. It's a tough culture, and you're not deluded about where you stand. But Tom Siebel and his people deliver.

Who wouldn't you hire?