The first issue of Crain's Chicago Business is dated April 17, 1978.[2] In 1977, when Crain Communications chief Rance Crain went to Houston to give a speech to the Houston Advertising Club, he spent an afternoon listening to the publisher of the Houston Business Journal explain how his publication was developed. "I figured if a business publication worked well in Houston, it would be twice as successful in Chicago," Rance Crain said.
Rance Crain was the newspaper's first editor-in-chief, while Art Mertz (1917–1993), a longtime sales manager at Crain Communications' Advertising Age magazine, served as the first publisher. Rance tapped Steve Yahn, a senior editor at Advertising Age, to develop the prototype, do the initial hiring, and get the paper going, effectively acting as the paper's first editor. "We wanted to call it Chicago Business, but another guy came out with a paper with a similar name [which was short-lived]," Yahn said. "I told Rance he ought to put the Crain name on our publication to differentiate them, and he did."[2]
Crain's was originally planned to publish every other week, but with the demise of the Chicago Daily News that year, those creating Crain's decided to make it a weekly publication, using the end of the Daily News for marketing purposes and also drawing on editorial talent from the failed paper.[2]
The first newsstand issue of Crain’s Chicago Business appeared on Monday, June 5, 1978, a 46-page edition with an exclusive lead story on how the Marshall Field & Co. department store chain was planning further suburban expansion.[2]
To promote the new paper, Rance handed out free issues to commuters at Union Station during the morning rush hour. “While I was passing out copies, a newsstand vendor in the station came up to me,” Rance recalled. “He said, ‘I sure hope you don’t have much of your own money tied up in this, because it’s not going to work.’”[2]
The Chicago business community also greeted the new journal with cynicism. “We would be working on stories and call sources, saying we were with Crain’s Chicago Business,” said Sandy Pesmen, feature editor at Crain's and former feature writer at the Daily News. “They would say ‘Who? What? The people who make the toilets?’ Some thought we were the plumbing manufacturer [Crane Co.]. Pretty soon, we were introducing ourselves by saying, “Hello, this is so-and-so from C-R-A-I-N’s Chicago Business.”[2]
One of Crain's’s biggest assets from the beginning was its physical appearance. “The first major sign of encouragement we got was for our lively, contemporary look,” Steve Yahn said. “A lot of people said it looked as much like a book about the city as a financial publication. And that was exactly the intent — Crain's was meant to be a ‘hybrid’ between a city publication and a financial publication.”[2]
From the start, it strove to build its reputation with enterprise reporting. “Rance loves scoops,” former Crain's editor Dan Miller said. “And the ‘scoops mentality’ became immediately ingrained in the culture of the new reporters we brought in.”
However, one of those early scoops caused a firestorm that threatened to severely damage the new paper’s reputation. In late July, Crain's learned through sources in the Chicago advertising community that Sears, Roebuck & Co. planned to drastically curtail its advertising. The banner story on August 7, with the headline “Sears slashes TV, print ad budgets,” stated that cuts could reach the $100 million mark. The giant retailer angrily denied the report. “They called it preposterous,” Yahn said. “As a result, we suffered credibility problems around town. From early August until mid-October, we kept trying to find a way to get it back.”[2]
Crain's Chicago Business editorial, June 5, 1978
Then came the break that stunningly and permanently reversed Crain's fortunes. “A young Sears public relations man named Wiley Brooks came to see Rance on a job interview,” Yahn said. “He wanted to be CCB managing editor [a slot that would open up according to plans when Dan Miller replaced Yahn as editor]. Brooks told Rance that our earlier article about Sears's ad cuts was true, that he had the proof, and that there was to be a massive reorganization of the company.”
Brooks’s proof was a voluminous, secret five-year plan referred to informally at Sears as the “Yellow Book.” Brooks proceeded to leak the plan to Crain's in three sections. “Each one cost Crain’s a lunch at Nick’s Fishmarket [a pricey Chicago eatery],” Yahn said. “I still remember sprinting through the downtown streets with the first part of the book in a manila folder. Our whole reputation for accuracy was on the line.”[2]
In a bylined piece by Yahn, Crain’s broke the story of Sears’s secret plan on Decembe