Steve Case: He knew what people wanted

NEW YORK: To Steve Case, the customer always comes first.

That was his credo when he ran a juice stand in Hawaii as a kid, and later

marketed pineapple toppings for Pizza Hut or while developing his Internet

service provider America Online into such a giant that it could eventually buy

out one of America's media institutions, Time Warner Inc.

At the combined company, AOL Time Warner, Case will turn in his AOL chief

executive hat to be chairman of the new media powerhouse.

The ability to gauge public tastes and demands was never more evident than

five years ago when Case predicted that by 2005, AOL would be as big a force on

the Internet as Microsoft was in software.

Everyone laughed, including Microsoft supremo Bill Gates, who once told Case:

"I can buy 20 per cent of you, or I can buy all of you. Or I can go in this

business myself and bury you."

No one is laughing now that AOL is on the verge of closing its union with

Time Warner, valued at about $106.2 billion on Thursday, making Case the

undisputed king of the Internet, years ahead of schedule.

And yet despite his brash prediction, Case, 42, is no egomaniac.

He has about $1 billion in AOL stock, but he often eats in the company

cafeteria where he is said to be especially fond of the turkey sandwiches and

Sun Chips. He defines "office casual" with his usual garb of jeans and

sports or Hawaiian shirts.

The sight of Case and Time Warner chief Gerald Levin announcing their merger

last January was a contrast in styles. Few could remember the last time they saw

Case wear a suit, and almost no one could remember seeing Levin out of one.

Case owns a modest home outside Washington, D.C., where he lives with his

second wife, Jean, and five young children.

The key to his success has been in understanding how an existing technology

could affect ordinary people, making that idea accessible to a mass audience,

and then marketing it.

"Right now, there is too much focus on the technology and not enough on

the consumer," Case once said.

He caught the business bug early, selling lemonade, magazines, and plant

seeds with his brother Dan as a youngster in Hawaii. He also wrote rock music

reviews for his local paper to get free records and concert tickets.

Third wave



And even though he majored in political science at the prestigious Williams
College - where he sang in two new-wave rock bands - it was not government or

law that became his calling, but marketing and advertising. His focus became

clear after reading "The Third Wave" by Alvin Toffler, a book about

what an interconnected society might look like.

After graduating, he worked at Procter & Gamble in Cincinnati for two

years as a brand manager marketing, among other things, home-permanent kits.

Cincinnati was one of two cities in the country that were part of an experiment

in interactive television, Qube, which was being test-marketed in a joint

venture of Warner Bros. and American Express.

Continued...

It was a crude system, but Case was enchanted by the possibilities. By 1982,

when he had moved to Kansas City to develop ideas for Pizza Hut toppings

(pineapple was one of his winners), he was already online.

"There was something magical about being able to sit at home in Kansas

City and talk to people all over the world," he said. "It wasn't a

great leap of faith to think that if you made it affordable and easy to use,

people would want it."

Case's passion grew into Quantum Computer Services, which he started in 1985

with two colleagues. It designed custom online offerings for the new crop of PC

manufacturers like IBM, Apple, Commodore, and Tandy.

In 1991, Case decided to mass-produce software for everyone and changed the

name of the company to America Online, which went public in 1992.

But he had trouble explaining to people what the company did. "It was

hard. People didn't quite get it," he told US News. Then, when they did

understand, they immediately counted AOL out because giants like Microsoft,

AT&T, and News Corp. were getting in the business.

Case made blunders along the way. In 1994, when the Internet was taking off,

he was slow to incorporate a good browser into AOL's software. Two years later,

he got in hot water with investors because of accounting irregularities.

And when AOL moved to flat-rate pricing, it was unprepared for the spike in

demand. Customers couldn't dial in, their e-mails weren't getting delivered, and

there was no one to answer their questions. Regulators forced the company to

offer refunds.

But with the help of Bob Pittman, his president and one of the founders of

MTV, Case righted the ship. The number of subscribers grew and advertising

revenue began flooding in. And investors, consumed by the mania for all things

Internet, flocked to AOL shares.

By the end of 1999, the stock traded at 10 times the price it had been in the

fall of 1998, giving Case the resources to do the once unthinkable - buy Time

Warner.

(C) Reuters Limited 2001.