Made the internet accessible to everyone with dead-simple interfaces and genius distribution. Carpet-bombed America with free trial CDs, converting up to 18% of recipients. By 2000, they had 34 million subscribers and controlled half of all U.S. internet access.
What Changed
The $165B Time Warner merger in 2000 came right as the dot-com bubble burst, killing their ad revenue overnight. The cultures clashed catastrophically — old media versus fast-moving tech. Meanwhile, broadband rolled out and destroyed their dialup moat. Subscriber base collapsed 70% from 2002 to 2007 as the value proposition evaporated.
Where it Landed
Spun out at 1/100th peak value in 2008. Thrashed through multiple strategies and CEOs. Finally sold to private equity for $5B in 2021. A quarter-trillion-dollar empire reduced to a footnote.
The Principles
1.
Vision without execution is hallucination. Steve Case's own words capture the merger disaster — great strategy on paper, impossible in practice.
2.
Your moat can evaporate overnight. Dialup dominance meant nothing when broadband hit 40% annual growth and erased the need for AOL entirely.
3.
Culture clash kills mergers. Fast-moving tech startup meets stodgy media giant equals $99B write-down and the largest corporate loss in history.
Builder's Takeaway
3 warning signs your advantage is about to vanish:
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Technology shifts can make your core business obsolete in under 5 years
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Merging opposites for 'synergy' usually destroys value, not creates it
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When your unique content becomes commodity, you're just a dumb pipe
