ProcureTechSTARS with James Gellert, Chairman & CEO, RapidRatings
RapidRatings is an organisation setting the standard for financial health transparency between partnering businesses.
RapidRatings represents the most sophisticated analysis of the financial health of public and private companies, with figures from over 140 global countries. During the conversation, James shared his thoughts on the commercial value of transparency, curiosity, the commitment mandate, Dr Seuss and his Mother’s best piece of advice.
1. What’s the mission and vision for RapidRatings?
Our mission is, having a world that is dominated by transparency as a critical means for companies to work together, and for RapidRatings’ principal domain of financial risk. That really means companies being able to talk about how they're doing as businesses.
We facilitate large corporations and financial institutions being able to understand their third parties and their suppliers, by looking at their financial health, which requires disclosure of financials from the private companies in those groups. That's something that we've been doing now for over a decade, very successfully, around the world.
Our mission is, having a world that is dominated by transparency as a critical means for companies to work together.
The common theme that we see is that collaboration and transparency bring a commercial value for both sides. But, it has to be based on a level of trust and communication, and therefore transparency. That is something that - regardless of industry or geography - we've seen both sides, suppliers and their customers and clients, benefit from greatly.
2. What do you think differentiates RapidRatings in the market?
We've taken the approach that using an algorithmic system - so a quantitative one, which is unbiased - is a great leveller. Plus, it is a way for companies to be viewed on ‘apples to apples’ bases, regardless of what industry they're from, where they exist geographically, or whether they're public or private.
That's really key because, historically, companies have used different modelling techniques to look at public companies and private companies. Or, they've only looked at their public companies, suppliers and third parties, and they haven't looked at private companies. We have a system that allows one to do both, and to use actual financial statements.
It still mystifies me, years after beginning this journey, that companies will look to measure the financial risk of other companies without understanding their financials. They’re looking at things like payment data and some other very cursory or superficial sort of guideposts, which offer interesting data points, but they are not deep financial analysis.
It still mystifies me, years after beginning this journey, that companies will look to measure the financial risk of other companies, without understanding their financials.
So, what differentiates us is that we're allowing people to see deeply into companies at a very large scale (which includes their private companies), and to do it in a way that facilitates business knowledge and insights.
3. What have been the most significant milestones in the RapidRatings journey so far?
My long-time business partner, Douglas Cameron, and I joined with Patrick Caragata, the original Founder of RapidRatings, in buying RapidRatings when the technology was at its earliest stage. Originally, we were approached to help find a buyer, but we actually decided to buy it ourselves.
That was, without question, the foundational decision that we made. But, I would say the biggest point was beginning to go and collect financial statements for our clients.
That really started when General Electric began reaching out to us, 10 or 11 years ago, and asking if we had a way of getting private companies to disclose financial statements, because they wanted to understand their private suppliers.
At that point, we could rate private companies, but we didn't have a process for going out to get the financials. But then, 10 years later and 130,000 private companies from 150 countries, and it's a real foundational part of the value that our clients get, and a big factor in helping our growth.
So, without question, that's the biggest thing we did along the way, to help us move in this direction.
4. What do you look for in the perfect customer?
The perfect customer isn't necessarily about their size or the amount that they pay you. I think the perfect customer is one that is committed and has a mandate, internally, to do whatever it is they're doing. And this isn't just about us, it's any SaaS company. Any company that's winning business from large enterprises.
If the client is dabbling, you have a harder time lighting up a programme that can demonstrate value, and continuing to work with them over a long period of time. But, if you have commitment, you have a mandate - for instance, in supply chain risk - and if a Chief Procurement Officer or Head of Supply Chain or even a CFO is committed to a programme of understanding the risks among suppliers, and that's communicated well throughout the organisation (so they're talking from the same playbook and speaking the same words to suppliers) those are the best programmes. And, the best programmes come from the best clients.
So, I would definitely look at our clients and say that the strongest ones are the ones where, internally, they know what they want and we can help them get there. Or, we can help teach them what they need and then they adopt a mandate around it.
If you have commitment, you have a mandate.
5. What are the foundations of growing a great team?
I think the best teams are made up of people who are eager and curious. Curiosity is one of the personality traits that I look for in the people we hire, and I hope our managers are looking for in the people that they're hiring.
This ties into the broader implications of what we do, understanding what other teams inside of the company do, and our ways of knitting together. Tied to what everyone's particular focus is within the mission of the business, as well as the client journey and what we are trying to achieve overall.
But, that doesn't mean that you can't end up with silos that build inside a company, and we are guilty of that as well. We’re always trying to look at how we can break those down, and create a more tightly knit team across the whole company.
So for us, the best teams, the strongest teams in our company, are the ones that have embraced that. Overall, as a company, we've done a good job. But, it's the kind of thing that every company needs to be evaluating all the time, and trying to make sure that they're improving and fostering that kind of curiosity and empathy.
I think the best teams are made up of people who are eager and curious. Curiosity is one of the personality traits that I look for in the people we hire.
6. How do you incorporate GenAI and what will be your next major digital innovation?
We've always been a heavy data company - the system was originally calibrated on 9 million company years’ worth of financial data. So, there's a lot of focus on how to extract data and do things with it, right from the very beginnings of the business.
But along the way, we have used probably more narrow AI than GenAI for the creation of reports. That way, a person - whether they're financially trained or non-quant - can look at the analysis that we're providing on an individual company, and have reports that not only explain what the rating is and what's beneath it, but the kinds of questions to ask the rated company.
We’re using technology to take significant data and analytics and boil it down, to enable an individual to have a more efficient workflow for themselves, and facilitate the kind of communication that they need to have with a business partner.
So, we've applied technology into our reporting, to take all of the analytics that are in our engine and put them on a one-pager. Here are five questions, then here's the context, and here's what you need to know. And we'll continue to do things like that.
We're also taking all the underlying data from public and private companies that we've rated for years, and we're creating new types of products that use that data for profiling companies and anticipating how companies’ risks will change.
We've just launched a product called HealthMark, which does not require financial statements for companies. It takes profiles graphically and then matches them against all of the underlying data that we've accumulated over the years, and provides a suggested risk profile for that company.
So, we will continue to innovate in ways like that, but it's exciting to think about all the opportunities that come with all these other advances.
We're also taking all the underlying data from public and private companies that we've rated for years, and we're creating new types of products that use that data for profiling companies and anticipating how companies’ risks will change.
7. What is the vision for RapidRatings? What does great look like in five years?
Well, we think that our Financial Health Rating (FHR) is becoming, for all our clients, a ubiquitous measure for understanding a company and all the elements that go into that company's financial health.
We see that continuing to grow, particularly as more and more private companies around the world have benefited from having an FHR and being rated.
Over the next three to five years, we see that continuing, and having the FHR really permeated into the market in a much broader way, which allows more partners to communicate with a common language - and that common language being the way we're looking at the risk of businesses.
We think that our Financial Health Rating is becoming, for all our clients, a ubiquitous measure for understanding a company and all the elements that go into that company's financial health.
The more that people recognise that financial health is a foundational risk for all other risk areas, the better.
Cybersecurity readiness for a company is very much dependent upon how well the company can fund those efforts. ESG investment and improvement are very much based on how strong a company is from a financial health perspective. Or, looking at it another way, a weakening financial health company has to cut corners and probably isn't going to invest more than they absolutely have to in something like ESG product and development research, or development innovations.
So, over the next three to five years, we’ll see a lot more of that recognition and the integration of risk areas, as opposed to them being separated, siloed and managed separately. We’ll see them all being pulled together, and we very much see ourselves as a component part of that.
8. How are you doing good for the planet?
Well, it's a daily question, isn't it. At home, I'm certainly being encouraged to do everything possible, to recycle and to reduce our carbon footprint at the company.
We are working hard with our clients to have them use our ratings of potential suppliers and current suppliers (who may be smaller, but are doing newer and more innovative things in ESG as well as in DE&I) and we're really working hard to try to facilitate the use of what we can do as a contributing part of the companies that we are broadly working with, with suppliers, private companies and public companies that are very mission-driven.
So, I hope that we are doing our part in working with our partners, in making these things more of a reality more broadly.
INSTANT INSPIRATION
1. What is your favourite book or blog?
I've read so many great books, but this is going to be a very Dad answer.
Anyone who reads Dr Seuss’ Fox in Socks will come out more cheery and smiling. You’ve got to read it out loud, though.
2. Who is your favourite inspirational leader?
My Mother once said to me, before going into a very tough conversation she knew I had to have with someone, ‘Just make sure that when you're done speaking to somebody, they think you're classy’.
And I thought, ‘You know, that's a pretty good guide post for life.’
Just make sure that no matter what you do, good or bad, difficult or not difficult, the other side of who you're talking to comes away going, ‘Well, yeah, they're a good person.’
3. What is your favourite piece of technology?
It's got to be a cell phone. I don't know what I would do without it.
4. What is your favourite cocktail or guilty pleasure?
A Mezcal Negroni, despite the fact that I'm really a bourbon guy.
5. What’s your favourite way to celebrate success?
With the people who have helped to achieve it.
There's nothing better than being able to spend time with the team that has helped you do it together.
Key Takeaways
- Transparency is the cornerstone of companies building strong partnerships.
- Transparency within business collaboration brings commercial value for both sides. It has to be based on a level of trust and strong communication.
- Using data and quantitative, algorithmic systems are great levellers.
- Measuring the financial risk of companies to a sufficient degree requires a deep analysis of a variety of data sets.
- The perfect customer isn't necessarily about their size or the amount that they pay you - look for customers that have a mandate and a shared focus. If you have commitment, you have a mandate.
- Although some suppliers may be smaller, they are often doing newer and more innovative things with ESG and DE&I. So make sure you include them.
- It’s all too easy to build silos within a company. So, assessing how to break those down is something that every company needs to be evaluating, on a consistent basis.
About RapidRatings
RapidRatings sets the standard for financial health transparency between business partners, transforming the way the world’s leading companies manage enterprise and financial risk. RapidRatings provides the most sophisticated analysis of the financial health of public and private companies in over 140 countries worldwide. The company’s predictive analytics provide insights into how suppliers, vendors, and other third parties are likely to perform.
About ProcureTechSTARS
ProcureTechSTARS are the digital CEOs and Founders who are
transforming Procurement and the enterprise.
In an open conversation with these leaders, Lance Younger discusses the highs and
lows of building the future, the challenges they’ve faced, their perspective on the latest
developments, and what motivates them.
