Amy Lashinsky talks to Venture magazine in Jordan about the business intelligence industry.
Digging deep
Written by Abdul-Wahab Kayyali
What business intelligence can do for your company.
Reputation makes or breaks business partnerships. When it comes to transnational partnerships, corporations can never be sure about their business partners’ reputation. But increasingly, companies are springing up to quench corporate curiosity about potential joint venture partners and associates. They run private investigations, digging up any dirt they can find on the subject(s). The benefits are tangible, and the stories are priceless.
“A very prominent Saudi merchant was very desperate to raise liquidity, and he had a chain of hotels in Egypt he was trying to sell,” said Ambrose Carey, co-founder of ALACO, a business intelligence company based out of London in a telephone interview with Venture. “He had a potential buyer based in Switzerland who claimed he could raise the funds. The buyer was a Frenchman and the negotiations were quite advanced, and what we were able to discover is that the buyer was wanted in France on a criminal charge,” he exclaimed. “We didn’t have a copy of the criminal record, but we had the information from a good source. Our client suggested they meet in Paris. The buyer kept declining, and the Saudi client decided to move on.”
The industry name is business intelligence, but it really implies “know your partner/associate/customer.” Venture interviewed Amy Lashinsky, managing director and co-founder of ALACO, and inquired about the business intelligence industry, its origins, and trajectory.
Tell us about the services you provide at ALACO and who are your major clients to date.
The nature of the business is “know your customer.” What we do is background research and investigations into the people and companies that our clients are considering doing business with. Our clients are the financial, legal, and corporate communities advising and providing finance for mergers and acquisitions, joint ventures, senior hires, going into markets for the first time. What we do is find the information they can’t or won’t find, because it’s not part of the deal process.
What geographical areas/sectors do you specialize in?
Although we are only 22 people based in London, 70 percent of our work has nothing to do with Europe or the UK. The majority of work we’re doing now is in Russia and the former Soviet Union, the Middle East and Africa, India, and China. So you could say it is emerging markets, defined by where hedge funds are piling in, or in terms of changing faces. We work on a lot of projects related to infrastructure, oil and gas, real estate, and retail. The US Foreign Corrupt Practices Act has provided a lot of work for us, because American clients need to be vetting all their foreign representatives, agents, and distributors to make sure they’re not breaching the Act or the European bribery bill. That has been a huge business for us. It’s a lot of small cases, but we’re making sure people are playing by the new rules.
It seems there is a thin line between business intelligence and actual intelligence. How would you differentiate the two?
The only difference is that intelligence we are gathering is to be used for business purposes, not political or personal purposes. In the old days, we never called it business intelligence, because there was such a negative connotation associated with the word “intelligence.” It sounded like espionage, but it’s not. We are asking questions to people who know the answers, and we’re not getting answers we’re not supposed to have. We don’t get insider information, and we don’t pass on insider information. We get insightful information.
Why should any company contract a business intelligence company? What is the value proposition of business intelligence?
One of our advantages is that we collect information from a neutral perspective. If the investment bank, the lawyer, or the corporation is out asking the questions, they’re sending out the message that a deal is about to be done or is being contemplated. Whether we are doing an industry study, a market study, or a regional/jurisdictional study, we’re not letting the cat out of the bag that a deal is about to happen.
Is that why it’s better to contract this work than do it in-house?
It’s one reason, because you can keep your plans discrete for a longer period of time. Having said that, it’s what we do all day. Bankers crunch numbers, accountants count the inventory or look at balance sheets, and businessmen do the structure of the deal. Our view is that no one these days spends enough time with management or in a country because they’re busy working on the deal. So we’re just another tool in the deal process. Not surprisingly, most of the work we do is cross-border.
It sounds like either your team does a lot of travelling or you have people on the ground in all these countries.
It’s a little bit of both. One of the things that make us different from our competitors is rather than have offices all around the world; we have foreign nationals working for us in London. We have people who speak Russian, Arabic, German, French, Greek, Mandarin, and Croatian. The first thing we do is collect all the information that is publicly available, so we start with free and subscription electronic databases. We hoover up all the information in the language of the country in which the deal is about to happen, then we have our foreign analyst write up the report, which would be in English but culturally through [local] eyes.
Do you have any government contacts where you operate?
We have non-government entity contacts, but not government contacts. We want to remain neutral, and we want information that is only publicly available. So we would go to the ministry of information or department of statistics and take things that are available. On the intelligence side, we act like investigative journalists or intelligence officers; we go out and find people to tell us what they know about what we’re investigating.
How difficult is that?
People like to talk. People like to be smart, or appear to be smart. People like to be asked questions about what they know, and they like to show off. I’ve been doing this for a long time around the world, and I think it is human nature. People are flattered when you come and ask them questions. Typically, most of what we do, we do covertly. So our client remains confidential, and we promise confidentiality to our sources as well. On the litigation side, things are different, and we need to be much more [upfront about sources’ identities] and ask permission from sources.
Are the challenges of collecting information the same across all countries and societies, or are they region- or culture-specific?
Coming from America, where everything is a matter of public record, I’ve learned after being out of America for 22 years that the public record is less available in certain parts of the world. But increasingly, the public record is becoming more available because of the requirements. When the Berlin wall came down, it was amazing how quickly all the [formerly communist] governments set up registries and insisted that everything be filed. Similarly, law enforcement agencies in these countries kept great files. People who did business in Russia used to ask us, “Does he have a KGB file?”And we’d want to laugh because everyone had a KGB file. If you didn’t have a KGB file, you didn’t exist. And now a lot of those former KGB agents are in private practices, so they know where these files are. We don’t ask them to do anything illegal, just direct us to where the information is.
How expansive is your reach? And what proportion of your work do you outsource?
Once we’ve done all the work we can do ourselves, we call up our freelancers/subcontractors. We have relationships with people around the world who can duplicate or supplement public records for us with information that hasn’t made its way to the wire world. Then we have people who go into the field and talk with people. In addition to our team, I’d say we have at least 30 people that we deal with around the world, and some of them are freelance journalists, retired expatriates in the Gulf or South East Asia, and academics.
How do you decide on your interview subjects?
It’s a lot like investigative journalism. We pull names out of the public record; we look at employees, competitors, former joint venture partners, industry watchers, regulators, law enforcement, local community, social circle and so on.
How do you evaluate the Middle East as an investment destination in the wake of the political turmoil?
We have worked in the region for the better part of the last 15 – 20 years, mostly for Western clients who are doing business with people coming out of the region. So when Dubai opened up, and a lot of business was going in there, our Western clients were asking us to check out potential joint venture partners. As far as the changing face of the region now, our clients are waiting for everything to settle down so they can go into Iraq, Egypt, and Libya, and they will want to know the locals they will deal with. Who are they now, and who were they before. Bechtel knows its way around, and so do the other big infrastructure companies. But people who are going to bring products to the region will need local agents, and won’t know their way around. And that’s what we’re prepared to do.
What is the revenue model? Is it project based, per hour, or percentage of a certain acquisition?
It is project based, and roughly bill by hour, but we do come up with a bespoke budget for each assignment. It’s a function of how much internal time we spend, how much we have to subcontract, how complicated it is, how many different people, companies, countries. We don’t work on a success fee basis.
How has growth been?
We were established in 2002, and we were 5 people. At the end of 2011, we were 22 people. Revenue went from £600,000 to £4.5 million. Business has been exponentially growing. The more an acceptable a part of the process it becomes, the bigger the business will be.
Article courtesy of Venture
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