How did you start the company?
The notion of an individual address change was the leading indicator of account takeover and the founding element of ID Insight in 2003. I had left ChexSystems and together with a (former) business partner Bob Clark we spun it out of the proverbial garage. Our goal was to use data analytics to serve loss-prevention departments inside large banking institutions and credit issuers. Identity theft was just going mainstream and I feel like we were really on the forefront.
You began in St. Paul, but why Northfield?
I’m an Ole (St. Olaf Alumni) and so are two of our board members. Part of the money we raised in second round was from an economic development group that wanted to recruit businesses to their area, so it made sense at the time.
…and why the decision to leave Northfield?
We intended to grow to 20-30 people after moving there but we actually did not… although we continued to grow revenues. So we were all driving the Northfield every day from all over the cities and eventually it became an employee retention concern, not wanting them to have to continue to commute for the sake of it. There were repercussions for us to up and leave, which is unfortunate, but it was the right decision and we have a good working relationship with the City of Northfield. We had subletted in Arden Hills and Maplewood for a bit, but now were happy with our new permanent space in Minneapolis.
What are your company’s products?
+Safe to Change is our main address change analytics product that screens consumer address changes and discrepancies on the fly for credit issuers. It’s a patented predictive score that basically gauges likelihood of a valid physical address change. We’re consistently scoring ~20k address changes per day, which helps credit issuers and banks make decisions. Between us and our partners, we are updating up to 3 billion address per month.
+Broadband Scout came about when the ARRA broadband stimulus money was flowing around 2009 for projects that assisted in broadband adoption. We had our moment of analytics aha as carriers and networks were in need of data that could demonstrate which areas where un-served or under-served. We happen to have the ability to acquire this type of data on a very local level which was as continues to be in demand. We essentially made this complex analytic engine out of the sky and today we serve some of the top carriers and government agencies in the Nation.
+CompleteID is an ID verification product for financial service firms who need to meet their “know your customer” requirement.
Who are some customers?
Safe2Change has over 400 customers, but indirectly and across all products, our proprietary data is used by over 6,000 financial institutions.
How did you personally become so involved in data analytics?
I was a math major at St. Olaf college but when I graduated the economy wasn’t great so I then ended up in applied mathematics – statistics, receiving my masters from Penn State. My first job was actually as a software programmer, which was hard. Back then there weren’t many great jobs for programmers but I started at Lutheran Brotherhood and then switched to Fingerhut. Side note, if you look at the analytics backbone of the Twin Cities, there were a lot of data analysts that came from that company. From there I went to Time Life in Virginia and developed their credit systems. After moving back to the Twin Cities in 1996, i joined Deluxe Corporation which was trying to figure out how to put all their companies together, they hired me to head up their analytics team. We were spun-off and a lot happened in new product development and the business side.
What’s your secret to success?
Buy smart – in the sense that we’ve made a number of very niche acquisitions that have worked well for our business. A focus on capital efficiency and revenue per employee instead of just having a big top line figure. Maintaining a top-notch security strategy and credible track record is critical for the space we’re in
What has been a big lesson learned?
For us, it took a lot longer than we anticipated to become cash-flow positive. It was hard and humbling, although I still think we’re relatively young. Now, our compound annual growth rate is coming around and approaching 40%+ over the past few years!
Where is next for ID Insight?
You know we hired Jack Sundstrom earlier this year and will be bringing two more key employees on by the end of this year. As the fraudsters are becoming more organized and complex, the demand for our analytics products grows.