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Case, Steve - Overview, Personal Life, Career Details, Chronology: Steve Case, Social and Economic Impact

aol online service services

America Online, Inc.


Steve Case is one of the pioneers of online services. Through his market-leading America Online, he was actively involved in the transformation of dial-up computer networking services from obscurity to a mass-market, multibillion-dollar industry. When Case launched Quantum Computer Services, the forerunner to AOL, in the mid-1980s, it was largely a text-based information and discussion forum. Advancements in graphical operating systems by the likes of Microsoft provided Case with the foresight to develop a graphical and user-friendly interface for his service, innovations that helped propel AOL to become the world’s largest provider of consumer online services.

Personal Life

Case lives in Fairfax, Virginia, and is divorced from his wife, Joanne, to whom he was married for 11 years. The couple has three children. He enjoys reading social history and political science.

Case was born on August 21, 1958 in Honolulu, Hawaii. His father was a corporate lawyer, his mother a teacher. He has an older brother, Dan, an older sister, Carin, as well as a younger brother named Jeff.

Case was an enterprising boy and was involved in a number of ventures with his younger brother throughout the boys’ childhood. When Case was six years old, the two of them opened a juice stand charging customers two cents a cup; many gave them a nickel and told the boys they could keep the change. For Case, it was an early lesson in high margins in business. Later, the brothers opened a company to sell products through a catalog and door-to-door. The two also shared a newspaper route.

While Case was a student at the Punau School, a private college-preparatory school in Honolulu, he wrote album reviews for the school newspaper. Although the position didn’t pay, it did get Case on the mailing lists of several different record companies. He began receiving free concert tickets and promotional albums.

Case then attended Williams College in Williamstown, Massachusetts, where he was a political science major. While in school, Case ran the student entertainment committee, which organized campus concerts and produced an album of some of the best musical offerings. He also became the lead singer in two rock bands, both musically fashioned after two relatively obscure new-wave groups, The The and The Knack.

In 1980 Case graduated with a B.A. from Williams and went to work in the marketing department of Procter & Gamble. He left the company after two years, having realized he was not comfortable working for such a well-established corporation.

Career Details

It was in his next job with the Pizza Hut arm of PepsiCo that Case first began to explore the personal computer. He was hired to work in new pizza development, which entailed traveling the country in search of innovative pizza toppings. He devoted his nights on the road to learning about the portable computer. He had bought a Kaypro CP/M personal computer and subscribed to The Source, one of the earliest online services. He was especially intrigued by the chance to talk with people around the world, which the service provided. Case’s fascination with the world accessible by computer was the first step in what would become his lifelong passion. Regarding the pizza company position, however, Case once said in an interview with the Washington Post, "I learned a lot about the big corporation experience, and that was good. But a lot of it was about leveraging business and not about innovating . . . It was all incremental rather than breaking new ground.

In 1983 Case was introduced to a start-up business, Control Video Corporation, by his older brother, Dan, at an electronics show in Las Vegas. Dan, an investment banker, was excited about the company’s first product, a service that delivered Atari video games to personal computers. Case was offered the job of marketing assistant, only realizing later that he had entered the company as the video gaming industry was dying. Control Video let most of its employees go but retained Jim Kimsey as chief executive officer. Kimsey, a former venture capitalist, retained Case to help him develop new capital.

In 1985 Case and Kimsey began a new company, Quantum Computer Services, Inc., which provided online services for users of Commodore computers, then a leading brand of home computers. Quantum quickly grew, and two years after the company was started, Case worked out an arrangement with Apple Computer, Inc. to provide his online service for Apple’s operating system and developing software for both the Macintosh and the Apple II. Soon, Quantum was signing similar deals with other companies, including Tandy Corporation and IBM, which was then the industry leader. While this was undoubtedly progress, the company’s overhead costs were prohibitively high, eating through the $5 million capital the company had received. In 1991 Quantum was renamed America Online—AOL, for short—and Case was appointed CEO, to replace Kimsey, who then became company chairman. AOL stock went public in March 1992, at $1.64 a share. The stock offering garnered $66 million for the company.

Case then focused his energies and the increased company revenues on usurping the two established leaders of online services—Prodigy and CompuServe. He developed a strategy for market dominance that included alliances with companies which would benefit AOL, dropping membership prices below those of the major competitors, and shipping out huge quantities of diskettes to potential clients, offering them a free trial period for the service. Membership began to grow, jumping appreciably each month, until by the end of 1993, it had surpassed the 600,000 mark. The company had a difficult time keeping up with such rapid growth, foreshadowing the service problems that would plague it for the next few years.

That same year, Case warded off two attempted buyout offers—the first from Microsoft cofounder Paul Allen. Allen, who had already left Microsoft, had purchased a 24.9 interest in AOL and had attempted to secure a seat on its board of directors. The second buyout offer came from Microsoft head, Bill Gates, who would subsequently go on to develop his own online service, bundling it with his company’s other popular software titles.

Case continued to explore new marketing strategies and either purchased or forged alliances with companies that would further its foothold in the online services marketplace. These included content agreements with the New York Times, Time, and NBC. He also developed a distinctive, user-friendly framework for his service, which was both intuitive and graphics intensive. By the fall of 1994, Case was beginning to establish a way to link his service with the World Wide Web, an increasingly popular arm of the Internet. Until then, AOL was essentially a closed network, meaning that subscribers could only interact with content provided by AOL, its vendors, or other AOL subscribers, rather than the provider-independent content associated with the Internet. The company first bought Advanced Network Services, Inc., which was experienced in building the fiber optic support needed to access the Internet. The December 1994 acquisition of BookLink Technologies and the following purchase of Global Network Navigator provided the means for AOL customers to browse the Internet with graphic browsing software from BookLink, which competed with Netscape’s Navigator browser.

As fierce competition heated up between the two leading web browser vendors, Microsoft and Netscape, Case came under significant pressure to choose one of the independent browsers for use on AOL. Until that point AOL subscribers were mostly restricted to using AOL’s proprietary software from BookLink, which lacked the performance and features of the leading browsers. While Microsoft had made heavy overtures to AOL, Netscape, which many inside AOL management favored, had given AOL a chilly reception. Presiding over the largest single base of web users, Case was especially wary of signing an agreement with Microsoft, which had recently debuted its Microsoft Network, a competitor to AOL. Thus, in 1996 he pulled off pair of stunning and controversial deals in which he formed a nonexclusive alliance with Netscape to use its browser, but made Microsoft’s Internet Explorer the primary one used with AOL services. While some Netscape executives characterized these actions as “slimy,” these agreements proved favorable to AOL.

Chronology: Steve Case

1958: Born.

1980: Graduated with B.A. from Williams College.

1985: Cofounded Quantum Computer Services, Inc. with Jim Kimsey.

1991: Quantum renamed America Online.

1992: Became AOL’s CEO.

1994: Acquired Booklink Technologies.

1994: AOL subscriber count passed 1 million.

1997: AOL subscriber count passed 10 million.

1998: Stepped down as AOL president while remaining chairman and CEO.

During this period, AOL continued to grow at an unprecedented rate, outpacing all its competitors in the number of new users. By 1994, AOL had more than 600,000 members; by March of the next year, membership exceeded to 2 million and continued to rise meteorically until, by August 1996, it tripled to more than 6 million. Two months later, Case announced that AOL would begin to charge a flat monthly rate of $19.95 for unlimited access to its service. Prior to the institution of this system, customers were billed a monthly charge of $9.95 for their first five hours, plus $2.95 for every additional hour spent online. Customers complained, however, that under the original rate system, the company was rounding online usage time up to the next minute, rather than basing billing calculations on a per-hour monthly rate. In addition to changing the rate structure, Case offered AOL users a free hour of online time to compensate for the perceived unfairness.

To manage help manage AOL’s sprawling services, in 1996 Case brought in Bob Pittman, founder of MTV and reputed as a successful brand manager, to improve the company’s customer service and better establish AOL as a consumer brand. This decision was seen as a partial retreat by Case on some of his earlier strategies. Pittman succeeded in stabilizing AOL by reducing subscriber growth to sustainable levels and improving AOL’s customer service reputation. For his efforts, Case rewarded Pittman in 1998 with a promotion to president and chief operating officer of AOL. Under this arrangement Case relinquished his title as president while remaining chairman and CEO.

Social and Economic Impact

Case’s important contribution to the information age was his vision of a mass-market online service, a vision that was translated into reality within a decade. Case understood—perhaps better than any of his counterparts at other online service vendors—how to obtain and market unique content that was broadly popular and accessible. His aggressive marketing strategies of mailing out millions of free disks to consumers and offering free introductory service helped create the largest service of its kind. More importantly, Case was an adaptive leader in the rapidly changing online services business; he was able to embrace new technologies and new business models as they presented a competitive advantage. The result was a multibillion-dollar powerhouse, headed by a man who just turned 40 in 1998, in the still young online services industry.

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