Anatomy of a First-Time CEO Hire
A case study in leadership
|Scott McCormack, partner with Seaport Capital and board member for AIS|
Now meet Tim Caulfield, CEO of American Internet Services (AIS), a leading provider of enterprise-class data center and connectivity services, with facilities in Los Angeles, San Diego, and Phoenix. Note his title, chief executive officer. The buck stops with him.
Seaport Capital, one of the more accomplished private equity firms in the data center market, with successful transactions of Switch & Data to Equinix, and Peak10 to Welsh Carson, recently helped Tim achieve his lofty status. Besides its data center interests, Seaport has a range of other interests, including a portfolio of professional baseball farm teams. From Seaport Capital’s perspective, positive bucks are better than negative bucks.
Tim is likely a better sailor than a baseball player and still better qualified to run growth initiatives in the data center space. As managing director of Global Solutions, and part of a nine-member senior executive team at $840 million Savvis, Tim directed a 600-member worldwide organization, launching professional services in EMEA, creating new revenue streams, capturing millions in cost reduction, and led the construction of ten data centers in under two years, on time and budget, outside the U.S.
He accomplished all this almost three years ago, which was well before the advent of the just-in-time supply chain and modular delivery that allows Digital Realty Trust to bring a smaller, templated data center to market in less than nine months. As senior vice president, Consulting and Hosting Services at Cable & Wireless, pre-Savvis acquisition, Tim merged three financially challenged service providers into a +$400 million nationwide business delivering +$30 million in EBITDA improvements while caring for 50 percent of Fortune 500 and 50 percent of eBusiness 50 (i.e. eBay, Google) companies.
These efforts alone would appear to make him a lock to be the CEO of a $32 million, 70-employee organization. But he was not the only candidate considered. Scott McCormack, partner with Seaport Capital and board member for AIS, recalls the Board ranking qualifying criteria and desired attributes for their CEO search, which included, in no particular order:
• Sales – demonstrated revenue generation
• Finance – history of delivering business charter profitably
• Prior CEO experience in the data center industry
• Leadership – moving collective interests and resources toward a successful outcome
• Private equity ownership
• Size of prior organization(s) – revenue, headcount, geographic dispersion
Blind polling the members of the AIS Board revealed different rankings and priorities, so how would they identify the best candidate? Each of us is a product of our collective experiences so discrepancies in what we value is no surprise. What AIS needed was someone who had demonstrated successful outcomes. Private equity firms are looking for high rates of return. A myriad of achievements are necessary to accomplish consistently high rates of return.
The different backgrounds of the two finalist candidates ultimately helped Seaport define its interests and charter for the company. One candidate had the CEO pedigree, having taken a similar-sized company through a successful event. He was masochist enough to want to do it again, albeit in San Diego, CA. The other candidate had never been a CEO but was an accomplished and credentialed data center executive.
McCormack recalls that at face value, “one represented a secure, sleep at night, know-we’re-safe profile, but presented challenges in terms of his scrutiny and concern for the strategy and challenge. The other was more of a risk for a fatal miss without the prior experience and would likely require a bit more attention, yet he demonstrated unwavering interest and enthusiasm for the role, the charter, and the challenge.”
Who would you pick? The right choice was contingent on the needs of the company and its growth charter. McCormack notes, “We looked deeper at Tim’s breadth of responsibilities for larger-scale, faster-growing initiatives than what we were asking him to step into. Tim is someone who believes in himself and his ability to lead people and achieve business charters. He had demonstrated time and time again in his prior experiences so there was no reason to believe that this would be any different.”
Seaport was careful not to overwhelm Tim or dictate his decisions. From a credibility standpoint, Tim wanted and needed to establish himself with the team and not have Seaport establish him.
“Tim delivered what he said he was going to do. He retained a significant majority of the talent, has them encouraged toward the continued healthy growth of the company, has hired some great talent to complement the team, and has created a vital, healthy culture for growth,” said McCormack.
Still, there remained a lot of on-the-job training for Tim. While he would have liked to spend more time at AIS during his interview process, full disclosure to the employees and facilities was a challenge based on an incumbent CEO. Once aboard, Tim needed to back off the expectations pedal a bit. He noted, “It may have been a bit shortsighted to plan in advance of being there the first few weeks but such is the curse of ambition.” He tackled issues related to customer retention, sales, marketing, and operational integrity. Tim also tackled the culture of AIS and transformed it from one of concern and protection to that of transparency and collaboration. He had to move a bit slower to round out his initiatives but has since ensured “a holistic platform for growth through consistent, enterprise problem focused, data-driven decision making.”
Tim noted, “The CEO title has definitely opened doors both personally and professionally. There is an informal “club” associated with the title.” But the CEO office can be a lonely place. No lateral peers, only up and down. He’s a professional buffer ensuring investor satisfaction and employee empowerment.
Beyond the support of the unsung chief influential officer hero at home, Tim has embraced an Inc. Magazinesponsored CEO Roundtable. While reluctant at first, he has since embraced the tremendous value of unbiased, objective advice from peers and colleagues who uniquely share his role. “It is also gratifying to realize that your own experiences and perspectives can be valuable to others.”
In selecting talent, look deeply at the individual tasks broken out and defined and deemed necessary to achieve successful charters. Aspiring professionals self-determine and acquire initiatives to achieve charters. Success in new charters begets success and voila, over years and time, a CEO happens. Congratulations Tim on your emeritus membership to the CEO Club!