http://www.businessweek.com/stories/2003-11-16/an-aol-believer-tells-all

Magazine

An AOL Believer Tells All


THERE MUST BE A PONY IN HERE SOMEWHERE

The AOL Time Warner Debacle and the Quest for the Digital Future

By Kara Swisher with Lisa Dickey

Crown Business -- 306pp -- $24.95

In the early hours of Jan. 10, 2000, Wall Street Journal writer Kara Swisher was madly e-mailing sources, trying to confirm an explosive tip from a colleague: America Online Inc., she had heard, was about to buy Time Warner Inc. Glancing at her "buddy list" on the AOL instant messaging service, she could tell that an unusual number of the company's top executives were also logged on. Within minutes, though, they started blocking her instant messages -- an indication that something big was afoot and that the unusual access she had enjoyed with them had been temporarily suspended.

Utilizing many details like this one, Swisher has produced a solid if not surprising narrative in There Must Be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest for the Digital Future. The Journal's Silicon Valley gossip columnist has long enjoyed a closer relationship with her subjects than do many other journalists. And right from the opening chapter, it's clear that this book is as much about Swisher's personal ties to AOL as it is about the company's history and its ill-fated merger.

Moreover, although it's not intended, the book's very title seems to refer to her. In an old joke, an optimistic boy was convinced he would find a pony in a pile of manure if he just dug hard enough. That joke, says Swisher, became an AOL mantra -- but it could also be said of the author. Having recounted the company's rise in her 1998 book, aol.com, and having been an early cheerleader for the company, Swisher now offers a dutifully downbeat account of AOL's unraveling at the hands of Time Warner. Then comes a tacked-on conclusion in which she says she still truly believes in AOL's prospects. There's a fundamental disconnect: Swisher can't let go of that vision of the pony, even though neither hide nor hair is to be seen.

There Must Be a Pony is the second new book on the AOL Time Warner (TWX) merger -- and two more are on the way. It is certainly more authoritative than the first, Stealing Time, by Washington Post reporter Alec Klein. Swisher doesn't come up with any bombshells, but she provides a thorough rendering of AOL's rise -- partly by rehashing her previous book -- and of its heady engagement and disastrous marriage to Time Warner. Moreover, rather than simply stringing together a series of events, Swisher bests Klein by explaining how and why the calamity unfolded. For example, she notes that, more than anything else, former AOL Time Warner CEO Gerald M. Levin's decision to place AOL execs above the Time Warner brass on the organizational chart "set in motion the intransigence from the Time Warner troops toward their AOL leaders." It's hardly a startling insight, but it helps explain how things fell apart so precipitously.

Of the fresh details that Swisher does manage to excavate, many will be of greater interest to close watchers of the merger than they are to general readers. And none of them alter the story's basic building blocks. For example, in a 1998 e-mail, former AOL Chairman Stephen M. Case expresses a certain nervousness about the company's increasing market valuation and the need to buy a more stable source of growth. Later, after AOL and Time Warner had announced their intention to get hitched, Swisher informs us, Time Warner's then-President Richard D. Parsons (now CEO and chairman) advised Levin to back out of the AOL merger, because the dot-com economy was souring.

The most unusual feature of Swisher's work is its focus on the author herself. She recounts how top AOL executive Ted Leonsis once offered her a job at the soon-to-be-booming online service -- an opportunity that she turned down. Of a separate incident, she writes: "Not many people have a $10 million napkin, but I do." The souvenir she's talking about dates from 1999, when a Silicon Valley venture capitalist scrawled out a big-bucks offer for "the barest whiff of an idea" she had for an online news site, something that she never pursued. She also describes a 2003 soiree where she rubbed shoulders with the likes of Yahoo! Inc. (YHOO) founder Jerry Yang and cell-phone tycoon Craig McCaw. Recounting the evening reminds her that in Silicon Valley, failure is seen merely as the prelude to the next innovation. And that thought causes her to restate her faith in AOL. "I had to admit I was still a believer," she writes. "And no matter the cost of its failure, AOL might still be an important factor in shaping the future...."

Pony doesn't offer much backing for this assessment, however. Instead, it is a solidly reported account of a merger gone wrong, with an optimistic postscript added on. Such a conclusion cannot be explained by anything other than a leap of faith on the part of the author -- or a "profound love" of the digital future. That's a love Swisher is still not quite ready to criticize or question. By Catherine Yang


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