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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.
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.
More precisely, Time Warner's pre-merger shareholders were, and AOL's pre-merger shareholders got a massive gift.
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.
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-
My old physics teacher once told us a story about how his mathy brain fails to mesh with the rest of the world. He had cable installed. The repairman came in, got him up and running, and left. About a week later, the cable company sent in a survey asking him how the repairman did.
He thought, "Okay, the scale is 1-10, meaning 5 should be around average. I think I got better than average service." Then he proceeded to fill the survey with 7's and 8's.
A couple more weeks go by, and he gets a call from the cable company, apologizing for the poor customer service he received and asking if there was anything they could do to make him feel better.
I'm not totally sure I remember the punchline correctly. However, I think after about forty minutes of trying to explain why "7" wasn't a bad thing under a normal gaussian distribution, he broke down and asked for a month of free cable just to end the phone call.
You want the truthiness? You can't handle the truthiness!
Giving a score, and then completely invalidating it by demanding perfection in it, is used by a lot of organizations. It perfectly captures the underlying evil behind managerial "rah rah we're a team and we're the best" thinking.
Kia Motors does this. When you buy a car or get service, you're warned to give full marks (10/10) across the board if you want the guy who changed your oil to keep his job. In fact, although Kia calls you independently to get the scores, if you give anything under 10, the desk operator will ask you, "Do you really want to do this? The person who helped you will be fired if you don't give the 10."
Col. Hackworth, a US expatriate (and badass) who does a lot of writing about bullshit in the Army, mentions that this kind of thing got added at one point (around the early 60s) where every soldier had to be a perfect marksman on pain of being demoted. The way soldiers would get around this was by having a buddy stick holes in their paper targets with a pencil indicating perfect shots.
That cable installer who put in your physics prof's cable was most likely fired instantly, just because your prof understood statistics and not managerial politics.
There's no sig like this sig anywhere near this sig, so this must be the sig.
FYI, most of Hawaii is owned by one of several land trusts. Dole and the Bishops are two of the bigger ones. Beyond the beaches and than the military reserves there isn't a lot of government owned land there. Of course the Bishop land funds the Kahmehahmeha schools and those aren't all bad. Case wasn't really laundering money, he just got the long end of the stick from TimeWarner (as well as all his company's shareholders).
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Question from the floor:
Who believes that part of the bubble bursting may have stemmed from the AOL/TW merger? TW suddenly realizes "Holy shit, these people just bought us with fake money".
Suddenly, everyone realizes that the impossible has happened (all that fake value has purchased real value) and the system corrects itself by removing all other fake value.
I mean, everyone I know (business and geek alike) knew it was a bubble, but that knowledge didn't burst it. Perhaps it took a real economic incident to convince the 'system' of the problem?
ummm....what crime? You're saying that he should have violated the law and NOT sought to increase shareholder value? He was employed by the shareholders and was LEGALLY required to do the sort of thing he did. If you don't like it, then take up the issue with the US Congress. I don't like it either, but he not only has done nothing illegal; he has done what was required of him BY LAW.
BTW, the reason rich people buy 5,000 acres is because they don't want people despoiling it. In the middle of it, instead of constructing a visitor center, they construct a home. If your concern is preservation of the natural beauty, I'd suggest that a rich man's estate, owned and administered by one man for his personal benefit, will have less impact on the environment than a public park, owned by everyone, administered by everyone, for the benefit of everyone.
the worst merger in history
It was not that spectacular, what about the Burroughs/Sperry merger? Compaq/Dec (or was that a takeover?), and those are just some of the IT ones which bombed. A seriously nasty one was when Swissair took Sabena on - the black holes in Sabena's books drove Swissair bankrupt.
AOLTW was just a good bit of Dotcom business, a totally overvalued company took advantage of that valuation to buy some serious real-estate. Nothing special, apart from the sums involved.
Mielipiteet omiani - Opinions personal, facts suspect.
I was using the term "punishment for his crime" in a sarcastic manner. He didn't commit any crime, as another poster pointed out, he converted speculative value into real value. He cashed out of a bubble. And, as another poster stretched the analogy, converting 'dirty' money into 'clean' money is laundering. Personally, I don't consider doing acquisitions for stock using 'dirty' money - it's just business. Time Warner got jobbed.
As to your 2nd point, it's moot. As the other poster pointed out, most land in Hawaii is owned by trusts or REITs. The fact he cashed out and took a big plot isn't what made me sick, it's that he's rewarded so hansomely for what amounts to a swindle.
And as for privately held land doing less damage than do the environment than a state park, that was summed up best by the guy who responded to you.
"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."
Your statement lacks scope. Time Warner failed every attempt at getting the internet "right." The very expensive "Full Service Network" in Orlando was considered a failure. Time Warner's "Pathfinder" portal was not a top destination for web surfers. Not to mention you had the history of Atari's "failure" coming from the Warner side of Time Warner.
Compare that to AOL. AOL (or so they thought) understood the internet. This was the company Microsoft was scared of. They owned Netscape. Nullsoft WinAmp. ICQ and AIM. Digital Cities. Mapquest. Early investor in many technologies like TiVo, and shareholders in Amazon.com and eBay (and they had first right to acquiring both companies).
AOL had a problem getting into broadband because all the cable companies blocked them. AOL needed Time Warner Cable. Time Warner needed a coherent online strategy that AOL could provide them. The deal made absolute sense. And furthermore, AOL as an outsider who understood the new economy could go over the heads of the various fiefdoms that remained fiercely independent since the original Time and Warner merger, not to mention the acquisition of Turner Broadcasting shortly thereafter. AOL was to deliver the "synergy" that even Steve Ross could not deliver from the original merger from 1989/1990.
And what do we have now? Short-sighted Time Warner executives calling the shots. The very same executives who failed to encourage the FCC and FTC to force open Comcast's pipes during their acquisition of AT&T Broadband. So AOL is having to go after add-on services to other broadband customers because none of the cable companies will allow them first tier billing. Even Time Warner Cable shafts AOL and pushes RoadRunner which is co-owned by Microsoft. Lay the blame for the failure of synergy at the door of Time Warner, not AOL...
"Right now, somewhere in this world, Scott Baio is plowing a woman he doesn't love," - Peter Griffin, *Family Guy*
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.
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
Earthlink/Mindspring? I worked for them shortly after the merger; it was a mess. A bunch of Mindspring people wanted to defect and start their own ISP called SpringHeads, which would have been pretty cool, but of course that was mostly just a dream...
Mindspring was once cool enough that they allowed drinking (yes, alcohol) at work, although that policy changed for legal reasons. Employees were generally happy, and their customers LOVED them. They were respected among techie people, and widely used by non-techie people too. Internally they ran by far the best CRM software I've ever seen with a nice big stable UNIX backend. Then Earthlink came along and we had to start changing everything, moving from the easy-to-use reliable web-based CRM tools to the Windows-based buggy pile of crap Earthlink was using (with the #00ff00 green status message that scrolled across the top of the screen repeatedly that nobody knew how to update or turn off), supporting weird-ass DSL connections that we weren't given any tools to troubleshoot, and... many more significant changes I can't think of at the moment. We heard horror stories about how employees were treated in legacy ELNK callcenters (imagine a big room with rows of small desks, no cubicle walls, no assigned seating, and obnoxious Lucent office phones instead of kick-ass Aspect call-center phones like we had).
And then the company closed all their callcenters and outsourced everything. Very glad I left long before that.
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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.