Collecting the collectors - Krause Publications publishes collector-oriented periodicals - Company Profile

Nation's Business, Oct, 1992 by Michael Barrier

By the time he moved to his present location, in 1975, he had 60 employees. Since then, the building has been expanded five times, to more than triple its original 20,000 feet, and the number of employees has more than quintupled.

Krause Publications is elephantine compared with its home town, which has a population of only 1,125 and is a half hour's drive from the nearest town of any size. But Krause has never considered moving out of Iola. He thinks that growing up in the Depression may account for the deep attachment he feels for what he calls "the village." "In those years," he says, "your neighbors were really your best friends." Krause's attachment to Iola was rewarded in 1990, when the U.S. Small Business Administration named him Wisconsin's Small Business Person of the Year.

It was in part to remove a threat to the company's continued residence in Iola that Krause adopted an employee stock-ownership plan (ESOP) in 1988. It now owns more than half the stock. Krause estimates his share at around 20 percent, "but I really don't know what the hell I own."

For all of Krause's fundamental indifference to financial matters--"I'm not a bottom-line manager," he says-Krause Publications has rarely flirted with serious financial problems. In the early '80s, Krause did fall prey to what he calls overconfidence, born of prosperity in the '70s. "Business was very good," he recalls. "We just thought we were geniuses, I guess."

Krause spent what he says was too much money expanding the headquarters building--so much, in fact, that he had to turn to a large Milwaukee bank for a $2.2 mullion loan, at a time when the company's annual revenues were running around $10 million. Relations with the bank were rocky, because Krause had never adopted the elaborate financial reporting that is now typical of American business. "We knew how to build buildings, and we knew how to promote new magazines," Krause says. We didn't know how to furnish reports."

He paid off the loan in 1986. Since then, he says, when he has expanded the plant or made an acquisition, "we paid for that out of the cash register."

After he turned 65, Krause cut back on his day-to-day involvement in the company. "Right now," he remarked one day earlier this year, "there are probably three or four meetings going on around the place, and I'm not in any of them."

Some entrepreneurs have trouble letting go of the reins of their companies, but "I don't have that problem," Krause says, because he and Cliff Mishler, Krause Publications' president, have worked together closely for almost 30 years.

Krause, a bachelor, now spends a lot of time traveling. Last spring, he and four Army buddies went to Europe and, he says, "retraced our steps" during World War II. Soon after that, he went to Montana to hunt prairie dogs.

Krause started serious traveling after he became a publisher, and his travels opened up new realms of collecting. "I was basically out there promoting my product," he says, and in the process I would find all this good stuff." He now has, he says, the "pre-eminent collection" of state bank notes--the currency issued by the states in the 19th century. He developed an enthusiasm for old cars, too, and that led 20 years ago to an annual show that now draws more than 2,000 classic cars and 100,000 people to Iola each July.