AOL may have moved its headquarters from the Washington area long ago, but business leaders in the region say the media company has long been one of the chief forces that shaped the region’s technology ethos.
Tuesday’s announcement that Verizon is set to buy the company that brought dial-up Internet to millions of Americans is the latest chapter in the online giant’s storied history.
The journey began in 1985, when co-founders Jim Kimsey and Steve Case set up a company named Quantum Computer Services in Northern Virginia to offer online services
Less than a decade later, Quantum had renamed itself America Online and the company grew rapidly, helping ordinary folks connect over the Internet. The “Welcome! You’ve got mail” chime became a cultural phenomenon, and millions used the company’s Instant Messenger service to chat back and forth.
AOL’s Washington operations flourished during the ensuing Internet boom, growing from hundreds of employees to thousands. At its zenith, the company’s Dulles headquarters spanned 1.2 million square feet and turned sleepy Loudoun County into a bustling tech hub.
“At the time, Northern Virginia was the center of the Internet universe and AOL was the shining star,” said James C. Dinegar, president and chief executive of the Greater Washington Board of Trade.
Its massive physical presence aside, AOL brought a spirit of community among technology companies in the region that continues today.
“AOL has been a transformational engine for technology and innovation throughout our region,” said Bobbie Kilberg, president and chief executive of the Northern Virginia Technology Council.
As AOL grew, it quickly gobbled up a host of upstarts until, in 2001, it made its biggest splash, taking over the venerable media giant Time Warner. AOL used its high-flying stock to purchase the media conglomerate, but the marriage between old and new media proved to be a troubled one.
When the Internet bubble burst, AOL’s fortunes began to decline. Customers started to defect to faster broadband providers, and new players began an assault on AOL’s business model, which aimed to keep users within a “walled garden” of digital content.
Amid the hemorrhaging, the company paid a costly fine over unconventional advertising deals, shed employees by the thousands and trimmed its office space in Virginia as it pivoted from an Internet company to one focused on online advertising. Top executives quit the company, including Case and vice chairman Ted Leonsis.
In 2007, AOL decided to relocate its corporate headquarters to Manhattan. Although the company’s leadership moved north, many of its 4,000 employees stayed in Dulles. Time Warner and AOL parted ways in 2009.
Dinegar and Kilberg say that despite the upheavals, the company never really left.
“AOL spawned a new generation of community involvement and investment across the region,” Dinegar said.
Steve Case went on to found Revolution LLC, an investment firm whose mission is to find and support grass-roots entrepreneurs, including those in the Washington region. Revolution is an investor in 1776, the D.C.-based tech incubator.
Leonsis heads Monumental Sports and Entertainment, the owner of the Washington Wizards, Capitals, Mystics and Verizon Center. Kimsey is a prominent philanthropist and has served on the board of government contractor Triple Canopy.
AOL alumni went on to fuel a new wave of businesses in the region. Former LivingSocial chief executive Tim O’Shaughnessy is an AOL veteran. So is Lisa Hook, who leads Sterling, Va.-based telecommunciations company Neustar.
AOL’s presence in the Washington region today is made up of about 1,300 employees who work primarily in the company’s engineering and technical divisions. Baltimore is home to AOL’s advertising division, a legacy of the company’s 2004 purchase of Advertising.com and a key asset in Verizon’s purchase of AOL.
The company has leased out a large chunk of its Dulles corporate campus in recent years and now operates in 650,000 square feet of space. AOL also sold a data center last year for $33.1 million. AOL officials said there are no plans to change operations at Dulles as a result of the merger.
The union of AOL and Verizon, which also has a significant Washington presence, could be a boon to the company, Dinegar said.
“They went quiet for a while, but now they’ll be even stronger,” he said.