Ubben Posse Fellow Interviews: Robert Fauber

The Jeff Ubben Posse Fellows Program awards five exceptional Posse Scholars $10,000 each and the chance to spend 4-6 weeks during the summer shadowing and learning from a major industry leader. The interview below with Rob Fauber, CEO of Moody’s Corporation, was conducted by Posse Scholar Tyler Reed, now in his junior year at Middlebury College, who worked with Rob Fauber as a 2024 Jeff Ubben Posse Fellow. The conversation has been edited and condensed.

TYLER: I would first love to dive into your background and your childhood. How was that experience? And what were the key lessons you learned?

ROB FAUBER: I spent my entire life down in the South. I was born in Georgia, and ended up growing up in Richmond, VA. My father worked for the Federal Reserve Bank and my mother was a schoolteacher. I went to the University of Virginia for my undergraduate studies. I was extremely fortunate as a child. I had a great family. I’m an only child, but my parents are fantastic. I grew up in a typical middle-class suburban environment with a loving family. I was very fortunate.

Did your interest in finance stem from your dad working for the Federal Reserve Bank?

Probably. My first job was at a commercial bank, and while I was in college, my father told me I had to take two accounting classes. That was the one thing he really insisted on. And I’m glad he did. It turns out that those classes were required to get a job as a credit analyst at a commercial bank. So, I got a job at a bank that had just been created in a merger, and it was called Nations Bank, which is now Bank of America. I got the job at a time where they would hire into the state banks, and for me it was the State Bank of Georgia. That was part of Nations Bank, and I got hired in the State Bank in Georgia and I thought, "Alright, this is great. I’m going to go work in Atlanta." But after I accepted the offer, I got a letter that said I was going to report to Macon, GA.

I would love to follow that journey. Could you touch on what happened after your time in Macon? How did you get to New York?

I worked super hard as an analyst. I was very fortunate because Nations Bank had a very competitive culture, and they ranked all the credit analysts. I worked really, really hard and I got a high ranking as a credit analyst. This allowed me to move to the Atlanta office as a lending officer. First as a junior analyst and then I became an actual commercial banker. I got a job in the suburban loan office in Atlanta and then I got promoted to downtown. I got a bigger portfolio, bigger companies. I ended up getting a call from someone in Charlotte, which is the headquarters now of Bank of America, then Nations Bank. They said, "Hey, you’re on some talent radar so why don’t you come to Charlotte?" I did that for a year. At that time, I applied to Business School, and I got into Cornell. When I was in Macon, my goal was to get to Wall Street. I was getting closer but still far away. Before I even set foot on campus for my MBA, I knew exactly what I wanted to do, I knew exactly what I had to do. I was very motivated. I received an internship at what was then known as Salomon Brothers, and that became Citigroup. I worked on Wall Street. I got a job as an investment banking associate, and I did that for about 6 years.

How did your experience with Salomon Brothers shape you, specifically how did it impact the culture that you want to build at Moody’s and your leadership style?

There were some great things about Salomon Brothers, and there were some not so great things about it. One of the things that I learned at Salomon Brothers, and this is something you learn in investment banking, is that it’s a very competitive and demanding industry.

Since it’s competitive, everything must be done completely right all the time. You work with a lot of really smart people, and the pace is very fast. That was something really valuable. If you think about it, I was rebooting my career on Wall Street, and I was learning what it took at that level to be really good. I learned how to put together presentations in a way that tells a story, how to do all the financial modeling, and how to work with really talented people who are very, very competitive. There was a high bar, and it was a demanding place. Now, there were some things I didn’t like about it. There were some cultural aspects that I found pretty rough and jarring.

When I came to Moody’s in 2005, my job was to run the mergers and acquisitions team. I was no longer doing M&A for clients; I was doing M&A on behalf of the company. It was great because I came here and had one person working for me, but I had a chance to establish the culture of that small corporate development team in the way that I wanted to. There were some things that I brought over from Salomon and Citigroup in terms of the high standards, in terms of what excellence looks like. There were some things I didn’t bring. For example, dropping things on people on a Friday afternoon because we didn’t manage the workflow properly, causing them to work all weekend on unnecessary fire drills, and sometimes maybe not treating people with respect.

I left all that behind in banking, but I brought the competitiveness and the high standards over to Moody’s. Here’s how we do things, and we want to win. We want to go out and find the deals and beat our competitors to those deals, and I think that was very valuable.

Looking back on that experience, it’s almost like you were in a boot camp. Once you get through that, those skills that you develop are valuable for the rest of your career. They also provided a bit of a stamp of credibility. If you can make it through that, you know what you’re capable of achieving.

I would love to continue this train of thought and talk about your current position where you’re managing your own team and developing your own culture at Moody’s. How did leadership style translate towards your progression in Moody’s?

If I look back at my career arc, I was a commercial banker, then I was an investment banker. Then I came over here and ran our M&A team for seven years. By that point, I was in my early 40s and the only thing I’d ever done was banking in some form. When I ran the M&A team here at Moody’s, I always managed a small team. After about twenty years of banking and M&A and then, I moved into the business. The CEO had asked me if I wanted to take over a role running all of sales and product for the rating agency. That was an important juncture in my career.

I had to figure out if I wanted to stay at Moody’s or if I wanted to take this skill set in banking and M&A and do that somewhere else, maybe at a private equity firm or wherever. Obviously, I decided to stay here, and my learning curve was steep. I took over the sales organization within Ratings. I was never a rating analyst. Now I had to manage a global team. I had never done that before.

I did that for three years and then I ended up running Moody’s Ratings, the rating agency part of the business. So, I went from managing 150 people to managing 3,000 and a company with $3 billion in revenue. That was a very steep learning curve where I had to really learn a lot about operations, management, and communication. When I was doing M&A, I wasn’t doing town halls. I never got trained for that. I never had training in that, so there was a lot of on-the-job learning.

What was it like getting the call when you were told, "You’re going to be the next CEO"?

That’s a great question. I’ll give you context leading up to getting that call. As you can imagine with any large company, there’s succession planning that goes on. It’s a very important responsibility of the Board of Directors. Interestingly, I never aspired to be a CEO. I never really thought about it. I never focused on it nor actively pursued it. I think that’s important. It’s not like I was gunning to be the CEO, and I believe that actually helped me in many ways. Sometimes if you’re too focused on that, it can lead to some negative behaviors. So, my philosophy has always been to do what I enjoy and do it to the best of my ability. So, when I received the call to be the president of the rating agency while I was leading the sales team, it was a shock. I thought, ‘wow, OK, things are moving very quickly.’ I transitioned from running the M&A team with five people to leading the rating agency with 3,000 people and $3 billion in revenue. Something’s going on here. That thought crossed my mind at the time.

In fact, when the CEO called me about that and he called me into his office, he said, "Hey, Rob, I just want to let you know we just finished our board meeting and I just had a conversation and recommended to the board that you be the next President of Moody’s Ratings." I was totally stunned.

But at that point, I said alright, it seems like there’s some sort of plan. I did that for three and a half years and then they started a formal succession process. The CEO was considering retiring at some point and they went through a process, and it was a very demanding process as you would expect it would be.

I went through psychological interviews, IQ tests, simulations, and all sorts of stuff. Then I had to do all sorts of interviews with the board of directors. I had to interview with the executive search firm that had been retained. At that point, you know you’re in. I mean, once I was running the largest business, the rating agency, I knew our CEO was close to retirement. I knew that this day was eventually going to come, and I knew that I was going to be a candidate for it because I was running our largest business and at the time I was 47 years old. So, it made sense.

One night I got a call from the CEO, and he said it’s going to be you. It was a surreal moment, but the more surreal moment was back when I was tapped to run the ratings agency because it was just such a shock. I don’t think I realized at that moment how many things were going to change. I want to do this job because I feel a sense of responsibility to this great company that’s been around for 115 years. I believe that I have something valuable to add to this company at this moment in time. It was a sense of something bigger than me that I thought I could be part of and contribute to in a valuable way. It was almost like a calling. If you’re asked to do it, you have a responsibility to do it if you think you can really contribute something.

What do you think contributed to that mindset of you wanting to support the company and the people at the company and the overall sense of responsibility?

One reason I felt a sense of responsibility was because of my background and what I spent a lot of time at this company doing, which was not just M&A, but I was involved in many growth initiatives at the company. Our joint venture in China, moving into India, setting up the analytics business, getting into our insurance business. There were a lot of things that I was very fortunate to have my hands on. I loved that job, and that job allowed me to have a very broad understanding of this company and to have been involved in many of the things that were very important to the growth of the company.

When I thought about taking this job, I thought, "this company has a great opportunity in front of it, but it’s going to need to take some risks and do some things differently." That’s where I thought my experience could bring a lot to the company, given everything that I had done. It was the set of experiences that I thought meant that I still had more to bring to this company.

Who was somebody who was like a mentor to you? Is there any key lesson that you took away from them that you want to instill onto others?

In life, it takes a combination of hard work and luck. I was lucky, and I worked hard. Those things came together.

When I started here, the CEO basically hired me. I worked for the Chief Financial Officer, and she was a great sponsor for me, but I spent a lot of time with the CEO. We started doing acquisitions and I’d sit down with him and tell him, "We’re going to get into XYZ market. Here’s the business plan and we’re buying this company." I had a lot of exposure to him. At some point, even the reporting line switched, and I started reporting directly to the CEO.

For a long time, I had a relationship with the previous CEO. His name was Ray McDaniel, and Ray is a really wise person. He was the person who would sit and listen to what you were talking about. Then he would ask the best question.

I learned so much from having a lot of exposure to him and just observing how he handled situations, how he handled meetings. He is a very humble guy. He rode the subway, and he was very self-deprecating. Just a very down-to-earth guy and I observed him and worked with him for 15 years.

He was an informal mentor. There were times where he would just really pass on some pearls of wisdom, and I still draw on that all the time. I’m close with him and still talk with him. I was very, very fortunate to have that relationship with him.