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On Monday February 27th, 2012, WikiLeaks began publishing The Global Intelligence Files, over five million e-mails from the Texas headquartered "global intelligence" company Stratfor. The e-mails date between July 2004 and late December 2011. They reveal the inner workings of a company that fronts as an intelligence publisher, but provides confidential intelligence services to large corporations, such as Bhopal's Dow Chemical Co., Lockheed Martin, Northrop Grumman, Raytheon and government agencies, including the US Department of Homeland Security, the US Marines and the US Defence Intelligence Agency. The emails show Stratfor's web of informers, pay-off structure, payment laundering techniques and psychological methods.

Labor Day Review of Where We Are

Released on 2012-02-27 12:00 GMT

Email-ID 49613
Date 2011-09-05 21:55:16

I hope you've all had a great Labor Day Weekend. This Labor Day marks a
turning point in Stratfor's history, and I wanted to share my thoughts
with you and some plans. It used to be, not so long ago, that we were so
small that information flowed to all hands by itself. It is hard for me
to recognize sometimes that this is no longer true, so I will provide an
extensive review of where we are and what is coming. Some of this will be
old hat to some of you; some of this will be new. This is an attempt to
start getting everyone on the same page.

Historically, Stratfor was unique in a number of ways. First, we accepted
no advertising. Second, we charged for our subscriptions. Finally, we were
revenue driven. We build the company from our revenues. This kept us
independent, it kept us free to experiment-and at times fail, it kept us
tight. We were reaching a point where we our revenues did not keep up with
our needs and market opportunities.

Shea Morenz provided us with two opportunities. First, he made an
investment in Stratfor designed to give us the capital needed to build our
staff and our marketing. Second, he proposed a new venture, StratCap,
which would allow us to utilize the intelligence we were gathering about
the world in a new but related venue-an investment fund. Where we had
previously advised other hedge funds. We would now have our own, itself
fully funded by Shea. Shea invested over $2 million in Stratfor and more
in StratCap. In return he took a seat on Stratfor's board and a minority
position in Stratfor, whose control remains in Don's and my hands. It was
a good deal for Stratfor, a good deal for StratCap, and since the deal
closed officially on August 1, we now have the task of doing what we all
want-building Stratfor and StratCap.

Our cash position is not spectacular by any means, but we have the
resources to build the kind of company we want, when that investment is
combined with our revenues. With cash under control we need to address
the next problem-people. We all are doing more than our share to keep
things going. In some ways that good but it can be overdone, and we are
overdoing it throughout the company. Our job now is to expand the team.
Money is one element of that, but relieving the pressure we are under in a
way increases the pressure, because we have to recruit and train new
people. So it gets harder before it gets easier, and that's the point we
are at.

Let's divide our departments into two groups. There are those departments
that must train their own people, particularly in intelligence beyond the
normal training needed by new employees. We do that because no one thinks
of the world like Stratfor, and that means that we can't hire people from
other organizations, or at least not without a major training programming,
which in our experience lasts up to two years. Then there are departments
that don't have this burden and that can hire people readily from other
organizations. Both groups of departments must grow and train, but the
burden of training is much heavier in the Intelligence departments that
train their staff from the bottom up than on other departments. It is
important for everyone to understand this distinction. It is not that
people in Intelligence are more important or more valuable than those in
other departments. It just means they face different problems in growing
and that if they don't grow, other things can't happen.

Now let's consider the tasks ahead. First and foremost-and always first
and foremost-we must be the world's leading private intelligence
organization (and one of the finest intelligence organizations, period)
and we must sell our intelligence through publishing. Our current staff
has done an outstanding job, but they are thin and sometimes we are weak.
We must do better in economics, and we must make certain that no AOR
depends on only one person. There are lots of things that are needed.

Second, we are committed to supporting StratCap, a private fund that will
begin operations some time this coming spring. What StratCap will do is
use our Stratfor's intelligence and analysis to trade in a range of
geopolitical instruments, particularly government bonds, currency and the
like in the world's emerging markets. Shea Morenz initiated this idea and
leads it. At the root of StratCap is a simple idea: Stratfor should put
its money where its mouth is. It does not conflict with Stratfor, but is
an extension of it.

Do not think of StratCap as an outside organization. It will be integral
to Stratfor, in the sense that much of the intelligence we are developing
is useful to Stratcap as well as Stratfor. The organizational and legal
distinctions are real and important, but StratCap is linked to Stratfor
intellectually and contractually. It will be useful to you if, for the
sake of convenience, you think of it as another aspect of Stratfor and
Shea as another executive in Stratfor.

Let me also add that it is our commitment that all our team will benefit
if StratCap is successful through some mechanism to be defined. This isn't
an attempt to get you to work harder for the same money. But that
discussion must wait until the legal and administrative relationships of
StratCap and its relation to Stratfor are worked out and reviewed by
something called "compliance officers," people who make certain that we do
not violate any regulations.

From that point of view, StratCap is something under construction. You
can see Shea Morenz hammering away building it in the corner office he
took from Darryl. In the world of StratCap, corner offices are marketing
tools. This points to the fact that StratCap will be building its own
staff and they come from a different world from Stratfor with a different
culture. That said, we have a great deal to learn from StratCap to
strengthen Stratfor's understanding of economics and it has much to learn
from us. We are already working on mock portfolios and trades, testing
our skills. Kendra, Korena, Melissa, Jen, Peter, Meredith and myself are
all involved in this along with Shea and Alfredo, a trader that makes us
easy to understand compared to him. It's going pretty well in fact, but
supporting StratCap will be a cultural and intellectual challenge. It's
important now to recognize that it is already here, growing and we will
accommodate to it and it to us.

I want to emphasize is that there is neither a legal, intellectual nor
moral tension between Stratfor and StratCap. We will continue to publish
what we think is true. StratCap is interested in our broad ideas but
mostly in the obscure nuggets picked up by intelligence that are usually
of little interest to our general readers. My pledge to you and our
readers is that our publication will remain untouched by StratCap-because
they are merely different sides of the same coin, intelligence.

We have also been asked to help the United States Marine Corps and other
government intelligence organizations to teach them how Stratfor does what
it does, and train them in becoming government Stratfors. We are beginning
this project by preparing a three-year forecast for the Commandant of the
Corps. This is a double honor for us. First, the professional
intelligence community is acknowledging us as being the gold standard of
intelligence. Second, we are being asked to use our honest and unhedged
views to support what is for Stratfor-an American company-its homeland.
Again, as with StratCap, there is no tension. We will tell the U.S.
government precisely what we tell our readers and we think ourselves. Our
first lesson to the government is that intelligence organizations exist to
make decision makers uncomfortable, not to make them feel better about
their decisions. I didn't come this far to compromise on that.

Add to this that the fact that Turkish Chamber of Commerce (not its name
but close enough; its name is TUSIAD) asked us to preside over their 40th
anniversary celebration, and that the Turkish Foreign Minister and Energy
Minister will speak at the event, and you can see both our global
recognition and our commitment to speak the same words to every country.
We can serve the world from the same platform.

So think about it. We have three triumphs. First, our publication is now
read by almost 300,000 people (counting our corporate accounts). We are a
major force around the world. Second, Shea-a guy who has played with the
big boys at Goldman Sachs, asked us to play in the majors with him.
Third, the USMC has asked for our help, and with them others in the
defense community. These are three validations of us that are precious to

Obviously, there is no way in the world that we can do all these
things-plus the endless little projects that we must do all the time-with
the staff we have. And given that we take two years to train new
analysts, and all of this is on us now-we have an urgent problem. We
can't punt opportunities at hand and continue at our current size. Nor can
we easily expand. So we will therefore expand with difficulty. There is
no choice. Our Analyst Development Program is the means where we train
people and find new analysts as well as find some staff for publishing
(watch officers, monitors, operations center and writers all under Jenna
Colley). We will have the largest group of ADPs ever this fall, starting
next week. About 13 people at last count will be joining us. This is a
huge percentage of the number of analysts on staff. Ideally all will work
out well and our crisis will be over. That's unlikely but our crisis will
be mitigated by January 1. Doing this will put a huge burden on
Intelligence, who must do their work and also train these people, but
there is no choice. This is the year when we break out. I promise to
work side by side with the team in training and growing he organization.
I also promise that if we succeed, we will become one of the most
significant and prestigious foreign policy publications in the world-and
those that made it happen will be known. I know there are questions about
by-lines. You know my hesitation, but we will figure out together someway
to make sure that the glory is shared.

Intelligence is divided into three parts. There is Strategic Intelligence
(under Rodger assisted by Reva) that is organized geographically. There
is Tactical Intelligence (under Stick, assisted by Nate Hughes) that is
organized thematically-organized crime, cyber-warfare, military,
terrorism, security, financial flows, supply chain and so on. There is
then intelligence gathering, under Meredith, assisted by Jen Richmond that
is building sources from around the world. All of them must grow
dramatically. The first two will grow mostly out of the ADP pool. The
latter will be done by extensive work in the field. But it is the Writers
Group that is making the most impressive evolution. Under Jenna (and Tim
French and Maverick) it has moved into the heart of intelligence, writing
as well as editing. Everyone should watch this team. They are pioneering
things the world hasn't seen yet. Along with Watch Officers, monitors and
the operations center, this unit is translating intelligence into product
with increasing effectiveness. It is now organizationally mature and
ready to both grow and sustain the growth of Intelligence.

This growth will put a tremendous strain on other departments. Leticia has
done a tremendous job in Human Resources, but the job has grown much
greater than she can possibly manage. Just the process of getting visas
for new ADPs is overwhelming, and at least half of these come from other
countries. We have selected an HR consulting firm to support her in the
coming months and other solutions will be found to sustain this. HR will
become more effective in the next months. In addition, we are retaining a
law firm to create a policy for Stratfor on Foreign Corrupt Practices
Act. I don't plan to do the perp walk and I don't want anyone here doing
it either. We need some clear guidelines on the law and are getting them,
particularly as we ramp our intelligence capability. Similarly finance has
kept us all going and similarly it has to expand, although it is a shade
less pressured than HR is.

IT faces a huge challenge. Traditional IT organizations focus on the
development of new capabilities for a company and sustaining complex
systems. At Stratfor, the focus must also be on sustaining basic systems
like phones, email, configuring and fixing laptops and cell phones and so
on-the basic tools that make our work possible and which are a particular
challenge in a global company operating 24-7. That gives our IT
department a different shape and tempo than exists in other companies.
With this class of ADPs, 24-7 will become very real. IT is under pressure
to maintain its focus on improving the web site and corporate systems but
has a special and intense mission of supporting a growing, global company
at the ground level, and the pressure is never going to be greater than
now with all the new people coming on board in all departments. Creating
an IT department that fits our peculiar needs will be Frank's challenge.

I want to also point to two departments that are performing extremely
well. Customer Service at Stratfor is among the best in the business. We
daily get emails praising their work. John Gibbons has done an amazing job
keeping this going. More subscribers mean more customer service of

Also to be mentioned is he on-line marketing team who has just done
something very impressive. There is usually a slump in subscriptions after
a Red Alert, and there was one, but in a matter of weeks they pitched in
and turned it around with some strange and wonderful campaigns. They have
broken their forecast in spite of a pretty quiet world. Its amazing the
kind of ads that work!

Let's turn to marketing and sales and the future. Our readership is now
about 5 percent of the Economist when we exclude corporate (not sure why
we exclude corporate but that's what we do). That means that we have
probably saturated a good part of the early adopters market-the early
adopters who love us and have built us-and put up with our weaknesses.
It's kind of like people who supported Apple in its dark days, putting up
with promising but not yet mature computers. If you haven't read,
"Crossing the Chasm," a rare business book that is actually helpful,
please take a look at it. It will explain much of what we are trying to
achieve in marketing.

We have no choice but to grow. If we stay this size someone larger, with
deep pockets will notice the market we have created and come in after us.
We won't be able to compete. The only protection is market share, to be
so dominant a force in the market that no one challenges us and our own
deep pockets. For this we must grow revenue and that means readership.
The place we must grow is in the mainstream. I don't mean by mainstream
CNN. I mean readers who are interested in what we have, but aren't
fanatics, groupies and wannabes. These people have higher standards in
production values, and less forgiveness for mistakes. They don't buy the
mystique. They buy the publication. That's where most of our customers
are and where we have to go.

Obviously this is one of the reasons we need more people. It is also the
reason we must deliver in new ways. Grant Perry and his team are looking
at ways to create a unique, Stratfor video culture. I see this myself as
consisting of much longer and serious conversations among analysts
moderated by an anchor, documentaries, briefings. Perhaps our Sitreps
should all be delivered via video and audio (there is I think huge demand
for audio products in cars, or so many people tell me). All of this will
evolve in unexpected directions under Grant, Colin, Brian, Andrew and
others who will join them. This is part of our own evolution into the
mainstream, on our own terms, with our own voice. What you see above, by
the way, are simply my own ideas, not fully thought out. Whatever Grant
and his team produce will be uniquely Stratfor.

Other than that we shall see. What markets we will enter, and how we
enter them is not yet known. We do know that the current Stratfor product,
however enhanced, will be our only offering. We will not be developing
new products for markets.

We have hired a consultant, Mark Stacey, who will guide this process. We
will also be bringing in a consulting firm to do survey research and
interviews to teach us more about our current readers, readers who won't
buy us, and readers who would buy us if they had heard of us. Our choice
was between hiring staff to give us a plan or hiring consultants to give
us a plan and then hiring permanent staff to execute it. The latter is
the safest-we avoid a staff without the skill to do what we need whom
instead craft a plan to do what they already know. In addition to this
initiative, we are participating in the University of Texas Business
School program where a team of graduate students will essentially parallel
the work of our outside consultants, giving us a double check on the

The goal here is to have a marketing and sales plan in place for execution
on January 1. From where I sit, the biggest challenge we have is that too
many people have never heard of us. At a meeting I can encounter someone
who has subscribed for years and next to him is a person in the same
industry that has never heard of us. It is difficult selling to people
who have never heard of us. So our challenge-before trying to sell to
them-is to increase awareness of who we are. This is called branding and
it's different from selling. It is the precursor. We will start with
branding in January. That means there will be marketing people around
asking many questions in the coming months, frequently the same ones.
Please work with all of them. In the end, we will have a plan with a high
likelihood of success.

Parallel to all of this, the executives (without Don, Steve Feldhaus or
myself-the board members) are going through a planning process of their
own, coordinated by Frank Ginac. Not being on it (and not wanting to be
informed of what is going on as there should be yet another set of eyes on
things other than mine) I can't tell you what they are doing. However,
the deal we have on this is that as CEO, I will proceed with implementing
my own plans that I've outlined here, and will consider their proposals
when I see them. If the decision point is past when they make their
recommendation on a subject, the recommendation will not be considered.
If they come in with recommendations before decision points, their
recommendations will be taken very seriously. This allows the company to
move forward and an alternative planning model to be brought on line when
it is ready.

The company has become too large and complex for any one person to know
what is going on. I am moving (with difficulty) from the role of an early
entrepreneur, knowing everything going on and getting involved in it, to
the CEO of a company at the inflexion point. The inflexion point is the
point all companies dream of and few achieve-when they start really taking
off. This is a great point and a dangerous one. Unless the company
changes the way it does things, inflexion aborts. I am trying to change
what I do.

There are some things that have to remain my responsibility. Building
Intelligence and publishing and particularly training new staff are things
that I should oversee. Building the intelligence capabilities of the
company along with Meredith is also my responsibility. Creating new
models to support Stratcap and helping to train Stratcap in the
capabilities of Stratfor is mine. Overseeing our training of the Marine
Corps is something I want to do. Kendra will be my deputy for this, but
this leaves a large load on me.

Along with this, for better or worse, I am the public face of Stratfor.
My speeches and travels build the brand, create intelligence
opportunities, and give me a clearer vision of how the world works. I
will be doing a lot of traveling to do these things, and I will combine
them with the Geopolitical Journeys concept that seems to have hit a
nerve. During my travels I will be doing articles, videos and writing a
book based on those journeys, on the world's borderlands. Between that
and making contacts for Stratfor and StratCap, I will be busy.

Along with that load is going to be setting the broad direction of the
company. Through long and sometimes painful experience I have learned
that ultimate responsibility can be delegated but not abandoned. It's an
old military principle that applies here. I have a vision for Stratfor and
while I will delegate, I will not turn over responsibility because I

That means that we will need an evolving management structure. I've asked
Don who is formally President of Stratfor to join Darryl in both the day
to day management of the company and in what we still call "the business
side." One day we will simply be one company, but right now we are still
two sides of one company. Don and Darryl will now manage that side,
implementing our plans there. I will not disappear, but become
intermittent on daily management but deeply focused on intelligence.

One of the other things I must do is prepare a succession plan. In some
parts that are well developed, I already have that plan. In other parts,
we have to build an organization to have a succession plan. But it is my
intention that Stratfor survive me (no, I'm not feeling poorly and can
still kick your ass). I want to build this into the world's finest
intelligence service, private and free to speak its mind. I see this as
the most lasting contribution I can make, and I am serious about making
sure Stratfor goes on.

We are all at the inflexion point where the level of effort temporarily
soars until new resources are brought on line. They couldn't have been
staged in earlier because there weren't resources available. But now they
can't wait, because the moment will pass and perhaps never return. For
everything there is a "now." This is now.

I ask only one specific thing of all of you. If you don't understanding
anything here; if you want to learn more; if something worries you and
your boss can't clear it up, come directly to me. I will be available
until the last week of September when I go with others to Turkey. Please,
please, please, do not engage in a round of paranoia or speculation based
on lack of data. Just set a time to see me and let's discuss it.
StratFantasy (a new term) is I really believe the greatest danger to
success that we have face.

This is a long review, but many have said they'd like to know where we are
and what we are doing. This is about as comprehensive as I can get. There
will be more such reports. There are no short versions about where we are
and what we are doing.



George Friedman

Founder and CEO


221 West 6th Street

Suite 400

Austin, Texas 78701

Phone: 512-744-4319

Fax: 512-744-4334