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Go to extended excerpts of the interview:
Q. Do you feel you personally and the company as a whole have gotten enough credit for keeping the network up through all of this?
I think we donít deserve credit for that. I think from a consumer marketing standpoint, the consumer will never say, "Wow, I had trouble dialing, but the network ran fine." The reality was that that was as big a challenge part as the dialup part and our guys had more control and really did a good job of that. The fact that they have gotten ahead of this demand this quickly -- it didnít linger on for three months. It was a real bad problem for about two or three weeks and itís gotten steadily better.
Q. You feel youíre ahead of it now?
A. Youíre not going to have a 20-minute wait getting on. I dial every night, and I had nights that there was a 20- or 30-minute wait. I found Port Gibson, Miss., was where I could get a number to get in.
Q. You have 28.8 access at home?
A. Now I have 56k. Itís actually quite good. Iím very impressed with it. We only have a limited number, one of them is in Washington. Itís quite nice.
Q. So youíre not feeling picked upon?
A. I have a funny view about that because Iíve [been] through businesses that have the bumps in the road. And our people say, "Oh my god, but someobdy else is down" or "Somebody elseís e-mail doesnít work." And I say, "You donít want them talking about other people. Take your lumps. This goes with the territory. You either want to be a leader, which means peopleíll pick on you, or you want to be one of the pack and you wonít get picked on. Which would you rather have?" Iíll take being a leader and weíll take the heat. And you know what? It keeps you honest. People say, "But-but-but..." I say, "Okay, letís fix it. We deserve it. Theyíre telling us. Listen to them." If you listen to your customers theyíll tell you exactly what you have to do. This is a very simple business: "I donít want a busy signal."
Q. Unlike in the early years, a lot of people now think that AOL is not is customer-responsive, not as customer-friendly -- turns a deaf ear to them.
A. That, Iíll tell you as a newcomer to it, is not true. Maybe they didnít hear it the right way, maybe they misinterpreted it, maybe we got too bureaucratic to do the right thing. But whatís interesting about the business -- and I was struck with it the first time I met Steve Case -- was that the company... like I said, thereís a blurry line between advertising and commerce? Thereís a real blurry line between member and employee. These people feel a sense of community thatís not a cliche but reality. They also feel this affinity for the customer. And when they got these busy signals, everybody was so distraught because it was like they were hurting their mother. It wasnít like they were hurting some unknown consumer product... My mom sitting down there in Mississippi with her computer: "Eh, whatís everybody complaining to me about?"
I think the company actually is extraordinarily consumer-responsive. The problem I think you have today is itís hard to figure out whoís representative of the mass market or the big consumer or which segment. But I will tell you the folks are all over any consumer issue. Theyíve got to solve it first.
Q. Itís the same kind of response, though, that you get from people talking about Microsoft -- itís the company people love to hate. They use the products but they have this image, you get bad vibes from them -- you donít want to like them.
A. Itís funny, my observation -- and I dealt some with Microsoft when I was with Time Warner and we were trying to do some strategic partnerships -- I find the base of the company, the culture, is technology. The base of the culture at AOL really is consumer -- consumerism, consumer feeling, community. They really do take it to heart. I find it a wonderful characteristic of the company. I think they donít get enough credit for that. You say weíre in the press getting picked on? Hey, we deserved all the heat we got and more about the busy signals. Did we have a reason why we missed? Sure, but we deserve the heat.
Q. Well, the customer service lines had busy signals too.
A. You got it. I mean, we hired every temp we could find. We had orders in for new lines to connect to outbound telemarketing centers to convert them to member services. I mean, we had all of our management answering phones.
And by the way, during that period, we were hiring everybody in Albuquerque and Tucson -- you got a grandmother, get íem in, get these people going. Then you run out of lines and then you run out of desks and then you run out of connections to a new center, which weíre going to temporarily rent. The problem too is we did this deal with the attorneys general, and the attorneys general all announced these numbers and said, "Call right now." Even though we negotiated 120 days. They said, "Call right now." Thank you. Well, youíre doomed. Thereís no company in America that can stand that kind of onslaught.
I was watching the news in New York. I was there that weekend, and the news showís going, "Call this 800-number." I know what happens when I put an 800-number up for, like, MTV or for Six Flags tickets. People call and say, "Now, how do I get there? Whatís the directions?" They call for everything other than what you listed. Every time you put an 800-number up, people call. I thought, "Oh, my god. Theyíre just going to burn our phones up." I mean, you canít do this.
Q. So how many people have requested refunds?
A. Not a huge number because I think at the end of the day there is some percentage that truly couldnít get through and for whom it really was a problem. There are others who said, "I got a busy signal and I didnít like it, but I got through; I used the service." So I think there are all varying levels of it.
Any time you have a crisis like this, youíre going to have a small group thatís going to be really hard to satisfy with anything other than, "Just take it, hereís your money." Iíve worked at theme parks before, and people say, "Iím unhappy." I say, "Can I give you your money back? What do you want?" And they go, "I guess my money back." And you give them their money back, and theyíre sort of like, "Okay, goodbye." Theyíre lost because what they really want you to do is fight with them, and theyíre really looking to sort of get rid of some of their anger through a fight. And the best way to do it is just take care of them. Donít let them leave the park unhappy.
You know what the reality is? Our policy generally is if you call up and youíve got sort of a legitimate beef, we usually just say okay. Weíre pretty reasonable on this stuff. My view of customer service in having been in a lot of these other businesses is just do what it takes to take care of people.
Q. Youíll still have to have some kind of reckoning or accounting of this.
A. We feel comfortable weíre well within the $20 million reserve or $22 million reserve we have. The main thing is -- what you want at the end of the day is -- to have done the right thing for customers. You hit a bad patch. You know what? Maybe theyíll forgive us. Some wonít. But at least you want to make sure you did the right thing by them.
Q. What is your revenue goal for chat-room advertising, say, if all chat-room minutes were sold?
A. Well, itís huge, but I would caution you against doing that because thatís like saying what if all the inventory on AOL were sold. That would be a $2 billion ad sale, and weíre not going to sell all the inventory and never should.
Q. Whatís the goal?
A. I think most analysts have us doing between $50 million and $60 million in advertising this year.
What people donít understand too with advertising, when you first start selling advertising, is give it time. If we had the 8 million subscribers and everythingís the same five years from now, weíd be doing three or four times the ad revenue we are just because of time and people. We go through this media buying cycle, and every time you go through a cycle youíll increase your share.
Q. What about the other online services? Did CompuServe do the right thing?
A. Whatís interesting through this period is we didnít have a wholesale defection of our members and they [CompuServe] were mad.
Q. It depends how you define wholesale defection.
A. Wholesale defection means a lot of people leaving outside the norm, and we didnít have a lot of that. I think that the last product I remember going -- and I actually talked to the fellow on this -- was "new Coke." People didnít go to Pepsi -- they got mad at Coca-Cola. They made íem go back -- just the pressure on the company.
Q. You talked about the "new Coke" experience with the Coke guys recently, in connection with this?
A. Yeah. I sort of said, "Talk to me." What it tells me is that CompuServe made an assumption that people think these products are fungible. If that were true, there would have been a wholesale defection to a CompuServe or someone else. They didnít. They said, "The lines are busy." What they wanted is AOL to fix it -- they didnít want to go somewhere else. So they [CompuServe] didnít benefit a lot, and I donít think anybody benefited from this. What we really had were members that were mad at us, not members who left us.
Q. That doesnít ring true common-sensically -- not that Iím accusing you of lying. Anybody whoís been on the edge would take that as an opportunity to go to an ISP.
A. AOLís market has been the mass market. Most people canít figure out how to use an ISP -- itís way too complicated. The functionality of an ISP is no where near as user-friendly as AOL.
Q. But if somebody is on AOL and knows enough about online services to be unhappy with access, then ...
A. Remember, most of the people have a hard time understanding how to pick up the next access number. Thatís what weíre dealing with. I want to reset the expectations a little bit: Two years ago, we marketed to people who had a computer and a modem. Now we market to people, and they get a computer and a modem to get AOL. Our member services people, if you go talk to them, say itís night and day from what they dealt with a year ago. People donít know the first thing who call today. "How do I turn it on?" They are frustrated by the whole experience.
And by the way, some people are saying, "Well, just do buy-your-own-access. You can still get AOL with no busy signals if you go to an ISP." Now Iím reasonably smart, but I donít know a lot about computers -- I just use one a lot. I donít know how to do that [connect to an ISP] and I wouldnít want to figure it out. And Iím paying you guys to just have it everything combined.
So I think you look at this world -- the techie users, somebodyís whoís a little bit sophisticated, youíre right. But thatís a very finite group of people, and not the big subscriber base for us. Part of our subscriber base is bring your own access, people who are already there reaching us through something else. . . .
Q. Real-life example: I took the opportunity of this trip to stop at my sisterís in New Jersey over the weekend. Sheís had a computer for two years and a modem for two years and did not want to have anything to do with anything online. But I made her sign up Saturday night.
A. Did you? To who?
Q. AOL. She said, "I get 50 hours free on this one."
A. How did she find the installation process?
Q. They just bought a new computer, so AOL was already installed.
A. Could she still sign up?
Q. Yes, but I was there every step of the way. So anytime she had a minor frustration, Iíd say, "Hit cancel," or whatever. If she were on her own, she might have gotten frustrated enough to stop.
A. When weíre starting to get to the kind of consumer we are now, like your sister, we are getting to the point where, as simple as we are, itís complicated.
Q. We also got to the credit card screen, and she said, "Are you sure I can do this? Is this really safe?"
A. Whatís interesting to me too is increasingly when we say, "Whatís your biggest problem?" the biggest problem is you have your computer here, and you have an AOL disk this close, and for six months it doesnít go in that slot. When you say, "Whatís the marketing challenge?" Itís to get you to do this [puts disk in slot].
Q. Sheís a prime example of that -- two years, a modem and a computer --
A. And she probably had a disk.
Q. Many disks.
A. They pile the disks up. They say Iím going to do it. ...
You know whatís interesting too is that in our research we find a stunning number of people would be willing to pay for a seminar to teach them how to use AOL. Pay money. Because they donít get all the functionality out of it.
Q. A new revenue stream.
A. If not us, at least somebody ought to be making money off this [laughs]. But that was sort of a stunner for me.
And then I got my mother a computer at Christmas. I said, "Look, Mom, Iím doing this now, youíve gotta learn computers at 72." And she went to the local junior college. And there was no room -- course was sold out. In this town, the computer course about how to use your computer and online is sold out in Tupelo, Miss. I go, "You know, this must be happening everywhere in the country." People are now recognizing -- if theyíre not using it, they are thinking about it, whereas three or four years ago, if you werenít using it, you didnít think about it.
Itís a funny time. Itís quite fascinating. If I could get intellectual about it for a second and get away from the pain of the day-to-day job, itís fascinating to watch this sort of pop into peopleís lives and see how it gets embedded. I love this whole thing that when you have a generation thatís born with the technology and brings it with them, they make the next generation do it. I made my mother use it. My son makes me use it more. And you almost donít have a choice. And at a certain point, you feel like, "If I donít do it Iím going to be overwhelmed by this tide." And I think that is yet another level. I love this stuff because Iíve been through a couple of these with 20-20 hindsight.
In my job, Iím at the point now where I live in a world that I can learn a lot real quickly. And I sort of told the guys that I work with, "You know, should I get a lot smarter really quickly, or should I...? I mean, Iím reasonably smart, should I try and deliberately not get too smart about some of this stuff so I have a little better instincts on the consumer?" Iím way ahead of where our consumers are, but Iím way behind you guys.
Most of them say, "Look, we know all that stuff -- donít. Let me handle this. You just sort of keep me in check here."
Q. That kind of perspective is very valuable. The longer you stay at a place -- The Washington Post or wherever -- the more you become an insider and you lose that perspective, and you canít help as much.
A. I was my best at Six Flags theme parks the first two years I was there because I had a lifetime as a consumer with never any expectation I was going to work in the business. So I never looked at it in that way. First couple of years, I made a lot of observations that "Geez, we never thought of it that way" because they always thought about it all from operations, like, "Well, what we really want to do is run the train faster." [I asked,] "But did you ever notice youíre not making eye contact with any of your customers?"
My first week on the job there I worked as a street cleaner. I said give me the worst job in the place. I had on the little shorts and I was out cleaning streets -- worst job in the park -- and I learned a very valuable lesson. These people worked very hard, and they hated our customers. The reason they hated the customer is they thought their job was to keep the park clean, not to give [the customer] the best day of their life. The only reason they were cleaning the park was because a dirty park would give them not the best day of their life, and they didnít connect the two.
And then I looked at the employee handbook and it said our number one concern is safety. And I said, "No, itís not, our number one concern is our guest. Weíre only interested in safety because itís the number one concern of our guest." And then we had to overhaul the culture because everything was about operational considerations like that. Nothing was about the customer. I think that happens with every business, where you get so caught up in "speed up the process, do my production." Wait a minute -- the customer, remember?