I finished reading Newspaperman: S.I. Newhouse and the Business of News by Richard H. Meeker. The biography is about Samuel Irving Newhouse Sr., who founded Advance Publications. At Sr.’s death, Advance Publications owned multiple newspapers and Condé Nast, which publishes famous magazines such as Vogue, Vanity Fair, GQ, and The New Yorker. Since then the company has grown rapidly, and it owned 26.5% of Reddit when Reddit began trading on the public stock market this year (see here, page 194). Reddit’s market capitalization (i.e., valuation) is just under $12 billion as of this writing.

This book and Newhouse: All the Glitter, Power, & Glory of America's Richest Media Empire & the Secretive Man Behind It by Thomas Maier detail one key strategy the Newhouse family used to grow their wealth: they optimized their tax liability and maximized the compounding of their wealth. The family studied the tax laws and implemented strategies that reduced their tax liability. This gave them more capital to reinvest in growing their companies or acquiring new companies.

Both books contain numerous examples. Their estate tax strategy especially caught my attention. When someone dies, their estate is transferred to heirs and a tax is due on the value of the estate being transferred if it exceeds that year’s federal threshold. When Sr. died in 1979, his sons filed a return valuing his ownership in Advance Publications at roughly $182 million and showing an estate tax due of roughly $49 million. The IRS said his estate was worth somewhere between $1 billion and $2 billion and that the estate tax due was, at a minimum, $600 million, and as high as $1.2 billion. At the time, Advance Publication owned thirty newspapers and various magazines. Its two most prosperous newspaper properties alone were worth more than $182 million.

Sr. had studied other publishing families to understand how death and estate taxes negatively impacted their family empires. Families often had to sell all or some of the company’s assets to pay the estate tax upon the founder’s death. Sr. developed a dual-share-class strategy to avoid that outcome. Sr. owned common shares in Advance Publications but issued preferred shares to his siblings, wife, and sons. His common shares carried voting rights and, essentially, control of company decision-making, but the preferred shares gave holders the right to vote on a company liquidation or sale. Said differently, if a buyer wanted control of the company, the buyer had to get the approval of the preferred shareholders first. The result was a gray area in the tax law. It could be argued that the fair market value of the company—the price a willing buyer and seller would transact at—was significantly lower than the IRS’s figure because there would be fewer buyers willing to buy a minority stake in a family-owned company that had such a bizarre ownership structure. Most buyers spending that kind of money would want majority ownership so they could have control. To gain control, they’d have to convince multiple family members to sell, a prospect many buyers would rather avoid. There’s more to this, but that’s the gist of it.

The IRS took the family to court, and the family prevailed. The result was that the family paid an estate tax bill that was a fraction of what it would have been if Sr. hadn’t planned so carefully. It wasn’t a material amount for the company, so it didn’t have to sell any assets to pay the tax. The Newhouse family’s empire could continue compounding for another generation and grow exponentially under Samuel “Si” Newhouse Jr.’s leadership for the next forty years.

I haven’t been a fan of books that tell the history of a company or a group of people (i.e., a family). These books introduce numerous people but don’t go very deep into any of their journeys. I enjoy biographies more because the in-depth coverage of a single person’s journey usually includes challenges encountered, lessons learned overcoming adversity, and details about how they applied lessons learned to achieve their goals. Biographies get me thinking and often lead to new ideas and insights, which excites me.

Though books about the history of a company or group of people aren’t my favorite, I now recognize they’re useful for something: links to other people or companies in an industry or time period.

I’m currently reading Newhouse: All the Glitter, Power, & Glory of America’s Richest Media Empire & the Secretive Man Behind It by Thomas Maier. It’s about the Newhouse family and their media empire. But because it covers so many decades and so many people, it’s introduced me to other companies and founders I wasn’t aware of. I’ve ordered biographies about several people mentioned in this book.

My thinking on the value of reading this type of book has changed. While I’m not learning as much about an individual as I’d like, I’m being introduced to more people in the publishing industry and can read about each person’s journey. These books are good discovery mechanisms and help me understand industry periods. I don’t want these to be the majority of my reading, but they’re a helpful supplement to biographies.

I had a conversation with an entrepreneur who’s an avid reader and history buff. He pointed out something that stuck with me: biographies and autobiographies about business founders are the most challenging historical books to write. He based that on a few insights:

• Authors who write about entrepreneurs aren’t entrepreneurs and don’t usually understand business. They focus on telling a compelling story and don’t deep dive into an entrepreneur’s actions or why they took them. This leaves entrepreneurs who read their book craving more details about some parts of the journey.
• Entrepreneurs who write autobiographies usually aren’t gifted writers. They know all the details about their journey, but putting it down on paper is challenging for many of them, and they need help. If they move forward with the book, many will get a coauthor to fill the gap.
• The more time that passes, the harder it is to piece together exactly what an entrepreneur did and why they did it. This isn’t as true of other historical events, such as wars.

The details of what an entrepreneur did and why they did it are what make a journey resonate with me and help me figure out how to apply it to my situation. When that’s missing from a biography, I tend not to enjoy it as much. My favorite books are autobiographies. Reading them is the closest you can come to getting inside an entrepreneur’s mind without talking to them. They usually include the nitty-gritty, reasoning, and emotions.

This entrepreneur made a great point today. I’m going to think about this more.

Last week, I finished reading Roy Thomson’s autobiography, the second book I’ve read about him in the last month. I found another biography about him, and I’m considering reading that, too. Last month, I read a biography about Felix Dennis, the second book I’d read about him.

I initially resisted reading more than one book about an entrepreneur, but I don’t feel that way anymore. Some material may be repetitive, but subsequent books usually contain new information too. Multiple books provide multiple perspectives on an entrepreneur’s life and get closer to a 360-degree view of that person’s journey. Reading too many books about a person would yield diminishing returns, but right now, my gut tells me that two or three books about a person is likely a good number.

I’ve also changed my thinking about how I record information about entrepreneurs I’m studying. Before, I thought in terms of books. Each book was an individual record, and I created a digest for each book. This meant I could have multiple digests about a single person. But now I’m thinking in terms of people. I need to consider how I want to capture the information. Ultimately, I want to do more than create blog posts and podcasts with these digests. Do I create one digest per person and add information from multiple books? Do I keep creating one digest per book? Or do I do something completely different?

I’ll be thinking about this question more and getting perspectives from people with relevant data management experience. In the meantime, I might experiment with my digest and blog post formats a bit.

I finished reading the biography about Jack Kent Cooke. The book detailed Jack’s journey from high school dropout to billionaire entrepreneur and sports mogul.

How Did Jack’s Early Years Affect His Trajectory?

Jack bet on himself early in life. He dropped out of high school and turned down a college scholarship to play hockey. Instead of pursuing education, he tried many things—and failed at most of them. He ended up going broke, and he and his wife had to move in with his parents. He didn’t give up, though. He picked himself up and kept trying. Experiencing failure and hitting rock bottom at a young age transformed Jack. From that point forward, he was no longer afraid of failure. And he realized he could outwork everyone else to increase his chances of success. With a fearless mindset and a dogged work ethic, Jack positioned himself to conquer almost any challenge.

What Strategy Did Jack Employ to Achieve Success?

Jack was a content master. He had a superior understanding of how people wanted to be entertained in their leisure time and knew how to create or acquire content that captured people’s attention. He started by creating programming for radio stations but eventually moved into magazines, newspapers, and professional sports. The type of content Jack focused on shifted, but the goal was always the same: provide people with something that captured their attention. Once Jack had captured an audience’s attention, advertisers paid him handsomely to make his audience aware of what they were selling.

Jack also understood the importance of distribution. He didn’t just want to create or buy content; he also owned content distribution mechanisms. He started with radio stations but eventually made a fortune in cable systems. The genius in Jack’s distribution strategy was that he preferred to own distribution mechanisms in areas where he could have a monopoly or where the barrier to entry was extremely high. This limited his competition and kept his margins high.

This isn’t unique to Jack, but he used leverage strategically throughout his career to acquire assets and build his empire. He also got extremely lucky when the S&L crisis allowed him to buy back, from the government agency that took over the S&Ls, hundreds of millions in bond debt issued a few years earlier for pennies on the dollar.

Jack achieved outsize success despite humble beginnings. But his health and relationships suffered because of how he went about achieving success. Anyone interested in publishing, broadcasting, professional sports teams, or the early days of cable could benefit from reading this book about Jack’s life.

According to the biography about Jack Kent Cooke, while he was still recovering from his heart attack in October 1973, Jack flew to New York to install himself as CEO of TelePrompTer Corporation to save the company. The stock price suffered after the CEO, Irving Berlin Kahn, was convicted of bribery. Jack’s stock in the company fell in value from roughly $50 million to less than $2 million, stirring Jack to action. Jack split his time between running his sports empire in Los Angeles and TelePrompTer in New York City. He cut 25% of the cable operator’s staff and stopped expanding into new areas. Over time, he was able to get the company back on solid footing.

At the same time, Jack was making winning championships a priority. In 1968, he signed superstar Wilt Chamberlain to the biggest NBA contract ever: $250,000 a year for four years. The Lakers won a championship in 1972. In 1975, he acquired superstar Kareem Abdul Jabbar in a trade. Jack ultimately drafted Earvin “Magic” Johnson in the 1979 draft and set the Lakers up for a decade of dominance.

His sports teams were doing well, but his marriage to Jean was falling apart, and in 1976, she tried to commit suicide again and left him. A contentious divorce and asset-separation process ensued. The divorce was finalized in 1977, but the division of assets wasn’t finalized until March 1979 after Jack’s underhanded tactics to hide information from Jean came to light. After over forty years of marriage, their assets were spilt as follows:

• Jean received their $1 million Bel-Air home, $24 million in TelePrompTer shares, and 28% ownership in Raljon Corporation, an entity that owned the Los Angeles Kings NHL team, the Los Angeles Lakers team, the Forum arena, the 13,000-acre Raljon ranch, and a videotape enterprise.
• Jack received a home in Las Vegas, all of his ownership in the Washington Redskins, and 72% ownership in Raljon Corporation.

Each of them received roughly $42 million in assets. It was the largest divorce settlement up to that point and was included in the Guinness Book of World Records. Three months later, in June 1979, Jack sold the Forum, the Kings, the Lakers, and Raljon Ranch to Jerry Buss for $67 million. The Buss family still owns the Lakers. Looking for a fresh start, Jack promptly moved to Washington, D.C., that summer to be closer to the NFL team of which he was the majority owner.

Jack owned 82% of the football team, and he put his stamp on the team. On the basis of his experience, the team leaned on ads and sponsorships to generate additional revenue. During his tenure as owner, he hired legendary coach Joe Gibbs, and the team appeared in three Super Bowls, winning two titles. The other owner of the team, until Jack bought him out in a contentious battle, was Edward Bennett Williams, an attorney and eventual owner of MLB’s Baltimore Orioles.

Jack also got into commercial real estate when the New York City market struggled. He bought the iconic Chrysler Building there for roughly $87 million in August 1979 from an insurance company that had foreclosed on the property. Jack finished their $58 million renovation project and added another $30 million to the budget. He refinanced his purchase in 1982 with an interest-only loan, paying $553,000 monthly at 10.5% interest on a $60.5 million loan. He refinanced again in 1987 for $250 million. The building was worth an estimated $550 million a decade after his purchase.

The 1980s were a busy time for Jack. He moved forward in his personal life and, in 1980, married Jean Maxwell Williams Wilson, but they divorced ten months later in 1981. In 1981 Jack sold TelePrompTer to Westinghouse for $650 million, netting himself over $70 million and a $4.65 million consulting contract. He won the bid to purchase Elmendorf Farm in Kentucky in 1984 for $43 million, using a controversial add-on bid. And in late 1985, he acquired the Los Angeles Daily News, paying the Chicago-based Tribune Company a whopping $176 million, or roughly twice what other bidders had offered for a paper generating $100 million in annual revenue and $12.5 million in annual profit. His biggest purchase was McCaw Communications, the twentieth-largest cable system with over 464,000 subscribers in forty-two communities. Jack paid roughly $1,800 per subscriber, or $755 million, for the company.

To finance all these deals, he used leverage. He did what everyone else was doing at that time: he used junk bonds to raise capital. In April 1987, he hired Michael Milken of Drexel Burnham, and a $951 million bond offering was completed. Jack used most of the proceeds to pay for the McCaw purchase and to refinance debt on and enhance operations at the Los Angeles Daily News. Jack wasn’t done. In 1987, he bought First Carolina Communications, a cable system with 156,000 subscribers. Jack paid $1,900 per subscriber, or $300 million.

In 1989, Jack decided to cash in. He exited the cable business for good in grandiose fashion. He sold all his cable holdings for a staggering $1.6 billion, or $2,300 per subscriber, likely making himself a roughly $400 million profit. With this deal complete, Jack liked to remind people that he’d become a billionaire. This was a rare accomplishment in the 1980s and early 1990s, even among the fraternity of NFL owners that Jack was part of.

Between 1987 and 1990, Jack married two more women and had a daughter by one of them. Both marriages were messy, making the pages of Washington, D.C., newspapers, and are detailed in the biography. At the time the book was published in 1992, Jack was still alive and running his sprawling empire. He passed away in 1997 at the age of 84.

Jack was a wildly successful entrepreneur whose gift of deeply understanding how people wanted to spend their leisure time allowed him to build sports, cable, and publishing empires.

In 1959, before becoming a U.S. citizen, Jack Kent Cooke purchased an AM radio station in Pasadena, California, for $900,000 in his brother’s name.  In 1960, a contest the station ran caused an FCC investigation that uncovered Jack’s majority ownership. In 1962, the FCC ordered the station shut down, and Jack lost the license. It was a major financial blow. While he was licking his wounds, Jack stayed in a remote California hotel. He was surprised to get clear television reception. He learned the hotel was wired for CATV—cable TV—and that people were paying $5 a month for the service. Jack immediately recognized the potential of cable TV and jumped into action.

Cable was simple then, just a way to bring six or so channels to a community from broadcast networks that didn’t have strong enough signals. In the fall of 1964, Jack made his first cable TV antenna system investment for $4.6 million. The profit potential of a protected cable franchise was obvious and reminded him of the early days in northern Ontario when Roy Thomson had a license to print money in broadcast radio. The formula was simple to Jack. Current customers plus projected growth of a cable system’s coverage combined with current and future subscriber rates told you how much each system could generate in revenue. Having calculated these figures, Jack paid $300 per cable subscriber when he purchased a cable system. With customers paying $5 monthly, one deal was netting Jack $80,000 in monthly cash flow. Jack named his company American Cablevision.

Jack’s broadcasting and publishing background gave him an advantage in understanding the potential of the cable market. He moved fast and, in 1965, added tons of communities to his coverage area by buying existing franchises in rural areas. He created two subsidiaries, too—one that “engineered other CATV systems” and one that sold cable equipment. Jack built American Cablevision to 85,000 subscribers and, in 1968, merged it with H&B Communications in a stock deal valued at $30.8 million. In 1970, H&B was bought by TelePrompTer Corporation, then the largest cable system in America, in a stock deal. After the acquisition, Jack owned almost 12% of TelePrompTer’s publicly traded stock, meaning Jack’s shares were worth roughly $40 million. In about five years, Jack had created a $40 million cable fortune.

Cable wasn’t enough for Jack, and in 1965, he purchased the NBA’s Los Angeles Lakers basketball team for $5,175,000, a record price. Jack viewed a team in Los Angeles as one of the three most valuable NBA properties, teams in Boston and New York being the other two. Jack was also gunning for the rights to start an NHL expansion team and thought owning the Lakers and having partial ownership of an NFL team legitimized him as a sports mogul. He was right. Less than a year after purchasing the Lakers, he was granted rights to Los Angeles’ expansion NHL team for a $2 million fee and a promise to play in an arena that seated at least 12,500 people. Jack also paid $250,000 for the right to have a team in the United Soccer Association.

Jack kept pushing and, in 1966, added real estate to the mix. He started building the Forum, a modern, roughly $17 million sports arena in Los Angeles that his basketball and hockey teams could play in. The arena opened in 1967 and was unlike anything anyone had ever seen. It was a huge success.

While Jack was thriving as a sports entrepreneur and also running other enterprises, his health and home life were suffering. In 1965, his wife Jean was unhappy and attempted suicide for the first time. And Jack’s brutal work schedule led to him having a heart attack in 1973. This slowed Jack down, but it didn’t stop him. He was just getting started and was focused on his teams becoming champions.

Jack Kent Cooke’s Toronto radio station was doing well, so he started and acquired businesses that provided services to it. For instance, he purchased a small ad agency and started a service that syndicated radio shows in Toronto. Owning these companies decreased expenses for his station and allowed Jack to profit when other stations needed the same services.

Jack was also doing deals with his partner Roy Thomson. They bought a drive-in movie chain, two national radio sales agencies, and other businesses. But one of their deals landed Jack in legal trouble: the 1947 purchase of an edgy and unprofitable magazine, Liberty. Roy and Jack bought it for $400,000, each owning 45%. But the magazine’s content got Jack sued for libel and led to criminal charges against him for “conspiring to publish defamatory libel.” Jack was acquitted, but the magazine was a financial drag, losing more than $300,000 over the years before finally turning a small profit. Jack’s experience with Liberty led to his 1952 purchase of a publishing empire, which included Saturday Night and other national and trade magazines owned by Consolidated Press. Jack had added publishing entrepreneur to his resume.

The Consolidated Press deal was significant but didn’t include Roy. The partnership between the two soured when Jack cut Roy out of a lucrative consulting deal to manage an Ottawa radio station. Roy felt Jack broke their agreement to share in each other’s deals and opted not to partner with him on deals anymore, although they remained business associates. Jack didn’t need Roy as a partner anymore. He was financially successful and started doing deals on his own. He had six offices in Toronto for his various businesses, which he bounced between daily.

Jack wanted to own more businesses in leisure industries, so in 1951 he bought the Toronto Maple Leafs, a minor league baseball team, for $200,000. With his knack for promotions and flair, Jack turned the games into must-attend events in Toronto. He also used the games as content for his radio station and did play-by-play calling of each game. He tried to do the same with local hockey team games, but because he didn’t own the team or the rights to broadcast the games, he was charged with radio piracy by the Canadian government.

Jack kept buying businesses. In 1956, he bought a company that owned two plastics factories and an aluminum foundry. Jack saw plastics as the future and a growth industry he wanted to be part of. His ownership got off to a rocky start when he sued the seller for misrepresenting the value of the inventory he’d bought.  

Jack’s dream was to start Toronto’s first TV station, and he’d been working it for years. He needed to be awarded the first license to turn that dream into reality. When Jack submitted his application to the Broadcasting Board of Governors (BBG) in 1960, his past tussles with regulators and his reputation for stuffing too many ads per hour into his radio broadcasts worked against him. In a crushing defeat, the license was awarded to another group.

After his television broadcasting license application was rejected, Jack made a major move. He uprooted his family and moved to California. He didn’t just move; he pulled off political wizardry to make it happen. Jack and his high-powered lawyers convinced the U.S. Congress to create a special bill for Jack. It allowed him to become a U.S. citizen immediately, bypassing the normal five-year waiting period, and backdated his citizenship by a decade. It passed the House and Senate and was swiftly signed into law by President Dwight D. Eisenhower. Jack had become powerful and connected not just in his home country but in the United States too. As a U.S. citizen, Jack couldn’t own certain Canadian companies, so he sold his radio stations, publishing business, and baseball team.

Having friends in high places paid off again for Jack. That same year, his well-connected lawyer, Bill Shea, shared an opportunity to buy into an NFL franchise. Jack jumped at the chance and paid $350,000 in 1961 to purchase 25% of the Washington Redskins (now the Washington Commanders).

This deal kickstarted Jack’s life as a U.S. citizen and launched what would become a professional sports team empire for him.

The biography about Roy Thomson described a critical partnership with a young man who helped propel Roy’s empire: Jack Kent Cooke. I did some research and learned that Cooke went on to have a prolific career in radio broadcasting, owning cable systems, and owning the NBA’s Los Angeles Lakers, the NHL’s Los Angeles Kings, and the NFL’s Washington Redskins. I wanted to learn more about Jack, so I read The Last Mogul: The Unauthorized Biography of Jack Kent Cooke by Adrian Havill.

Jack was born in 1912 and raised in Toronto, Canada. His parents had immigrated from South Africa and Australia. He grew up in a lower-middle-class family that sometimes struggled financially. Jack wasn’t into school and skipped it for weeks at a time. He finished only three of the five years needed to graduate high school before dropping out. More interested in making money, he tried various things, including forming a band that performed at local school dances. The “high school hustler” lived by his own rules.

In 1934, the Depression profoundly affected North America. Twenty-five percent of Canadians were unemployed. Twenty-one-year-old Jack had eloped with seventeen-year-old Barbara Jean Carnegie and begun traveling door to door to sell encyclopedias. Selling books failed, and Jack went broke. He and Jean moved in with his parents, and he took a traveling salesman job selling Colgate-Palmolive products to stores in remote northern Ontario. During one of these trips, Jack walked into a radio station to ask for a job. Roy Thomson owned that station.

Forty-three-year-old Roy was intrigued by twenty-five-year-old Jack’s persistence and hired him to manage station CJCS in Ontario. With Jean pregnant with their first child, Roy was anxious to prove himself. Jack started at CJCS in January 1937 and worked from when his eyes opened to when they closed. By June, the once-troubled station’s profits were so substantial that Roy sold the station for a handsome profit. Jack had quickly proven himself to Roy while learning the ins and outs of radio broadcasting.

Roy liked working with Jack so much that he offered him the opportunity to become partners by buying in to his next deal: purchasing a Quebec radio station for $21,000. Roy and Jack each put up $1,000, and they financed the remaining $19,000 with a bank loan. A year later, they sold that station for $105,000. Jack was in his late twenties, and this deal was his first big financial win.

Jack started looking for his own radio deals and negotiated to buy a Toronto station for $500,000. He didn’t have $500,000 liquid, so he agreed to put down a deposit, which he would lose if he didn’t close the deal in thirty days. Jack raised the money from wealthy people in Toronto. Interestingly, Roy declined to invest. After taking over, Jack immediately broke unwritten radio rules by broadcasting twenty-four hours a day and introducing other changes. Within a year, Jack had a 35% market share and his was the leading station in Toronto. Within a year or two, Jack repaid each investor $69,000, almost three times their $25,000 investment.

Jack was eager to continue expanding and wanted to buy an Ottawa radio station, but regulators blocked him. To get around the regulators, he signed a consulting contract with the station’s owner: he would manage the station and get 40% of the gross profits before taxes and depreciation, an extremely lucrative deal. In the 1950s, the station generated $1,600,000 in gross profits, of which Jack received $640,000. Jack got what he wanted, but his wheeling and dealing didn’t sit well with regulators. He was developing a reputation as a cowboy who wouldn’t follow the rules.

Jack was hitting his stride as a radio broadcasting entrepreneur and becoming well known in Toronto. He was having professional and financial success, but it didn’t come easy. Jack’s typical workday at a radio station was from 7 a.m. to midnight. It got so bad sometimes that his wife had to go to the station and drag him home. Jack’s employees viewed him as a hard-charging workaholic, notoriously cheap and prone to outbursts when something didn’t meet his standards. One newspaper article in 1949 described him as ruthless, tough, and working every waking moment.

Jack’s style helped him get early wins but also ruffled feathers and got him in trouble with the law.

I finished reading Mike Bloomberg’s updated autobiography, published in 2019.It details Mike’s journey from a Wall Street firm to entrepreneur, mayor, and philanthropist. It’s a mix of his journey, the principles he lived by, and thoughts on society.

How Did Mike’s Early Years Affect His Trajectory?

Mike was raised in a middle-class family in a blue-collar community. His father worked six or seven days a week until he died. His father’s and his community’s work ethic left an impression on Mike. Now, decades later, in his seventies and with a net worth reportedly exceeding $100 billion at the time of this writing, Mike’s idea of a perfect day is one that starts with exercise and being at his desk by 7 a.m., is jam-packed until into the evening, and ends with falling into bed exhausted. Mike believes in grinding daily, even though he doesn’t have to at this stage of his life.

Mike benefited from serendipity in his youth and early in his career. A coworker at his after-school job put Johns Hopkins on his radar. He went to graduate school because that’s what everyone else in his class was doing. He didn’t know that institutional sales and equity trading was a job, but a Harvard classmate told him to apply to Salomon Brothers for the role anyway. Salomon was acquired, and Mike’s interest in the partnership was bought for $10 million. At a glance, it looks like Mike got a lot of lucky breaks. But digging deeper, it’s apparent that his work ethic put him in environments that increased his chances of getting lucky. He did everything to the best of his ability, which led to more and better opportunities.

What Strategy Did Mike Employ to Achieve Success?

Mike learned how inefficient and difficult accessing data was while he was working on Wall Street. He wasn’t technical, but he solved this problem for his firm using computers, while still doing his day job. After this experience, he was able to do the same for other Wall Street firms, and this led to him founding his company and creating his Terminal product.

The genius in Mike’s strategy was his embrace of media. Bloomberg’s core goal is to gather accurate data and help people analyze it via their Terminal. Mike recognized that each medium was a unique way to distribute his data and analysis to people who could be potential Terminal customers. Leveraging media was a way for Mike to increase awareness about Bloomberg and pull people interested in financial data to Bloomberg. He created a magnet using media that pulled customers to him and made it easier to sell Terminals to them.

Mike also understood supply-and-demand dynamics and their impact on company longevity and margins. Providing something that’s not unique means that others can provide something similar. The supply of that thing is high, and the price you can charge for it goes down. Mike wrote about the example of reporting the news—everyone can do it, so the supply is high.

Providing something that isn’t beneficial doesn’t add value and often means there are alternatives. There isn’t a great need, which can result in low demand. Michael uses the example of entertainment content. It’s nice but not necessary, and many alternatives exist, so demand can be low.

High supply and low demand equal low prices and low margins. Mike understood this and aimed for the opposite: low supply and high demand. Bloomberg was the only company able to provide accurate data and a superior analysis tool that helped financial professionals do a better job. The supply of products like the Terminal was limited and demand was high, allowing Bloomberg to charge a sky-high rate of up to $2,000 per month to rent a Terminal. Customers happily paid it.

What I Learned from Mike’s Journey

Building a media company and selling attention is a proven and lucrative business model that scales well because of the low cost of marginal replication. However, it leaves you dependent on advertising revenue, which can be unpredictable. If you can create a unique product or service with high demand, creating media related to it is a great way to attract an audience, make that audience aware of your product or service, and increase sales of your product or service. Ad revenue can be gravy, not the primary revenue source.

Mike has had tremendous success with Bloomberg and materially affected how finance professionals work. I’m glad I got to learn about his strategy for building Bloomberg. It got me thinking about media differently. Anyone interested in learning about data, media, politics, or philanthropy may benefit from reading his updated autobiography.