How Jules Kroll Ignored Naysayers & Started a Rating Agency
How I Did It: Kroll Ignores Naysayers Starts Ratings Agency
When credit rating agencies came under fire for their role in the 2008 financial crisis, Jules Kroll, the corporate-investigations pioneer, saw a business opportunity.
00:07 Jules Kroll: It caused me to pause and say, "Geez this kind of feedback makes me wonder, am I doing the right thing?"
In 2010, Jules Kroll, the corporate-investigations pioneer, launched a bond rating agency to help investor measure debt risk.
Kroll Bond Ratings agency would compete with the three established ratings agencies, which came under fire for playing a role in the 2008 financial crisis.
Jules began meeting with potential investors--some of whom showed immediate interest.
00:40 Kroll: We had been pursued by a very large venture capital firm and they had really wanted to be part of what were were doing. They had heard about it, they had been a client of mine in my original business for decades, and we had several meetings, they seemed to be very excited.
The VC brought the idea to its clients, to gauge the level of interest.
01:05 Kroll: And they came back to me in the, really, it was in the spring of 2010 and they said to me, "Nobody can see how you can conceivably take on these people and be successful." And these were all younger men and women, and they were giving me feedback that some state pension fund, I think it was the State Pension Fund of South Carolina, said, "We can't imagine how anybody could break into this business." And that really stopped me in my tracks. And you get this sort of sinking feeling in the pit of your stomach, and then you raise your medication levels and you move forward. That probably was the moment in time that was most concerning to me.
Despite the feedback, Jules pushed ahead with plans for the new company.
02:02 Kroll: There's a fine line between persisting and just being stubborn. And in this case, I would say, it's an interesting example of, despite some negative feedback at the beginning from both some younger men and women and also from people much older, that were questioning, "How could you possibly take on these long established, virtually, a monopoly in this area?" And so for me, it was not just a question of making a point, you also constantly have to do your sums and you have to listen and hear, as well as talk. And I was getting enough feedback from many other people, such as, "It's about time somebody took this on." And in my case, they said to me, "You built a reputation for integrity. Your brand stands for something and that will be helpful here. Although it's not in the ratings business, it was in the business of due diligence and investigations." So it was, there were moments that were a little bit scary, a little bit ugly but we were able to get the licenses, we were able to raise the money, we were able to recruit first rate teams, and now, in the middle of 2012, we are really having breakthrough moments and establishing tractions.
Kroll Bond Ratings Agency has reportedly raised more than $30 million in financing.
Investors include Bessemer Venture Partners, RRR Ventures and New Markets Venture Partners.
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