Burn Rate

by Michael Wolff

  Then—well, nothing. Like there was no AOL. Like there was no Vienna, Virginia. Silence. Nothing. Nada.

  So what you do is you send an e-mail and you say, “Oh, it just so happens I’m going to Washington, have a meeting with the President, and thought I’d stop by and see you afterwards. Maybe we can continue our discussions.”

  You show up and it truly might have been that all you’d find was a fragrant field, where, in your dreams, a company called AOL had been. But, no, you get there and find another conference room of eager, unfamiliar people wanting to talk about the great things you’re going to do together.

  You keep doing this. Why? Because it is just so weird. And then you get to talking to other people, other AOL partners and prospective partners, and you find out you’re not alone, that this is the way you do business with AOL. It is like the government. And, like the government, it is not going to do anything unless you make it, force it. Work the halls. A thousand handshakes later, your company gets a tax abatement. Or something like that.

  The Patricof people prepare the two-page document outlining our agreement with AOL and fax it to Jon Rubin, who is in St. Barts for the weekend, and deliver it by hand to the AOL Exec at his apartment in New York, by Fed Ex to his office in Vienna, by e-mail attachment, and—to be double, triple, quadruple sure—by courier out to the hotel in Arizona where the AOL partners conference is shortly to commence.

  By midweek, the AOL Exec’s secretary in Virginia confirms that, indeed, he hasn’t gotten anything from us yet but that we should get it to him as soon as possible.

  We deliver it all again.

  No word.

  Then, yes, confirmation.

  Silence.

  The weekend.

  Day One of the next workweek with everyone in their respective offices.

  Day Two.

  Day Three.

  “I’ll call him,” Jon Rubin says.

  Day Four.

  Day Five. “It’s set,” Rubin reports. “It’s cool. There’s an executive committee meeting on Monday. It’ll be signed off on, and we’ll go to contract. He’ll call as soon as the meeting ends.”

  Alison and I take ourselves out to dinner again.

  Monday. Day One of Workweek Two. Waiting for the nod from the executive committee meeting. Continue waiting. No word.

  Day Two. “The meeting got pushed,” Rubin reports back. “It’s on Thursday. What can I tell you?”

  Day Three. I send an e-mail. My tone tactically assumes that a deal is done, that we’re working together, that we’re all on the same team.

  Day Four. Nothing.

  Day Five. “Looking good,” Rubin says.

  “What does that mean? Are we going to contract?”

  “I just got a message that everything was looking good, that’s all I know.” Rubin is testy.

  The technology advisor, the EVP, and I head out to Chicago for a meeting with Ameritech.

  Ameritech has the idea that it’s going to become the Midwest’s gateway to the Internet, so it’s more than likely we won’t be able to do the AOL deal and the Ameritech deal. We’ll go with AOL, but obviously it will be good to have Ameritech in our back pocket.

  It’s an easy meeting. Ameritech is at least eighteen months behind the industry. Their enthusiasm is untempered by any experience. I’ve taken advantage of this kind of condition before; I’m confident I can take advantage of it again.

  We spend the day working with them through their due diligence. We seem sound to them. They like us. And that’s it. Yes, they’ll do the deal, invest the money we need at the valuation we want. And they’ll close it by Christmas.

  So there it is. Home. Safety. I’ve made it.

  We deliver Ameritech into the factotum’s hands. We’ll have a deal memo in days.

  Now let’s see if there are better options.

  The Washington Post Company comes in again. They are having a slight change in the way they are thinking about our deal. They are seeing it now as a Newsweek deal—they own Newsweek magazine—rather than a Washington Post deal.

  “Okay,” we say.

  “But,” the factotum says, “we should tell you. We have a proposal we’re considering from AOL.”

  This rattles them. Clearly. Our price is going up. Way up.

  They’ll get back to us next week, for sure, they say. In fact, let’s set it up, let’s get all the appropriate Newsweek people in here. Let’s get the dialogue going.

  At the end of the third week, I place a call to the AOL Exec through the Wildfire system. Wildfire is the king of all voice mail systems. It’s one of those Hal-like bits of technology that makes you say, “Whoa, this is enough!” The cool dominatrix voice. The machine’s omniscience. It’s universal reach. The way it expresses its lack of interest in you, the way it declares you unworthy of a connection.

  My query ricochets through the AOL offices in Vienna and then up to the Seagram’s Building in New York. It finds the AOL Exec in transit via cell phone.

  He accepts the call, and Wildfire completes the connection.

  “I would tell you,” he says, “if there was anything to worry about. There is nothing. This deal will happen. I give you my word. Guarantee. We want this deal. This is a no-brainer. I’m sorry things got fucked up last week, but this is a fucked-up company. But it doesn’t have anything to do with your deal. I won’t let anyone fuck this deal up. Relax.”

  “Listen,” I say firmly. “We have an offer from Ameritech. And we’re going to get one from the Washington Post. We can’t do those deals and do a deal with you. We want to do a deal with you. You’re our choice. But we have to nail it down with you. And I mean now!”

  “I’m telling you, we are nailed down. I don’t want you to do those other deals. I absolutely don’t want you to do those other deals. Promise me.”

  “I promise you if you do a deal with me, I won’t do another deal.”

  “Done! Really, man, I’ll kill you if you do another deal. I’ll fucking kill you!”

  “Listen, here’s an idea. Why don’t we all come down to Vienna. We’ll come with our lawyers, you’ll get yours there, and we’ll just finish it. Close it.”

  “If you want to do that, fine, no sweat. But it’s not necessary. The executive committee is meeting on Monday. We can do a conference call with lawyers on Tuesday. Then we’ll make a game plan for closing.”

  “Okay. Let’s schedule that.” I am confident I have cleared the path to finishing this.

  The executive committee meeting was put off until Thursday. Meanwhile, another executive, who in fact had previously worked as a consultant for us and from whom we had an outstanding bill for ten grand or so (and who, I imagined, feared his $10,000 might be in jeopardy if we didn’t get the AOL deal), had been asked to prepare a business plan for our deal. This executive suggested that perhaps we wanted to do a draft. This was good, I knew. This was how you stayed in control. We were well connected. We were on top of things. We were working the organization.

  On Thursday, Jon Rubin went out to National Airport and hung around the shuttle gates to run into, fortuitously, the AOL Exec on his way up to New York. From the exec, Rubin learned that the executive committee meeting had been held, all right, but something had come up and our deal had been bumped from the agenda. But the AOL Exec gave Jon Rubin his word. They talked about the frustrations of such high-growth organizations, of the certain sickness of opportunities that affects the organization, a real pathology, this need to grab for everything. And they talked about vintage Mustangs, too. They both dug them. Jon Rubin had one, and the AOL Exec was looking for one, too.

  Jon Rubin was confident about the deal.

  I wasn’t taking anything for granted. I was shepherding Ameritech with great care. We were looking to close a few days before Christmas. We were on target. This was the factotum’s real talent; he was a document guy. He would pull this together. I was checking in with him on an almost constant basis—two calls in the morning, two calls after
lunch. There were no wrinkles. Say what you want about the boring Midwestern guys at Ameritech, they were steady. What you see is what you get. The factotum was totally confident about the deal. And he didn’t have any doubt that we could bring it in right on schedule.

  We were all a little less sanguine about the Washington Post Company. They weren’t necessarily less interested, but they seemed all of a sudden interested in the wrong thing. They were interested in our book business. It was odd. They kept gnashing their teeth about the Internet, about what the Internet was costing them already, and about all the costs to come. And would it really happen, the Internet? How could you be sure? Books suddenly seemed like a great thing to them. Now, our books were a decent business—we pumped out a new guidebook to the Internet every twenty days or so, which provided a nice revenue stream and even a little profit—but because book businesses, no matter how profitable, tended to be sold at about a multiple of one times revenues, and Internet businesses, no matter how unprofitable, could well be sold at twenty to forty times revenues, the last thing that we wanted to talk about was books.

  Ameritech was on the phone. I was on one end of the floor and asked for the call to be put back to my office at the other end. It was going to be a schmooze call. I was starting to like these guys and had begun to balance in my mind the relative value of AOL glamour, with its attendant dysfunctionality, against Ameritech’s flat-footedness and its accompanying dependability. At the moment, certainly, AOL had the business by the tail. But that could change in a second, I figured, and you could easily see the RBOCs slowly, doggedly coming to control the Net. It was a pretty fundamental choice. Glamour on the one hand, infrastructure on the other. It was one of those choices that you could make either very right or very wrong.

  When I picked up the phone, the guy from Ameritech, a very affable sort in his early thirties whom I had first met at the conference in New York and become friendly with during a fair amount of conference room time, said, “We’re not going to be able to do the deal.”

  An echo chamber seemed to open up.

  “I know that’s not what you expected to hear. And all I can do is say that it wasn’t what I expected to tell you. But a decision has been made to curtail all of Ameritech’s Internet investments for at least the next quarter and probably two. It’s terrible that yours was so close to getting done. I’m sorry. This is really a hard one.”

  “I understand. Thanks for calling.”

  “I’d like to stay in touch.”

  “Definitely. Definitely.”

  Our office was just down the street from the Museum of Modern Art. The museum was an awfully good place to hide from reality for a couple of hours.

  Meanwhile, AOL, we were getting reports, was going through another transformation in the way it saw its business. It was probably the thing that most marked it as a new kind of company, a twenty-first-century company. It was not that AOL represented a new kind of media delivered through computers but that it was comfortable changing the fundamental nature of its business as often as need be—every other month, if necessary.

  It had been a computer bulletin board service, an information distribution company, an Internet service provider, a direct marketing organization, a media company, and now, in its latest incarnation, it was trying to become something like a cable company; using the infomercial media model, it would sell space to direct marketers, to the Ginsu knife people, and on top of that would take a piece of each sale, too.

  “There’s been a rethink,” said the consultant, to whom we owed $10,000, who had joined AOL. He was delivering a back-channel point of view. “If there’s any way,” he said deliberately, “that you can revise your proposal so that you’re paying us instead of us paying you, the time to do that would be now.”

  AOL, apparently, had understood the implications of flat-fee pricing. As they continued to think about the no-win situation of paying information providers, they flipped this around and saw, clearly, that information providers should be paying them.

  “This is my fault. I’m going to take care of it,” said the AOL Exec. “This is what we’ll do. We’ll put everybody in a room and just get it done.”

  “And you still feel . . . you still feel that it will go through?” I prodded.

  “Don’t sweat it, okay? Don’t sweat it. I would tell you if there were any problems. This is just a fucked-up company, and sometimes you have to wrestle people to the ground. Just get your guys together.”

  AOL was in physical transition, too, moving from its more modest, redbrick, down-the-end-of-the-road office to a corporate edifice, with atrium lobby, in a campus setting out near Dulles Airport in Virginia.

  The meeting was scheduled in the new executive suite out at the “Dulles location,” as it was being called in the transition.

  Jon Rubin and the factotum swung by the Vienna office and offered the AOL Exec, who had not yet completed his move, a ride out to the Dulles location. The EVP and I went directly out to Dulles.

  The EVP was a businessman’s businessman. He was in the Halcyon Club of every major frequent flyer group; at Helene Curtis, where he worked after his stint at P&G, he flew to Asia twice a month. He bought every self-help inspiration business book—God Is My CEO, Lincoln Is My Manager, or some such. His head was always in Forbes, BusinessWeek, or Fortune. He was analytic to a fault. Paragraphs were for pansies, spreadsheets were for men. His desk was military neat. He snacked on Power Bars. He never wrote a sentence without a forward slash in it. He had a square head, a close shave, and UCLA shoulders. He was a constant reminder of the intrusion into my business of a sensibility—impersonal, managerial, literal—that I assumed dominated most businesses in America. He was the by-the-book guy in every army movie.

  He was here, we both understood, to take my job. He had been promised it. He was the investors’ stalking horse. He was their fallback—and their leap forward, too. He was one more way they figured they couldn’t lose.

  It was odd, therefore, that we got along. I thought it was perhaps a talent he got out of the self-help business books, some rule of modern business warfare. Kill the other guy with sincerity. We had nothing in common, except miles flown together. But perhaps this was not true. We had the cyber business, which had hit him hard. All the certainties of business (which, no doubt, was what appealed to him about business) had been removed. A whole business value system—successful businesses are profitable businesses; numbers don’t lie; phone calls are to be returned—had been turned on its head. The hype was killing him. In the packaged goods business, where he had spent the formative years of his career, people, apparently, told the truth more often than not. In the cyber business, it seemed that no one ever told the truth. Sometimes it seemed that there was no truth. It was all bullshit.

  As the EVP and I sat in the AOL commissary, he started to reminisce about the Procter & Gamble cafeteria. He confided: “When I was at P&G, I never wanted to eat in the cafeteria,” he said, as if to tell me some secret about his character. “I always went out to a restaurant. Didn’t care what kind of place it was.”

  I had an unlikely vision of the EVP walking down the road in Cincinnati, P&G’s hometown.

  Then he said, “I’ve told Rubin and the Patricof people that if we can’t complete this AOL deal, I’m going to be leaving the company. I’m sorry. I just can’t do it anymore.”

  I had found that one of the hardest things in business was that people leave you. Even when the people I didn’t want in the first place tell me they’re leaving, I choke up.

  “I guess it’s been rough,” I said. “I’m sorry.”

  “I can’t deal with people who aren’t straight with you. Who do these AOL guys think they are?” he asked bitterly. “Do they just think they can screw around with anybody they want to screw around with? Maybe that’s naive. I can’t help it.”

  “I’m not sure it’s a screw job,” I offered. “I think it’s more that nobody knows what to do. I think everybody is sitting on top of very
precarious businesses. It’s as likely as not that none of the companies we take for granted today will be here in a year or two. Not just us.”

  “You don’t think you’ll be here?” He seemed concerned.

  “I guess I’ve never thought much more than a day, or a pay period, ahead. Which is wrong, obviously. We should be taking the long view and realize that nothing that we do today really matters.”

  He seemed shocked. “I don’t think I could live if I thought that way.”

  “Well, it matters. Today it matters,” I tried to comfort him.

  “You think this will all be . . . ” He waved his hand, trailing off.

  “I think it will all be different, unrecognizable. Yeah. We’re transitional. All technology is transitional.”

  “In the end, what? Time Warner or Disney or Murdoch or Microsoft buys the winners and runs it all?”

  I shrugged. “I’m sure they’re transitional companies, too.”

  “That’s cool,” he said, seeming to find some comfort in this notion.

  In my experience, most meetings are hard to start. AOL meetings were particularly hard to get going. This meeting, however, which involved moving people—the penultimate people in the AOL corporation—not only around a new building but across northern Virginia, was the worst so far.

  My father described World War II as four years of waiting around. Now I have an experience, I was starting to think, to compare to his.

  It took a few hours for Jon Rubin and the factotum to round up the AOL Exec in Vienna and transport him to Dulles. They were all in a good mood, a fraternity brother mood, when they arrived.

  It took an hour or more to have lunch again because they hadn’t eaten.

  “Where are we?” I asked, catching Rubin for a second.

  “The deal is done.”

  “No, seriously.”

  “Really, he says there’s nothing to worry about.”

  “What did you say to him?”