the Motley Fool Inc. - Expansion

EXPANSION

As the firm's success on the Internet continued, the Gardners found themselves expanding offline as well. With the help of Gary Hill—the company's chief financial officer hired in 1996—the firm partnered with Simon and Schuster and published its first book, The Motley Fool Investment Guide, which became a New York Times bestseller. It also teamed up with Andrews McMeel Universal (AMU) to develop a nationally syndicated weekly newspaper column. In 1998, The Motley Fool began a nationally syndicated radio show. That year, the company expanded internationally by establishing Fool U.K.

The Gardners continued expanding by tapping into any media channel that was available. In 1999, the Motley Fool Monthly magazine was launched. The company also formed a strategic alliance with Reuters Ltd. As part of the deal, Reuters supplied financial news to The Motley Fool Web site and advertised the firm on its News Network. The company also developed FoolMart, an online store that operated as a subsidiary by selling e-mail subscriptions, detailed investment information, and company reports. That year, the firm secured $26.5 million in venture capital from Maveron and the Mayfield Fund, funds it used to beef up marketing efforts and upgrade The Motley Fool Web site.

Growth efforts continued into the new millennium. After nearly a year of searching for the perfect CEO candidate, the Gardners hired seasoned marketing executive C. Patrick Garner in May of 2000. Garner began to oversee the firm's growth efforts, which were focused on Europe and Asia, while the Gardner brothers remained co-chairmen and chief strategists. That month, the firm launched a new monthly subscription-based publication entitled The Motley Fool Select . The new publication replaced company research reports and detailed the Fool's top investment ideas. The stocks covered were divided into three categories: the highly profitable companies, or Rule Makers; the emerging firms, or Rule Breakers; and the smaller startups, or Small-Cap Foolish 8.

To fund expansion, the firm secured a second round of financing—$30 million from Softbank Finance Group, AOL Time Warner Ventures, Maveron, and the Mayfield Fund—in early 2001. At the same time, The Motley Fool signed a content distribution agreement with MSNBC.com, an Internet-based news site. The agreement allowed MSNBC.com to feature Fool information on its network. The successes of the company were overshadowed, however, by the downturn of the dot.com industry. As a result, The Motley Fool was forced to lay off 115 employees. The Gardners blamed a drop in advertising revenues, along with a weakening U.S. economy, for the cutbacks. In June of 2001, the firm continued with its downsizing and cut 45 additional jobs. The layoffs weighed heavily on the founders, who took pride in operating a close-knit organization. Co-founder Rydholm, the chief operating officer of the firm, stated in Institutional Investor that, "it was one of the most difficult things I've ever had to do. But you owe it to your investors to perform." As part of the restructuring, The Motley Fool also divided its business into six different units including Publishing, Electronic Media, Consumer Internet, Corporate Solutions, Fool U.K., and Fool Japan.