Mansueto's Magazines. "These are two of the luckiest magazines in the world because they found Joe Mansueto, and Joe Mansueto found them," says Michael Burgi of Mediaweek, referring to Inc. and Fast Company magazines, as quoted by Mindy Fetterman in USA Today. Joe Mansueto, as you probably know, is ceo of Morningstar, the $200 million mutual fund research company. He bought the two magazines last spring "for a bargain price of about $35 million" (their previous owner, Gruner + Jahr USA, had purchased them for $550 million five years ago). Joe's rationale: "The time to buy is when things are out of favor." On that basis, his timing was auspicious indeed: "Inc.'s ad pages fell 46 percent from 2000 to 2004. Fast Company's fell 72 percent." Not only that, but Inc. and Fast Company must compete against the likes of Forbes, Fortune and BusinessWeek (whose own ad pages have dropped "11.3 percent, 14.7 percent and 4.5 percent through Oct. 31").

In other words, the whole business magazine category remains down, where it has been since the dot-com bubble burst and 9/11. So what is Joe Manseuto thinking? He's thinking the two magazines need "to focus on stronger journalism, better design and better photography." Inc. will "serve readers who own a company or want to." Fast Company will "focus on new ideas bubbling up from the 'creative class,' the designers, innovators and thinkers in industries such as film, fashion, video games, communication, marketing, advertising and technology." But some folks suggest that buying these two magazines is just a lark for Joe Mansueto, a hobby. They might've made the same suggestion when he started Morningstar 21 years ago, in his bedroom with just $80,000.

It's instructive to remember that a key to his Morningstar success was "the design of the numerical grids and ratings" of mutual funds, which was "more user-friendly than traditional financial agate tables" (and as Joe points out, it's basically a publishing business). Today, Morningstar has "more than 800 employees in the USA and 17 other countries. Its third-quarter profit rose 83 percent to $7.5 million, or 17 cents a share. The stock (ticker: MORN) ended Friday at $38.65, up from $18.50 a share when it went public May 3 on the Nasdaq exchange." And Joe says he got there one step at a time: "Our first year, we had revenue of $97,000. Our second year, $120,000. Our third year $180,000. Our fourth year, $400,000 and on and on until $1 million ... It's like the law of compounding. You can build a sizable firm if you just stay focused." It will be no different for his latest venture: "Someone willing to invest for the long term is a breath of fresh air," he says.

Tim Manners
editor