How one enterprising journalist hit it big

The entrepreneurial business model for journalism may not succeed as often as we would like, but it worked perfectly for Michelle Leder, who just sold her home-brewed publishing business to a $2.2 billion company.

You may not have heard of Michelle Leder or her website, Footnoted.Org, which she started in 2003 in her suburban home in Peekskill, NY. But dozens of billion-dollar, hedge-fund managers know Footnoted.Org very well.

And they have come to rely on the site in the last 6½ years for the juicy tidbits that Leder mines out of the ponderous financial disclosures that publicly held companies are required to file with the Securities and Exchange Commission.

While those turgid tidbits might bore ordinary mortals senseless, they represent valuable and actionable business intelligence that can help traders make or avoid losing millions.

Fortunately for Leder, a 43-year-old lifelong business journalist, her work didn’t merely attract the attention of the Wall Street crowd. Her growing following also captured the interest of Morningstar, the giant, Chicago-based publisher that sells nearly $500 million a year in research and advisory services to large and small investors.

After Morningstar representatives contacted Leder last year to see about using some of her content in their products, one thing led to another and, well, Morningstar yesterday bought Leder’s business for an undisclosed sum.

“I am very excited about this,” said Leder, who will become a Morningstar employee but continue to share in the future revenues generated by Footnoted.Org. “Not only will I get some cash and continue working with them, but I am really excited about having the resources to grow a business I believe in. It’s just really cool.”

Cool, indeed. And it’s also a perfect example how of a modern journalist no longer needs a job at a major media outlet to build a satisfying and remunerative career.

Whether you have a job or not, the secret to journalistic success in the future is to become an entrepreneur by developing a specialty (or two or three) – and then working tirelessly to brand yourself as a recognized expert in the field.

The low costs of online publishing make it easy to hang out your shingle on any conceivable subject and then to leverage the viral power of the web to build an audience. From there, you can go on to writing freelance articles, authoring a book, speaking, teaching and maybe even selling doggie T-shirts.

But it isn’t easy, as Leder is the first to point out. “This has not been an instant success,” she said in a telephone interview. “I have been plowing away at this for a long time.”

Prior to starting Footnoted.Org in 2003, Leder was a reporter and editor for 10 years at newspapers in Florida, Connecticut, and New York. She found her calling as an SEC maven when she began digging into government filings to investigate questionable accounting practices at a Florida bank.

Her skill at parsing arcane documents led her to write a book called Financial Fine Print, which was published in 2003. She started the Footnoted site to promote the book and has been scouring SEC filings ever since.

I met Leder several years ago, when she was seeking ways to make bigger money off her all-consuming project. We discussed and soon rejected the hope of building a significant revenue stream from online advertising. Instead, we agreed that her primary effort ought to be selling subscriptions for premium content to hedge-fund managers. And that’s what she did.

(To be clear: I am not trying to horn in on the credit. Leder did this all herself.)

Leder won’t say how many investors are paying $2,500 a year for her premium service, but it is a safe bet that the willingness of her subscribers to write those fat checks is what persuaded Morningstar to write its check to Leder.

Now, Leder is looking forward to a wider audience for her work – and all the future financial goodness that may mean. “I am generating maybe 500,000 page views a month, while Morningstar does 200,000 a day,” she said. “They have a hell of a lot more people to market to than I will ever have.”

Before she can get around to that, however, Leder and her two-person staff have a pile of SEC documents to plow through.