How Morningstar was Born

In the early 1080s, mutual funds were a relatively small phenomenon, and there was no single source of information on them-performance, holdings, and the like. The only way to get that information was to order each fund's prospectus individually, which Mansueto did. One night in his one-bedroom apartment at Clark Street and Wrightwood Avenue, as he looked through all those prospectuses spread out across his dining room table, the idea hit him.

I thought, Boy, wouldn't it be really interesting if somebody compiled all these things into a compendium, so I wouldn't have to make these calls every three months? Mansueto says. Gee, maybe this could be a business. You could publish a book on mutual funds with comprehensive information, with the goal of helping investors make better decisions about the funds they were buying.

And so Morningstar was born.

The vast majority of its revenue-$168.6 million-now comes from licensing its data and ratings to financial advisers and institutional clients such as Charles Schwab, Merrill Lynch, Fidelity Investments, Goldman Sachs, and J. P. Morgan Chase. (this was in 2006)

One good lesson Joe took away from Buffett in starting Morningstar was developing a thesis on what is a good business-and publishing is a good business,

Source: The Quiet Billionaire