How I Built This: AOL: Steve Case

Full podcast here.

  • In the 1990s AOL mailed free CD-ROMs to almost every household in the US

  • Steve Case was as relentless as he was ambitious. During the day he was doing product development for Pizza Hut. At night he would tinker with his computer. 

  • In the 80s a modem was considered a peripheral, nonessential part of computing. (2:47)

  • [When Steve started AOL] The market was pretty small. 3% of Americans were online for an average of 1 hour a week

  • I believed that huge companies were going to be built on the back of the internet

  • I wanted a deal with Apple. I moved from DC and got an apartment in San Francisco just to do a deal with Apple. They were skeptical. Every day for 6 months I showed up at their office. They said stop bugging us. I wanted the deal. I figured someone at Apple was going to say yes. I just needed to find that person

  • AOL was viewed as a fringe, hobbyist thing that wouldn’t amount to much. But I still believed. I kept at it. 

  • Until 1991 it was illegal for most people to connect to the internet. At the time it was a network of computers used by researchers and the department of defense. 

  • The turning point for AOL: Congress passed legislation that allowed the internet to be commercialized. AOL had convinced PC manufacturers to build modems so they were standard and not peripheral

  • AOL was the first internet company to go public. They had less than 200,000 customers. The first decade was hard and slow. The second decade is when AOL took off.

  • Steve knew the internet had finally arrived when AOL moved to unlimited pricing and the network collapsed. We were down for 23 hours. It was a national news story. The internet has arrived. 

  • Microsoft almost bought AOL. Microsoft wanted its own portal to the internet. Microsoft was going to bundle it with every copy of windows. It came down to a close vote but the board decided not to sell. 

  • Fortune magazine had Steve Case and Bill Gates on the cover asking who was going to win the battle for the internet. The answer was none of the above. 

  • Why did AOL need a merger with Time Warner? AOL had a good run. $150 billion market cap. 50% of all internet traffic went through AOL. But we were stuck in dial up. We had no path to broadband. It was all controlled by the cable companies. Time Warner had the largest cable network. We needed their broadband footprint.