The history of MarketWatch: How a sports data startup became a half-billion-dollar financial news site

MarketWatch was born as DBC Online, inside of Data Broadcasting Corp., in the fall of 1995. After DBC bought a sports data and information business that I had bootstrapped with friends-and-family money, it agreed to take me on to run the business and expand it to do the same thing for financial news.

It wanted a financial news and data business to support its existing real-time portable stock-quote product, QuoTrek. Then, as the internet emerged as a commercial reality, DBC agreed to let me to spin our fledgling business out as a separate internet-based company that it would half-own.

We agreed we needed a media partner to help expand financial news into an advertising-supported business, and that ambition set us on a course for a watershed event that was to come in the autumn of 1997.

More on MarketWatch’s 20th anniversary — Oct. 30, 2017

QuoTrek was the only portable device, in the early ’90s, that transmitted real-time quotes. It preceded popular adoption of the internet. It used, believe it or not, the FM sideband to transmit those market quotes to a hand-held device. It did that by injecting the live feed of quotes from the market ticker into an FM radio signal.

To transmit that signal, it had to piggyback on the signal of an FM radio station in every market. DBC would pay each station a fee to inject its signal into the head end. So about 5% of the FM broadcast signal was devoted to data, not sound.

The QuoTrek customer would have a hand-held device — which looked like a large calculator or, had the BlackBerry existed at the time, an oversize model — but was actually an FM radio receiver with a crude data screen instead of a speaker. The screen was populated by live quotes on the stocks the consumer had entered with a keypad on the unit.

DBC, based in San Mateo, Calif., was the only profitable business run by a company that had several financial-services businesses back at its New York headquarters, including an ill-fated financial TV operation called the Financial News Network, or FNN, which would later be sold to CNBC after Dow Jones failed to exercise an option under which it could have purchased the network for a song. Years later, Dow Jones regretted its decision, with CNBC’s acquisition of FNN often credited with turning CNBC into the hugely profitable financial powerhouse it became.

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At this point in the story, it’s important we remember some things about the late ’90s. Individuals were leaving their stockbrokers in droves and starting to invest through online brokers like E-Trade
and Charles Schwab

More than a few of these investors had come to believe that their brokers weren’t helping them and, in fact, were often steering them to investments based more on the profit that would accrue to the broker than the investor’s prospects for capital growth.

So there was this growing hunger for the kind of information that brokers had: real-time market data, research and news about stocks, along with investing advice. Up until then, all that information could only be found, in real time, on very expensive terminals that were used by brokers and professional traders.

Reuters, Bloomberg and Dow Jones all had their own terminals for professionals, and they cost between $1,000 and $2,000 a month, well out of reach for most individual investors, and the stock exchanges charged additional fees for rights to their real-time data.

The only options for consumers who craved real-time data effectively were the QuoTrek and its sister business, Shark, which had begun to channel that data into the nascent world of home personal computing by first connecting an FM receiver to a computer, and later by injecting the data into a cable TV feed which could also be connected to a PC.

We built the MarketWatch newsroom first to serve those DBC customers over the FM Sideband and cable feeds. The customer could have one of those terminals or portable devices for a few hundred dollars a month, considerably less than the big guys’ prices but still much too expensive for the average home trader.

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Meanwhile, all three larger purveyors of real-time, market-driving financial news, had their news streams on those professional platforms. Consequently, when the internet came along as a distribution stream into personal computers, and we started to build a news operation to cover real-time market news for consumers, we were one of the only serious news and data operations that would put real-time news on a real-time platform and make it available to the general public for free. Our belief was that there was now enough advertising to support such a business.

Reuters, Dow Jones and Bloomberg were reluctant to put their information out for free on the internet in the late 1990s or even in the early 2000s, when the huge number of at-home day traders began to drive the market. Their existing $1,200- or $2,000-a-month subscribers would revolt if the news they were getting was suddenly available for free to anyone who wanted it.

Timing is everything when you’re an entrepreneur.

The opening left by the incumbents gave MarketWatch — first under the DBC Online brand name — the opportunity to serve a rapidly growing market comprising, in large part, these at-home traders. And advertising, particularly from the new and growing category of online brokerages, provided the revenue to fund a first-class news operation, whose output could be made available to the public for free.

So on an October morning in 1997, at CBS
headquarters in Manhattan, we announced the creation of a new company called, converting the thousands of online pages that constituted DBC Online to CBS MarketWatch, piping a freshly hatched CBS brand into an existing audience of a couple of million monthly unique users.

We experienced — and endured — everything the early internet era had to throw at us, including a crash of the site at the very moment we were introducing it to the public at CBS headquarters, causing, for me, an interesting exchange of glances with CBS News President Andrew Heyward, who’d joined me on stage for the announcement. Fortunately, we were able to drag the announcement out long enough for the techies to get the site back up. The planned demo at the end of the event was a success. Andrew became a critical supporter, friend and board member at MarketWatch for the next decade.

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And I was allowed to live.

At that moment, the company became half-owned by CBS and half-owned by DBC, with the employees getting options on 10% of the company (5% contributed by each partner). For its 50%, CBS gave us no cash, providing instead $50 million in promotion on the CBS television network and the right to use the CBS “eye” in our branding and marketing as CBS MarketWatch. It was a deal that ultimately worked for everyone.

Eighteen months later, we took the company public on the Nasdaq in one of the most storied IPOs in history. We had embarked on the pre-IPO roadshow estimating a pricing of the offering at $10 to $12 a share, went public two weeks later at $17 a share, and the stock hit $130 a share on the first day of trading, settling back to $97 a share at the end of the day. At that moment, with about $7 million in annual sales, we owned a billion-dollar market cap.

Seven years later we were sold to Dow Jones for $528 million, and less than three years after that Dow Jones was itself sold to News Corp

MarketWatch founder Larry Kramer went on to serve CBS Corp. in various roles, including president of CBS Digital Media. He later became president and publisher of USA Today and is today the chairman of TheStreet Inc. He is a board member of Gannett Co. He serves on the board of trustees at his alma mater, Syracuse University.

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