Return to Virginia Business - May 2002

by James A. Bacon
Publisher and Editor in Chief

Click image to enlarge

Virginia Business was a bubble baby, born in the mid-1980s. Virginia, along with the rest of the nation, was undergoing the biggest commercial building boom in its history. Generous tax breaks and ill-conceived banking regulations combined with the strong economy to stimulate a frenzy of construction. Awash in cash and convinced the good times would never end, banks, S&Ls and developers spent lavishly on building their brands.

Regional business publications were among the beneficiaries. Weeklies and monthlies popped up in cities and states around the country. In Washington, D.C., the fastest-growing real estate market in the country, Regardie’s magazine celebrated “Money, Power, Greed” in a monthly, ad-packed tome the size of a small phone book. Media General Inc., owner of the Richmond Times-Dispatch and other media properties, saw an opportunity to create a comparable publication covering business across the state of Virginia.

In late 1985, James L. Dillon, a Media General vice president, took on the task of launching Virginia Business. A former Marine and newspaper ad man, Dillon did not know much about magazines, but he possessed boundless energy and limitless self-confidence. He hired me that fall as editor of the start-up team. Having grown up in Washington, D.C., and Norfolk, I’d covered the textile and furniture industries for the Martinsville Bulletin and written about coal and railroads for the Roanoke Times & World-News. But he still took a big chance: at 33, I had limited editing background and supervisory experience.

The atmosphere was one of feverish excitement, much like a dot-com launch. Young, enthusiastic and largely clueless, we figured out what were doing as we went along. Backed by Media General’s resources, we had plenty of cash including a full-sized staff and a travel budget generous enough to fund reporting trips to Japan and Israel. We had all the editorial space we wanted, color on every page, and ample funds to pay the best illustrators and photographers to make the best use of it.

We turned out some great magazines, too. The first issue, March 1986, featured Norfolk Southern CEO Robert Claytor on the cover. In issue after issue, we profiled the CEOs of the leading companies across Virginia. It was Dillon’s conviction that putting the mugs of Virginia’s top executives on the cover of the magazine would give us entre into any boardroom in the state. And it did.

What Virginia Business didn’t do back then, though, was make money. The market wouldn’t support a magazine with our overhead. When the 1991 recession slammed the door on lucrative real-estate advertising, we began losing money on a scale worthy of a dot-bomb. Reacting with characteristic energy, Dillon moved to bring our costs in line with revenues. Laying off our writers, we repositioned Virginia Business as a publication written mainly by free-lancers under the supervision of staff editors, following the business model pursued by most other state and regional business magazines. The overhaul worked and we became profitable. Virginia Business survived.

Jim Dillon did not. He’d been fighting cancer for several years, disappearing for treatment with no explanation, then reappearing all fired up and ready to go. By 1994, the cancer had spread to his liver. Undergoing round after round of grueling chemotherapy, he returned to the magazine each time weaker than before. Around the Christmas holidays, he slipped into a coma and we thought he would die. But the gutsy, old fighter wouldn’t let go. Convalescing at home, he’d work the telephone, peppering the staff with questions and suggestions.

Running Virginia Business literally gave Dillon a reason to live, and he held on for a half year. The last time I saw him, three days before he died, he sat in the sunroom of his home, pallid, shriveled, swallowed by his bathrobe. His voice was weak but firm, his eyes as steely as ever. He’d arranged his succession, appointing me as publisher to run the magazine with Michael Thomas, our business manager, as second in command. As I stood up to leave, he gave me one piece of parting advice. Knowing my infatuation with that new-fangled technology called the Internet, he said, “Don’t waste your time. It’ll never last.”
As I recall those words, I shake my head in wonderment at how wrong Dillon was. Yet, if he were around to watch Virginia Business today, I sometimes think, he would have gotten the last laugh. The Internet is here to stay. But few in the media business, including Virginia Business, have figured out how to make it profitable.

Click image to enlarge

Magazine editors don’t normally find themselves on the publisher track. But I enjoyed traveling around the state, meeting people, and putting together what we in the trade refer to as “special sections.” I’d identify groups who were willing to partner with us to publish reports on narrowly focused topics. It wasn’t the enterprise journalism we’d done in the 1980s, but we did tackle subjects that other media were neglecting, particularly in the fields of economic and community development. To give me visibility, Jim Dillon had promoted me to associate publisher in 1991. Although he had his reservations, he deemed that I had potential as publisher, particularly if my enthusiasm and optimism were tempered by Thomas’ caution and judgment. In mid 1995, I took control of Virginia Business determined to build upon its newfound profitability.

The booming economy helped. Revenues rebounded, and Virginia Business kept a tight lid on expenses. For the first time ever, we enjoyed healthy profit margins. But the job didn’t get any easier. Competition in the business-to-business arena intensified. New publications sprang into existence, targeting our customers with lower rates. A proliferation of regional conferences and trade shows gave business advertisers the option to brand themselves by buying “sponsorships” rather than ads. Exploiting the plummeting cost of administering databases, businesses began communicating to customers and prospects through targeted newsletters and direct mail. And, of course, everyone was putting money into the World Wide Web.
By the late ’90s, it became obvious that we couldn’t do business as usual. When we’d started in 1986, we were the niche publication. Now we represented the stodgy status quo. It was time to shake things up again: We had to rebuild our reputation as a must-read publication. That meant running more articles, making them shorter and punchier and giving the editors more latitude to pursue enterprise stories. We were ready to embark upon an overhaul when our executive editor, Karl Rhodes, took a promotion to corporate Media General. In his place, we hired Peter Galuszka, a Business Week editor, to carry out the mandate.

Bringing fresh perspectives from one of the world’s premier business publications, Peter came on board in the spring of 2000. Within short order, Virginia Business was publishing timely, harder-edged stories packaged in a more reader-friendly format. Readers responded favorably.

Unfortunately, the changes coincided with the dot-com crash in 2000, then the recession in 2001. Virginia Business ad sales tanked. Magazines around the country, including some of our local competitors, were folding. We had to cut costs, but sacrificing editorial quality was not an option — businesses simply had too many alternatives for reaching our audience, Virginia’s business leaders. If we ceased to be a “must read” publication, we’d cease to be a “must buy.” The proudest accomplishment of my business career was guiding Virginia Business through 2001, the worst year for magazines since World War II, according to The Wall Street Journal. We managed to stay in the black while maintaining our commitment to editorial excellence, and we’ve emerged stronger than ever.

By March, it was clear that Virginia Business would survive the storm. I announced my resignation, effective in May, in order to pursue a long-held dream of starting my own publication. I never could afford to start a magazine the way we launched Virginia Business, but I figured I could create an electronic op-ed page for the state of Virginia in the form of a Web publication, or “e-zine.” Resurrecting my old “Bacon’s Rebellion” column, I will explore issues related to state-local governance, economic development and community revitalization. I won’t have Media General’s deep pockets to dip into or venture capital to support me. I won’t be hiring expensive P.R. firms or giving any launch parties. I’ll run my “new economy” business the old-fashioned way: working long hours out of my basement office.

From my vantage point at Virginia Business, I’ve made a career of observing Virginia’s economy and business community. Here, I offer a few parting insights into the health and vitality of our commonwealth:

• It’s the global economy, stupid. Eco-nomically advanced nations such as the U.S. are evolving into service econ-omies that encompass higher-value functions such as product design, finance and marketing. Manufacturing functions are moving to industrializing nations such as Mexico, Brazil and China. Two results are the devastation of Virginia’s mill-town economies and the proliferation of warehouse-and-distribution centers supporting the import of Far Eastern goods. By chasing manufacturing investment, Virginia’s economic developers are targeting a shrinking share of the economy and neglecting those areas with the greatest potential. Virginians need to re-think their approach to economic development.

• Don’t recruit technology — apply it. During the 1990s, Virginians got the tech bug — as did every other state in the union. Rather than recruiting out-of-state tech companies, however, we should focus on applying technology to give existing businesses a competitive advantage. Consider how Capital One used technology to revolutionize marketing in the credit card industry, Owens & Minor to turbo-charge distributing hospital supplies and Circuit City to reinvent the sale of used cars.

• Human capital trumps financial capital. In the Knowledge Economy, money follows knowledge. Scientists conducting cutting-edge research have no trouble attracting research funding. Executives and entrepreneurs with successful track records have no difficulty finding venture capital. Virginia needs to switch gears from recruiting corporate investment to luring world-class research scientists and managerial talent. If the talent comes, the capital will follow

• Our government structure is out of whack. The structure of local government borders on the dysfunctional. Virginia’s years’-old system of counties and independent cities made sense when there was a clear demarcation between urban and rural areas. But hop-scotch, low-density development now sprawls across multiple jurisdictions, breeding traffic congestion, ballooning housing costs, stressing the environment and creating inefficiencies in the delivery of government services. Throwing tax dollars at these problems is a bad idea unless we address the pattern and density of growth.

As I look back, I’m grateful for the opportunities given to me. I’ve enjoyed making friends in every corner of the state. I take away a deep respect for the creativity and professionalism of my colleagues at Virginia Business. It sounds like such a cliché, but it’s unavoidable: They deserve the credit. I think the big thoughts — they do the work. Most of all, I treasure my association with the Old Dominion. I love this state, and I love the people who live here. This is my home. If I can play some small role in making it a better place to live, do business and raise a family, then I’ll count my career as one well spent.

You can get on the email distribution list for Bacon's Rebellion by sending your name and email address to jabacon@attbi.com.

Return to Virginia Business - May 2002