A short reading list on the many lives of AOL, which will be acquired by Verizon for $4.4 billion. Fifteen years ago, AOL acquired Time Warner for $165 billion.
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It is Case’s America Online Inc. that has shown how to turn a community of cybernauts into a mass market and how to successfully turn a computer network into a new medium for entertainment and news. With more than 5 million customers and 75,000 more joining every week, AOL is the most potent force in cyberspace.
Yet it was also a company in constant danger. Innumerable challenges had given AOL a heart-rending roller coaster ride all along the way, and many observers had long predicted AOL’s imminent demise. In 1993, they claimed that AOL was too small to compete with CompuServe and Prodigy (online services backed by big bucks from major U.S. corporations). AOL was too glitchy and simplistic to catch on with consumers, they opined in 1994. AOL was vulnerable to a withering frontal attack from Microsoft, they declared in 1995. AOL was going to really get knocked flat by the growing popularity of the Internet’s World Wide Web, they announced in 1996. And finally, in 1997, they could say with absolute assurance, AOL was going to be its own executioner, shooting itself dead with a dizzying series of corporate missteps.
Sabotage, bureaucracy, and emoticons: Inside the late ’90s chat wars between Microsoft and AOL, from the perspective of a former Microsoft programmer:
The messenger war was a rush. Coming in each morning to see whether the client still worked with AOL was thrilling. I’d look through reams of protocol messages to figure out what had changed, fix the client, and try to get an update out the same day. I felt that I was in an Olympic showdown with some unnamed developers over at AOL. I had no idea who my adversaries were, but I had been challenged and I wanted to win.
AOL tried different tactics. At one point they seemed to be identifying the Microsoft client because it wasn’t downloading a huge chunk of advertising that the AOL client downloaded. So I changed our client to download it all (and then throw it away). They put in mysterious messages that didn’t seem to affect their client but broke ours because we weren’t expecting them. One day, I came in to see this embedded in a message from the AOL server: “HI. –MARK.” It was a little communication from engineer to engineer, underneath the corporate, media, and PR worlds that were arguing over us. I felt some solidarity with him even though we were on opposing sides.
An oral history of the ill-fated merger with Time Warner in 2000.
MR. TURNER I’d like to forget it. That’s what goes through my mind. I almost didn’t do this interview because I didn’t want to dig it up again. Let it pass into history.
The Time Warner-AOL merger should pass into history like the Vietnam War and the Iraq and Afghanistan wars. It’s one of the biggest disasters that have occurred to our country.
I lost 80 percent of my worth and subsequently lost my job. We looked it up to see if I was the biggest loser of all time because I lost about $8 billion. But I don’t think I was the biggest loser of all time. I think at one point Microsoft stock went down more than that for Bill Gates. I think he’s the biggest winner and the biggest loser. I was in the top three or four of all time.
In retrospect, it may be that Case’s first mistake was handing over the title of C.E.O. to Jerry Levin, and then withdrawing to the sidelines as chairman. According to people close to him, he liked playing an elder statesman: making informed speeches about the digital revolution, thinking big thoughts, tending to his charitable foundation. Besides, with the exception of Levin as C.E.O., the most senior corporate positions at the new company were generally occupied by loyal AOLers. But as time went by and the heady promises of the great AOL Time Warner deal faded-and with Case now being criticized for remaining aloof from the fray-the AOL side slowly lost control. One by one, the executives who’d initially played a role in bringing together AOL and Time Warner lost power: some of them were fired, others forced out, others marginalized.
A profile of CEO Tim Armstrong’s efforts to build its news business (before it acquired the Huffington Post, and after it acquired TechCrunch) and make a play for local coverage with Patch.
A biography of Tim Armstrong and his leadership at AOL:
“He’s a very loyal guy. He made a commitment to different parts of that matrix organization, and damn it, he’s not going to let them down. And even though we brought in McKinsey and they told us to unravel it and Tim bought into it as the right strategy, he couldn’t get himself to do that because it would have been a breach of his personal loyalties.”
This was the first time Armstrong would struggle to make a call that he knew to be the right call because making the decision would force him to hurt lots of people who had believed in something he built from the ground up.