E-BUSINESS SPECIAL REPORT
The Case Against Case

As tenures at companies go, Steve Case's trajectory at AOL was similar to that of a bullet fired straight up -- it ascends at a fast rate but eventually plummets.

Case is widely credited as a visionary who grew AOL from a run-of-the-mill Internet service provider into a tech bellwether. But on the heels of the much-touted merger with old-media giant Time Warner, which was supposed to leverage both companies' content, advertising and broadband capabilities to drive growth, Case has encountered little else but failure.

Last week, Case resigned his chairmanship under pressure from stockholders who have lost tens of billions of dollars since the merger. Is his departure an isolated event, or does it reflect a general failure of new-media executives at old-economy companies?

A Whole New World

IDC analyst Jonathan Gaw told the E-Commerce Times that the question does not revolve around old versus new economy, but rather around an entrepreneurial attitude versus a mature company approach.

"Entrepreneurs are great at startups, and they're really crappy at big companies," he said. "It is more of a function of stages. Every company is at a different stage, and you need different kinds of leaders for different stages."

In Case's case, his hard-charging attitude and vision of AOL as an online mecca for fun-loving consumers and audience-seeking marketers were just the ticket when the company was growing from a small Virginia-based company into the world's largest Internet service.

In essence, Case was almost restarting AOL with each evolution of the online service, making him an ideal leader for the company in the pre-Time Warner days. But the rules changed after the merger.

Case's Problem

When AOL bought Time Warner, Case attempted to meld his entrepreneurial spirit and new-media approach with Time Warner's traditional culture and mature management style. Those efforts failed -- likely because the skills required at an old-economy company are so different.

Yankee Group program manager Andy Efstathiou told the E-Commerce Times that although the heads of Internet startups have diversified backgrounds and roles, in general they all work on developing a product and trying to identify a market need. These executives also build their workforces from scratch.

On the other hand, execs at mature companies spend a much larger percentage of their time selling existing products, as opposed to developing brand-new innovations. Old-world company executives also have established workforces, so they need the political skills to deal with those employees.

With such differing required skill sets, Internet executives likely are not a good fit to run old-world enterprises, Efstathiou said.

Enlisting the Old Guard

Like many entrepreneurs, Case is not disappearing entirely from his role with the media giant. He will remain a member of the company's board of directors and will co-chair its strategy committee.

AOL officials were not available for comment on this story.

Case's Next Case

In a press release announcing his resignation, Case did not detail his future plans. Efstathiou noted that Case's skills could be useful in starting another company, or possibly entering the venture capital or investment banking fields. It seems relatively safe to say, though, that he will not become head of a Union Pacific Railroad or Dow Chemical (NYSE: DOW) anytime soon.

"He would understand essentially what the value of the different assets are in order to provide more accurate pricing as well as better corporate fits for these types of consolidations," Efstathiou said. "Over and above that, he has lots of contacts in the industry as well."

Although Case's future career path is uncertain, the eventual outcome for AOL Time Warner is even murkier. After posting the largest quarterly loss on record last year, the company is in dire straits. Under new leadership, will AOL Time Warner succeed in integrating its disparate corporate cultures, reviving its stock price and emerging as a unified force to be reckoned with? Or will it scrap the stated goals of the merger and rely on its old-economy properties to generate revenue, eventually spinning off the AOL division entirely? Only time will tell which way this merger tale will end.