Another Measure of D&O Risk?

My grandfather never believed in the efficacy of reforming the criminal mind, "once a crook..."

I don't know Barry Minkow beyond reading the story in the WSJ today (here and on pg1 of Marketplace) but after serving time for a "stock swindle" he seems to have won the praise of the FBI according to the article and is trying to (profit from) pointing out corporate fraudsters.

This reminds me of the early days when Howard Schilit (who never served time) used business school students to demonstrate manipulation of corporate earnings and wrote his book "Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports" (description on Amazon here).

Advisen reached out to Howard, we had a great breakfast meeting listening to how he took some reports on a handful of companies from the grad school lab to an actual business. I always enjoy hearing these stories from entrepreuners like Howard, the courage to start a business using your own family money can't be appreciated enough.

Howard started CFRA in 1994 and sold it on to what is now the RiskMetrics Group (see press release here). Howard brought in an executive from Goldman Sachs to institutionalize his models such that there would be indicative scoring on thousands of public companies while deep forensic due diligence might only be completed on a few hundred public companies.

To provide commercial insurance underwriters with an important measure of risk, especially to those in the D&O market, Advisen has carried the indicative scoring, the full reports and a dashboard of CFRA scores to make risk analysis quicker and more complete. This measure of risk is incorporated into our company exposure look-up pages, available in our risk & insurance search engines and in our configurable underwriting work-ups.

I'm curious whether readers would find Mr. Minkow's research worthy of being included in our risk profiles. His company is the Fraud Discovery Institute here.

Please let me know in the comments or by e-mail.

Thank you

Small Businesses & Web 2.0

Alan Meckler posted yesterday about the over-hyping of Web 2.0 citing a good story on internet.com about how small business owners need to have clear ROI before engaging in blogging, wikis, social networking, etc.

The report covered in the article says that these small business owners are twice as likely to care about e-mail newsletters and having quizzes and calculators on their site rather than blogs or wikis or social networking.

I will need to read the report to see if the businesses rely on internet marketing or if their web site and internet marketing are not core.

We're forming our 2008 marketing plan at Advisen and determining exactly where some Web 2.0 products could help. Our goals are to deliver great content to new and existing readers and to drive them to consider the advisen.com premium product as well to deliver a higher level of customer service by informing our clients about new information and analysis that is relevant to their book of business. We want to do this with technology versus more staff.

Advisen's #1 marketing tool is a series of vertical e-mail newsletters and Advisen has had great marketing success with topical surveys so we have some of the "web 1.0" bases covered.

In terms of web 2.0, I started this blog in large part to learn how blogging has helped other businesses and to show our team that it is not too difficult. We launched one in 2004 that covered the Spitzer investigations into the insurance industry and I'm very pleased to see that our developers have installed new software and that we will launch a new blog soon, likely to cover the developing subprime story for commercial insurance professionals.

I'm particularly delighted that they built the blog into the advisen.com navigation like our newsletter so that with the first release of the blog we will not only show in natural search engine resuls but also drive interest in our premium subscription offering.

If I've learned anything from Alan it's that you can't be all things to all people, small businesses can become bigger businesses by publishing vertical content. We are betting that social media can generate additional vertical content and help achieve our goals for growth and a higher level of service to premium customers.

Piece of Cake

Getting a successful internet start-up from idea to execution sounds easy these days. It's not. Just when you have dug in with late nights and long weeks to deliver a project, you dig deeper to deliver the next one. You have to believe, despite hearing "no" a lot.

Having just finished reading "1776" I'm struck by the parallel ups-and-downs with the early days of the business. Apparently George Washington's most-used word in motivating his officers was "perseverance".

Steve Carpenter married my stepsister and has believed in his manifest destiny to found a successful internet business. After Harvard Business School, Steve brought an idea to market and I congratulate him for his perseverance in launching Cake Financial. See their write-up in Forbes here.