Robert McLeod is the co-founder and chief executive officer of MLex, a financial news service acquired in 2015 by LexisNexis for an undisclosed amount.
Prior to co-founding MLex in 2005, McLeod worked as a Bloomberg News journalist twice — he left in 2000 and returned in 2001 — covering financial services, mergers & acquisitions and antitrust in London, Paris and Brussels.
Having cemented a reputation for providing inside insight and commentary on the risk to business from government regulation and intervention, he quickly gained investor support for the news start-up that became MLex.
MLex’s newsrooms include experienced journalists with decades of experience as well as reporters fresh out of college who are paired with the experienced reporters.
McLeod spoke with Talking Biz News on Monday morning by telephone. What follows is an edited transcript.
How did MLex get its start?
In 2004, Google released a new search engine that brought all of the news from around the world into one screen. At that point, it set in point the destruction of the traditional news industry, which is continuing to happen. It takes away all of the advertising revenue.
The newspapers’ response to that was to get rid of their highest cost base, their journalists. And the most expensive journalists are business and regulatory reporters. It’s hard and its boring, and you need to be paid well to do it. The newspapers sacked them across the board and then went to the agencies like Bloomberg and Reuters and say, can you fill up our news pages?
What the agencies did was to to dumb down the copy. My view at the time was that there was a market from people who want this news. They want the detailed insight and they want the detail and they want it written right. I had an argument with a managing editor at Bloomberg who shall go nameless about a story that had a small detail in it about the process, which is of interest to the people involved in the process. It was confidential information and it was good information. He wanted to take it out of the story. He said, listen, if you don;t like it, go start your own news agency. He was right. I think there was room for something else.
2005 was the rollout of global broadband. For the first time, someone could set up a website and reach hundreds of thousands of people at the same time and those people could reach them without the site crashing. Previously that was only available to the big sites. At the same time again, we started getting licenses for free software, or popular software. It wasn’t just the geeks that were playing around with it. By the time I left Bloomberg and build the website, the cost was $5,000. It democratized the ability to build a website
When we launched Sept. 1, 2005, we were sitting on my terrace in a nice sunny day and we pressed send on the first story. I remember pressing the screen and we got a reader. And we got another reader.
We started on antitrust and trade. I went to 50 law firms in the UK and Belgium and explaining to them that this was going to be detailed information and a subscription site. Forty five of them said, I don’t get it. Five of them said yes. We launched with those five law firms.
In September 2008, we celebrated three years in business. We’re looking good. On Sept. 17, Lehman Brothers went bust. And 40 percent of out subscribers went bust. We had to raise some money. We launched on financial services and telecom in Europe. We hired John Riga from Bloomberg and a bunch of other people. 2009 was our toughest year. We grew 9 percent and we didn’t go bankrupt.
What was lacking in terms of covering regulators at that time?
No one was doing it in the detail that the affected community was looking for, the companies and their advisors. They wants information on what the agencies were doing and what they were thinking. A lawyer knows everything about what cases they’re working on, but nothing about the cases that they’re not working on.
How does MLex cover regulators in a way that distinguishes itself from other media organizations?
First of all, we cover things in great detail. The regulators trust us. Everything we do is off the record. No one is quoted. Its up to our reporters to decide what the issue is. So there is a lot of analysis and commentary. That is a lot of the work that we do. And people trust us because we’re very rigorous. The rigor that Bloomberg imposes on its journalists to be accurate and correct and for sourcing — we have the same sort of standards. I think people appreciate that. They like it and they pay for it. We’ll say why something is happening and what is coming down next
How big is the editorial staff and how much content are they producing daily?
We have probably 65 or 70 editorial staff now. Which is pretty high given we have 110 people in the business.
We’ve never hired a requirement for a certain amount of content. They are responsible for their regions. The journalists tell the editors what’s going on in their beat. They’re responsible for the content. They know the beats. They don’t need editors to tell them what to do. They need editors to make sure they have the resources and to question what they’re doing to make sure what they’re doing is clear and correct. It’s up to the reporters to say what they’re covering.
Are there main areas of focus in that coverage each day?
In 2011, we launched in the U.S., anti-trust first and later financial services, and then data privacy and digital risk. In 2013, we added Brazil, and China and Hong Kong. We added global financial services and anti-bribery and corruption. in 2015, we launched in Korea, Japan and Indonesia across the main areas that we cover, plus we launched a global trade services and a service on anti-bribery and corruption. Our biggest offices are Washington, London and Brussels, followed by Hong Kong.
Are there regulatory coverage areas that you’d like to increase coverage?
We’re looking a number of areas right now that are critical, without tipping our hand. We’re looking at state aid and taxation. We think that’s going to become more important in the future. We’re looking at corporate tax reform.
We launched a service on Brexit the day after the vote. We switched it on the day after, and it’s been our fastest selling news service ever. Wherever there is government regulation. It took 120 years for antitrust to spread around the world, and most of that has happened in the last 25 years. It took 40 years for anti-bribery regulation to spread around the world, amd most of that has happened in the last five years. It took privacy regulation 10 year so spread around the world.
These three core areas of risk are really where the governments are trying to, and quite rightly, address corporate malfeasance.
Who are your main readers?
About 60 percent of our subscribers are law firms, about 20 percent are corporation. More than 10 percent are governments who pay for their subscrptions — we don’t give it to them. The rest are made up of economists and advisors and investors.
How has MLex’s growth been funded in the past decade?
It has been more or less organic. Last year, we were approached by LexisNexis, and we made it clear that we weren’t for sale, but they came up with a business plan and a long-term investment plan for the business. I had to look at what was best for the business. They’re investing in the business, and we continue to expand. It’s been a very happy acquisition. They’ve been as flexible as we could ask. We’re a different culture than other businesses.
I see three editorial openings in the States currently. Does that mean you’re expanding?
Yes, and we’ve taken on three more people in Europe. We’re going through the budgets for next year, and we’ll add considerable editorial posts, at least a dozen, and that’s just on the existing lines. That doesn’t include anything new we might launch.
What can you tell me about the cost of a subscription? Is that the main source of MLex’s revenue?
It’s not cheap. Quality journalism is not cheap. Sometimes it’s the biggest investment that an organization makes in antitrust information. But it’s proven to be quality. We have a very strong renewal rate — over 100 percent by value and well over 90 percent by volume. If you look at the law firms, it’s close to 98 percent by volume. It’s going to be a value proposition otherwise people wouldn’t take it.
