Please tell me about yourself and HC Group.
I joined HC Group after university and will celebrate my 20th year with the company this month. I started as a desk researcher on the European gas and power markets. In 2007, three years later, I put my hand up and said, ‘Hey, I think I’d like to go to the US. A booming energy market is out there, and we aren’t doing any of it. Give me a shot.’
Our then-founder and CEO, Justin Pearson, agreed and gave me a choice between New York and Houston. I chose Houston and have been here ever since.
We started focusing on agriculture in 2010, with ADM as one of our anchor clients. During that period, the main ag houses were diversifying into other areas of the value chain, so much of our work was outside of trading in areas such as animal and human nutrition.
The years between 2012 and 2018 were challenging for us and the sector. In 2018, Justin Pearson was keen to move on. My colleague Damian Stewart and I bought the business from him, and now we’re co-owners. The firm was then down to about 24 people. With luck and judgment – luck being the markets coming back and judgment being that we made some significant changes to get the business back on its feet – we’re now 85 people in six offices.
At HC Global, we do everything a top-tier standard search firm would do, but we just focus on the commodities sector. That focus gives competitive advantages over other, more generic search firms. We understand the roles better and better at assessing candidates’ skillsets and fit. We have an established network and brand within the market, so we are typically already connected within the candidate community, and they trust us. It also means we can be true advisors to our clients.
Where are the current hotspots?
Digitization, de-globalization, and the energy transition are the current hotspots. If you take those three and look at any given commodity vertical, the hottest demand is the intersection point.
The intersection in ags occurs around biofuels. An energy company may need ags experience for their feedstocks, while an ags company may want energy experience for marketing.
With de-globalization, the world has become more complex, riskier, costlier, and less certain. You need professionals in your organization to manage that.
Then, there is digitization with a drive to lower costs and facilitate decision-making. Of the three verticals, energy, ags, and metals, ags is probably five or six years behind the other markets in digitalization.
Another hotspot is hedge fund demand for ag traders. There are relatively few ag traders, particularly those who can trade from a blank paper.
Skill sets are the easy bit. The hardest is the cultural and behavioural fit. You have only a few companies in the ag world, and they are culturally independent. Cargill is different from ADM, and Dreyfus is distinct from both. The challenge is to find people who fit in your organization and your organization’s goals.
That’s particularly true in trading, where you might have people with the same skill set, such as a wheat or oilseeds trader. Depending on what company they’re in, they’re trading for vastly different goals. One might be filling a system, and you don’t want them taking risks. In a hedge fund, it’s an entirely different scenario. That’s why the cultural and behavioural fit are critical. Getting that piece right is challenging, particularly in a market short of talent.
Now, let’s go to the podcasts. How do you find participants for them?
Most of our guests come from recommendations from our network. Overlaid onto that is an odyssey of personal interest. What do I find exciting? What are the current themes that need addressing?
It is sometimes challenging to find individuals who are not overly controlled by communications departments. We look for guests who can provide a balanced, in-depth view rather than just advertise talking points.
People are sometimes reluctant to participate for fear of revealing strategies and information. There’s a historical culture in that you don’t want exposure, you don’t want to be in the media, and you don’t want to talk openly about anything for fear of giving your competitors insights and information. There’s a feeling there’s a downside to discussing how much money you’re making. You face political and cultural headwinds in the commodity trade.
I try to find a balance between men and women, but it’s a function of demographics. Women make up about 30 per cent of the workforce in the sector but occupy only 20 per cent of the senior positions. I try to do better, but the demographics of the podcast probably reflect that reality.
Typically, I have a half-hour to an hour chat with potential guests, and we’ll develop the primary arc of the conversation. I don’t like scripting or going into too much detail. It takes an hour to record the episode. I do a draft edit and send it to a lady in Finland who does the fine edits. All in all, end-to-end, it’s probably a three-hour process. But then I’ve had a lot of practice. The first few episodes took a lot longer.
I do one podcast a week and publish it on Wednesday.
You’ve been doing these podcasts for four years and have just completed the 200th. On average, how many listeners do you have?
I can’t capture all the data because we don’t have access to some platforms. Roughly speaking, we have about 25,000 listeners a month. We’re nearing a million downloads and have had some 300,000 listeners. Our core audience listens to every episode, and many people dip in and out depending on the topic.
The commodity sector is niche; we only advertise on LinkedIn and to our connections. We create podcasts for the commodity sector. Despite being niche, we are regularly in the business charts in Europe and the US.
Most of the other commodity podcasts are short market updates. Ours are more extended discussions. One advantage is that, as a recruiter, I can ask stupid questions, say I don’t understand something, and ensure everyone’s on the same page.
Ultimately, everything comes down to people. We talk about talent at some point in every podcast. The success of a hedge fund or trading house depends on how good their people are and the culture that they build.
HC Group is a global search firm dedicated to the commodity sector and the people within it. Our podcasts are an extension of the culture of the business.
What have you learned since you began the podcasts?
I feel less confident about everything now than before I started the podcasts four years ago. Understanding markets takes work and research. I’ve learnt how complex and nuanced everything is and how people quickly jump to shorthand, heuristic judgments.
Let’s take the energy transition. We’ve done episodes on critical minerals with issues around child labour, unsatisfactory working conditions, and corruption. Companies like Apple say that they want this and that, but they ignore some of the complexities. Regulators ignore the trading community when it comes to battery minerals. They don’t engage traders.
If you want to affect energy transition and get to the heart of sustainability, the commodity sector is the place to do it. Other sectors, like the technology sector, are terrible for the environment, but they’ve managed to hide the material supply chains they rely on. Trading houses and traders receive the blame.
A senior banker recently told me his bank’s risk committee would drop a commodity trading house if it got fined millions of dollars for an infraction. At the same time, Google regularly gets billions of dollars in fines, and no one has a problem doing business with them.
The stock market typically values companies with a trading arm at a discount. Trading is innately hard to understand. It overlays with the desire of the sector to go under the radar. Most of the headlines and books on commodity trading glorify and revel in the scandals. They do a disservice to the industry as they don’t reflect how it operates today.
When you see a headline that a trading company made billions of dollars trading European power, the public perception is that the energy traders have been gouging us. The reality is they have been solving problems.
The worry is that there’s intensive pressure on governments to intervene, particularly in the ag markets. Without a free-trading commodity market, you would have increased volatility, sharper price spikes, and higher inflation. It is a real challenge for the sector. In a more volatile world, will we lose the functionality that allows markets to address issues in solving problems in space, time, and form?
When I first joined the sector, the top companies, such as Cargill, had the pick of the best schools in the US. The top students now go to investment banks, hedge funds, and technology companies. A lot of that has to do with the low returns over the last decade. It has resulted in a talent bottleneck at the junior executive level. Everyone’s feeling it.
You’ve got two more issues. One is that the sector is male-dominated, which makes it harder to attract women. The other is the environment. It can be hard to tell your classmates you’re joining an oil-trading company.
The sector has some real challenges. It’s not promoting itself. It’s not attracting the best and the brightest. And it hasn’t done so for some time.
When I did an MBA at Rice University in Houston, we had classes on equity trading but not commodity trading. Few universities teach how commodities flow around the world. All top universities should have classes on it.
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