These Are Places That Are Gone

Last Tuesday was sad. One of my former employers declared Chapter 11.

I’m no stranger to Chapter 11 or its slightly more Harley Quinn-esque step-sister, Chapter 7. To paraphrase Dorothy Parker, there was a time that whenever things got dull around the old consulting shop, you could find me and Chapter 11, off in a corner, necking.

It wasn’t my fault, I swear. Our consulting firm worked with companies that made sports collectibles, trading cards specifically, and while we helped them create a bubble, we told them very clearly that it was a bubble and it would burst and when it burst many companies like theirs would go into receivership, and darned if it didn’t happen.

However, the company that went into Chapter 11 this past week didn’t make sports collectibles, though it published the best magazines that wrote about them – and not just sports collectibles, but comic books, old cars, and coins. 

The company was F+W Publications, though to those privileged enough to be a part of it when, it was and will always be Krause Publications.

A WWII Air Force vet named Chet Krause started Krause Publications on a farmhouse kitchen table in Iola, Wis., and from its founding KP reflected its roots: small-town, friendly, created by folks like you for folks like you. 

Image credit: Comichron

A KP periodical like Numismatic News or Sports Collectors Digest may not have featured New York Times-caliber journalism throughout (though these days, even The New York Times doesn’t always feature New York Times-caliber journalism throughout), but it was an earnest and sincere reflection of the interests, passions, and idiosyncrasies of its readers, filtered through the highly personal lens of whoever happened to be editing it.

The best KP periodical, Comics Buyer’s Guide, was edited by the husband-and-wife team of Don and Maggie Thompson, rock-solid journalists and stone-cold comics fans whose patter as they created each week’s edition rivaled His Girl Friday for screwball invention and (mostly) profanity-free invective. 

It’s easy to see how these periodicals could have been destroyed by the Internet, yet it’s just as easy to see how they could have adapted to the new medium. 

Online, collectors search incessantly for archaic information, and KP had the archaicest: volumes and volumes of catalogs and price guides and pictures and reviews and analyses.

An easy way forward would have been to throw up some paywalls, offer hybrid subscriptions, mete out the data, sell books and catalogs, and live long and prosper. Ad revenue would have suffered, but the publications would have found their way.

That was not the road F+W took. As an AdWeek article notes, its CEO, Gregory Osberg, “said the thought at the time was F+W customers were passionate about their hobbies and would ‘purchase items from the company related to their passions besides periodicals, such as craft and writing supplies.’”

In response, the company renamed and repositioned itself as not just a seller of magazines, but as an online seller of stuff you might find in its magazines. 

F+W’s dive into ecommerce looked good early. By 2014, per AdWeek, “F+W had grown its ecommerce business from one store with $6 million in revenue to 31 ecommerce stores with nearly $60 million in revenue.”

However, the growth came at a cost. The company hired hundreds of new staffers, according to the article: “ecommerce directors, online product managers and marketers, SEO/SEM experts, email and traffic managers, third-party partnership managers and an in-house customer service call center.”

And then the roof caved in.

As the article states, “The company vastly underestimated how much it would cost to run an ecommerce business, including buying merchandise, leasing warehouses, marketing products, fulfilling orders and responding to customer service inquiries.”

Well, yeah. If that isn’t the same old story, my name’s not Rosalind Russell.

Buying physical stuff costs money. Manufacturing costs money. Warehousing costs money. Shipping costs money. Sales support costs money. 

Chet Krause with the first issue of Numismatic News, 1952. Image credit: Comichron

The costs of starting up a business are always, always, always significantly higher than you think they’re going to be, and if that business happens to make and sell real stuff, you’re into J.P. Morgan yacht territory.

It’s my own little Rule of Two. If you think it will cost $x dollars to start up and maintain your business, and you’re profitable at that, assume it will cost $2x. If you’re comfortably profitable at $2x, take it to $4x. If you’re comfortably profitable there, you should be okay – not great, but okay.

Unfortunately, just about every new business fails this test. In sports consulting, many prospective clients failed the test; we disappointed a lot of wannabe millionaires, but it was for their own good. 

Another former employer failed the test as well. When I asked them if they had enough money to launch their flagship product, the CFO said, “Yeah, we’ve got $5 million.” Turns out $10 million wouldn’t have been enough.

What does this have to do with marketing? This: If you’re working with a client who thinks that you just throw up a website and start Facebooking and the world will beat a path to your door – and these clients still exist – you need to tell them now this is not how it works.

Marketing is not exempt from the Rule of Two; in fact, it’s responsible for the Rule of Two, and for making it a de facto Rule of Four.

Per the credo of the Townes Van Zandt School of Marketing, if you want good friends they’re gonna cost you, whether it’s via paid social or SEO or advertising or market research. 

Investing in customer experience is the most cost-effective of these approaches … eventually. But there will be a long dry period inbetween the time you create a world-class customer experience and a sufficient number of customers notice, and begin sharing the news with their friends.

Weak organizations bail during the dry periods. Only strong organizations with an unshakable sense of self make it to the end with CX.

Before it was sold, KP was one of those organizations. If you collected baseball cards or comics or records, a KP publication rarely disappointed. But the further the company got away from its origins, the more the message was lost. 

As Tommy Keene points out, Krause Publications and Comics Buyer’s Guide and great magazines in general – these are places that are gone. However, their lessons carry forward, and their greatness is undiminished by time.