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May 2001
 Cover story
by Mark Druskoff
10 Years of
MinnesotaBusiness magazine
Nobody thought it had a future, but ten
years later BBN Publishing has fought its way into the top ranks of Minnesota’s
competitive business publishing industry.
If the 1980s were the decade of greed, then the 1990s were the decade of
enterprise. Our heroes became brainy CEOs and twentysomething entrepreneurs, our
celebrities became venture capitalists, and our national pastime became founding
start-ups with killer apps. And although Sand Hill Road and Route 128 got most
of the glory, enterprise-fever was just as infectious throughout the rest of the
country.
According to the “U.S. Competitiveness 2001” study by the Council on
Competitiveness (www.compete.org), from 1990 to 1998 nearly 5.3 million new firms
were launched. And those new businesses accounted for nearly one-third of the 10
million new jobs created between 1990 and 1997, which helped to keep U.S.
unemployment among the lowest in the industrialized world.
At the same time, risk capital in the form of institutional venture capital
increased six-fold between 1995 and 2000, rocketing from under $10 billion to
almost $70 billion. Plus initial public offerings unleashed scads of cash. In
1990 just over $4 billion was raised in IPOs, by 2000, new stock issues raised
$55 billion (and in 1999 it was even higher). Since 1995, the U.S. has been the
most productive economy among other industrial economies, we’ve led the world in
new patents, and our per capita gross domestic product reached the highest
levels in 40 years, outdistancing the nearly the rest of the world.
It’s no wonder, then, that in such a climate business commanded so much of
the limelight. It should also come as little surprise that the business of
business publishing in the Twin Cities boomed during the 1990s. And even in
1991, during the height of a brief recession, the business publishing market was
crowded. That was the year Kenan Aksoz, founder and president of Better Business
Network Corporation (BBN), parent company of BBN Publishing, which publishes
MinnesotaBusiness Magazine, decided to try his hand at the publishing game.
“I think we have probably twice the number of long-lasting, long-sustained
business publications in the Twin Cities than in virtually any other market in
the United States,” notes Tom Mason, former publisher and editor of Twin Cities
Business Monthly and now a principal at the public relations firm of Mason
Smiley Larson Ltd. in St. Paul.
The market was not only crowded, it was competitive too, notes Jay Novak, a
former of editor of Corporate Report and the founding and current publisher and
editor of Twin Cities Business Monthly. The big daily newspapers were a big
source of that competition. Having expanded their business coverage throughout
the late 1980s and early 1990s, says Novak, the dailies had become major players
in the marketplace. “Therefore the magazines had to be better at covering
things.”
To differentiate themselves from the dailies, local business magazines had to
give more thought to how they covered local business. “It was not easy… to come
up with subjects and stories that the newspapers were clearly going to miss,”
comments Novak.
So, he observes, “by the time Minnesota Business got started the market was
really pretty crowded. I think it probably took some fortitude to enter a
crowded market during a recession.”
But in those days, Aksoz did not worry about such competitive concerns
because he says he never intended to create a magazine. “I started the magazine
by accident,” Aksoz admits.
Biz Bound
Aksoz was no stranger to world of commerce, however. He
had been involved in running businesses since his teenage years. His first
management position came at the tender age of 14 when he ran a jewelry store on
the weekends in Istanbul’s Grand Bazaar, in his native country of Turkey.
However that career was short lived. Just two years later his family—members
of the Christian ethnic minority Assyrian community—fled Turkey in 1979 to
escape political and religious turmoil. Forced to sell or abandon all their
possessions, the family came to the United States, sponsored by a relative, with
just $500 and a few suitcases of belongings. When the family of six arrived in
Minnesota, they all shared a one-bedroom basement apartment.
In order to save up enough money to buy a home, everyone in the family
worked. “The third week we were here,” remembers Aksoz, “we all got jobs even
though we didn’t speak any English. I started working at McDonald’s—it was just
like the movies—I thought I’d died and gone to heaven.”
In addition to working and going to high school, Aksoz helped his father and
mother to found and run a chain of tailor shops, called Roberto’s Tailoring
(named after his older brother). Later on, he would also help run another family
enterprise, Princess Jewelers, now located in downtown Minneapolis.
Yet Aksoz had not always seen business in his future. Good with numbers,
Aksoz says he originally considered becoming a chemical engineer. It also seemed
like a wise choice because of his trials in learning English. “We came here and
we got zipped up because—all of a sudden—we couldn’t communicate except for
smiling, like what you see in the movies,” explains Aksoz.
But the sterility of the lab and the lack of human interaction changed his
mind about pursuing an engineering career. “I couldn’t see myself being at a
desk, dealing with machinery all day long, or being in a lab all day long,”
Aksoz remembers realizing. So he shifted his major to business, which meshed
well with his background.
After graduating from the University of Minnesota in 1987, Aksoz had big
hopes as an entrepreneur. “When I graduated from college with a business degree,
I got all these great ideas in my head. What I wanted to do was form a
management team and buy businesses.” His first step towards that goal was to
become a business broker, which also had the benefit of combining his numerate
side, business analysis, with his social side, deal making.
After two years in the business-brokerage field, Aksoz spotted an opportunity
to improve the efficiency of the marketplace by bringing buyers and sellers
together. Unlike similar industries, such as residential real estate that had
the MLS system, no central database of businesses for sale existed. Part of the
reason was because of the confidential nature of the business; the other was the
independence of individual brokers. Aksoz decided that he would be the first to
create such a listing.
Word is Born
When Aksoz incorporated BBN in 1991 to convert his
idea into reality, he began with only a rough sketch of what he hoped to
accomplish. “I had no idea what I was getting into,” he admits. “By the way, I
would never recommend that anyone do that—going in with no business plan, just
having an idea, and saying, ‘I’ll make it work somehow.’” His initial concept
was to create a membership-based network where subscribers would pay to obtain a
list of Minnesota businesses for sale, gleaned from submissions from local
business brokers, who paid nothing to be included.
His seed capital was $1,000.
“That’s all I had extra to risk, as a 27-year old,” says Aksoz. Using that
money, he rented a small office in Edina, hired his first employee, Anthony
Giombetti, and paid for the printing of 300 copies of the first monthly
publication, the BBN Report. It was a 16-page booklet produced at Kinko’s, but
it was a start.
“We got on the phone and started selling memberships,” says Aksoz.
Eventually, the pair sold several hundred memberships that brought in enough
revenue to pay salaries and rent. Still accommodations were scarce. Aksoz and
Giombetti had to share the same desk and the same computer.
With no outside funding except for a small line of credit, BBN grew using
internally generated funds, and, Aksoz adds, through “a lot of blood, sweat, and
tears.” He remembers many times when he and Giombetti would work straight
through the night trying to assemble the publication on an antiquated 286 PC.
(He says he stopped pulling all-nighters after he got married and and the first
of his four children was born.)
It did not take long for Aksoz to realize, however, that his initial business
idea was flawed. Although subscribers wanted the information, they weren’t
willing to pay for it. So by 1993 the company transitioned over to an
advertising-based revenue model. “You have to be flexible, if something doesn’t
work you, you can’t stick with it,” Aksoz observes.
As part of that change in strategy, the company added a sales person and
began including articles to add value to the business listings. “As long we
we’re going to these buyers, sellers, and brokers of these businesses,” Aksoz
says, “we figured we’d add a couple of articles from people that are dealing
with the industry—attorneys, CPAs, brokers, and bankers—about legal
implications, tax ramifications, financing, etc.” The title of the publication
also changed to Minnesota Business Opportunities to reflect the changes in
content.
“It was a classic, classic start up,” remembers Giombetti, now the director
of communications at shopping network Value Vision. “I remember largely we
settled our editorial calendar based on things we were going through at the time
and didn’t know.”
The publication ballooned to 40 pages, with the business listings becoming
just a small part of the entire magazine. The subscriber base steadily
increased. Yet with no budget for marketing or buying mailing lists, finding new
subscribers was no simple matter. “We would get in the car and distribute it
door-to-door sometimes,” reminisces Aksoz, “or put them in racks out front of
grocery stores.”
Printed in black and white on newsprint paper, Aksoz acknowledges the
publication had a humble started. But he views that as working to his advantage.
“We were in a market that was already dominated by the (now defunct)
Corporate Report and Twin Cities Business Monthly,” says Aksoz. Plus, Minnesota
Ventures magazine was in the market as well as CityBusiness. Not to mention the
dailies, including Finance and Commerce.
BBN’s strategy was to run silent and deep. “My philosophy at that time was to
not make waves. We wanted to fly under the radar so nobody paid any attention to
us until we built this thing up,” explains Aksoz. “And even though we had
advertising and we were gaining momentum, I think our competitors may have
looked at us and thought, ‘Well it’s just newsprint, and pretty amateurishly put
together, they’ll never make it.’” But Aksoz had other plans.
Turning the Corner
Aksoz had decided to turn his publication into a
“full blown magazine that would have its own niche and dominate that niche in
this marketplace.”
The first big step in that direction was when the company placed its first
business personality on the cover in September 1993—former U.S. senator Rudy
Boschwitz. “We decided we were going to deal with individual personalities and
how they affected their organization,” remarks Aksoz. “I’ve always been
interested in discovering how other entrepreneurs began and what strategies
they’ve used to achieve business success.”
David Neiman, an independent commercial photographer, who shared an entryway
with the then nascent BBN, was asked to shoot the cover photo of Boschwitz. From
that point on, Neiman has shot all of the magazine’s covers. “Kenan definitely
shifted gears in his attitude toward the magazine to bring it to another level,”
notes Neiman. “It wasn’t an evolution. It was more of a revolution.”
By focusing on Minnesota’s business leaders, a new framework was created in
which to shape the publication. Aksoz admits, however, that it took awhile to
make significant strides in the new direction. “It took us a good four or five
years to perfect it,” comments Aksoz. “You’ve got to remember, I’ve always had
other full-time careers going. So it took us longer than it should have.”
In addition to running BBN, Aksoz also worked full-time as a business broker,
owned and operated a family entertainment company, partially owned and partially
owned a pair of convenience stores, and helped to expand his family’s chain of
tailor shops.
Thinking back, Aksoz realizes how crazy it was to be juggle so many
businesses at the same time. “I was an eternal optimist, I thought I could
handle everything.” But, he adds, that he might have given up if he would have
known better. “Being naive is sometimes the best thing you can have going for
you, because then you don’t have any fear. Fear of failure is not there.”
Experience has taught him the err of his ways. “Now, knowing what I know, I
think what keeps me going is fear of failure.”
That’s not to say failure did not nearly claim BBN anyway.
“In 1996, resources were running low, and we had key people jumping ship to
the competition,” remembers Aksoz. “The company was basically thrown into a tail
spin.” But he says he was too stubborn to give up.
“I just kept constantly asking myself, ‘We’re competing with these giants, so
we have to come up with a better product, we have to come up with a better way.’
If it didn’t get any better, we were dead in the water because the product was
not there yet. So unless it’s improving, and people were looking forward to a
stronger product in the future, we had nothing to offer at that point.”
At every opportunity, he says, the company worked to enhance the magazine by
improving the paper quality, hiring new editorial writers, and investing more in
design. For that reason, Aksoz is thankful for the competition—friendly or
otherwise. Such changes also were personally gratifying for Aksoz.
“I have very low tolerance for boredom,” he confides. “If I find myself in a
place where I don’t want to be because I’m bored, you couldn’t pay me enough to
stay there. I have that same mentality with the magazine. I had to make it
different on a monthly basis, whether we were changing to new paper, updating
our look, adding new articles, or redoing the whole book. I made sure something
changed periodically so that I felt like I was creating, I was growing, I was
developing.”
Kathleen Nye-Reilling, principal of Colliers Towle Real Estate, who recently
joined MinnesotaBusiness’ editorial advisory board, has watched the change take
place through the years. “It used to be more for businesses for sale, and it
seemed to concentrate on just the mom and pop businesses. I think today it’s a
sophisticated magazine. I think it’s very much in tune with the entrepreneurial
and the young and growing business market.”
“I think MinnesotaBusiness has grown tremendously in how seriously it takes
its own journalism,” comments Mason. “I think that it has been a very enduring
representative of emerging companies. It identifies the companies that are going
to make it, and gives them early coverage. I give the magazine tremendous credit
for that.”
Leaner and Meaner
In addition to striving to improve the look and
content of the magazine, BBN also sought to broaden its strategy by expanding
its product offerings.
“We wanted to have a 360-degree interaction between us and the reader,”
explains Aksoz, “which would come from the print product, face-to-face, and the
Internet.” So in 1997, the company began organizing a series of business social
events called After Hours to enable live interaction with readers of the
magazine. The company also secured its “minnesotabusiness.com” domain name
(though the company would not go live with a site until 2000).
In addition, the company began a rebranding campaign, changing the name of
the magazine to MinnesotaBusiness Magazine and establishing BBN Publishing as an
umbrella organization. The necessity for this move came when the company began a
custom publishing division.
The logic behind the expansion was simple—capacity utilization. As editorial,
sales, and production operations became more efficient, less and less time was
needed to produce each publication. Plus, the company made use of new
technologies to eliminate film from the production process, which was time
consuming and expensive, and converted over to computer-to-plate, which meant
shorter printing cycles by sending only digital files to the printers.
The improvements freed up BBN’s resources, opening up the possibility of
taking on new projects. The niche the company chose to focus on was developing
magazines for local chambers of commerce as communication vehicles to its
members. It also made sense because it complemented the company’s existing focus
in business-to-business communications.
The firm’s most successful chamber publication to date has been Business
Central, which it produces in cooperation with the 1100-member St. Cloud Area
Chamber of Commerce.
Teresa Bohnen, president of the St. Cloud Area Chamber and an editorial
advisor to MinnesotaBusiness, attributes the growth of Business Central to a
previous lack of coverage on issues impacting businesses in central Minnesota,
which can diverge from business interests in the metro area. There’s also the
factor of St. Cloud’s independent character.
“There are a lot of people in St. Cloud that think we are just going to
become a big suburb of the Twin Cities,” notes Bohnen. “I don’t think that’s
going to happen… There’s a lot of autonomy, and a lot of tradition tied up in
our area. The magazine gives us an outlet to maintain that identity.”
Shifting Gears
In addition to expanding its product offerings, BBN
refined the editorial focus for MinnesotaBusiness Magazine. Moving from a
concentration on start-up and early stage companies, BBN began targeting the
leaders of growing companies. The intellectual catalyst for the move came from
ideas being developed at the University of St. Thomas, Institute for Strategy
Management.
As a company evolves, it passes through several distinct phases. In the
start-up stage, companies are focused on survival. Little organizational
structure exists within such companies because little is needed—decisions are
made and executed by the same individuals. Planning and strategy is limited to
rough outlines that can change frequently as start-ups seek to find a stable
position in the marketplace.
After a company emerges from such a phase, they enter a growth stage in which
the company has solidified its strategy and established its target markets. The
main concern of a growing company is finding a way to execute on its strategies,
for example, through adding employees, developing alliances, or acquiring new
technology, as well as planning for the future to ensure continuing growth.
Seizing on these key differences, BBN Publishing began adjusting
MinnesotaBusiness Magazine’s content to appeal to leaders within such
organizations. The reason was simple, says Aksoz, “We felt the audience
advertisers would want to go after were the companies that were growing fast. In
the start-up phase, most of these companies have no money to spend on anything,
they’re bootstrapping.” It also made sense because BBN was undergoing the
process of changing over to a growing company.
Peter McNiff, the former group publisher at BBN Publishing and now an
associate publisher with Minnesota Monthly Publications Inc., observes, “I think
that the magazine as a company lives the message it puts out in the magazine… It
lives the emerging company story, it lived [the transition] from entrepreneurial
to professional.” (That was one reason McNiff says he left his position at
Corporate Report and Ventures to join the company in 1999.)
Novak notes the company’s enterprising character: “MinnesotaBusiness Magazine
provides an example of entrepreneurial initiative. It got started at what was
outwardly an impropitious time—it was a crowded market, the economy was not very
strong, and, by looks of things, it was not particularly well capitalized…. Yet,
for years, from the time it was started on forward, there were steady
improvements in quality.”
McNiff also points out the importance of the timing in changing the editorial
focus. “We wanted to expand the size of the readership and expand the market
share of the product at a time when you saw CityBusiness’ circulation declining,
Corporate Report going away, and the editorial flavor and format of Ventures new
to the market. I think that was an ideal time to make BBN Publishing more
visible in the market.”
Pushing ahead
So far, Aksoz believes the shift has been successful,
enabling the company to continue growing revenue at about 30 percent a year and
is projected to rise to more than $2 million in revenue in 2001. To augment that
growth, Aksoz says BBN will begin placing greater emphasis on the online and
events portion of its product offerings.
To that end, the company developed an online presence with
MinnesotaBusiness.com to complement the printed product. And BBN recently hired
a dedicated marketing and events manager to increase the frequency and quality
of its events, which for the past three years consisted of bi-monthly After
Hours business social events. “We’re redeveloping it to make it a lot more
relevant to our readers as well as make it a must-attend event where companies
will want to exhibit their products and services.”
For his part, Aksoz says he’s grown as BBN Publishing has grown. “One of the
key things I’ve learned over the last ten years is you must focus.” So Aksoz has
divested himself of his other businesses and now runs just two companies—BBN
Publishing and Aksoz and Company, his mergers and acquisitions firm.
He notes that, rather than dividing his attention, his M&A firm has
benefitted his publishing company. As Aksoz and Company has expanded from
handling small transactions to large, complex deals, his business experience and
knowledge has grown accordingly. And he says he’s been able to apply that
real-world understanding to enhance the magazine and grow BBN Publishing.
In the near future, Aksoz says BBN Publishing may expand its product
offerings through acquisitions of other business-to-business or
business-to-consumer publications, or through internal start-ups. He also sees
potential opportunities in custom publishing. As for the possibility of a
recession, Aksoz retains a sanguine outlook, noting that he started BBN at the
height of the 1991 recession. “And there’s still plenty of market share
available for us to take.”
What are Aksoz’s ultimate goals? He says he’s keeping his exit-strategy
options open. But whether that is selling-out or passing on the business to a
successor, he won’t do it prematurely. “I’m still young, and I’m still
learning,” Aksoz says. “And I’m more determined now than ever before to drive
this company to its full potential.”
Mark Druskoff editor@minnesotanusiness.com" is
managing editor of MinnesotaBusiness Magazine.
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