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There Must be a Pony in Here Somewhere
Kara Swisher's There Must be a Pony in Here Somewhere is subtitled "The AOL Time Warner debacle and the quest for the digital future." Debacle is not an over-exaggeration, as the chapters of the book unveil personal, professional, corporate and political dramas happening during the so-called merger. A reporter for The Wall Street Journal, Swisher knows many AOL executives personally, and according to her stories, frequently engaged in lively conversations conducted where else but in AOL Instant Messenger, available on PCs of top management and board members as the preferred means of communication.
The title of the book takes roots from a famous joke, attributed to Ronald Reagan, where a hopeful boy is dealing with a large pile of manure. When asked why he is so insistent about digging the pile with such enthusiasm, the boy replies that with such a pile there "must be a pony in there somewhere." If you read the press lately and followed AOLTW's stock ride, you probably know that the pony wasn't quite there.
It's amazing how many optimistic forecasts and wide smiles were presented to the press and general public on the day of the merger and long after it. The word "synergy" could qualify for the most popular noun of the year, used by AOL executives almost in every sentence.
As Swisher writes on page 18, "Most people involved in the deal seem to be suffering from a peculiar amnesia now, so it's easy to forget that kind of hype and optimism. Today, almost everyone near to this toxic merger runs screaming from it in an attempt to avoid any culpability. The denials come fast and furious: Not me. I wasn't involved. I thought it was wrong from the very beginning. And - most of all - Steve Case is a big, fat loser. This was always more familiar territory for me, since that was exactly how most of the world regarded Case throughout his career. For most of it, he had always and forever been a loser."
Well, you can tell that the author is not sucking up to AOL's ex-CEO.
Swisher's book is extremely personal. Unless you've been involved in AOL or Time Warner personally, you are probably not aware of the company's management. At the time, when executives of Yahoo, eBay and other Silicon Valley startups weren't just visionaries, they were cool, AOL's top management was rather bland and plain. They weren't the cool guys, they were just managing some dial-up ISP in Dulles, VA that somehow took over the United States with its goofy icons, goofy commercials, goofy sounds and likewise membership. The author takes you through the personalities of top managers, talks about the AOL-TW off-standish behavior towards one another, questionable deal and threatening techniques used by David Colburn and AOL's Business Affairs department.
The book is easy to read and is full of interesting details. For example, the day when the deal was announced, there was another company discussing potential merger with AOL. But since everyone was involved on Time Warner deal that was supposed to be "huge," Meg Whitman and eBay crew got almost no attention from America Online, with executives constantly leaving the room and portraying an attention span of five-year-olds. Perhaps if some executives paid more attention to eBay and discuss potential buyout, the Internet would look different nowadays.
Otherwise, the book looks like a classic business study on how failures happen and what to avoid when you are faced with the task of running world's largest media outfit. It's an easy and pleasant read, informative as well as entertaining. Don't expect technical details from it in regards to AOL's operations, load balancing and nationwide dial-up network, since Swisher's main audience is business types and readers interested in details behind the "deal of the millennium". The first chapter of the book is available online on New York Times Web site.
You can read more of Alex's reviews of business and technology titles. You can purchase There Must be a Pony in Here Somewhere from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, carefully read the book review guidelines, then visit the submission page.
Just read through the review and I just thought I'd point out that this may be the first time I've seen a review here get a rating below 7. And was the reason it wasn't given a higher rating because it wasn't quite what the reviewer expected? I thought of that after reading: "Don't expect technical details from it in regards to AOL's operations"
Time Warner got fucked
If the dollar is an "I owe you nothing", then the Euro is a "Who owes you nothing." - Doug Casey
"Bubbles can burst!?!?"
You have to hand it to Steve Case though - how we managed to convince the world's most powerful and valuable media empire to sell its soul for a dialup ISP with a proprietary service is truly one of the great feats of negotiation in business history. AOL would be trading for $2 now if not for Case convincing Levin to impale TW shareholders.
Most of the dotcoms managed by 'cool guys' failed. There was far too much emphasis on 'being cool' than having a realistic business model.
did the author take writing advice from al franken or something? The line Steve Case is a big, fat loser reminds me of the title of franken's fair-and-balanced book "Rush Limbaugh is a Big Fat Idiot"
"How AOL / Time-Warner came to be..." Uggg! I'd rather read about how AOLTW accidentally got flushed down the toilet, to be lost FOREVER!
"Who are in control, they are not in control of anything - they don't even control themselves!" - Glen Beck
Orwellian in which sense, language being distorted to control people's thoughts, or ubiquitous surveillance?
Simple, same thing that happened at HP / Compaq : greedy asshats at the helm that are able to make a gazillion dollars while destroying two companies in the process, destroying the shareholder value of those two companies in the process. Ask Carly about that one, and Mr. Case.
Glonoinha the MebiByte Slayer
This is not the sig line you are looking for... -- Old Jedi Sig Line Trick
Every time I saw AOL's name at the beginning of a movie, I shuddered... I think even The Matrix was a victim of this...
Slashdot's first reaction to VMware
You sure are on the ball. I heartily concur.
Sincerely,
Mark Cuban
Of course it turned out all to be a stock thing. AOL stock, at the time, was high-flying, and TW stock was looked down upon as this underperforming, boring old line stock. AOL would give TW a facelift for the 21st-century, and both sides would benefit from that 90s buzzword "synergy."
Ha! From trying to force TW staffers to switch internal mail systems to the laughable AOL mail system, to conflicts on the board level, to a failure to find true value out of the synergy, and then the stock market collapse, followed by the fleeing of subscribers from AOL, it was not to be. Now AOL/Time-Warner is back to being Time-Warner, the old line guys are getting revenge on the dot-com upstarts, and the whole thing seems like a bad idea gone wrong from the start.
Which it was.
Who here read the review mainly because of the title?
From day one, I could not understand how this was possible. I have not read this book, but it seems that every time something major like this happens, something just smacks me as being wrong. AOL does not make money. It didn't at the time, and it probably never will. Sun can not realistically make money. Apple clung on for dear life and will eventually falter -- iTunes can only hold out for so long. IBM got out of HW, look where they are. Novell embraced Linux and where are they? Doing much better than a few years ago. MS investing in Corel? Look where that is now.
Isn't there someone out there who would actually think of consulting with intimately aware industry experts (us, for lack of a better idiom) before believing the hype on balance sheets that list 95% goodwill as an asset?
Maybe I'm being too cocky in believing I'm better than the "experts", but I seem to be right more often than not.
Hope they didn't miss out important details about the AOL CDs. Were there lively debates about what to call the new CDs? Does it say which smart aleck decided to do away with the jewel boxes once they realized people were picking up thousands of CDs just to keep use the nice jewel cases and replaced them with shitty cardboard covers?
I'd buy the book if it had notes and chapters about AOL CDs.
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
I think you want to compare Carly to TW's Levin. For Case, the merger was a masterstroke. AOL would be in the gutter now if it hadn't tethered itself to the world's most valuable media company. It is pre-merger TW shareholders who should be out for blood, not pre-merger AOL shareholders.
It's only the megacorporation that smells like horse shit.
The CB App. What's your 20?
Well, you can tell that the author is not sucking up to AOL's ex-CEO.
you mean, the CEO that in 1998 gave 8$ million to a christian school where they "cure" homosexuals?
I hate seeing all the crossbranding on AOL/TW sites when all I want to see is the content. Specialized sites have always given me faster, cleaner, and more detailed news and information. For example, recently I needed to know an obscure fact about the Mozilla/Firefox browsers in a hurry. With Google I had to dig a big, but plugging the same search terms into mozillazine.org forums yielded the answer immediately.
I think the worst part of this merger is that the Atlanta Braves had to cut payroll this season for the first time in quite some time. We lost Sheff, Javy, and Maddux, for God's sake! Bring back Ted Turner.
Fine. I'll just go off and read some Agatha Christe.
"Prepare for the worst - hope for the best."
The Columbia Journalism Review has made this interesting report available. It shows the depth/breadth of media formats that Time Warner has control of. It's quite astounding, check it out.
-pararox-
Every AOL shareholder who wasn't smart enough to sell near the top of the bubble should fall down on their knees every day thanking Steve Case for preserving as much of that value as possible.
Q:How many libertarians does it take to stop a Panzer division? A:None. Obviously market forces will take care of it.
Sniff ... yeah, that'll come in handy.
BOOH-AH-AH-AH.
My life is an open book ... up to a point.
First off - yes, the merger made no fucking business sense whatsoever.
Watching it unravel was a great window into two disparate (and ultimately, mutually-exclusive) corporate cultures interact.
The most telling example was the reaction of "West Coast" (AOL/dotcom) culture with "East Coast" (Time-Warner/traditional media) culture when it came to what to do with their respective stocks/options.
West Coast culture says "W00hoo! The business rationale for this is pretty silly, but look at our stock price! People actually believe the hype. I could cash in my options and have fuck-you money , plus a few shares left over in case things work out. AWESOME!"
East Coast culture says "This is huge... but you can't just cash in your options -- that would take away your only motivation to make it work! Everyone'll look at you funny. Where's your loyalty? This kind of thing could get you kicked out of the country club! How could you?" (Or for 95% of East Coast employees, "What are these 'options' things again? And why do these West Coast people all seem to have them, and why are they so happy? I thought you had to be in a country club to do that sort of thing!")
OK, I'm stereotyping both the East and West coast cultures here, but you get my drift. When the worldviews of two sets of employees are that far apart, and especially when things start to go wrong, you're going to end up with a lot of bitterness from the boardroom on down, and such a merger is a recipe for disaster even when it does make business sense.
Was the merger a disaster? Sure. Are the old-line guys back in charge? Yup. But who really won? I'd argue that the AOL shareholders are the winners here, regardless of who's in charge of rehabilitating the broken down shell of the media giant.
Orwellian in the sense that it is similar to something that happens in a book by George Orwell.
Orwell's novel "Animal Farm" is a story about a revolution among the animals at a farm. They take control of the farm and establish a new order, free of oppression. There are a lot of symbols very unsubtly linking every part of the novel to the Russian Revolution, but one of the most visible is the barn.
Upon the overthrow of the Farmer and the establishment of Animal Farm, the animals decree a "constitution" for Animal Farm, establishing the inaliable principles by which Animal Farm is to be governed and which whatever method of administration is about to be determined would have to adhere to. This constitution is painted on the side of the barn, to be kept firmly in everyone's minds. It contains a number of points, some of them protections of the liberty of the animals, some of them (for example, a prohibition on alchohol) to ensure a healthy and distinctly animalistic way of life is followed. But the foremost and unifying principle, the single dictum on which Animal Farm and all it represents is founded, is the first: ALL ANIMALS ARE EQUAL.
An administration happens to be put into place where the pigs happen to hold all the power, and since this is an allegorical fairy tale, power corrupts. Gradually, the newfound freedoms of the animals cease to mean anything; gradually, the structure and way of life of the farm begins to be indistinguishable from the way it was before the revolution, only with the humans replaced with pigs. And as this happens, one by one, each of the clauses of the Constitution on the side of the barn become subtly perverted. Each guarantee the Constitution once provided the animals learn to live without; sometimes because security makes it necessary that principle become briefly abandoned, sometimes because the prosperity of the farm requires a little bending of the rules, sometimes simply because the animals wake up one day and find that the wording of one of the painted dictums on the barn is slightly different then it used to be, or is it, can you remember? And all the while, the spirit of the revolution recedes further and further from the animals' minds.
On the very last page of the book, as the farm's oldest animals sit and try to piece out exactly what has happened, the naarator allows the reader to simply read the side of the barn. And all it says is this:
ALL ANIMALS ARE EQUAL
BUT SOME ARE MORE EQUAL THAN OTHERS
I get these nifty little metal boxes, about half an inch thick.
In the famous words of one of the SNL skits, "You can put your weed in there"
This space for rent. Call 1-800-STEAK4U
Those were the days... ;-)
And - most of all - Steve Case is a big, fat loser. This was always more familiar territory for me, since that was exactly how most of the world regarded Case throughout his career. For most of it, he had always and forever been a loser."
Watching Steve Case from a distance, he always looked like one of those underestimated but really really shrewd guys to me.
I never paid for AOL (though I did use a free trial once), and I never owned the stock, but in my book, Steve Case is a big winner.
A) I give him credit for being able to, on at least one occassion which I was familiar with, bring innovative technology to market. I loved his the Commmodore 64 BBS service, QuantumLink, which he later turned into AOL. It had some of the same "least common denominator" aspects as AOL, but it also could do streaming download+playing of MIDI sound files at the same time I was typing and reading in chat rooms over a 1200 baud modem. Pretty fancy for 1987 in the DOS PC era.
B) The AOL service may have been lame and its customers clueless, but hey, Steve Case stayed focused on the customers and making stuff easy to use for them. Props for that. Even if it wasn't perfect, it was a lot better than most of the alternatives-- I could safely recommend it to friends/acquaintances for many years without having to go to their house and/or do maintenance on their PCs to get/keep it working.
C) He managed to grow his company like a madman for well over a decade, continued to hold onto and grow the business for 6+ years despite it being wildly overvalued, and then sold it out for a huge premium 3 months before the Internet stock market bubble burst. To me that is just an incredible feat of timing and business acumen, and one that was almost totally optimal for his shareholders (albeit not Time Warner's shareholders... but hey, he was the seller, not the buyer!) That wasn't just dumb luck. He knew what he was doing. He probably didn't know the bubble would be over in 3 months, but he knew his stock was way overvalued (and not just due to some sales shenanigans.) Hey, *I* knew in 1996-1999 that AOL was overvalued, but if I were CEO, could I have picked a better time to sell out and maximize the bubble-value for my shareholders? No way!
D) And I appreciate any money they poured into Mozilla.
So no, I don't think Steve Case is a loser.
--LP
The only reason all of these people are calling Steve Case a "loser" is because he beat them.
An excerpt from "How Ronald Reagan Changed My Life" by Peter Robinson
Chapter One
The Pony In the Dung Heap
When Life Buries You, Dig
Journal Entry, June 2002:
Over lunch today I asked Ed Meese about one of Reagan's favorite jokes. "The pony joke?" Meese replied. "Sure I remember it. If I heard him tell it once, I heard him tell it a thousand times."
The joke concerns twin boys of five or six. Worried that the boys had developed extreme personalities -- one was a total pessimist, the other a total optimist -- their parents took them to a psychiatrist.
First the psychiatrist treated the pessimist. Trying to brighten his outlook, the psychiatrist took him to a room piled to the ceiling with brand-new toys. But instead of yelping with delight, the little boy burst into tears. "What's the matter?" the psychiatrist asked, baffled. "Don't you want to play with any of the toys?" "Yes," the little boy bawled, "but if I did I'd only break them."
Next the psychiatrist treated the optimist. Trying to dampen his out look, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. "What do you think you're doing?" the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist. "With all this manure," the little boy replied, beaming, "there must be a pony in here somewhere!"
"Reagan told the joke so often," Meese said, chuckling, "that it got to be kind of a joke with the rest of us. Whenever something would go wrong, somebody on the staff would be sure to say, "There must be a pony in here somewhere.'"
First thing I think of is the tomatometer rating for games. Fresh games are rated at least an 8 (instead of 6 for movies), otherwise most games would be recommended.
Dogma - "let's just say we'd like to avoid any empirical entanglements."
By "fake wealth" I mean paper wealth, like the stock price of a company or the price of any other paper or electronic financial instrument.
You buy low and, if you get lucky, the price goes up; and if you can't convert all that wealth to cash, instead you buy a "real company", lots of real estate, or something else with intrinsic value.
Then, even if your original business goes belly up (like AOL's is doing) you are sitting pretty.
Time Warner's management and stockholders made a huge mistake, because they were greedy. But if I'm ever in AOL's shoes, I'd do exactly the same thing.
this is an interesting theory, and imho may have some merit. it took a catalyst to bring the whole thing down....
La via sola al paradiso incommincia nel inferno
I figure that Steve Case is no dummy and that he saw that his company was worth much, much less than its market cap. So he looked around and figured out how to turn its overblown value into something that would last a bit longer. He would use the "synergy" thing to sell it. If he hadn't done the merger, his shareholders would have taken a big bath when the bubble burst. He was beholden to his shareholders, not TW's. After the merger, his shareholders held more real value than before. It's like they had a big pot luck dinner with Time-Warner, except that only Time-Warner brought any food.
One should always know alot about a company before investing in them. Mutual funds help by adding diversity and professional management, but the investor should still note what stocks the fund is in to make sure it is being managed reasonably.
This deal helped some investors and hurt others. This is not atypical in the tech sector. Here is another example. Note the extremely high stock price in Jan of '00, just before the recession began later that year, and compare to the current price. Management of a major corporation can be a tricky thing. Buyer beware.
My private theory is that the bubble collapse is actually a side-effect of Y2K.
In two ways:
1) Tech spending boomed before Y2K as companies spent huge amounts on both hardware and software efforts to make sure they were ready for Y2K, had backup systems, etc. There was a huge drop in IT spending right after Y2K since companies already had all the equipment they needed. This hammered Q1 earnings for tech stocks in March/April and boom, the Internet bubble burst. This fact (reduced revenue and profits of tech firms) is well-documented in earnings reports of that time frame. I'm very surprised this hasn't gotten more press, other than that nobody wants to give the naysayers any credit for maybe have been, in some way they never anticipated, right.
2) The Federal Reserve had flooded the money supply right around Y2K to ensure there were no financial liquidity crises. When they re-tightened up (or at least stopped increasing the money supply) post-Y2K... boom, instant fiscal tightening contributing to a recession. I've never seen this documented, at least the re-tightened part, so take it with a grain of salt.
--LP
Ted said just a few weeks ago that he was duped then dumped in the merger deal. He went on to say how he was screwed on the deal and that he was known as the guy at the end of the hall because he refused to move out of his offices. He was the ghost walking the halls. He built his media and sports empire from a small local TV station in Atlanta into a major entertainment giant, only to be locked out of all the decisions and plans. Personally I will miss Ted's antics and genius.
Sig temporarily out of service.
It's all a matter of perspective really: if you were an AOL shareholder this is the best possible thing that could have happened. Basically you got to trade in your vastly overinflated dot-com dollars for something much more realistically valued. Of course TW shareholders would have the opposite perspective. You've got to give Case credit for that - he really couldn't have swung a better deal for the AOL owners.
This whole thread is filled with hind-sight discussions of whose stock was "really" worth the stock price, and who was proved to be brilliant by events, etc.
In the world-as-we-live-it, minute-by-minute, a thing is worth exactly what you can sell for at that minute.
If you guys are so GD fore-sighted, you should all be making serious fortunes in the stock market, bond market, futures markets, etc.
How many of you geniuses actually made $ from the AOL-TW merger?
Lew
"The Constitution, the WHOLE Constitution, and nothing but the CONSTITUTION."
After Carly's idiotic invasion of Compaq, long term employees at HP LOST a week's vacation. Then she set the pay curves to match Compaq's saving the company millions (true) but basically condemning thousands of employees to work at HP for the rest of their days with little hope of ever getting another raise. In the meantime, Carly stuffs her greedy pockets with millions in cash.
No- the parent is not a troll, and I urge someone with points to give it a 5 / insightful, because the book on Carly has yet to be written, and it will prove that she, like Case, is just a big fat loser.
RS
Shoes for Industry. Shoes for the Dead.
Except for the fact that there is nothing "dirty" about stock gains. Your analogy is seriously flawed.
Capital appreciation (stock gains) is, in the short term, tied directly to perception but over the long term, it more accurately reflects the real underlying value of the company. Nowhere in any of the many many finance classes I took for my MBA, can I find any reference to dirty money laundering being compared to stocks. Yes, fraud exists for sure, but I don't think you are suggesting that. You have implied that the sole fact of AOL having a high stock price means there is something "dirty" going on. And that, my friend, is just simply not the case.
There is absolutely NOTHING wrong with stock gains and capital appreciation. After all, Case and Levin didn't "vote" the price of AOL stock -- the market did. And the market, which is made up of individuals, decided the price of AOL/TW should be sky high. It's only natural (and expected) that Case would maximize his opportunities when the market places such a high value on his underlying company.
To do otherwise would be crazy (and he would be fired).
Johnny, tell him what he's won!
One problem with scenario 1:
.com's never had any earnings to speak of, so why would Q1-Y2K's lack of earnings make any real difference?
The real
Your theory has some merits, but as the parent AC post said, everyone knew it was a bubble. Poor earnings wasn't a new thing in that quarter, it was pretty much in line with bubble-expectations.
Regarding the Y2K part of your hypothesis:
Just before I graduated from college in 98 (a little Y2K nostalgia for ya), I interviewed with a lot of consulting firms who were in a hiring frenzy. It didn't take me long to sense the pattern and start asking them, "What's your strategy for keeping me off the bench once Y2K has come and gone?" None of the people I asked had a good answer. It was pretty obvious they had never once considered that businesses might need less outside help once The Mother of All Bugs was finally squashed.
Such conduct renders ratings meaningless.
There is no 'room' for a 'bell curve' which would give meaningful results.
When I read the parent, I immediately thought of this:
A reasonable question. But the tech stock indexes and large-cap leaders were not largely driven by dot com stocks (Amazon), but by Sun Microsystems, Cisco, Oracle, etc. (MS/Intel were more stable than those for obvious reasons.) I'm speaking of the drop in revenues and earnings those guys experienced. In a speculative gold rush, the people making shovels are the more sure plays for who makes the money. When those guys dropped, the momentum left the entire market. Everyone knew it was a bubble, but nobody knew when it would end and people who should know (Jeffrey Vinik, Fidelity Magellen manager) has famously shown they didn't know. The first quarter of earnings post-Y2K marked a new huge break in momentum for tech stocks.
At least that's my theory. I was not actively trading stocks at the time; I was more of a sideline watcher.
--LP
I'll bet if I had just said:
The Bible says: He that is without sin cast the first stone.
and left it at that, I wouldn't have had the parent post modded offtopic.
However, I opted to cite the entire passage as that is what I thought about when reading the 'grandparent' post and to avoid:
A text taken out of context becomes a pretext.
Also, this passage, to me, best shows the fallability of man and the hipocracy of perfectionism--traits that continue to haunt mankind to the present day....