Boom, Bust, & Boom Again: The Making of a CFO

Few CFOs have blazed a career path as varied and as rich with experiences as Dave Martin, CFO of Dimensional Fund Advisors. The former CFO of the Janus Capital Group has served earlier tours of duty with Charles Schwab & Co., Interstate Bank of Texas, and Texas Commerce Bank. Here Martin recounts the hard lessons that come only from navigating finance organizations through the ups and downs of economic cycles.

Steve Player: Clearly, you have had a very interesting and rewarding career, Dave. I thought that your early years might be a good place to start in light of how some of the lessons those years offered might be timely for our readers.

Dave Martin: Well, I actually started out in 1981 working for an oil field services company, the Western Company of North America. It was the pinnacle of the oil boom. There were 4,500 rigs operating on shore in the U.S. At Western, we were doing offshore drilling and servicing the onshore rigs with cementing, acidizing, and fracturing services. I was in a job designed to lead into a general management role.

Things changed with a rapid downturn in the oil business in late '81 through early '82. My job shifted and I was coming up with a layoff list by district within our region every other month, and, in fact, I guess I'm probably a fairly rare person in that I recommended my own layoff. I recommended reductions to the regional office in Houston that included my own job. In 14 months, we eliminated 55 percent of the workforce in our region, including me.

SP: That's a management lesson few people get to start with …

Martin: Yes, the real lessons came from seeing how fast things can change, the danger of being in a capital-intensive business when the business turns south, and the dangers of leverage. When you see that kind of a rapid change in a business, it really kind of puts things in perspective. Later on, when you see a downturn, you tend not to get nearly so excited.

SP: How did you bounce out of that, and what did you do when you found yourself on your own layoff list?

Martin: Even though I hadn't been in Houston that long, I looked there first. In a fairly short time, I found a job at Texas Commerce Bank. This was a more of a typical finance job, working right outside of the CFO's office.

SP: Tell us about how Texas Commerce shaped your career …

Martin: I would point out two things about Texas Commerce: One is that I had the great fortune of working for Marc Shapiro, one of the most incredibly perceptive, analytical people I've ever met, and also for David Senior, who showed me what mentorship was all about.

The other thing is that my career became diverted into real estate. I went into corporate real estate as part of running the bank's facilities. The banks in Texas were basically real estate developers. For example, we owned a third of the largest building west of the Mississippi. We had ownership percentages in major projects all over Texas. At that point, I considered staying in real estate long-term as opposed to being in banking or finance.

I went from Texas Commerce to First Interstate Bank, heading up their facilities department and also security and some other things and really building that department for the first time there.

After a total of eight years in real estate, four at Texas Com-merce and four at First Interstate, I went back into a more typical finance role of planning and analysis and then became CFO of the Texas region for First Interstate Bank. Although we were part of a larger banking organization, we still had our own separate books, a separate audit, and a separate board of directors because we were an independent entity. So that was my first real CFO experience.