Broker, Trader, Lawyer, Spy - Eamon Javers [85]
Phil Houston and his colleagues thought that selling this timeless TBA training to law enforcement agencies across the country might be a good business. At first, it was. After 9/11, local police forces realized they needed to beef up their interrogation techniques on the front lines against terrorism. Police officers signed up for the training, and Houston and his colleagues traveled the country evangelizing about TBA. But although Houston is a brilliant interrogator, his colleagues say he’s not a brilliant businessman. His company kept bleeding money. Police forces were late paying their bills. Houston and his colleagues were more interested in delivering the training than in following up on invoices.
Soon, the struggling little firm faced an impasse. It needed a buyer to inject business discipline and make it thrive. That’s when Houston met Liam Donohue, a venture capitalist based in Boston who was then running an investment fund called Arcadia Partners. TBA and the CIA’s “elicitation” techniques captivated Donohue, and he saw a wide-open new market for them: corporate America.
Arcadia bought a large percentage of Houston’s firm, and the CIA veterans retained a significant equity share in the reconstituted new company, which was now called Business Intelligence Advisors, or BIA. The acronym was a deliberate reference to the CIA.
Officers of BIA declined to be interviewed during the writing of the book. But the firm describes itself, succinctly, in a document distributed to clients and signed by its current president, Cheryl Cook:
Business Intelligence Advisors Inc. (BIA) adapts techniques developed in the context of international intelligence gathering and national security to enhance high-value, high-risk decision making in the private sector. BIA’s services are targeted to, and most valuable in, information driven processes, where the reliability of information can make a crucial difference in outcomes.
BIA’s employees and network of experts include the world’s leading intelligence resources, with unparalleled expertise in strategic interviewing, intelligence gathering, risk assessment and security. BIA combines these resources with experienced analysts, consultants and project managers to ensure that resources are deployed to maximize return and business impact.7
Liam Donohue eventually became chairman of the board of the new company. Under his leadership it began to thrive. As an MBA from Dartmouth’s famous Amos Tuck School of Business Administration, he brought in a series of managers who shared his background. He reoriented BIA from an enterprise primarily focused on law enforcement to a business focused on generating corporate clients. He hired a CEO, Don Carlson, who was a lawyer and had been with the investment banking firm Goldman Sachs. By 2005, Carlson says, BIA was generating between $10 million and $11 million in annual revenue.
Donohue is extremely secretive about BIA, and the firm has opened up to the press about its services only once, for an astonishing article in Barron’s by Jonathan R. Laing, “Is Your CEO Lying?”8 The article laid out BIA’s deception-detection techniques and set off a flurry of interest in CIA-style interrogation within the hedge fund community.
The CIA didn’t invent these techniques. Although it spent years working on tactics based on the best information modern science has to offer, at most it was just reinventing something that had been developed more than 100 years ago by the first private eye, Allan Pinkerton. All the biographies of Pinkerton mention his ability to get criminals to confess. In the 1850s Pinkerton wrote that there was a reason for this astonishing success: “Criminals must eventually reveal their secrets,” he noted. “And a detective must have the necessary experience and judgment of human