Evolve or farewell--goodbye, AOL
Technology has compressed the time of business evolution drastically. Hi-tech firms can live an entire life cycle: rise from the seed of an idea, flower in full bloom and then slowly sink back into the muck in about ten years, soon to become a fossil. Compare this to the slow movements of last century manufacturing industries like US Steel, Westinghouse and General Motors, who took 50+ years to visibly change how they did business. Microsoft came from nothing to become the largest, most significant company to end up as a less than dominant player without Bill Gates; all in 25 years.
Silicon Valley is littered with the ravaged faces of the old tech whores tottering up and down Hwy 101, still plying their wares and occasionally getting a little action. Remember Atari? Silicon Graphics?
Knowing about this punctuated lifecycle, exit strategies become even more significant for tech companies. The smaller, venture-backed ones, have this down to a science. The larger ones, though, always seem to stay at the party a little too long.
Case in point: AOL. Their original business made sense, they were a modem bank providing online access, competing against Compuserve and similar fledgling access providers. They grew into a kind of Mr. Roger's Neighborhood for early Internet users who knew enough to want to get online, but didn't have the ability or the know how to get a real connection. Demphasizing the ISP part of their business, they continually strengthened the Muppet end of the business, growing bloated enough to gobble up Time Warner.
Today AOL is a huge, meaningless company that lingers and shambles through the Internet like the last guest at a party who won't take the hint and leave. Why AOL? What's their differentiator? What's their market? What are their strategic alliances? What's new about what they do?
The only time that you hear about AOL these days is when they commit a social gaffe like dumping three months of all of their users' search data onto the open internet or when one of the few executives at the company that historically "got it", Ted Leonsis, quits.
So whereto AOL?
I have three suggestions:
1. Divest everything that is not a core business (meaning TIme Warner) and modernize your core business about building a safer Internet
2. Bring a newer, hipper management team and give them the charter to do a complete corporate makeover including image, mission and management.
3. Have a summit meeting, invite smart thinkers across the world to Dulles, wine and dine them for a weekend and come up with what AOL must do to be meaningful in the new millenia.
Failing that, I recommend that the company find the nearest tar pit and leap in.
Posted on September 18, 2006
