As the chairman and CEO of America Online, Steve Case helped connect mainstream America to the Internet for the first time. He orchestrated AOL’s $165 billion acquisition of Time Warner in 2001, which remains the largest merger in U.S. history, and he led the since-regretted combined company — which included Warner Bros. Studios, Time Inc. and CNN — for two years before stepping down as chairman in 2003. He left the board altogether in 2005, but with his private holding company Revolution and his philanthropic venture, the Case Foundation, he has remained active in shaping the way businesses and people use the Internet.
This is what Case had to say about the birth of social media, AOL’s recent acquisitions, angel investments, and the future of the Internet:
- 1. When AOL launched, it faced competition from companies like CompuServe and Prodigy. Why do you think it was AOL that ended up with 30 million users?
Our whole focus was mainstream: How do you get everybody online? At the time, some of the other competitors like CompuServe focused a little bit more on people with some technology skills… Some of the things we did specifically [also made AOL competitive], like adopting a graphical user interface when everybody else was doing text interfaces, and a big focus on community — building the community, kind of getting people interacting with each other. What is now called social media was sort of the killer app.
- 2. How do you view AOL in terms of its contribution to social media as we know it?
It was the pioneer that got America online to a large extent, and it embedded that community notion in the minds of lots of people… a whole generation has now grown up with the Internet. Many of them were first exposed to the Internet through AOL, including a lot of founders of companies … Mark Zuckerberg at Facebook told me that his first few years of the Internet really were around AOL and AOL Instant Messenger and trying to figure out different ways to essentially hack our software so that he could do things that he wanted to do.
Also for many people, particularly in the 1990s, mid-to-late 1990s, their introduction to the Internet and how they think about and use the Internet today is still influenced to a certain degree by that initial experience.
- 3. What do you think AOL’s recent acquisition of companies like TechCrunch and StudioNow says about the direction that the company is headed?
I think it’s generally positive. AOL obviously went through a period of, I’m not sure what the right word for it is, but it was drifting. And then when it was getting separated from Time Warner a year or two ago, there was a lot of time focused on untangling things. And now I think the focus can shift more toward innovation, which is where I think it should be.
Some of that is going to happen in-house, with teams developing things, but some of that is always going to happen by identifying interesting ideas and entrepreneurs — technologists who have the things that are worth acquiring. So the fact that AOL appears to now be playing offense again — is starting to be more inquisitive and not just focus on playing defense — I think is a healthy thing.
- 4. Your current venture, Revolution, has invested in companies like Zipcar. What do you look for when you make angel investments?
Companies like Zipcar or Exclusive Resorts are examples of companies that really use the Internet as a platform … to try to essentially disrupt other industries. So in the case of Zipcar, we’re disrupting the traditional car business with a car sharing model, which really wouldn’t work if it wasn’t for the fact that people have the ubiquitous ability to make reservations through the Internet.
Our focus is how do you build on what’s already out there on the Internet and not just focus on so-called “Internet businesses?” [It's about] using the Internet as a way to have a broader impact on the things that affect people’s everyday life, whether it be their money with a company like Revolution Money … or their health (we funded five companies in the health care area) or transportation, like Zipcar, or real estate and hospitality, like Exclusive Resorts. It’s a mix of early stage venture investments and later-stage investments, but they’re all focused on the consumer. They’re all focused on the disruptive business models, and they’re all focused on giving [consumers] more choice and control and convenience in the important aspects of their lives.
- 5. What role does social media play in the philanthropic efforts of the Case Foundation?
It’s really central. We’ve done a number of things over the past decade [or so] and one of the core ideas that’s really been a big initiative the last two or three years has been embracing social media and actually educating people in the public sector and the government about the power of social media.
We also have sponsored things like America’s Giving Challenge, which was a partnership with Facebook and Parade Magazine to try to really encourage a broad base of giving. So everybody giving a little bit to a cause they care about has been very powerful, and that model has been adopted by others as well. We do a lot of things on our casefoundation.org website and conferences and training sessions and so forth to try to educate people in the non-profit sector about what’s happening with technology generally, but particularly what’s happening with social media, and how they can and should embrace these tools to really carry their mission forward.
- 6. What do you think the Internet will look like in the future?
I think that it will continue to evolve. In 25 years it has gone from a first phase, which was really a pick and shovel phase, to simply building the basic platform, the basic technology, the basic network, the basic tool to do well. Then [the Internet] really was about expansion and really taking it to the mainstream. And in the last few years, and I think the coming decade, [it] really will be about — now that the Internet really is ubiquitous, [and] people are relying on it in increasingly habitual kind of ways — how do you not just create Internet businesses, but create businesses that can impact every aspect of people’s lives using the internet as a tool?
Someday, it would be great if instead of being “e-mail,” it would just be called “mail.” Instead of being “e-commerce,” it will just be called “commerce” — just because it is so ubiquitous that it is just taken for granted, much as we take for granted electricity, or water, or other kinds of utilities. We’re not quite there yet. But we’re getting there. When you get there, it’s less of a focus on the Internet and a particular technology or industry because that’s faded into a part of your daily life. It’s more focused on what you can do with that and how it impacts important things: education, transportation, health care, communication — big things that affect people’s every day lives. We just scratched the surface in terms of the Internet as a platform to disrupt those non-Internet businesses.
- 7. Historically, “walled gardens” like AOL have been followed by the rise of open systems like ISPs and Broadband. Facebook right now is kind of recreating the idea of a portal that existed in the Web 1.0 world. Do you think that anything will break down the new ecosystem that is Facebook, or do you think that the current level of interconnected services will be enough to keep the modern day social networks on top?
I think the inherent tension is that the best way to unleash innovation is to be more open, but that also creates a degree of chaos and confusion, which actually works against mainstream consumer adoption. So there’s always going to be some tension. If you simplify too much [in] trying to make it appealing to consumers, you might close off the potential for sustainable innovation. If everything is open and freewheeling, it likely is not going to be something that is appealing to a mass consumer audience. The fact that this tension will continue is a healthy process.
I do think some of the things that AOL did in terms of trying to simplify things were critical in terms of driving growth and the adoption of the Internet, and I’m not surprised that Apple, Facebook, and others are embracing some of those concepts, really trying to focus on simplicity and integration while at the same time trying to be open to a reasonable level of innovation.
Twitter, I think, is an example of a company that has really benefited greatly from its openness — the open API, and really allowing a lot of people to develop on top of that basic set of APIs. …[At] the same time, it recognizes that as it becomes more and more mainstream, it likely needs to put some more boundaries around the Twitter experience. And that’s going to create some tensions with some people in the Twitter ecosystem. But it’s a balancing act. If you are too far off on one extreme or the other, you likely will fizzle.
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