Value Added: Catching up with the D.C. business world's titans of 1998

Up-and-comers of Washington area business posed for a group shot in 1998. In the top row, from left, are Joseph E. Robert Jr., Stephen M. Wolf and Steve Case. Middle row: Emanuel J. Friedman, Jonathan J. Ledecky and Jeong H. Kim. Front row: John W. Sidgmore, Katherine K. Clark and Robert L. Johnson.
Up-and-comers of Washington area business posed for a group shot in 1998. In the top row, from left, are Joseph E. Robert Jr., Stephen M. Wolf and Steve Case. Middle row: Emanuel J. Friedman, Jonathan J. Ledecky and Jeong H. Kim. Front row: John W. Sidgmore, Katherine K. Clark and Robert L. Johnson. (Lucian Perkins/the Washington Post)
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By Thomas Heath
Monday, November 30, 2009

A decade ago, they were considered the New Face of Washington Business, a group of nine up-and-coming entrepreneurs shaking up the establishment.

America Online mogul Steve Case and BET co-founder Bob Johnson went on to become household names. Katherine Clark and Jeong Kim built on their reputations as technology mavens. Others, such as Stephen Wolf, then chairman of US Airways, became corporate dons.

They were smart, skilled and at the right place at the right time. In the group photo from 1998, all nine wore jaunty smiles. You would, too, if you were that rich. But the past 11 years and the ensuing economic collapse have faded those smiles, turned hair gray, swelled some midsections and caused bank accounts to swoon.

STEVE CASE Life on a 'roller coaster'

In 1998, AOL co-founder Steve Case referred to his business life as a "roller coaster . . . when people are putting you on the cover of magazines and telling you how smart you are . . . you know that a year from now, they'll be saying how dumb you are."

The quote still fits, Case said.

"Nothing's changed in 10 years," he said. "When we started AOL in '85, it was a roller coaster as well. I saw that early on, in tech markets, things move quickly. And 10 years ago, the Internet was becoming more of a central thing and AOL was kind of king of the hill. The merger with Time Warner was intended to propel it to a new level of greatness, but for a variety of reasons, it didn't work out in the way that people intended."

Case, 51, left the AOL Time Warner board in 2005, after having become a lightning rod for engineering the $112 billion merger of AOL and Time Warner in 2001 that eventually wiped out tens of billions of dollars of value for Time Warner shareholders.

"Strategically it was a wise thing for both companies," Case said. "Diversification was smart for AOL shareholders. The synergy we hoped to have, the combination of two members of digital media, didn't happen as we had planned. That's a bit of a disappointment."

Since then, Case has had a hand in several local start-ups that aim to blow up traditional business models in credit cards (Revolution Money), movies (SnagFilms), health (BrainScope), transportation (Flexcar/Zipcar) and travel (Exclusive Resorts).

"They are all Internet consumer business where we are trying to disrupt traditional industries," said Case, who owned 2 percent of AOL in 1998 worth around $200 million. "It's been a little like the early days of AOL, when [we were] believing something new was happening when others were skeptical."

Revolution Money was recently purchased by American Express for $300 million, Case's biggest post-AOL success so far. But start-ups are always a crapshoot. Case said the important thing is that Washington is producing so many new companies out of the ferment left behind by others.

"In the last 10 years, [the Washington region] moved from major companies like AOL and MCI to a much more diversified ecosystem of start-up companies," he said. "And at least half of them are based in D.C., like LivingSocial, SnagFilms. Clearspring has a number of AOL people," Case said.


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