Venture

Folio: The Magazine for Magazine Management, May 1, 2004 by Rachel Lehmann-Haupt

Byline: Rachel Lehmann-Haupt

The story of Venture magazine is just the kind of business story the magazine liked to tell - a cautionary tale of how a great idea can falter in the execution.

Twenty-five years ago, when entrepreneurs like Bill Gates and Steve Jobs were becoming the new rock stars of the business world, MIT published a report on job creation, which noted that most new jobs came from small businesses. Joseph Giarraputo, a graduate of the Harvard Business School, was working for CBS's magazine group and decided to start his own magazine. "The idea was to publish a body of information for entrepreneurs - everything from new business opportunities to how to raise and invest money," says Giarraputo, who is now the publisher of Global Finance magazine. "We also thought it was a desirable audience in terms of their income levels."

Giarraputo approached a number of people, including Bernie Goldhirsh, a Boston publisher of boating magazines. Goldhirsh passed on Venture but not on the idea of a magazine for companies too small to get coverage in Fortune, Forbes and Business Week. He launched Inc., which improved on the Venture idea by covering going concerns - small and medium-sized businesses - instead of entrepreneurs.

Undaunted, Giarraputo went ahead with Venture, raising $2 million from the Christiana Company, a home-building firm that was looking to get into the magazine business. "The investment was good at the start, but it also planted the seeds of Venture's demise," says Giarraputo.

Giarraputo hired Karl Bergen, a senior editor at Business Week, as editor-in-chief, and the first issue of Venture launched in May of 1979 with a paid circulation of 75,000 and a cover that featured wooden puppets exchanging business plans. The cover line read: "The Environment for New Deals." Initial advertisers included Mercedes-Benz and Johnny Walker. There were more men's lifestyle ads than business ads, says Giarraputo. Memorable writers included Los Angeles Times reporter Sally Hofmeister, the magazines's star investigative reporter, who covered everything from franchise scandals to get-rich-quick scams.

Then, when soaring interest rates depressed the home-building business, Christiana had second thoughts about magazines and pulled out, leaving Venture to find alternative financing. "We went from trying to put out a magazine to getting consumed by financing and working for an IPO," says Giarraputo. After failed attempts to sell Venture to Bertelsmann and The New York Times, Giarraputo sold the magazine to financier Arthur Lipper. Giarraputo had taken a bridge loan from Lipper for over $2 million and was planning an IPO to pay it back. When investor appetite for IPOs dried up, Giarraputo was forced to cede control of the magazine to Lipper in 1981.

Giarraputo continued as publisher and Carl Bergen stayed on as editor - but not for long: Giarraputo left at the end of 1983, before his equity was totally eroded, and Bergen left a year later.

Meanwhile, Lipper fell into a classic trap: He went from dispassionate backer to emotionally involved owner. "I originally was only interested in the profit of the financing," he says now. "By the time the company had run out of money, I had made the mistake of allowing myself to fall in love with the publication. I viewed and managed Venture as a cause."

Sadly, the first-time publisher's love affair with Venture is what eventually killed it. "Lipper was difficult," says Jim Jubak, who became editor in 1987 and, after a stint at Worth, has become a columnist with MSN Money Central. He recalls a time when Lipper ordered him to use a photo of Lipper's favorite desk sculpture - a human figure made out of nails--as the cover art. "It had absolutely no connection to the story," says Jubak. "Charlie Brucaliere, the art director, and I looked at each other and then looked at him and asked why?" Lipper's answer, he recalls: "I like it."

Lipper says the worst management decision he made was allowing Giarraputo to persuade him to chase Inc. in circulation. He spent heavily to take paid circ from 75,000 in 1982 to 450,000 in 1989 - the year when Lipper was forced to sell out to Carl Ruderman of Drake Publishing. Lipper went back to Wall Street and the magazine folded in 1989. "Venture probably had a natural and unforced circulation level of about 150,000, and we should have scaled the overhead to that reality," says Lipper.

The final lesson: Don't believe those optimistic sales managers. "I blindly accepted the projections of Venture's ad sales directors as the future advertising revenues, none of which came to pass," laments Lipper. If he were to do it again, he says he would make it a newsletter delivered via the Web. "The pity is that the 150,000 or so natural subscribers were so editorially interesting and demographically desirable and upward bound that a really good business could have been developed."