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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.
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.
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
6 out of 10 is "okay" in my book. If I like it and want to re-read it some time later, it's probably 8-9. If it's outstanding, it's 10. 6 means "pretty good, room for improvement" as my English professor would say.
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
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.
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
Orwellian in the sense that all animals are equal, but some are more equal.
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.
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?
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.
IBM got out of HW,
Err... what planet are you from? IBM no longer sells PC's to retail customers at stores. Hardware in general remains about 35-40% of the business. For IBM, that translates to about 30 Billion dollars a year. It makes Sun look positively puny.
Even in PC's IBM sells more laptops to businesses than anyone else. IBM sells more servers than any other company by a significant amount. That is all serious money.
SirWired
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.
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!
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
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.
Pretty much everyone involved in the deal did, other than people who traded the stock at the right time.
Before buying Time Warner, AOL was buying up companies making technology important to them, such as Netscape & WinAmp. They didn't want to be dependant on anyone.
Time Warner didn't care about any of that stuff. They were content letting other people deal with those issues, and just providing the content.
The two merged, and really didn't mix well. Everything stagnated, and they blamed each other for the fall. AOL really only had one product, so when that started to lose popularity, they took all the blame, and Time Warner took over the company and tried to distance themselves from AOL as much as they could.
Ted Turner pretty much lost any power he had, and things he used to own went down too. The Atlanta Braves have had a huge cut in payroll. WCW was sold off for peanuts to WWF (now WWE) - supposedly just the wrestling rings and other equipment alone was worth more than the total sale price. WWE is making a lot of money selling DVDs made from the video footage they got in the deal.
Netscape got left to die a slow death, before finally getting killed off last year.
NullSoft hasn't been allowed to do anything interesting.
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.'"
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.
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