How firm grew from two guards to Sh1bn revenue

Julius Abiero’s security business – which last year recorded annual revenues in excess of Sh1.4 billion – was launched in humble beginnings in 1988 at a Sh6,000 rental house in Kisumu’s Milimani Estate.

That year, Kenya – then a single-party State – was holding a controversial election. But that was not what worried Mr Abiero the most. All he wanted was to run a successful security services company. He only had two guards at the time... and a prayer.

Thirty two years later, Riley Falcon Security Services has become one of the largest and well-established security companies in Kenya with more than 4,000 guards, a presence in numerous towns across the country and a diversified portfolio, not to mention an annual turnover in excess of Sh1 billion.

That feat saw it become one of only two companies to become members of Club 101 at last year’s annual Top 100 competition organised by Nation Media Group’s Business Daily newspaper and KPMG .

Club 101 is an exclusive group, now with 52 members that have crossed the Sh1 billion annual revenues mark. Riley has, after many years, become the falcon that it is named after; a bird of prey with powerful flight, incredible hunting skills and a ruthless dominant predator instinct that primes it for success in its environment.

Innovation has played a critical role in the Riley’s transformation. It is not just a buzzword for the company, something to put up on a website in bold letters to make the company look progressive and in touch. The leadership of the company often spends time discussing about innovation to improve its performance, stay ahead and remain relevant. And because there cannot be a better or more innovative way to train guards to march or man a doorway, the next frontier is technology.

“In the next five years we will definitely see more issues around cybercrime as e-commerce grows. We are not just going to protect physical businesses anymore, but also protect data,” said Tobias Otieno See, the firm’s managing director.

“To add onto that, I think it’s difficult to talk about innovation now if we don’t talk about artificial intelligence,” said 33-year-old Simon Obiero, Executive Director of the company and the founder’s son.

He studied mechanical and later financial engineering in the United Kingdom and has a handle on the ever regenerating technological needs of the company.

“There’s a lot of technology coming up that enables cameras and biometric systems to adapt artificial intelligence and what artificial intelligence has to offer. Cyber security is one of the things we are really looking at seriously as an offering to our clients. This and other emerging innovations,” he said.

Mr Otieno, now a shareholder, joined the company in 1995 as a controller. He had just graduated from Kenyatta University with a Bachelors of Arts degree in sociology and history. He had, incidentally, unsuccessfully tried to join the police and the prisons department but he was disqualified because he was overqualified.

“In 1995 the founder had already grown the company substantially,” Mr Otieno told the Business Daily during an interview at the company’s offices in Upper Hill, Nairobi. Outside, grim faced marching guards were undergoing training as they hummed and slapped their feet on the ground. “By then we had 200 guards and two vehicles. Our services were predominantly guarding.”

Their first major assignment that blew them out of the water was the Sondu Miriu Hydroelectric power station project. That one contract alone made it necessary for Riley Falcon to hire another 200 or so guards, thus doubling its workforce overnight. Through this project, the doors of corporate security services started opening. Similarly, the scope of the business expanded and they started shaking hands in boardrooms after signing contracts worth significant amounts.

Personalised service

United Millers Ltd - a powerhouse in the Nyanza region - came on board as a client, followed by the Mayfair Group, then Kisumu Motor Works Ltd and the Aga Khan Hospital. This rolling ball snowballed along, picking in its way other firms like Acacia Hotel, The Swan Centre mall, KCB Group, Co-operative Bank and Safaricom.

“The secret of retaining customers?” he asked. “Service. Personalised service. You cannot be too important to stay at your desks. You have to go to the customer. What does the customer need? Have their needs changed from last year? What do they want today?”

The business landscape in the late 1980s and perhaps early 90s is reminiscent of a long dining table with only a few people on it. People who called each other by their first names and knew everybody’s dietary requirements and nobody was trying to pass the Chestnut Hummus to the guy allergic to nuts. Now there are more people at the table, some unscrupulous or just talking with food in their mouths. The pie is getting smaller. You step out for a minute to go powder your nose and someone takes your seat. That is how stiff the competition has become.

“Nothing ever remains the same, change is inevitable,” Mr Otieno said. “But I can tell you that physical guards will not be replaced by technology anytime soon. The number of guards in the developed countries has gone up since September 11. In this era of terrorism people have to reassess how they are going to protect their lives and property”.

He is referring to the September 11, 2001 terrorist attacks in the US where thousands of people lost their lives after aeroplanes were flown into skyscrapers.

According to him, although the police retain their critical role of dealing with the public aspect of crime, the protection and prevention aspects largely remain with private security companies.

Crime, he points out, has evolved. In the 1980s and early 90s, much of the crime was petty; thugs smashing through windows to steal a radio or a gas cooker. Over time, however, violent robberies took centre stage, primarily gunmen hijacking cars or holding up banks, or ambushing cash-in-transit vans.

“You have a more organised crime now and cybercrime. One of the big areas that all the organisations need to look at is cyber protection,” said Mr Otieno.

“A big part of our growth has been necessitated by needs and the evolving world. Initially, we were predominantly guards because the needs then were simple, but over time, as crime evolved we have had to adopt other methods of protection; intruder alarms, access control, CCTVs, patrol dogs (the company has 100 mean German Shepherds), private investigations, back-up response, automated gates and barriers as well as event management”.

Biggest threat

In short, the security environment has become more complex and requires technology.

“This also requires that our personnel get trained to understand what they’re dealing with,” Mr Otieno told the Business Daily.

Curiously, he says that the biggest threat in business so far has been competition.

“Competition is okay, but it is worse when it is not regulated. There are people who open kiosks and hire guards who pay peanuts and who resort to crime. Thankfully the government is attempting to regulate the security industry now.”

Outside the offices, the trainee guards have stopped matching. The voice of their trainer can be heard faintly, speaking in clipped short sentences. Inside, Mr Otieno was saying why after over three decades Riley Falcon Security Services has not crossed borders and established footprints in the neighbouring economies.

“Expansion is easy to romanticise,” he said. “But there are issues it comes with like manpower... and that means as you expand you must start thinking what sort of people are you going to employ and where are you going to get them from. When not controlled, expansion can bring you down. So I think we are just being careful. We are managing the potential risks that come with the expansion.”

The company remains keen to set up operations in at least two East African countries by December. Over the next ten years, the company intends to raise its workforce to between 10,000 and 15,000. Revenue growth remains a key focus.

“And the most important is improve on the customer experience.”