Leading the Way at a Company Called Experian
When the big red TRW sign is lowered from its perch atop an Orange County high-rise in coming weeks, it will symbolize the huge changes occurring at a company that touches virtually every consumer with a credit card or loan--TRW Information Systems & Services.
The company that helped create the credit information business launched a $300-million bond sale, broke away from its Cleveland-based parent and struck out on its own under a new name, Experian--all last week.
Leading the most ambitious change in the company’s 27-year history is a courtly white-haired executive who, in the words of one admirer, looks like a buttoned-down corporate manager but thinks like a freewheeling entrepreneur.
At 63, David van Diest Skilling--he prefers to be called Van--had two years to go before a forced retirement from TRW. But he was not about to go quietly.
A loyal company man to the outside world, he argued inside the corporation that the unit he ran was misunderstood and underutilized--a sales-and-marketing outfit awkwardly grafted onto a company run by engineers who were rooted in the manufacturing world.
Play me or trade me, Skilling urged, seeking a pledge from TRW to either let Information Systems use its cash to grow or sell the unit that last year earned $52 million on revenue of $540 million.
The campaign paid off. Earlier this year, TRW sold an 80% stake in the information unit for $1 billion to an investment group that includes Skilling and most of the unit’s top managers. In a move industry analysts see as a vote of confidence in the new business, TRW retains a 19.6% stake in Experian.
Skilling, general manager of Orange-based Information Systems since 1989, now is chairman and chief executive of Experian, and he’s free of the corporate strictures he felt were holding him back.
“I can’t imagine a more exciting opportunity for all of us,” he says.
The transformation of TRW Information Systems is likely to excite more than its employees, though. The company has ambitious plans to go worldwide with existing services and an array of new products.
Citing competitive reasons, Skilling declines to discuss new products his company is developing. But they most certainly will give customers faster access to detailed information about millions of people. They’ll make credit checks quicker and more accurate, the kind of service that already enables department stores to offer customers instant credit approval, for example. And they’ll provide refined marketing data so mailing lists can be tailored to increasingly specific audiences.
This will probably loosen a bonanza of data to be gobbled up by information-hungry businesses. There’ll be more opportunities for prospective landlords, employers, lenders and marketers to obtain information on consumers’ personal assets and credit histories. And more catalogs, credit card applications and targeted advertising will be piling up in the daily mail.
Industry insiders say Experian has a powerful new tool--a $70-million high-tech system that can pull data from its files on 190 million people and 12 million businesses and produce customized packages of information with far more accuracy and speed than has been possible before.
Want a mailing list of high-income Santa Monica residents who own vacation homes, like boats and are likely to pay their debts? No problem.
The data-gathering blitz is likely to intensify as big rivals such as Equifax Inc., Trans Union Corp. and Dun & Bradstreet introduce an array of new products to protect their territories.
“We’re all a little bit wary,” admits Harry Gambill, president and chief executive of Chicago-based Trans Union. “This means the business can only become more competitive.”
That has one major consumer group on edge. The likelihood that there soon will be a flood of new information products on the market “definitely heightens our concerns” about personal privacy and accurate credit reports, says Pamela Pressley, a consumer advocate with the California Public Interest Research Group in Los Angeles.
Some observers expect Skilling and his financial backers, Boston investment funds Bain Capital Inc. and Thomas H. Lee Co. also will make an aggressive effort to snap up other companies.
“There’s a lot of consolidation going on in the information industry,” says John Kutler, president of Quarterdeck Investment Partners in Century City. “You get maximum leverage by finding new markets, and the quickest way is to buy up smaller companies that are serving those markets.”
TRW Information itself was the product of an acquisition. In 1969, Aerospace giant TRW bought Credit Data Corp., a Michigan-based credit reporting business that was one of the first in the industry to computerize.
The unit grew rapidly. But that came at a price.
When Skilling took over seven years ago, the operation consisted of a batch of barely related business units with no focus, a top-heavy management structure and a payroll burdened by too many people doing the same jobs.
He got rid of half a dozen businesses--including a collection agency whose contracts included keeping tabs on gamblers’ IOUs for Las Vegas casinos. He also trimmed the information unit’s management staff to 30 people from 180 and slashed the total payroll from more than 5,000 employees to 3,600.
Almost as soon as he took over the information division, Skilling also faced a nightmare--public outrage over widespread reports that consumers’ credit files were poisoned by erroneous information. There was a perception that credit reporting agencies such as TRW were unwilling to help people correct the errors or even to admit that there were problems.
Congress finally stepped in after a number of incidents--one of these was a case in which almost half the 3,100 residents of a rural Vermont town had been branded deadbeats in TRW and other companies’ reports because of faulty information from a contractor hired to gather property tax data.
The credit reporting industry has always contended that the companies are independent agents reporting data provided by credit issuers and that consumers’ complaints should be with the lenders that report wrong information.
But in testimony before a congressional committee in Washington in October 1991, Skilling called for federal legislation to regulate his industry.
Skilling says now that there “were a lot of quality control problems because we’d grown so fast.” But he also says he believes the industry has done a lot to improve reports’ quality. And TRW offers a free credit report to consumers once a year so they can catch and correct errors.
Skilling says the company’s new database, called File One, also has eliminated errors. It has enabled TRW to consolidate all information on an individual in a single master file tagged with a unique identification code.
Now, the company says, there should rarely be cases in TRW reports of John Jones on Smith Drive in Pomona being denied credit because John Jones on Smith Avenue in Pasadena forgot to pay his Discover Card bill.
All of this activity makes folks at the Public Interest Research Group nervous, however. In a report released earlier this month, the California branch of PIRG said credit reporting companies still don’t do enough to help consumers remove false damaging information out of their files.
Skilling declined comment, saying he hadn’t seen the report. As to general criticism that businesses like his still aren’t doing enough to help consumers, his response is terse and forceful: “I don’t agree.”
No surprise there. The company’s consumer credit products remain the chief source of revenue. Indeed, he expects the consumer credit market to drive the foreign expansion that he began in 1993 with an investment in a fledgling credit reporting business in Japan.
In 1995, the company launched Datacredit, a joint venture that made Mexico the third country in the world--after the United States and Canada--to have an online credit reporting system.
The man who could arguably be called one of the nation’s top snoops is a take-charge type, friends and co-workers say, so it’s hardly surprising that Skilling is looking forward to running a company that starts life with almost $800 million in debt and a future dependent on new products.
“This is the opportunity to be in charge of our own destiny, and it’s exhilarating,” he says.
