Broker, Trader, Lawyer, Spy - Eamon Javers [112]
Verbatim’s techniques are based on the training that its managing partner John Strehle received as an intelligence officer in the U.S. Navy aboard the aircraft carrier USS Dwight D. Eisenhower. He says the challenges he faced as a young lieutenant in the 1980s and 1990s and his present work gathering intelligence on global companies have a lot in common: “You have to make sure you prioritize intelligence properly, you have to be used to changing deadlines, and you have to be able to reach conclusions based on less than complete information.”
Verbatim’s team members are analysts, the corporate equivalent of the CIA’s employees in Langley who pore over data trying to predict trends. For instance, they scrutinize economic and crop data to predict the next famine in the third world and its resulting political instability. Predicting is one of a spy’s most valuable skills. To do it, Strehle wants to hire smart, sociable people and trains them in elicitation techniques.
The software manufacturer Salesforce.com, which is based in San Francisco, makes so-called “customer relationship management” computer programs to help salespeople keep track of their accounts and contacts. A hedge fund client asked Verbatim to predict Salesforce’s quarterly earnings. In 2006 the company had released a new software product, and it was getting only tepid reviews in the press. Wall Street was betting that the quarterly earnings would be grim.
But Verbatim built its own prediction of what those earnings would be, going from customer to customer, and asking them all how many units they’d purchased that quarter, and matching the information against data it had gathered in previous cycles. Verbatim’s team took a systematic approach, calling large and small customers, and getting a wide geographic spread. They talked to the people at big companies who were responsible for buying Salesforce’s software. Unlike some of the other corporate intelligence outfits, Verbatim says it doesn’t engage in deception. The company insists that its analysts tell sources who they are and what they’re doing.
Although Verbatim doesn’t pay for interviews, Salesforce’s customers were motivated to talk anyway. Sometimes Verbatim’s interviewers knew more about what was going on at Salesforce than a customer did, and the customer could pick up valuable information of its own by chatting with them. What new products are coming out next? Are other customers getting discounts that we’re not? The interviewers probed for specifics in return: How many users at your company are working with the Salesforce software now? Which of Salesforce’s competitors have approached you—and what are they offering? What kind of discounting are the Salesforce reps offering?
The results were surprising. The customers liked Salesforce better than Wall Street thought they did. Verbatim turned over a report to its client, several weeks before the end of the quarter. The hedge fund managers saw aggregate results, answers to all the questions, and the names and phone numbers of Salesforce’s customers who had agreed to be identified to the hedge fund. The software company reported an unexpectedly strong quarter, and Verbatim’s client was well positioned when the quarterly numbers were officially released.
SPIES OFTEN SAY that 90 percent of a good intelligence operation is open-source information—stuff that’s in the newspapers, in government documents, or easily available with a phone call or two. Corporate spies also know that. And they know that the best material of all can exist in the narrow zone somewhere between public and private information.
On the afternoon of November 15, 2005, day traders chatting on Yahoo.com were scrambling for information. They couldn’t figure out why there was so much action in USG Corporation, a Chicago building-materials company that was mired in asbestos lawsuits. Its stock was trading at double the normal daily volume and