“I don’t like confrontation,” admits executive recruiter David Barrett, a man who makes a lucrative living confronting, among others, scores of job seekers who’ve been rejected from a role. “I’m passive-aggressive — but when it goes, I explode.”
The genial founder of David Barrett Partners is still irritated about one such instance.
“I actually blew up a great ten-year relationship with Bank of America in, probably, 2006,” he recalls. “These HR bureaucrats keep making us compete, making us compete, and frankly, it was immature. I had done, like, 15 searches for this group. The person doing the screening didn’t know anything about the market, but he wanted me to drop names. I could’ve dropped names until the cows came home, but I refused to do it. So they didn’t give us the search because another firm, they said, ‘gave much better market perspective.’ So I just lost it on the hiring manager and the internal recruiter. I just lost it. Blew up a ten-year relationship.”
Was this over the phone?
“Yeah. It was worse, because I also put it in writing in an email. It was documented: total loss of control,” Barrett admits. “You learn something every day. No matter how long you’ve been in the business, the client is always right. That was an expensive lesson.”
But blowing up sure felt good, he says. “I’d kissed their ass for ten years. There was no feeling of partnership or respect. You’re just a vendor.”
For David Barrett — the man Harvard calls when it needs an endowment CEO — there’s no greater insult. After all, top institutions pay dearly for his firm’s lavish client service and exclusive access to its candidate pool. His taste in talent has shaped the face of institutional investing.
But how long can his winning streak last?
Dominance in recruiting happens the way Ernest Hemingway described going broke: gradually, then suddenly.
Since 2011, Barrett’s boutique has found new leaders for the endowments of Harvard, Stanford, Dartmouth, and Emory, among many other major universities. Mark Zuckerberg and Priscilla Chan picked DBP to find their first-ever chief investment officer, as did the Catholic Church for its new $3 billion health foundation. Barrett, 60, has worked for weapons contractors, Middle Eastern sovereign wealth funds, and a children’s hospital.
“Two or three years ago, David just started getting every big endowment and foundation search,” says one investor recently placed by DBP. “And once you get a bunch of big accounts, it kind of snowballs. Investment committees are all about covering their asses. If all your peers used David Barrett Partners, you won’t get in trouble for hiring them too.” Momentum and brand power work wonders for recruiters, particularly in niches like institutional investing, where clients don’t hire executives very often.
But there’s a catch. Clients don’t want their recruiter running searches that compete with theirs, or stealing talent they’ve paid to secure. Top-notch headhunters know this, and force themselves to pass on business and candidates they’d otherwise jump at. When DBP was searching for Emory’s new investment chief, for example, the same role opened up at the University of Virginia. It couldn’t do both. DBP had to pass on being considered for the contract. Furthermore, any investor placed by a recruiter in the past is essentially off-limits for life.
“You can only be hired once by David Barrett,” says the investor DBP placed. This person never plans to leave his or her current job, but sees the problem for others. What if you blew your one shot on a senior analyst position? Barrett set up his shop in 2005, so early placements are cycling back into the market, some for the second time. This is a whole generation of experienced investors that DBP can’t touch.
Good recruiters broadly follow these rules: no overlapping searches, no poaching from clients, one placement per career. The less diversified a firm’s clients and candidates are, the more these rules can strangle the business. Barrett is acutely aware that his company’s growth hinges on broadening its institutional clientele. Pension funds would be an obvious new market. But in some endowment circles, mixing with pensions is considered déclassé. Instead, DBP’s pushing to go global.
Then there’s the matter of diversifying candidates. Asset management’s upper ranks are overwhelmingly white, privileged, and male. Many recruiting firms have made diversity a core priority — or say they have — as scrutiny increases. In the era of #MeToo and rising income equality, it’s a bad look to use your son’s Dartmouth lacrosse team as a short list for new analysts. The same goes for cliquey hiring at an executive level.
“It’s no longer a little cottage industry,” says James Houston of Prince Houston. “There was a time when doing work for endowments and foundations was like a musical chairs game. You would take a person from endowment A and put them at endowment B, and then you replaced [that person] with somebody from C. Now there is a much greater need for creativity, and we think there are broader sources of candidates.”
Critics of David Barrett say he still plays musical chairs, and filters out superb investors based on pedigree. “He’s a snob,” as one consultant puts it. “If you don’t already work at Princeton, he won’t give you the time of day.”
Indeed, when DBP recruits for prestigious institutions, successful candidates almost always come from other elite organizations. They are also predominantly male. Out of 34 chief investment officer and CEO placements reported by DBP, 30 of the jobs went to men. For DBP’s institutional searches at all levels, nine women were hired, versus 58 men. A single client — Bowdoin College — was responsible for four of the women placed, but none landed in its C-suite.
“We’re very proud of our diversity recruiting,” insists Barrett, pointing to statistics provided by DBP. Since inception, 32 percent of all placements have been women and/or people of color. “I think our major strength relative to other search firms is that we’re credible and trusted by the candidate pools. We’re not the classic mercenary headhunter who will return your call just when we have a search. We literally are the only firm that has that type of credibility. David Barrett Partners looks far and wide for creative talent.”
His faith in traditional candidates may stem from his own experience. More than 30 years ago, Barrett was one.
“He was tall, good-looking, captain of the squash team at Yale,” recalls Russell S. Reynolds Jr., the founding father of Wall Street recruiting. He met a young David Barrett in the 1980s, when Barrett got his foot in the door at Reynolds’ firm. Nearly all of today’s top investment headhunters are alums, including Houston and his partner Marylin Prince. “Russell Reynolds Associates is where we both learned the craft of executive recruiting, and it was a really great training ground,” Prince explains. “What David Swensen did at Yale, Russ did for the search business.” Spot talent, train them, instill values, and release.
Reynolds started his firm in the fall of 1969 with $10,000. At the time, recruiting wasn’t a profession and it wasn’t called “executive recruiting.” “There were some very unflattering terms, like ‘body snatcher,’” says Hank Higdon, an industry pioneer. “‘Headhunter’ was certainly a pejorative.” Higdon, now in his late 70s, is vice chairman of RSR Partners, which Reynolds founded after selling his namesake firm.
When he and Reynolds started in the business in the 1960s, “it was unprofessional,” Higdon says. “Anybody could do it because it was an easy business to enter. No capital requirements, no certification, no graduate degrees, no licensing, no regulation. With a nickel and a phone booth, you could get into the business, and that’s how some people did.”
Not Reynolds. He imposed strict rules that became the industry gold standard. According to his book Heads: Business Lessons from a Search Pioneer: No poaching clients from one’s last employer, no soliciting business, no advertising, work only on retainer. Among quality recruiters, the best still rarely hustle business. At Prince Houston, for example, 96 percent of search work comes from existing clients or referrals.
Reynolds also believed in hiring bright young people from other professions. He started out as a Wall Street banker — “then I became somewhat restless, because I was a redhead,” and founded his search firm. Looking the part mattered, and still does. “Quality attracts quality,” he writes. “I felt appearances were an important part of this.” A Steinway piano sat in reception at Russell Reynolds Associates’ early Park Avenue offices, for example. “I tended to hire recruiting professionals who were fit and had a strong handshake,” Reynolds notes. Substance matters more than it did back then. “There are an awful lot of people now who are more nerdish — they don’t see the big picture,” gripes Reynolds, now 87. “We like people who come from good schools with a B or B+ average, rather than an A+ average from Carnegie Mellon or MIT.”
David Barrett has two Ivy League degrees, but no one would describe the 6'3" former athlete as “nerdish.”
“I was the first ne’er-do-well who did not go into the family investment business,” says Barrett. As the oldest of three siblings, he used to assume he’d one day take over Barrett Asset Management, as his father had before him. Barrett graduated from Yale in 1981, then spent two years as an analyst at Brown Brothers Harriman, followed by Columbia Business School. He moved to Los Angeles and began life as an electric utilities analyst at TCW Group.
Barrett lasted a year. Lacking a spark for the subject, in 1986 he took a contact up on a job offer. “My father was like, ‘Wait, didn’t I just pay for a college and business school, and now you’re what? A headhunter? What the hell is that?’” John Barrett II, now 83, eventually came around. A veteran portfolio manager, he surely saw that his athletic, charismatic eldest wasn’t cut out for analyzing utilities.
Hank Higdon claims credit for bringing Barrett into the search business. Barrett calls Higdon the closest thing he’s ever had to a mentor. The younger recruiter spent nine years learning the craft at Russell Reynolds, then in 1995 moved to another corporate search factory, Heidrick & Struggles. “I don’t think David was happy [there],” Higdon says, echoing the view of Russell Reynolds Jr. “I don’t think the people were as top-quality as they were at Russell Reynold Associates.” The culture changed, he notes, to focus on cranking out placements versus client service. In 2003, Barrett quit.
Higdon was running his own small shop at the time and brought Barrett on as a full partner, rechristening it Higdon Barrett. The firm’s two-year life span says what neither partner would admit on the record: Higdon Barrett didn’t work out. Barrett’s not one for burning bridges, Bank of America aside. Instead, he took his partner to lunch at the Yale Club and broke the news gently. The men maintain a regard for one another.
“When David Barrett resigned, he did it honorably and aboveboard, and it was graceful,” Higdon remembers. “He told me he wanted to run his own firm, and 100 percent of it. I just said, ‘Thank you and good luck.’ I was disappointed, because I had hopes and there were arrangements made. But his father is an entrepreneur — it runs in the family.” For a profession built on choreographing elegant exits, recruiters often don’t have them. Things can get ugly. Some prominent leaders in asset management search have been accused of attempted client stealing, for example. “Some other people who have left didn’t leave as honorably as David did,” Higdon says pointedly.
Barrett didn’t poach any of Higdon Barrett’s clients, but he did begin to win them outright. When Stanford University needed a CEO for its investment office in 2005, Higdon did the search. A decade later that CEO left, and Stanford retained David Barrett Partners.
Those who’ve been in DBP’s Manhattan offices know there’s something unusual about it. Like most recruiters, DBP is tucked into a discreet building near Grand Central station. But open the door, and you enter a veritable museum of Yankees memorabilia. A set of old Yankee Stadium seats adorns the lobby, and bats and balls and pictures fill almost every corner of Barrett’s office. Incredibly, DBP’s offices hold only a fraction of Barrett’s full collection, which has its own building — called “the Shrine” — on his property in Greenwich, Connecticut.
Relatively hidden, on a shelf above an office desk, sit David Barrett’s other trophies: a tidy row of collegiate baseball caps, each one marking a successful endowment or foundation search.
Harvard doesn’t churn through endowment CEOs fast enough to reliably fund DBP’s payroll, however. Investment firms and banks also contribute mightily to the bottom line, if not the recruiter’s brand power. “Sophisticated users of search know how to manage search firms,” Barrett says. “It started with Goldman. The big asset managers — especially on the third-party side — had realized they have the power. There are eight gazillion folks who call themselves headhunters. Even at the high end, where we work, there are seven or eight firms. These big firms do almost anything” for asset manager search business, according to Barrett. In fee negotiations, “they’ll cave immediately” and accept a cap or flat fee, he claims, “but they won’t lead with it. We do. Because nine out of ten times, it’ll get negotiated.”
For the trophy institutional searches, fees matter less than a recruiter’s reputation. A foundation or ultrarich family won’t have too much other than name brand and pitch quality to go on, as they need the service only occasionally. One-off contracts make price shopping tricky. But insiders say that top-tier firms — DBP, Russell Reynolds, Prince Houston, Spencer Stuart, Korn/Ferry — tend to charge in the same ballpark. Barrett and others won’t give hard numbers. “We know how much it costs to do a search, and we know what’s reasonable in the market,” says Barrett.
Human and technological competition have forced recruiters to raise their game. But at the trophy level, they don’t sound anxious about the prospect of disruption. A Vanguard of executive recruiting exists: It’s called LinkedIn. When a sovereign wealth fund needs a CEO to oversee $100 billion, it’s not going to balk at spending $200,000 to find the right person — or to cover the board’s behind if it doesn’t. Stakes this high are barriers to entry. If DBP loses an elite search, it’s to a competitor, not an algorithm. And DBP hasn’t done much losing lately.
On a bracing January Friday, for example, Barrett returned to New York on the London red-eye, triumphant. Despite the all-night travel, he looked fresh.
Shortly before Christmas, Barrett had pitched for the prize contract of recruiting the University of Cambridge’s next chief investment officer, and won. He returned in mid-January to spend two days with his London partners and the new client, getting intimate with the task ahead.
The previous fall, Cambridge’s last CIO, Nick Cavalla, had quit along with almost the entire investment staff — rough for the university yet handy for Barrett, who has one less constituency to please and potentially more jobs to fill. He doesn’t always get hands-on in an overseas search — that’s the point of having outposts in London and Hong Kong — but Cambridge is special. In the drive to export the brand worldwide, it’s a big win.
David Barrett Partners is an American company almost no one’s heard of — even on Wall Street, but especially overseas. Yet it will largely determine who’s in the running and who’s in the recycling bin for Cambridge’s top investment job. All of this takes place in secret, involving only Barrett, his London employees, the selection panel, and, naturally, a squad of executive assistants. Whoever’s hired as CIO gets power of the purse over Cambridge’s £3.3 billion ($4.3 billion) endowment and instantly becomes one of the most high-profile investors in the country.
Winning any David Barrett search meanswealth and prominence. As much as he and his peers all stress respect for candidates and people being out of work, the reality is that they can’t help everyone — and don’t have much use for people who need that help.
“I could have unemployed friends and family, one-degree-of-separation folks, in my office every half-hour, ten hours a day, including weekends,” Barrett says. Prince admits she often doesn’t tell people at cocktail parties her profession, to avoid getting a barrage of résumés. The work is to please clients, not grant merit scholarships into the upper class.
The best way to get a job from David Barrett? Have one already. Preferably at Princeton.