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DealBook Column: Relationship Science Plans Database of Names and Connections

February 12, 2013 by Leave a Comment

It sounds like a Rolodex for the 1 percent: two million deal makers, power brokers and business executives — not only their names, but in many cases the names of their spouses and children and associates, their political donations, their charity work and more — all at a banker’s fingertips.

Such is the promise of a new company called Relationship Science.

Never heard of it? Until recently, neither had I. But a few months ago, whispers began that this young company was assembling a vast trove of information about big names in corporate America. What really piqued my interest was that bankrolling this start-up were some Wall Street heavyweights, including Henry R. Kravis, Ronald O. Perelman, Kenneth G. Langone, Joseph R. Perella, Stanley F. Druckenmiller and Andrew Tisch.

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It turns out that over the last two years, with a staff of more than 800 people, mostly in India, Relationship Science has been quietly building what it hopes will be the ultimate business Who’s Who. If it succeeds, it could radically change the way Wall Street does business.

That’s a big if, of course. There are plenty of other databases out there. And there’s always Google. Normally I wouldn’t write about a technology company, but I kept hearing chatter about it from people on Wall Street.

Then I got a glimpse of this new system. Forget six degrees of Kevin Bacon. This is six degrees of Henry Kravis.

Here’s how it works: Let’s say a banker wants to get in touch with Mr. Kravis, the private equity deal maker, but doesn’t know him personally. The banker can type Mr. Kravis’s name into a Relationship Science search bar, and the system will scan personal contacts for people the banker knows who also know Mr. Kravis, or perhaps secondary or tertiary connections.

The system shows how the searcher is connected — perhaps a friend, or a friend of a friend, is on a charitable board — and also grades the quality of those connections by identifying them as “strong,” “average” or “weak.” You will be surprised at the many ways the database finds connections.

The major innovation is that, unlike Facebook or LinkedIn, it doesn’t matter if people have signed up for the service. Many business leaders aren’t on Facebook or LinkedIn, but Relationship Science doesn’t rely on user-generated content. It just scrapes the Web.

Relationship Science is the brainchild of Neal Goldman, a co-founder of CapitalIQ, a financial database service that is used by many Wall Street firms. Mr. Goldman sold CapitalIQ, which has 4,200 clients worldwide, to McGraw-Hill in 2004 for more than $200 million. That may explain why he was able to easily round up about $60 million in funds for Relationship Science from many boldface names in finance. He raised the first $6 million in three days.

“I knew there had to be a better way,” Mr. Goldman said about the way people search out others. Most people use Google to learn about people and ask friends and colleagues if they or someone they know can provide an introduction.

Relationship Science essentially does this automatically. It will even show you every connection you have to a specific company or organization.

“We live in a service economy,” Mr. Goldman said. “Building relationships is the most important part for selling and growing.”

Kenneth Langone, a financier and co-founder in Home Depot, said that when he saw a demonstration of the system he nearly fell off his chair. He used an unprintable four-letter word.

“My life is all about networking,” said Mr. Langone, who was so enthusiastic he became an investor and recently joined the board of Relationship Science. “How many times do I say, ‘How do I get to this guy?’ It is scary how much it helps.”

Mr. Goldman’s version of networking isn’t for everyone. His company charges $3,000 a year for a person to have access to the site. (That might sound expensive, but by Wall Street standards, it’s not.)

Price aside, the possibility that this system could lead to a deal or to a new wealth management client means it just might pay for itself.

“If you get one extra deal, the price is irrelevant,” Mr. Goldman said.

Apparently, his sales pitch is working. Already, some big financial firms have signed up for the service, which is still in a test phase. Investment bankers, wealth managers, private equity and venture capital investors have been trying to arrange meetings to see it, egged on, no doubt, by many of Mr. Goldman’s well-heeled investors. Even some development offices of charities have taken an interest.

The system I had a peek at was still a bit buggy. In some cases, it was missing information; in other cases the information was outdated. In still other instances, the program missed connections. For example, it didn’t seem to notice that Lloyd C. Blankfein, the chief executive of Goldman Sachs, should obviously know a certain senior partner at Goldman.

But the promise is there, if the initial kinks are worked out. I discovered I had paths I never knew existed to certain people or companies. (Mr. Goldman should market his product to reporters, too.)

One of the most vexing and perhaps unusual choices Mr. Goldman seems to have made with Relationship Science is to omit what would be truly valuable information: phone numbers and e-mail addresses.

Mr. Goldman explained the decision. “This isn’t about spamming people.” He said supplying phone numbers wouldn’t offer any value because people don’t like being cold-called, which he said was the antithesis of the purpose of his database.

Ultimately, he said, as valuable as the technology can be in discovering the path to a relationship, an artful introduction is what really counts.

“We bring the science,” he said. “You bring the art.”

A version of this article appeared in print on 02/12/2013, on page B1 of the NewYork edition with the headline: A Database Of Names, And How They Connect.

Article source: http://dealbook.nytimes.com/2013/02/11/a-database-of-names-and-how-they-connect/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

News Analysis: Europe Ponders Changes to Finance Ministers Group

September 15, 2011 by Leave a Comment

More than 18 months after Europe’s monetary union first toppled into trouble, officials are debating whether more streamlined decision-making — and better presentation — could help their epic battle with the financial markets.

France and Germany agreed last month that the leaders of the 17 European Union countries in the euro zone should meet as a group at least twice a year under the chairmanship of Herman Van Rompuy, the president of the European Council. He now runs summit meetings of the full 27-member European Union.

That has prompted speculation that Mr. Van Rompuy might also lead the monthly meetings of the Eurogroup, made up of euro zone finance ministers. That is a job held since 2005 by Jean-Claude Juncker, the longtime prime minister of Luxembourg.

In part, the debate, which may reach its peak next month when the European Union leaders discuss proposals to strengthen the euro, reflects grumbling over the performance of Mr. Juncker. His influence has waned as his relations with the two main power brokers, Germany and France, have become more and more strained.

On top of some perceived public relations blunders, he also did not help his position when he began advocating jointly issued euro bonds last year — knowing full well that Berlin was staunchly opposed.

“It was always clear that his ability to do the job would suffer substantially if and when lines of communication with Berlin and Paris broke down,” said Thomas Klau of the European Council of Foreign Relations and author of a book on the creation of the euro. “His advocacy of euro bonds damaged his relationship with Berlin and Paris and impaired his ability to function.”

In an e-mailed response, Mr. Juncker’s spokesman, Guy Schuller, said Mr. Juncker intended to complete his mandate, which ends in June.

“Not one single head of state or government or finance minister has ever publicly, or in the presence of Prime Minister Juncker, criticized his leadership of the Eurogroup,” he added.

The European debt crisis has strained all the euro zone’s ramshackle structures and drawn attention to the need for deeper economic integration, something well beyond the ability of any single person to resolve.

The chain-smoking Mr. Juncker was once one of the most influential figures in the bloc. Though the country he has led since 1995 is tiny, Mr. Juncker, who speaks fluent French and German as well as English, specialized in playing the go-between and deal maker.

As head of the Eurogroup of finance ministers, Mr. Juncker vied with the president of the European Central Bank for the informal title of Mr. Euro. But under his leadership, the Eurogroup has failed to emerge as a body able to broker big deals during the latest crisis, often having to refer difficult decisions to national leaders.

During one meeting this year, Mr. Juncker canceled the customary news conference afterward, only to give ad hoc interviews in different languages as he left the building. Officials of the International Monetary Fund, who attended the meeting, said privately that they were shocked by the chaotic presentation.

According to a senior official, who spoke on the condition of anonymity, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France have pulled back from the idea of trying to oust Mr. Juncker before the end of his term. “They decided the downside of doing that exceeded the upside,” he said. “No one is going after Juncker.”

One complication is that, under part of the European Union’s governing treaty, the finance ministers themselves “shall elect” their own president, so imposing a candidate from outside would be difficult.

An emerging proposal, however, would make the Eurogroup chief accountable to Mr. Van Rompuy. Under this plan, the agenda of euro zone finance ministers would be discussed with Mr. Van Rompuy before meetings, as would any decision to call an emergency meeting of finance ministers.

That arm’s-length approach would probably suit Mr. Van Rompuy, whose position was instituted less than two years ago, since he is supposed to operate at the level of government leaders, not finance ministers.

Mr. Schuller said that Mr. Juncker favored the selection of “a full-time president for the Eurogroup” after his term expires, someone who would have that “as his or her only job.” Ideas being discussed include tapping “a former finance minister or even an outstanding expert,” he added.

Some within the European Commission are pressing for the economic and monetary affairs commissioner, Olli Rehn, to get the job, but that idea is likely to be resisted by Germany and France, who want to retain as much control as possible.

It would also blur the lines of the structure in which the European Commission is supposed to be policing the finance ministers, ensuring that countries meet their economic objectives.

All this means that the most likely solution is one that ties the head of the euro zone finance ministers group more clearly into a new line of command with Mr. Van Rompuy at the head.

While Mr. Klau said he believed that more streamlined structures made sense, he warned that they were only a small element of any long-term solution for the euro.

“Tinkering with the chairmanship is no alternative to devising a form of governance that operates on politically integrated or federal grounds,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=bba28827ff2baad4c78c1d39c5ba1f19

Filed Under: Business News Tagged With: , ,

Arsenal of a Lobbyist: Hardball and Cupcakes

March 26, 2011 by Leave a Comment

IN this covetous town, the delicacies of the Georgetown Cupcake shop stand alone as symbols of wish fulfillment — heaping swirls of luscious confection atop rich, creamy pastry.

Therefore: Operation Cupcake. As the Federal Communications Commission debated final rules last December on how Internet service providers should manage their traffic,  ATT delivered 1,500 of these opulent desserts to the F.C.C.’s headquarters here.

Like many other big corporations, ATT annually blankets power brokers with token holiday gifts, but the cupcake campaign was notable for its military precision. A three-page spreadsheet, stamped “ATT Proprietary (Internal Use Only),” detailed how the desserts were to be deployed to each of the 63 commission offices: four dozen were assigned to the enforcement bureau, 10 dozen to the wireless divisions, 12 cupcakes to each of four commissioners, and 18 to the chairman, and so on.

As it turns out,  ATT had begun its $39 billion courting of T-Mobile about the same time. The resulting ’deal, announced a week ago, would transform the industry if approved. It would narrow the field of major wireless providers to three and vault ATT into the No. 1 spot, ahead of Verizon; consumer advocates say the combination will lead to higher prices.

As interested parties lobby for and against the merger, one person will be pulling at the levers of power more often and with more influence than anyone else, according to both friends and foes: ATT’s chief lobbyist, James W. Cicconi. A master strategist, Mr. Cicconi (pronounced si-CONE-ee) internalizes the art of regulatory and legislative war — and Operation Cupcake is but one of the efforts to come out of his shop.

Tutored by James A. Baker III in the ways of politics in the administrations of Ronald Reagan and George H. W. Bush, Mr. Cicconi, 58, plays hardball — literally, as a pitcher in an adult baseball league, flinging fastballs toward batters more than a decade younger.

His roots are in Texas, and he never forgets the lesson of the Alamo: the Texans lost. Other battles have different lessons for him. He once took his staff on an overnight retreat to Gettysburg, Pa., where it toured Cemetery Ridge and Little Round Top and absorbed lessons on battlefield tactics.

In 13 years at ATT, Mr. Cicconi has helped guide the company through roughly a dozen mergers, large and small, and he has made his share of enemies in Washington. As a testament to his power, however, few of them will criticize him on the record.

“He’s smart, he’s savvy, he’s strategic,” says Gigi B. Sohn, president of Public Knowledge, a media and consumer advocacy group that has often wrestled with him. “I don’t think there’s a lobbyist in town who I disagree with more on the issues, but I have the utmost respect and admiration for the way he does his job. He’s always thinking three steps ahead of the competition.”

MR. CICCONI, senior executive vice president for external and legislative affairs, is not alone, of course, in spreading ATT’s corporate message. Five other executives rate a similar rank, and four more are group presidents or chief executives, all under ATT’s chairman and C.E.O., Randall L. Stephenson.

Nor is Mr. Cicconi’s lobbying effort a one-man show. He oversees a division that spent $115 million on lobbying over the last six years, putting it among the top five corporate spenders in the country, according to the Center for Responsive Politics, which tracks lobbying and campaign spending.

ATT employs an army of outside lobbyists, including at least six prominent former members of Congress, including the former Senate majority leader Trent Lott, a Mississippi Republican, and former Senator John Breaux, a Louisiana Democrat.

Over the last two decades, ATT employees and its political action committees have pumped more campaign contributions into federal politics than any other American corporation, the Center for Responsive Politics reports. In the last election cycle, ATT contributions found their way to 390 representatives and 70 senators.

“They are a behemoth,” says Dave Levinthal, editor of Opensecrets.org, the center’s online lobbying database. “When you have dozens of former federal officials doing your bidding in Washington with a detailed knowledge of how Washington works, it is exponentially easier to grease the skids of government.”

As Congress discusses the merger, Republicans and Democrats will duel over the balance of market forces and regulatory intervention. The White House will strive to balance the president’s campaign promises to get tough on antitrust issues while trying to prove he is not anti-business.

In advocating for the T-Mobile merger, ATT and Mr. Cicconi have their work cut out for them. The Justice Department’s antitrust unit will aim to determine whether the deal will substantially limit consumers’ choices. After the merger, ATT and Verizon would together control nearly 80 percent of the cellular market, with Sprint a distant third.

(Verizon declined to comment on Mr. Cicconi or on ATT’s deal to acquire T-Mobile.)

And the F.C.C., which along with Justice must approve the merger, wants to reapportion the scarce broadcast wavelengths on which wireless broadband operates. The T-mobile deal would result in fewer potential bidders in its airwave auctions.

Article source: http://feeds.nytimes.com/click.phdo?i=84923ae23e4b73947f96d9d66ac5c9c6

Filed Under: Business News Tagged With: , ,