The Motley Fool, Inc.

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The Motley Fool, Inc.

123 North Pitt Street
Alexandria, Virginia
Telephone: (703) 838-3665
Fax: (703) 684-3603
Web site:

Private Company
Incorporated: 1994
Employees: 375
NAIC: 51331 Wired Telecommunications Carriers (pt)

The Motley Fool, Inc. offers personal financial advice and investing strategies to readers through a variety of media. The company maintains a presence online through America Online and through its own web site,, which attracts more than two million visitors per month. Its founders, brothers David and Tom Gardner, reach millions of readers through books, nationally syndicated newspaper columns, and weekly radio shows. The company also operates a web site for investors in the United Kingdom, located at


The multimedia blitzkrieg of personal finance information launched by brothers David and Tom Gardner began modestly, receiving only tepid response from the public. In July 1993, the Gardners, along with a college friend, Erik Rydholm, created a 16-page print newsletter that combined investing information and humor written for the individual investor. The unusual slant of irreverent stock advice was published under the banner The Motley Fool, an investment guide geared for the layperson and produced by unabashed novices in the arena of investment analysis.

The title of the newsletter was drawn from a line in Shakespeare s As You Like It: A fool, fool! I met a fool i the forest, a motley fool. It was a fitting reference considering the background of the newsletters writers. David and Tom Gardner were English majors at college, neither with any formal training in finance, but both were convinced that their approach to personal investment would attract a broad audience of aspiring investors. In Elizabethan literature, the fool was the one person at court who could speak truthfully to the king without fear of losing his life. David and Tom Gardner, iconoclasts wearing jester caps, perceived themselves as the fools of Wall Street. They would teach and amuse, and along with their audience, learn the secrets of investing.

The elder of the two Gardner brothers, David, graduated as a Morehead scholar from the University of North Carolina in 1988. At Chapel Hill, David majored in English, while his brother studied English and creative writing at Brown University, graduating with honors. Rydholm attended Brown University as well, earning a degree in political science in 1989. David Gardner eventually began writing for a financial newsletter, Louis Rukeysers Wall Street, before he teamed with his brother and Rydholm to create the first issue of The Motley Fool Initially, the trio developed a list of potential subscribers by using wedding lists gathered from their friends and relatives. A mailing list was created and sample issues of the newsletter were sent to those on the list, along with an invitation to subscribe. Few chose to do so, but the young entrepreneurs persisted. Working out of David Gardners house, the partners published 12 monthly newsletters before they abandoned the project, never gaining more than 300 subscribers.

Debut of America Online Forum: 1994

Their first attempt failed, but the Gardner brothers soon found another medium to explore. In November 1993, Tom Gardner posted a note in the personal finance area maintained by Internet service provider America Online (AOL). He provided his telephone number and offered free copies of The Motley Fool newsletter. By the following day, three messages were on his answering machine, one from Texas, one from Maine, and one from Minnesota. Sensing an opportunity to reach a large audience with their offbeat approach to investing, the Gardners set up a message board on AOL to serve as a forum for exchanging investment information. They explained they were novices, but offered to answer any questions anyone might have, and encouraged others to offer any advice of their own. By February 1994, the Gardners bulletin board had become the most popular personal finance site on AOL.

Officials at AOL noticed the popularity of the Gardners site and invited the brothers to establish an official presence on what ranked as the countrys leading online service. The invitation came with a modest sum of start-up moneyless than $10,000 enabling the Gardners to move their operation into the ground floor of a townhouse in Alexandria, Virginia. More computers were purchased and employees were hired, as The Motley Fool took on the trappings of a legitimate business. The forum, in its new, official guise, debuted in August 1994 and quickly became a haven for those pursuing financial independence. The electronic conversations and the writings of the sites editors centered on the demystification of investing, on tearing down the barriers that distanced the ordinary investor from Wall Street. In a July 1997 interview with Entrepreneur magazine, David Gardner explained The Motley Fool perspective.When we began, he said, we looked at Wall Street, and what we perceived was a huge world that had gotten rich managing other peoples money because people didnt know what to do with their money. There was no incentive for the institutions to teach them. If they taught them, people would stop paying fees. Wall Street has many such conflicts of interest, where its interests are not fully aligned with the customers it is serving. Thats why its both easy and powerful to teach people about investing.

Starting with 60 readers its first day, the forum on AOL quickly flourished, spawning the establishment of the Gardners own site, (later shortened to Aside from offering advice and managing the flow of questions and answers on the forum, the Gardners established the Fool Portfolio, a collection of stocks funded with $50,000 of their own money. Later renamed theRule Breaker Portfolio, the assortment of stocks served as the testing ground for the techniques, theories, and strategies explored by the Gardners and the online investment community that was gathering around them. Usersthe fellowFools who participated in the forums and frequented the web siteswere invited to watch and learn from the companys own mistakes and successes, an opportunity that an increasing number of investors chose to take.

For their first year as system operators running a forum, the Gardners anticipated annual revenues of $25,000. Their projection was based on their percentage of the $2.95 hourly rate AOL charged visitors to the forum, but the brothers soon found their popularity fueling grander expectations. AOL itself was recording mushrooming growth, its subscriber rolls swelling month by month, and the financial markets were beginning to demonstrate unprecedented vitality, attracting more and more individual investors. Allied to both of these powerfully growing phenomena, The Motley Fool was swept up into the frenzy, feeding the insatiable appetite for up-to-the-minute financial information and stock tips. By mid-1995, the Gardners had added three new forums on AOL, which increased revenue estimates to $1.5 million. The success of the Rule Breaker Portfolio, whose eight stocks were up 22.5 percent by May 1995, led the company to establish additional portfolios that served as case studies for a variety of investing strategies. A half-dozen teach-by-example portfolios were created, bearing titles such as theBoring Portfolio, which was created in January 1996 to illustrate a more conservative approach to investing.

As the depth of The Motley Fools online presence increased, so too did the breadth of the Gardners burgeoning business empire. Through the Internet, the brothers had gained the attention of a large audience of individual investors, which led them to introduce their signature blend of humor and investing advice through a variety of media formats. Beginning in 1996, the brothers began writing books through a partnership with publisher Simon & Schuster. The first book, The Motley Fool Investment Guide, became an unmitigated success, ranking as a New York Times bestseller. During the next three years, two more books were published, You Have More Than You Think and Rule Breakers, Rule Makers, both of which were also New York Times bestsellers. The Gardners publishing success spawned the creation of a line of self-published titles released under the Fool Publishing label, representing one facet of the Gardners smorgasbord of personal finance information.

After the publics embrace of The Motley Fool Investment Guide, the Gardners unique perspective was fed into other media channels. Nationally syndicated weekly newspaper features debuted in 1997, giving The Motley Fool a ubiquitous presence in many of the countrys newspapers. Three years after the Gardners began writing weekly columns, more than 170 newspapers across the nation featured the instructive writings of The Motley Fools editors and analysts. One year later, in 1998, a joint venture with Cox Radio led the way for a nationally syndicated radio show, The Motley Fool Radio Show, which over the course of the ensuing two years was broadcast every weekend on more than 120 radio stations nationwide. In 1999, the company added yet another tributary to its broadening flow of information and advice, launching The Motley Fool Monthly magazine.

The Motley Fools online activities intensified during the late 1990s as well. The company reached overseas for the first time in 1998, when Motley Fool UK was established. Designed specifically to meet the investment and personal finance needs of the United Kingdom, the site,, was established on AOL UK and found a receptive audience. Visitors to the site reached into the millions within a matter of months, prompting the company to hatch plans for a German site, which was expected to launch in 2000. The Motley Fool also began diversifying as it expanded, including a foray into mortgage services. In 1998, the company announced an agreement with E-Loan, the leading online mortgage marketplace, to provide online mortgage services through a co-branded Mortgage Center. The exclusive two-year agreement provided Fools with access to services such as customized loan recommendations, mortgage quotes, online applications, and rate comparisons, enabling users to electronically shop for the best price among local and national lenders.

Company Perspectives:

The Motley Fool is here to Educate, Amuse, and Enrich you.

A New CEO for the Future

As The Motley Fool prepared for the end of the 1990s and its future in the new century, it did so with a new chief executive officer. The company began looking for a new strategic leader in July 1999, hoping to find someone able to steward the company in its new, multifaceted form. The search lasted ten months, ending with the arrival of C. Patrick Garner, a former senior executive with the Coca-Cola Company. Garner boasted three decades of experience at Coca-Cola, figuring as one of the companys leading business and marketing strategists. His arrival at The Motley Fool occurred at a critical juncture in the companys history, taking place just as the countrys financial markets were beginning to show less robust signs of growth. The frenetic growth of the 1990s had fueled The Motley Fools remarkable rise to prominence, but many observers wondered whether the company could continue to proliferate as a brand during a market downturn. Such was the challenge facing Garner as he assumed control over the company in mid-2000, and the early evidence showed that the challenge was daunting.

At roughly the same time Garner began his tenure at The Motley Fool, the company announced the launch of Debuting in August 2000, was an online venue that allowed anyone to post investment research reports for sale. After a promising start, the forum quickly sputtered, failing to realize expectations because, critics contended, the quality of the investment reports was poor. was shut down in February 2001, its failure just one of the casualties suffered by The Motley Fool that month. The companys attempt to establish a Germany-based operation also was scuttled, ending a year after it began because the company was unable to find a local partner. The most distressing news of the month affected the entire organization, providing a clear signal that the rampant confidence of the 1990s had begun to wane. The Motley Fool announced it was reducing its staff by one-third because advertising revenue was declining. At the companys Alexandria headquarters, 109 jobs were eliminated as well as another six positions in London.Were adopting an old economy approach to profitability, a company spokesperson told the Financial Times on February 9, 2001.

As The Motley Fool prepared for the future, the events of early 2001 signaled the beginning of a new era for the company. Continued success depended on its ability to thrive amid declining market conditions and ebbing investor enthusiasm, which threatened to drain the company of its remarkable vitality. With Garner plotting the companys next strategic moves, however, The Motley Fool stood well positioned to progress positively through the transition and to remain a prominent fixture in the media.

Principal Subsidiaries


Principal Competitors

Raging Bull, Inc.;, Inc.; Yahoo! Inc.

Key Dates:

The Motley Fool forum debuts on America Online.
The Motley Fool Investment Guide, the first of a series of books, is published.
Nationally syndicated newspaper columns first appear.
A web site for U.K.-based investors is established.
C. Patrick Garner is hired as chief executive officer.

Further Reading

Brothers Find Fools Gold Mine, Tennesseean, March 2, 1998,p. 1E.

Cohen, Adam, A Chorus of True Believers, Time, June 17, 1996,p. 48.

Graves, Jacqueline M., All Systems Going Green for Sys-Ops, Fortune, May 15, 1995, p. 28.

Harper, Philipp, A Fools Paradise, Forbes ASAP, February 19, 2001, p. 75.

Jenkins, Patrick, Motley Fool Sheds a Third of Its Staff, Financial Times, February 9, 2001 p. 29.

Keating, Peter, When Fools Are Bored, Wise Men Should Worry, Money, April 1998, p. 31.

McGarvey, Robert, Only Fools Cash In, Entrepreneur, July 1997,p. 110.

Motley Fool to Launch, Financial Net News, May 8, 2000, p. 7.

Jeffrey L. Covell