There Must Be a Pony in Here Somewhere

by Kara Swisher

Chapter Two

  THE PERILS OF PAULINE

  Pardon My French

  I’m not sure exactly when Steve Case developed his King of France walk.

  I first saw the transformation as the new century dawned with the AOL Time Warner merger. Case rapidly assumed an unusual statesmanlike gait, perhaps due to his newfound importance in the world. Apparently, he was thinking such great thoughts and carrying around such weighty visions in his newly expanded head that getting around now required a bearing that was slow, deliberate, self-important. Aloof and possibly rude. Above it all and imperial. Always accompanied by a look of slight displeasure.

  At a big cable television event in Silicon Valley on February 27, 2000, a little more than a month after the merger was announced, I got my most potent whiff of Case’s new air of royalty. He and a cluster of other big Internet gurus, such as Yahoo’s cofounder Jerry Yang, were appearing on MSNBC’s grandly named “Summit in Silicon Valley,” hosted by NBC anchor Tom Brokaw. Case was now important enough not to attend, and appeared instead on a giant screen suspended above the crowd at Stanford University. I was there, too, as a kind of living prop—one of a group of reporters brought in to ask these Web gods “tough” questions.

  Naturally, I was assigned to ask questions of Case, since I’d written a book on his company before he had hit the big time. So, from my little seat near the stage, I peered at his big head looming over me and asked him if he thought perhaps AOL Time Warner was just too big a company now to operate properly. Case said he did not think bigger was better, in a tone that suggested I was clearly not illuminated. “Better is better.”

  I was flummoxed. Was this a New Economy haiku? A Zen insight? Or, as I suspected, was it just another of the kind of meaningless declarations he’d suddenly taken to spouting of late? I asked the obvious follow-up question: “What does that mean?” But the sound to my mike had been cut, as Brokaw took over and nodded in serious agreement with Case’s pearls of wisdom.

  The NBC anchorman was not alone in his deference to Case. So many people seemed to agree with him in that golden time after the merger with Time Warner was announced that it was easy to see how Case had developed this new, preening posture. For one shining moment, at least, Steve Case was the Sun King of the New World Order. Young yet wise, entrepreneurial yet solid, wonderfully wealthy yet understated—he personified a new kind of American Dream. And his brand of khaki capitalism was apparently capable of transforming everything.

  Most people involved in the deal seem to be suffering from a peculiar amnesia now, so it’s easy to forget that kind of hype and optimism. Today, almost everyone near to this toxic merger runs screaming from it in an attempt to avoid any culpability. The denials come fast and furious: Not me. I wasn’t involved. I thought it was wrong from the very beginning. And—most of all—Steve Case is a big, fat idiot.

  This was more familiar territory for me, since that was exactly how most of the world had regarded Case throughout his career. For most of it, he had always and forever been a loser. I lost count of the many times over the years that Case was disdained, insulted, and considered a bit of a fool by both the powerful New York kingpins of media and Silicon Valley’s technology czars.

  And why shouldn’t he have been pilloried? For much of its short life, his rinky-dink little company was in serious distress; it bled cash, lost customers as fast as it got them, was derided for its clunky technology, and lived under constant attack from major competitors, including giant Microsoft. AOL’s path has been one of the bumpiest ones possible—a dramatic journey that has at times seemed like a mix of the Keystone Kops with Indiana Jones and the Perils of Pauline thrown in.

  From the beginning, in fact, the history of AOL has been, to put it politely, a disaster waiting to happen. The company had veered from one crisis to the other in a way that has terrified and fascinated its longtime observers. Stewart Alsop, the venture capitalist and AOL supporter, once noted quite correctly, “AOL has turned being in trouble into a corporate culture.”

  During its journey, the company acquired a plethora of nicknames—“The Online Kmart,” “America On Hold,” “The Giant Sucking Sound.” But the one from its earliest days, “The Cockroach of Cyberspace,” was the one that turned out to be most true. No matter what happened, AOL survived, through constant reinvention and an astonishing ability to leave behind any baggage so it could move on to the next thing.

  That’s why, over the many years I covered AOL, I always kept on the wall above my desk a little clip from an old issue of Wired magazine. Titled “Demise of AOL,” it read, in part: “Someday, the history of cyberspace will be written as a chronicle of the predictions of AOL’s demise. From claims that America Online would fail because it wasn’t ‘open,’ to charges that it was inherently unreliable, the service has been the canary in the coalmine for all of cyberspace.”

  This was true. No matter how big its business got, no matter how high its stock went, it was still the most ridiculed company around. Even though it completely dominated its competition throughout the late 1990s, no one could ever quite believe AOL was succeeding. After the CompuServe purchase in 1997, Fortune magazine pictured Steve Case on the cover under the headline “Surprise! AOL Wins!” How could this be happening? Didn’t AOL suck?

  Well, yes, AOL did suck a lot of the time. But it also offered the easiest way for people who didn’t know (and didn’t want to know) anything about computers to get online. The genius of Steve Case lay not in developing the most sophisticated, versatile product he could, but in realizing that most people wanted the exact opposite of that. Most average users simply longed for a convenient way to be part of this great new communications medium without doing a lot of heavy lifting.

  In these times of tearing down AOL, it’s impossible not to credit it with almost single-handedly popularizing the online medium and bringing it to the mainstream. This was due in large part to Case, who was also the most unlikely suspect to lead one of the greatest communications revolutions of all time.

  In fact, he’s about the last person one would pick as the great communicator. It’s not for nothing that Case garnered the nickname “The Wall” among his staff. He’s difficult to read and more difficult to know—he’s even uncomfortable with those he should be comfortable with, from Wall Street analysts to his own executives. It’s rare to meet a person Case has encountered, even among those closest to him, who doesn’t have some story of his inability to make a connection and his pervasive social awkwardness.

  I’ve actually been collecting such stories over the years. My recent favorite was a Time Warner executive’s painful tale of having to introduce the stiff Case to Lil’ Kim, the bodacious rap singer of Time Warner’s Atlantic label, at the Grammy Awards show in Hollywood in 2002. It’s hard to imagine two more disparate personalities trying to find something to talk about. “It hurt my eyes to watch the encounter,” moaned the executive.

  One reason Case is hard to know is that he’s a mass of contradictions. He professes not to care (and shows no indication that he does) when waves of critics deride AOL and even Case himself. Yet every once in a while, he has expressed deep hurt and bewilderment in emotional emails whipped out after a minor slight. He has been lauded for his ability to delegate, as well as for his willingness to listen and amend his views. Yet he can be astonishingly pig-headed when he thinks he’s right.

  Case is usually modest and soft-spoken about what he’s achieved, yet, as one major investor who’s dealt with him describes it, “He’s got Tourette’s syndrome of arrogance. He acts humble . . . but then he bursts out with these arrogant comments.” This odd combination of superciliousness and standoffishness would prove to be critically damaging to his ability to lead at AOL Time Warner later.

  I have probably spent more time interviewing him than any other reporter. Yet even now, when people ask me what he’s like, I pause, realizing I can’t really describe him. Usually, I rely on the crutch of anecdotes, such as those resulting from my attempts
to get him to do interviews for my first book, which focused on AOL’s early days.

  Despite promises to the contrary to be open and accessible, Case had reneged on his vow and suddenly proved reluctant to talk. I spent four long, frustrating months trying to convince him to submit to an interview. I’d tangled with obstructive PR people, sent insistent emails, cajoled and pleaded to be seen, and even resorted to bringing fresh pies to entice cooperation. Basically, I stalked him.

  He’d already talked to me several times before, for stories I’d written for the Washington Post. But now that I had a book to write, he kept fending me off in that wary, sarcastic way I would come to know so well. This was partly due to a lot of things, including a divorce he was going through and concern over how his family would be addressed in the book. But partly, I think, it was because Steve Case didn’t feel the need to explain himself. And he didn’t care what anyone thought of him until pressed by advisers to do so.

  Then, one day, he finally agreed to an interview, many months after he had promised to cooperate. We set the date: December 11, 1996. It happened to be my birthday. That morning, I drove out to Dulles in freezing rain and sleet, hunched over the steering wheel and squinting through the windshield. I pulled into the AOL parking lot and ran inside the headquarters building, drenched. When I walked into Case’s fifth-floor office, escorted by a public relations person, I found him peering out his window at the downpour.

  “I was just looking out at this rain,” he said in a dreamy tone, “and thinking, ‘If she gets in a fiery wreck on the way out here, I won’t have to do the interview!’ ” He then turned to face me, a half-smile on the placid mask of his face. “Oh,” he added cheerily. “Happy birthday!”

  The PR person stuttered out some feeble attempt to smooth over this horrid remark. And yet, it actually made me like him a lot more. I sat down and opened my notebook.

  Island Boy Wonder

  Stephen McConnell Case was born to be an entrepreneur.

  By now, the story of the boy-wonder salesman Steve Case has passed into AOL mythology. Born in Hawaii to a lawyer father and schoolteacher mother, he was raised in an upper-middle-class family of comfort and privilege. Steve was always close to his brother Dan, who was just 13 months older. The brothers were outwardly different—Steve was shy and intense, while Dan was outgoing, glib, and charming—but they shared a precocious entrepreneurial streak. Adopting the name “Case Enterprises,” and calling their bedrooms their “offices,” the brothers undertook several fledgling businesses, including selling limeade and magazine subscriptions.

  To me, this boyhood focus on making money and doing deals always seemed a bit odd, but it gave the Case brothers a kind of all-American geek patina and a raft of stories they could recount over and over as the pair got more famous. It certainly makes for a good tale, with all sorts of premonitions of greatness. In reality, it was a lot less elaborate.

  But in the first part of this story, Dan was the clear star of the family, forcing Steve to differentiate himself to stand out. One way Steve did that was by choosing hobbies that Dan had shown no interest in, such as photography and journalism. Another was the music business, which Steve discovered in his teens. He began writing typically positive music reviews for the student paper, Ka Punahou, at Honolulu’s exclusive Punahou School, and he entered into a happy cycle of getting free tickets and albums as well as backstage access at concerts when he told promoters he wrote for the largest student paper in Hawaii. Dan Case later joked to me that this was Steve’s “first pyramid scheme.”

  After graduation, Case enrolled at Williams College in Massachusetts, his father’s alma mater, shunning Princeton University because Dan was a student there. He expanded his efforts in the music business, promoting concerts and arranging events at the college. He even fronted his own bands, called The The and The Vans. Despite, or perhaps because of, his involvement in extracurricular activities, Case was mostly a B student. Ironically enough, the course he hated most of all was computer programming.

  Yet even in that era of clunky computers, dot-matrix printers, and 300-baud modems, he was already fascinated with the idea of how interactive technology might change the way people live. In 1980, when he began applying for postcollege jobs, he wrote a remarkably forward-thinking essay to include with his applications. “I firmly believe,” Case wrote, “that technological advances in communications (especially two-way cable systems) will result in our television sets (big-screen, of course!) becoming an information line, newspaper, school, computer, referendum machine, and catalog.”

  It sounded like a blueprint for the Full Service Network, Time Warner’s experimental interactive cable service that would launch in the early 1990s. And, in fact, the 21-year-old Case applied for a job at HBO in 1980—the division of Time Inc. that Gerald Levin had headed. In one of history’s delicious near misses, Case didn’t get the job and the two men didn’t meet. Instead, Case took a job in Ohio with Procter & Gamble, where he would learn marketing by developing campaigns for hopelessly mundane products. P&G was the training ground where Case learned the marketing skills he would later bring to AOL. But not surprisingly, he was soon bored with this job. He hated the constraints of big-company life, so when Pizza Hut offered him a position as “manager of new development,” he jumped.

  His work at Pizza Hut was only marginally sexier, providing yet another good tale for the storybook rise of Steve Case. For Pizza Hut, he traveled all over the country, sampling regional specialties and considering how they might fare atop pizzas (in a nod to his roots in Hawaii, he soon suggested pineapple chunks). But, once again, this position felt like a lead weight to the ambitious young marketing man.

  One reason for his boredom was that Pizza Hut had sent him to live in the American Siberia of Wichita, Kansas. Years later, when I asked him what was the best thing to do in Wichita, since I planned to stop there on a cross-country trip, he told me, “See it in your rearview mirror.” Wichita was clearly no place for a lonely, single young man stuck in a post he felt was beneath his talents. But soon enough, Case discovered a unique outlet for his restless feelings.

  Case bought a boxy Kaypro computer and painstakingly configured it to log on to The Source, a fledgling online service. With that, he was suddenly able to tap into a whole new world, communicating with dozens of other users in far-flung places. Years later, he would paint the same lonely picture for almost every story written about those early days, a genius in exile miraculously touched by digital lightning.

  But for the shy and awkward Case, the ability to reach out online from the darkness of his lonely life in Kansas must have been a powerful influence. So it was perhaps inevitable that he would find a way to get a job in this new, exciting medium. He was helped in this endeavor by his brother, Dan, who by that time—after earning Phi Beta Kappa honors at Princeton and winning a Rhodes scholarship—had become a rising star at the investment firm Hambrecht & Quist in San Francisco.

  In 1983, Dan introduced Steve to one of his clients, a colorful and eccentric entrepreneur named Bill Von Meister who lived in the Virginia suburbs just outside of Washington, D.C. It was here that Von Meister—not Steve Case, despite what most people think now—had planted the seed that would later grow into AOL.

  They Shoot Founders, Don’t They?

  Bill Von Meister was a classic serial entrepreneur. He loved to start businesses, and he was terrible at seeing them through to maturity. He was a thrill addict, a man who loved fast cars and expensive wines, and whose free-spirited nature made him both endearing and maddening to those who worked with him. He died before I could ever meet him, but his personality came alive in the vivid memories of those who knew him well. Von Meister was the kind of character reporters tend to love, and interviewing people about him always made me smile. Even dead, the man was highly entertaining.

  Silicon Valley venture capitalist Frank Caufield, who invested $100,000 in one of Von Meister’s early schemes, described him as “like that cartoon charac
ter in Who Framed Roger Rabbit?—he wasn’t bad; he was just drawn that way.” Indeed, everything about Von Meister was extreme, from his gold jewelry to his endless chain of cigarettes, his huge appetite for food, and his beefy facial features.

  His ideas were also excessive. Unconstrained by any kind of self-censorship, he spewed forth schemes both visionary and absurd. Some of his more marketable ideas included Light Alert, a device that allowed night watchmen to turn on store lights by shining a flashlight through the windows; and the Home Music Store, a way of delivering music into homes via satellites and cable that he hoped to launch with investments from the 1970s icons, the Osmond family.

  More important for the early history of the commercial Inter-net, he was also the founder of The Source—the online service that had so captivated Steve Case in his Wichita apartment. But as with so many of his ventures, Von Meister lost control of that business after spending too much money and exhausting the patience of his investors.

  Still, Von Meister—whose ideas often blended practicality and whimsy, generally with some kind of online component thrown in—was always on the lookout for the Next Big Thing. “Let’s take another run around the rosebush!” he’d bark at investors, usually with a glass of Chivas Regal held high. As former Imagic vice president Brian Dougherty, one of Von Meister’s many investors, described him, he was the perfect combination of “P. T. Barnum and a technologist in the same body.”

  When Steve Case walked into his life, Von Meister was busy launching his latest product, called the GameLine Master Module, at his new company, Control Video Corporation (CVC). The idea was to create a device that would allow users of the Atari 2600 video game machine to download games over telephone lines. Despite the fact that the product itself didn’t yet exist, Von Meister had arranged for a splashy debut for the concept at the Consumer Electronics Show in 1983. With characteristic ebullience, he rented a room at the Tropicana, enlisted a few showgirls to spice things up, raffled off a gold bar, and loudly trumpeted GameLine as the newest video game sensation. Inspired by Malcolm Forbes, he also used precious marketing dollars to fly a hot air balloon with GameLine’s logo on it outside the hotel. Von Meister—referencing the hot cable channel made popular by AOL’s future president Bob Pittman—bragged that it would soon be the “MTV of video games.”