Issue 3.09 | Sep 1995
|
Inside a modern, four-story brick building at a suburban office park in Vienna,
Virginia, a technician slides his security card into a lock, opening the door
to a control room where banks of servers handle upward of 1 million online
sessions a day. The momentary roar of cooling fans is especially jarring in the
low-key atmosphere here at AOL headquarters. The staff is young and casual, the
look leaning toward T-shirts, jeans, and rayon dresses. A nervous job
applicant, pacing in the lobby, wears the only suit in sight. He may have a
decent shot, as the company has been adding new employees in droves. More than
2,000 people work at America Online and its various subsidiaries and support
centers, up from 300 employees two years ago.
The company recently expanded into a building next door. Steve Case holds court
in his spacious new office on the second floor, overlooking the parking lot.
Sparsely furnished with a desk, a small, scratched-up conference table, and a
couple of plants, it's clearly a work-in-progress. In one corner, a credenza
cluttered with computer books bears a bottle of champagne commemorating AOL's
millionth subscriber, a milestone reached in August 1994. A bank of windows
fills the room with natural light.
Case is leaning over his desk, fiddling with his computer as I enter. Tall,
broad-shouldered, with a roundish face topped by a collegiate haircut, he's
trimmer than he appears in photos. With his beige khakis and pressed denim
shirt - no tie - Case looks like he just stepped out of the Gap ad he appeared
in last spring. Only today he's traded in the penny loafers for a pair of white
leather tennis shoes.
The day of my visit, the company announced that it had passed the 2.5 million
subscriber mark, roughly tripling its membership in a year. As Case and I shake
hands, I venture that he must be feeling pretty good. "Not bad," he says. "But
there's always something we could be doing better."
At the moment, it's hard to imagine what that something might be. Net fanatics
may hate AOL for unleashing millions of untrained newbies who have spammed
newsgroups and clogged servers from one end of cyberspace to the other. (Check
out alt.aol-sucks for a taste of the venom.) But turning America on to the joys
of cyberspace pays. With the average user now spending US$17 a month, AOL's
revenues have zoomed from $40 million in 1993 to an estimated $375 million in
1995. By the end of next year, Case expects AOL to become the online industry's
first billion-dollar company.
Growth like that has certainly grabbed Wall Street's attention. Anyone smart
enough to put $10,000 into AOL stock when the company went public in March 1992
was sitting on roughly $160,000 in July this year. Long the subject of takeover
rumors, the company would be worth $2 billion to $3 billion on the open market,
analysts estimate. Not that AOL management is looking to sell out. Just ask
Microsoft co-founder and zillionaire Paul Allen, who gave up his stake in AOL
last year - pocketing an estimated $39 million in the process - after his
unwanted efforts to gain control were thwarted by Case and his partners.
In fact, it's America Online that is doing the acquiring these days. Case has
spent more than $160 million over the last year and a half to buy a slew of
technology outfits as part of AOL's expansion into multimedia and the Internet,
which management sees as the keys to the company's future (more on that later).
And it's not just American households that Case is after. Last February, AOL
formed a $100 million joint venture with German media conglomerate Bertelsmann
to bring the America Online vision to Europe. If all goes as planned, European
versions of AOL could be up in Germany, England, and France by the end of the
year. Case and company are currently looking for a partner of similar stature
to expand into Asia.
"It's an amazing success story," says Rod Kuckro, editor of Information &
Interactive Services Report, an industry newsletter. "Steve Case looks like a
genius. He's the Ted Turner of online services."
The secret of AOL's success? Dead-stupid simple: figure out what people want
most - and give it to them. "It's easy to use, it's affordable, and it's got
all the content you could want," says Paul Sweeney, a media analyst at the
Wheat First Butcher Singer brokerage firm in Richmond, Virginia. "They've done
- hands down, without a doubt - the best job around of marketing and promoting
their
service."
SEE ALSO
Archive Category:
Virtual Communities
Online Commerce
Connectivity
Online Business Models