Michelle Leder isn't the first entrepreneur to find success post-pink slip, but her tale is a parable about the importance of finding a niche – and of personal branding.
In 1998, Leder, a financial journalist, was fired from her business-reporting job at Gannett's Poughkeepsie Journal. She parlayed her skill parsing complex Securities and Exchange Commission documents into a business she ran from her home office. This month, investor advisory service Morningstar, the $2.2 billion company mutual-fund rating company, bought Leder's tiny company for an undisclosed sum. (Full disclosure: Morningstar CEO Joe Mansueto owns Inc., and Leder has written for the magazine in the past, most recently in 2005.)
How did this laid-off journalist turn financial voyeurism into a paycheck?
Writing about a small Florida bank's aggressive accounting first piqued Leder's interest in SEC filings. After losing her job, Leder, now 43, became an expert at panning the arcane documents for news nuggets, writing a 2003 book called Financial Fine Print. To promote the book, she started a blog, called Footnoted.org, where she wrote about corporate shenanigans and other news investors could use buried in the – you guessed it – SEC documents' fine print. (Revenge is sweet: One of Leder's best scoops was discovering – buried in a 2003 proxy report to shareholders – that Gannett Chief Financial Officer Larry Miller received a consulting contract with the company valued at $600,000 a year for the rest of his life.)
As the blog's readership grew, Leder saw financial opportunity. She sold advertising space on the site, then peddled reprints and original content to customers that included the New York Times's DealBook. She also promoted her reputation as an expert – and, of course, her blog – by being quoted in newspapers, appearing on TV, and writing freelance articles.
In 2008, Leder decided advertising "was never going to sustain the site," she told Harvard University's Nieman Journalism Lab. So she kept part of her content free and put the premium stuff (the scoops most likely to affect stock prices) behind a subscription-only paywall. Hedge fund managers forked over $2,500 per year or $250 per issue for what she called the Footnoted Pro service. (She wouldn't reveal how many subscribers she has, though she said it fell just short of her goal of 100.)
Chicago-based Morningstar came calling last spring and, last month, Leder blogged the news of the acquisition. She'll continue to run Footnoted (soon to become Footnoted.com).
Leder didn't reveal the multiple fetched by her company, writing only: "While I negotiated mightily for the keys to the Gulfstream, the corporate apartment in Paris, the company yacht, the lifetime consulting contract and, of course, a tax gross up – all crazy perks we've written about in various M&A deals – I came up empty handed."
Instead, her reward, she wrote, will be growing the Footnoted business – she's already hired a full-time employee and happily handed over the sales part of the business to Morningstar. "I'm really good at reading SEC filings and finding nuggets. I'm not really good at selling subscriptions," she told the Nieman Journalism Lab.
Three of Leder's top tips for start-ups:
1. Quality is key. "There's so much content out there," she said. "People recognize quality."
2. Don't need office space? Don't fork out for it.
3. "Have a backup plan." (Part of Leder's: Her husband had a job.)