Two decades ago, back in the days of the earliest personal computers, when "going online" meant watching monochromatic text scroll across one's monitor at a torpid pace, Steve Case had an early vision of the wired life: millions of PCs connected to one another, allowing ordinary people, armed with simplistic software, to chat, buy things while sitting at home and get electronic news reports.
Back then, most people who heard his prediction thought he was certifiably loopy. But Case was undeterred. He quit his job with the marketing department of Pizza Hut to join a fledgling technology venture that would later become America Online.
Later, industry analysts predicted pure Internet service providers would overtake gated electronic neighborhoods such as AOL's. There were forecasts that the firm would get run over by Microsoft, AT&T or IBM. Some questioned whether Case was driving his company into the ground by spending millions to carpet-bomb America with AOL diskettes. And yet others wrote obituaries for the Dulles-based firm when it signed up more flat-fee subscribers than it could handle, leading to a spate of busy signals.
Through it all, Case stayed his course, remaining singularly committed to his original vision.
Soon enough, things started going his way--in a big way. First, AOL swallowed up its chief rival, CompuServe. Then, armed with a dizzying stock price, it spent $10 billion to acquire Netscape, the company that popularized the Internet browser. Now, AOL's $183 billion acquisition of Time Warner, in which he will become chairman of the media colossus, makes him, in the eyes of many in the tech world, the unquestioned leader of the Internet industry.
Those who know him well say megalomania isn't what is driving him. He's not the sort of guy, they say, who particularly likes to run a company with tens of thousands of employees, attend black-tie dinners or schmooze with politicians. He'd rather be in front of his computer, thinking deep thoughts, firing off e-mails and otherwise living that wired life.
But Case, 41, also has that commitment to the convergence of new and old media, to create--as he often mentions--"a medium we can all be proud of." And now that AOL's high-flying stock has given him the currency to go on a spending spree, buying Time Warner helps him complete that dream.
"He's had a religious, long-term vision of what he was building," said John W. Sidgmore, the chief executive of UUNet in Fairfax, who has known Case for six years. "This deal is sort of the culmination of that."
Or as Marc Andreessen, the Wunderkind who helped found Netscape, put it: "Steve's known exactly what he wanted to do for longer than most people knew there were even those opportunities out there."
Case, for his part, portrayed the deal yesterday as a necessary and foresighted marriage in the heady, rough-and-tumble world of electronic commerce, multimedia news, high-speed Internet connections and online communities.
"From our perspective, we've always believed that we were doing something important, trying to . . . position AOL really at the epicenter of the Internet," Case told CNN, a news operation his company will now own. "We've always thought of ourselves as an interactive services company, a media and communications company, really a new kind of company for this new economy. And what this really says is, now it's time to take AOL and the Internet to the next step."
The terms of the deal also will give Case something he wants: the freedom to think big. Day-to-day operating responsibilities will be handled by Time Warner Chairman Gerald Levin, who will become chief executive of the merged firm. The only person that Case mentioned would report directly to him is AOL's chief technology officer.
"The role I'm going to play is, I think, the role I can play best," said Case, who yesterday forsook his trademark denim shirt and khakis for a dark blue suit and yellow tie. "Certainly the one I enjoy the most is really being a strategist, thinking about maybe what might be looming around the corners without having to be burdened by what's happening today or this week or this month or this quarter."
His friends believe that will be a good fit for him. "Steve is very much of an introvert," said AOL's former chairman, James V. Kimsey, who hired Case in 1985. "He's most comfortable in front of his computer."
Selling Early and Often
Unlike Bill Gates, Steve Jobs or other technology industry titans, Case wasn't interested in computers as a youth. In fact, he has said the class he hated most in college was computer programming.
The young Case did, however, show a knack for entrepreneurship. Born in Hawaii, he and his brother, Dan (now the chief executive of investment bank Hambrecht & Quist in San Francisco), formed a company called Case Enterprises that sold everything from lemonade to magazines to watches. Later, at Williams College in Massachusetts, he started several businesses, including a lucrative airport shuttle.
After graduating with a degree in political science, he got a job in the marketing department of Procter & Gamble Co., where he was responsible for trying to hawk a new moist tissue coated with fabric softener. Although he helped to craft a catchy slogan--"Towelette? You Bet!"--the product flopped. It helped to teach him an important lesson: Even good marketing can't help a flawed product.
Next up was a marketing job at Pizza Hut. But at the same time, Case was becoming more fascinated with the nascent online world. He bought a primitive home computer called a Kaypro and the first generation of consumer modems, which, after much effort, he was able to use to connect to an early online service called the Source.
All he could do was send and receive text. But he could do it with people all over the world--something that fascinated him. "It was as if something magical was happening," Case recalled.
In 1983, his brother helped him get a job at a Northern Virginia company called Control Video Corp. that had the bright idea of transmitting video games to computers over phone lines. A few weeks after he arrived, the company folded. But Case and Kimsey, a Washington businessman, decided to pick up the pieces and create an online service for users of the Commodore 64 home computer.
Soon, the company expanded beyond the Commodore crowd, changed its name to America Online--and found itself with more than 100,000 subscribers.
Case made an early bet to make his service markedly different from CompuServe and Prodigy, then the big dogs of the online world. Instead of the tech focus of CompuServe or the electronic shopping-oriented Prodigy, AOL would concentrate on making its service easy to use and promoting user interaction through chat rooms and message boards.
It was a hit.
By 1994, AOL had 1 million members. Although some technology observers lampooned AOL as the "Internet on training wheels" and suggested that ISPs such as AT&T's WorldNet service, Erol's or EarthLink would put the company out of business, the easy-to-navigate AOL grew ever more popular with ordinary computer users.
So popular that in late 1996, when AOL announced that it was offering unlimited monthly access for $19.95, so many new subscribers climed aboard that the firm's phone lines were jammed for weeks. But Case quickly promised to set up tens of thousands of new phone lines, which stemmed a much-feared exodus of customers.
By 1997, AOL was doing so well--and CompuServe was faring so poorly--that AOL decided, with telephone company WorldCom, to buy its onetime rival. The shopping spree didn't stop there. AOL picked up dozens of smaller Internet-related firms. And then there was Netscape--the biggest deal.
Knowing the Consumer
These days, Case coolly dismisses those who doubted him in the early years. "I never gave much heed to people who predicted our doom," he said, smiling, in an interview yesterday. "They were irrelevant because they never understood what the customer wanted."
When it comes to consumer behavior, particularly with regard to technology, there are few executives who get it better than Case, say many in the computer industry.
"Fundamentally he's smarter than the rest of us, and he's certainly smarter than his competitors," said Andreessen, now the chief executive of Loudcloud Inc. in Silicon Valley. "He understands the business he's in better than anybody else."
Andreessen calls Case "half nerd and half marketing guy."
"He's enough of a nerd to be really into online services, but he has all the marketing skills to understand how to make it work," he said.
Intensely private about his personal life, Case is married to AOL's former chief communications officer, Jean Villanueva Case. His 9 million shares of AOL stock are worth about $650 million at yesterday's closing price.
After naming media executive Robert Pittman as AOL's chief operating officer in 1997, Case has devoted more of his time to charitable efforts, pushing AOL's causes in political Washington and hobnobbing with the local technology community. "He's been in training for this sort of high-profile role for a couple of years now," Sidgmore said.
Case's new role perches him above the fray in the combined AOL Time Warner, leaving it to Pittman--who once worked for Warner--to navigate the intensely political culture of the media giant.
Friends say the new position appeals to Case, who is most comfortable, at work or at home, in front of his computer.
"He genuinely likes being online," Sidgmore said. "He really believes in the product he's pitching."
CAPTION: AOL Chairman Steve Case will take on a more visionary role as head of AOL Time Warner.