1
00:00:04,120 --> 00:00:07,160
Speaker 1: Get in touch with technology with tech Stuff from how

2
00:00:07,200 --> 00:00:13,800
Speaker 1: Stuff Works dot com. Hey there, and welcome to tech Stuff.

3
00:00:13,840 --> 00:00:16,759
Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer with

4
00:00:16,800 --> 00:00:18,920
Speaker 1: How Stuff Works, and I heart radio and I love

5
00:00:19,079 --> 00:00:23,360
Speaker 1: all things tech. And in our last episode, I traced

6
00:00:23,400 --> 00:00:26,200
Speaker 1: how A o L became a dominant player in the

7
00:00:26,239 --> 00:00:30,320
Speaker 1: dial up online service provider business, leading to the incredibly

8
00:00:30,400 --> 00:00:34,199
Speaker 1: ambitious merger with Time Warner to form a o L.

9
00:00:34,320 --> 00:00:37,040
Speaker 1: Time Warner and I talked about how the dot com

10
00:00:37,120 --> 00:00:40,519
Speaker 1: crash and the rise of broadband dealt a double whammy

11
00:00:40,560 --> 00:00:43,400
Speaker 1: of a blow to the brand new company, making the

12
00:00:43,440 --> 00:00:48,200
Speaker 1: merger look like it was premature and wildly too expensive

13
00:00:48,320 --> 00:00:51,760
Speaker 1: of a move for both companies, and I ended mentioning

14
00:00:51,800 --> 00:00:55,240
Speaker 1: that Steve Case, the last remaining founder of A o L,

15
00:00:55,440 --> 00:00:58,640
Speaker 1: stepped down from the board of directors in two thousand five.

16
00:00:59,120 --> 00:01:02,360
Speaker 1: But not every ing was dark and dismal for A

17
00:01:02,480 --> 00:01:05,600
Speaker 1: o L. In two thousand five, the company was being

18
00:01:05,720 --> 00:01:08,760
Speaker 1: eyed with interest by some other big names in the

19
00:01:08,800 --> 00:01:12,520
Speaker 1: text sphere. There were stories that both Microsoft and Google

20
00:01:12,680 --> 00:01:15,320
Speaker 1: were looking at A o L as a possible acquisition

21
00:01:15,360 --> 00:01:18,639
Speaker 1: if they could convince the merged company to break up. Again,

22
00:01:19,360 --> 00:01:21,560
Speaker 1: A O L had repositioned itself with a bit of

23
00:01:21,600 --> 00:01:24,640
Speaker 1: a renaissance. At the end of two thousand four, many

24
00:01:24,760 --> 00:01:28,760
Speaker 1: people were still using lots of A O L's services,

25
00:01:28,800 --> 00:01:32,920
Speaker 1: including A O L Instant Messenger and map Quest, which

26
00:01:33,160 --> 00:01:36,720
Speaker 1: the company owned. The A O L dot Com website

27
00:01:36,760 --> 00:01:39,960
Speaker 1: offered up the content that previously only A O L

28
00:01:40,040 --> 00:01:43,640
Speaker 1: subscribers had been able to access, and it was all free. Well,

29
00:01:43,680 --> 00:01:45,960
Speaker 1: I mean, it was his ads supported, but you get

30
00:01:45,959 --> 00:01:48,800
Speaker 1: what I mean. However, al L was still making some

31
00:01:48,880 --> 00:01:53,880
Speaker 1: really big business moves while things were looking uncertain, and

32
00:01:53,960 --> 00:01:56,880
Speaker 1: that just made people kind of wonder what was going on.

33
00:01:57,000 --> 00:02:00,120
Speaker 1: In two thousand four, the company had agreed to acquire

34
00:02:00,000 --> 00:02:04,520
Speaker 1: a startup called Advertising dot Com, Inc. And I'm pretty

35
00:02:04,520 --> 00:02:07,320
Speaker 1: sure you can guess what business that company was in

36
00:02:08,040 --> 00:02:10,840
Speaker 1: the division We get a rebranding in two thousand thirteen

37
00:02:10,919 --> 00:02:13,880
Speaker 1: as A O L Networks, partly to send the message

38
00:02:13,919 --> 00:02:17,680
Speaker 1: that services could span across different types of screens, not

39
00:02:17,840 --> 00:02:22,320
Speaker 1: just computers, but televisions and phones and other devices. But

40
00:02:22,440 --> 00:02:26,320
Speaker 1: executives over at the time Warner side of this company

41
00:02:26,480 --> 00:02:29,840
Speaker 1: weren't really head over heels in love with A O L.

42
00:02:30,320 --> 00:02:33,600
Speaker 1: Before the merger, A O l's value was estimated to

43
00:02:33,600 --> 00:02:38,080
Speaker 1: be somewhere in the two billion dollar range. Yikes. After

44
00:02:38,160 --> 00:02:43,040
Speaker 1: the dot com crash, however, that value dropped to five

45
00:02:43,400 --> 00:02:47,840
Speaker 1: billion according to some accounts, although honestly most accounts say

46
00:02:48,040 --> 00:02:51,000
Speaker 1: the value was closer to twenty billion. But whether it's

47
00:02:51,040 --> 00:02:54,320
Speaker 1: five or twenty, both of which are enormous numbers, get

48
00:02:54,480 --> 00:02:58,200
Speaker 1: don't get me wrong. Billion is a lot. That's such

49
00:02:58,200 --> 00:03:02,720
Speaker 1: a huge drop from two hundred billion. By two thousand five,

50
00:03:03,560 --> 00:03:06,680
Speaker 1: the number, according to some sources, had climbed a little bit.

51
00:03:06,720 --> 00:03:09,680
Speaker 1: It was moving in the right direction, but still a

52
00:03:09,800 --> 00:03:13,240
Speaker 1: fraction of what A O L had been prior to

53
00:03:13,400 --> 00:03:17,160
Speaker 1: the merger. At the time of the merger, AOL had

54
00:03:17,200 --> 00:03:21,600
Speaker 1: the higher market capitalization between the two companies, but Time

55
00:03:21,639 --> 00:03:24,919
Speaker 1: Warner was making way more revenue. So you can look

56
00:03:24,919 --> 00:03:28,280
Speaker 1: at this as indicative of the whole dot com problem.

57
00:03:28,320 --> 00:03:31,440
Speaker 1: In the first place, you had these internet based companies

58
00:03:31,840 --> 00:03:36,120
Speaker 1: that were valued much, much greater than what they could

59
00:03:36,160 --> 00:03:39,480
Speaker 1: actually pay off in the They their value was greater

60
00:03:39,520 --> 00:03:42,920
Speaker 1: than their worth, and that was really the issue that

61
00:03:43,000 --> 00:03:46,640
Speaker 1: led to the dot com bubble bursting in the first place.

62
00:03:47,200 --> 00:03:51,400
Speaker 1: The culture clash never settled down between the two companies.

63
00:03:51,880 --> 00:03:55,160
Speaker 1: They weren't able to find a good equilibrium. The AOL

64
00:03:55,240 --> 00:03:59,040
Speaker 1: executives felt their traditional media counterparts just didn't get how

65
00:03:59,120 --> 00:04:02,080
Speaker 1: business on the inner that worked. They were probably right,

66
00:04:02,840 --> 00:04:05,200
Speaker 1: but the Time Warner executives saw A O L as

67
00:04:05,240 --> 00:04:09,160
Speaker 1: wasteful and filled to the brim with hubris. A company

68
00:04:09,240 --> 00:04:11,840
Speaker 1: just was convinced that the way it did things was

69
00:04:11,960 --> 00:04:14,920
Speaker 1: the right way, and that it was building a business

70
00:04:14,920 --> 00:04:17,279
Speaker 1: on a product that was clearly on the way out,

71
00:04:17,360 --> 00:04:21,560
Speaker 1: that being dial up service, and the Time Warner executives

72
00:04:21,839 --> 00:04:25,240
Speaker 1: were kind of right. No one was wholly in the

73
00:04:25,279 --> 00:04:28,640
Speaker 1: wrong here, other than the fact that this partnership was

74
00:04:28,839 --> 00:04:32,200
Speaker 1: wholly in the wrong. In fact, by two thousand three,

75
00:04:32,520 --> 00:04:35,880
Speaker 1: just a few years after this merger, A O L.

76
00:04:36,000 --> 00:04:39,640
Speaker 1: Time Warner began to drop the A O L part

77
00:04:39,720 --> 00:04:43,520
Speaker 1: from its name came to just call itself Time Warner again.

78
00:04:44,120 --> 00:04:46,640
Speaker 1: Keep in mind, all L was the company that technically

79
00:04:47,200 --> 00:04:51,200
Speaker 1: made the acquisition. It's technically the company that bought Time Warner,

80
00:04:51,600 --> 00:04:57,160
Speaker 1: but now the collective entity was casually ignoring the online

81
00:04:57,200 --> 00:05:00,360
Speaker 1: part of its identity. In two thousand five, A O

82
00:05:00,560 --> 00:05:04,640
Speaker 1: L and tell A Pictures Productions, a division from Warner Brothers,

83
00:05:04,920 --> 00:05:08,480
Speaker 1: would create TMZ and If you're not aware of what

84
00:05:08,600 --> 00:05:14,919
Speaker 1: that is, consider yourself fortunate. It's a tabloid news website

85
00:05:15,040 --> 00:05:19,279
Speaker 1: that's mainly focused on following celebrities around and publishing everything

86
00:05:19,279 --> 00:05:22,240
Speaker 1: it can about those celebrities. It has been one of

87
00:05:22,279 --> 00:05:24,480
Speaker 1: the more successful properties to come out of the A

88
00:05:24,600 --> 00:05:28,400
Speaker 1: O L and Time Warner days. So I'm pretty snarky

89
00:05:28,440 --> 00:05:31,720
Speaker 1: about the whole thing. I don't really like TMZ and

90
00:05:31,800 --> 00:05:35,440
Speaker 1: the way they do business. However, I cannot deny that

91
00:05:35,520 --> 00:05:38,640
Speaker 1: it's been a money maker. It has been very successful,

92
00:05:39,200 --> 00:05:42,680
Speaker 1: whether I like it or not. So I mean, you know,

93
00:05:44,160 --> 00:05:46,719
Speaker 1: they they're the ones who became really rich on it,

94
00:05:46,920 --> 00:05:49,799
Speaker 1: So what do I know. In two thousand and six,

95
00:05:50,080 --> 00:05:53,360
Speaker 1: America Online officially changed its name to A O L.

96
00:05:53,920 --> 00:05:57,480
Speaker 1: CEO John Miller said that the reason for this change

97
00:05:57,960 --> 00:06:01,680
Speaker 1: was that getting America Online would That had been the

98
00:06:01,680 --> 00:06:04,600
Speaker 1: old mission of the company, to get America online, so

99
00:06:04,640 --> 00:06:08,239
Speaker 1: that's why it called itself America Online. But he said,

100
00:06:08,440 --> 00:06:11,640
Speaker 1: the company did that. We've done that already. We achieved

101
00:06:11,640 --> 00:06:15,839
Speaker 1: our goal. So this new name indicates the quote expanded

102
00:06:15,880 --> 00:06:21,160
Speaker 1: mission to make everyone's online experience better end quote. A

103
00:06:21,279 --> 00:06:24,520
Speaker 1: O L had also changed in another way. It changed

104
00:06:24,560 --> 00:06:28,640
Speaker 1: from A corporation into a limited liability company. Now they

105
00:06:28,640 --> 00:06:31,920
Speaker 1: get into the differences between an LLC and a corporation

106
00:06:31,960 --> 00:06:35,040
Speaker 1: in the United States is more than a little beyond

107
00:06:35,120 --> 00:06:37,760
Speaker 1: the scope of tech stuff, but it mostly has to

108
00:06:37,800 --> 00:06:40,400
Speaker 1: do with how profits and losses are handled, and it

109
00:06:40,480 --> 00:06:42,560
Speaker 1: also has to do a lot with how a company

110
00:06:42,680 --> 00:06:46,000
Speaker 1: is taxed. So we're not gonna dive into all that.

111
00:06:46,279 --> 00:06:50,080
Speaker 1: I'm sure most of you don't really care, and honestly,

112
00:06:50,080 --> 00:06:53,280
Speaker 1: it gets pretty dull pretty fast. But the following year,

113
00:06:53,880 --> 00:06:58,240
Speaker 1: AOL made another big change. It moved its headquarters, which

114
00:06:58,279 --> 00:07:01,480
Speaker 1: had been in Dulles, Virginia ever since the founding of

115
00:07:01,520 --> 00:07:03,920
Speaker 1: the company. Now it was going to move to New

116
00:07:04,000 --> 00:07:08,200
Speaker 1: York City. It also laid off about two thousand employees,

117
00:07:08,360 --> 00:07:13,160
Speaker 1: or about of its entire workforce. This move was largely

118
00:07:13,320 --> 00:07:17,120
Speaker 1: to refocus a o L on its advertising business as

119
00:07:17,160 --> 00:07:19,960
Speaker 1: the dial up side continued to dwindle, though it was

120
00:07:20,000 --> 00:07:24,040
Speaker 1: still generating revenue at that point. This was two thousand seven,

121
00:07:24,080 --> 00:07:26,440
Speaker 1: and and just for reference, two thousand seven was also

122
00:07:26,520 --> 00:07:29,880
Speaker 1: when Apple introduced the iPhone. So the iPhone comes out,

123
00:07:29,960 --> 00:07:33,040
Speaker 1: people are still using dial up modems enough for a

124
00:07:33,160 --> 00:07:36,080
Speaker 1: o L's division to be profitable that's not the last

125
00:07:36,080 --> 00:07:38,560
Speaker 1: time we'll talk about dial up though. Anyway. A o

126
00:07:38,720 --> 00:07:42,560
Speaker 1: l's new headquarters were closer to Time Warner's HQ, and

127
00:07:42,600 --> 00:07:45,640
Speaker 1: it was also much closer to the advertising world in general.

128
00:07:45,680 --> 00:07:49,680
Speaker 1: The advertising world in the United States is almost entirely

129
00:07:49,760 --> 00:07:52,760
Speaker 1: based out of New York City, so this was putting

130
00:07:53,320 --> 00:07:58,080
Speaker 1: a o L close to where the advertising businesses thrived.

131
00:07:58,640 --> 00:08:02,160
Speaker 1: AOL also would change CEO s Jonathan Miller, who had

132
00:08:02,200 --> 00:08:04,880
Speaker 1: been leading the company up to that point, was replaced

133
00:08:04,880 --> 00:08:08,000
Speaker 1: by a guy named Randy Falco. A o L made

134
00:08:08,000 --> 00:08:12,480
Speaker 1: some acquisitions, many of which did not turn out so well. So.

135
00:08:12,560 --> 00:08:15,840
Speaker 1: For example, in two thousand eight, a o L acquired

136
00:08:15,880 --> 00:08:19,440
Speaker 1: a social networking site called Bibo. It's not that well

137
00:08:19,480 --> 00:08:21,840
Speaker 1: known in the United States, but it was the second

138
00:08:21,920 --> 00:08:25,640
Speaker 1: largest social network in the UK after Facebook. Back in

139
00:08:25,680 --> 00:08:29,360
Speaker 1: two thousand and eight. Bibo could boast twenty two million

140
00:08:29,480 --> 00:08:33,720
Speaker 1: unique visitors and they spent an average time of forty

141
00:08:33,800 --> 00:08:37,200
Speaker 1: minutes a day on the service, which sounds like a

142
00:08:37,240 --> 00:08:41,640
Speaker 1: pretty attractive bargain. You can go to an advertiser and say,

143
00:08:42,040 --> 00:08:44,600
Speaker 1: I can guarantee you that millions of people are going

144
00:08:44,600 --> 00:08:46,800
Speaker 1: to look at this for forty minutes every day, and

145
00:08:46,840 --> 00:08:48,600
Speaker 1: you're gonna be able to sell a lot of ads.

146
00:08:49,280 --> 00:08:52,600
Speaker 1: So A O L would spend eight hundred fifty million

147
00:08:52,840 --> 00:08:56,720
Speaker 1: dollars in cash on this acquisition. So how did it

148
00:08:56,760 --> 00:09:01,880
Speaker 1: turn out? Not great at all? Now, you could argue

149
00:09:01,920 --> 00:09:04,320
Speaker 1: that Bibo was on the same path of decline that

150
00:09:04,440 --> 00:09:07,200
Speaker 1: A O L was as a As broadband was becoming

151
00:09:07,200 --> 00:09:11,319
Speaker 1: more popular, A Well's dial up was dwindling. Well, Bibo

152
00:09:11,520 --> 00:09:14,240
Speaker 1: was seeing its number of users dwindle. A lot of

153
00:09:14,240 --> 00:09:17,359
Speaker 1: them were going to other social networking sites like Facebook.

154
00:09:18,040 --> 00:09:21,000
Speaker 1: A O L was not able to capitalize on Bibo

155
00:09:21,200 --> 00:09:25,199
Speaker 1: like executives had hoped, So just two years after buying

156
00:09:25,240 --> 00:09:27,720
Speaker 1: the company, A o L would sell it to a

157
00:09:27,760 --> 00:09:32,240
Speaker 1: digital media investor group called Criterion Capital Partners, and the

158
00:09:32,280 --> 00:09:35,080
Speaker 1: price was much lower than the eight hundred fifty million

159
00:09:35,080 --> 00:09:37,560
Speaker 1: dollars that A o L had paid for it. They

160
00:09:37,640 --> 00:09:41,440
Speaker 1: sold it for ten million. Three years after that, the

161
00:09:41,440 --> 00:09:44,640
Speaker 1: original founders of Bibo were able to buy back their

162
00:09:44,679 --> 00:09:48,760
Speaker 1: company from this investor group for just one million dollars.

163
00:09:48,800 --> 00:09:50,920
Speaker 1: So they sold it for a D fifty million and

164
00:09:50,960 --> 00:09:54,280
Speaker 1: then they bought it back for one million. Now that's

165
00:09:54,320 --> 00:09:56,199
Speaker 1: all a bit outside the scope of A O L.

166
00:09:56,400 --> 00:09:58,920
Speaker 1: But I thought it was an interesting little tidbit, so

167
00:09:58,960 --> 00:10:01,840
Speaker 1: I decided to include. Plus it's another way to illustrate

168
00:10:02,200 --> 00:10:05,880
Speaker 1: how A o L was still making some pretty questionable choices.

169
00:10:06,280 --> 00:10:09,600
Speaker 1: That the merger with Time Warner wasn't an outlier. I

170
00:10:09,600 --> 00:10:11,680
Speaker 1: mean it was an outlier in the sense of how

171
00:10:11,720 --> 00:10:14,600
Speaker 1: big it was. A hundred sixty billion dollars is an

172
00:10:14,760 --> 00:10:19,120
Speaker 1: enormous outlier, but not an outlier in the sense of

173
00:10:19,160 --> 00:10:23,880
Speaker 1: making some rash decisions that ultimately didn't pay off. Now

174
00:10:23,920 --> 00:10:26,000
Speaker 1: that's also not to say that every purchase A o

175
00:10:26,160 --> 00:10:29,760
Speaker 1: L made was inherently bad. A o L bought lots

176
00:10:29,760 --> 00:10:34,720
Speaker 1: of companies, dozens of them. In fact, companies like Weblogs Inc.

177
00:10:35,160 --> 00:10:38,840
Speaker 1: That owns popular sites like Engadget and the former Joystick.

178
00:10:39,840 --> 00:10:43,839
Speaker 1: There was Game Daily that A o L purchased True Vio.

179
00:10:44,000 --> 00:10:46,800
Speaker 1: All of those made products or services that faced the public.

180
00:10:47,120 --> 00:10:51,040
Speaker 1: A well also bought companies like e Voice, Info Interactive,

181
00:10:51,400 --> 00:10:55,280
Speaker 1: and ad Tech. Those were more business oriented ventures, so

182
00:10:55,440 --> 00:10:58,640
Speaker 1: not necessarily things that you and I would encounter, but

183
00:10:58,760 --> 00:11:02,120
Speaker 1: other enterprises would. And A o L was never afraid

184
00:11:02,160 --> 00:11:05,360
Speaker 1: of buying other companies in an effort to remain relevant

185
00:11:05,679 --> 00:11:08,600
Speaker 1: or regain relevance, depending upon your point of view, but

186
00:11:08,720 --> 00:11:11,800
Speaker 1: things between A O L and Time Warner would get

187
00:11:11,960 --> 00:11:15,280
Speaker 1: less stable by the year. The cultures of the two

188
00:11:15,280 --> 00:11:19,080
Speaker 1: companies still had not found a good meeting point. In

189
00:11:19,160 --> 00:11:23,960
Speaker 1: March two thousand nine, the company replaced CEO Randy Falco.

190
00:11:24,120 --> 00:11:26,760
Speaker 1: The new leader for the A O L branch would

191
00:11:26,760 --> 00:11:30,920
Speaker 1: be Tim Armstrong. Armstrong was coming from Google, where he

192
00:11:30,960 --> 00:11:34,560
Speaker 1: had helped build the company's advertising division into a juggernaut.

193
00:11:35,280 --> 00:11:39,400
Speaker 1: At the time, various industry journals reported that Armstrong had

194
00:11:39,480 --> 00:11:43,520
Speaker 1: had aspirations of being a CEO of a company, He

195
00:11:43,640 --> 00:11:46,320
Speaker 1: just hadn't quite settled on which company he wanted to

196
00:11:46,360 --> 00:11:49,719
Speaker 1: go for. According to add Age, his name was one

197
00:11:49,760 --> 00:11:52,319
Speaker 1: of the ones that Yahoo was considering when it was

198
00:11:52,360 --> 00:11:56,360
Speaker 1: searching for a replacement for their CEO and founder Jerry Yang.

199
00:11:57,120 --> 00:11:59,760
Speaker 1: But A O L would end up being his destination.

200
00:12:00,320 --> 00:12:02,720
Speaker 1: And that was just the beginning for the big events

201
00:12:02,800 --> 00:12:05,720
Speaker 1: of two thousand nine. I'll explain more in just a second,

202
00:12:05,760 --> 00:12:08,920
Speaker 1: but first let's take a quick break to thank our sponsor.

203
00:12:16,559 --> 00:12:19,760
Speaker 1: In May two thousand nine, just two months after Tim

204
00:12:19,880 --> 00:12:22,920
Speaker 1: Armstrong took the helm of A O L. The tumultuous

205
00:12:22,960 --> 00:12:25,480
Speaker 1: pairing of A O L and Time Warner began the

206
00:12:25,640 --> 00:12:29,560
Speaker 1: slow march to divorce. Time Warner said it would spin

207
00:12:29,640 --> 00:12:33,000
Speaker 1: off A O L as an independent company later that year.

208
00:12:33,440 --> 00:12:35,959
Speaker 1: In December of two thousand nine, A O L shares

209
00:12:35,960 --> 00:12:38,400
Speaker 1: would begin trading on the floor of the New York

210
00:12:38,520 --> 00:12:42,480
Speaker 1: Stock Exchange. Time Warner executives said the reason for the

211
00:12:42,559 --> 00:12:45,360
Speaker 1: split was that A O L was more likely to

212
00:12:45,440 --> 00:12:49,199
Speaker 1: grow as a separate company than as part of Time Warner,

213
00:12:49,440 --> 00:12:52,520
Speaker 1: and that A O L attracted different investors than Time

214
00:12:52,559 --> 00:12:55,760
Speaker 1: Warner did. Time Warner would become a more lean and

215
00:12:55,840 --> 00:12:59,480
Speaker 1: straightforward company as well, according to the wisdom of the time,

216
00:13:00,120 --> 00:13:03,160
Speaker 1: and this was largely true. Time Warner, by the way,

217
00:13:03,280 --> 00:13:05,800
Speaker 1: and I'll again have to do a full episode about

218
00:13:05,880 --> 00:13:09,000
Speaker 1: this whole thing at some point. They would later spend

219
00:13:09,000 --> 00:13:12,560
Speaker 1: off Time Incorporated in two thousand fourteen, and in two

220
00:13:12,600 --> 00:13:16,119
Speaker 1: thousand eighteen, A T and T would move to acquire

221
00:13:16,240 --> 00:13:21,000
Speaker 1: Time Warner, which is now called Warner Media LLC. By

222
00:13:21,040 --> 00:13:24,680
Speaker 1: the time this episode airs, that should be finalized. But

223
00:13:25,120 --> 00:13:29,280
Speaker 1: as I'm recording this, there's currently an appeal out on

224
00:13:29,320 --> 00:13:32,680
Speaker 1: an earlier court ruling that permitted the mergers. So you

225
00:13:32,720 --> 00:13:35,679
Speaker 1: had one court say yeah, that mergers fine, and A T.

226
00:13:35,800 --> 00:13:38,440
Speaker 1: And T and Time Warner were ready to make it

227
00:13:38,440 --> 00:13:41,200
Speaker 1: a real deal, but then you had an appeal go out,

228
00:13:41,320 --> 00:13:43,720
Speaker 1: and that appeal is still being decided as of the

229
00:13:43,720 --> 00:13:48,120
Speaker 1: time I'm recording this episode. Between the announcement and the

230
00:13:48,200 --> 00:13:52,679
Speaker 1: actual spinoff date, A O L would acquire another company

231
00:13:52,760 --> 00:13:58,439
Speaker 1: called Patch Media, and Patch Media oversaw community news websites

232
00:13:58,559 --> 00:14:03,120
Speaker 1: so reach local community news. It was also a company

233
00:14:03,160 --> 00:14:06,400
Speaker 1: that was co founded by Tim Armstrong, the leader of

234
00:14:06,520 --> 00:14:09,600
Speaker 1: A O L. A L would end up investing another

235
00:14:09,679 --> 00:14:14,680
Speaker 1: fifty million dollars in Patch in but in the company

236
00:14:14,720 --> 00:14:17,360
Speaker 1: announced it would be reducing the number of Patch sites

237
00:14:17,440 --> 00:14:20,360
Speaker 1: from nine hundred to six hundred, and also the company

238
00:14:20,360 --> 00:14:23,480
Speaker 1: would be laying off staff at all levels of the organization.

239
00:14:23,960 --> 00:14:29,760
Speaker 1: Armstrong also famously publicly fired Patches creative director over a

240
00:14:29,840 --> 00:14:35,880
Speaker 1: conference call on which all Patch employees were participating. Armstrong

241
00:14:35,920 --> 00:14:39,200
Speaker 1: would later apologize for this breach in etiquette. A O

242
00:14:39,360 --> 00:14:41,800
Speaker 1: L would spend off Patch and sell off its ownership.

243
00:14:41,880 --> 00:14:47,360
Speaker 1: In two thousand fourteen, in A O L purchased tech Crunch,

244
00:14:47,600 --> 00:14:50,200
Speaker 1: a tech news site that was founded back in two

245
00:14:50,200 --> 00:14:53,360
Speaker 1: thousand five. Tech Crunch is still part of the overall

246
00:14:53,400 --> 00:14:56,960
Speaker 1: company that we'll get into how that company has changed

247
00:14:57,000 --> 00:15:00,360
Speaker 1: in just a little bit. Also in a o L

248
00:15:00,480 --> 00:15:03,960
Speaker 1: bought a young web hosting service called about dot me,

249
00:15:04,520 --> 00:15:07,360
Speaker 1: which had launched in October two thousand nine, so it

250
00:15:07,440 --> 00:15:09,400
Speaker 1: wasn't even a full year old when a o L

251
00:15:09,480 --> 00:15:12,520
Speaker 1: bought it. About dot Me is meant as a sort

252
00:15:12,560 --> 00:15:15,800
Speaker 1: of centralized personal web page, and it's meant to coordinate

253
00:15:15,840 --> 00:15:18,600
Speaker 1: all the various online points of contact a person might

254
00:15:18,680 --> 00:15:22,960
Speaker 1: have in one place. So there are various social media accounts,

255
00:15:23,000 --> 00:15:26,680
Speaker 1: email addresses, websites, all that kind of stuff. And that way,

256
00:15:26,760 --> 00:15:28,720
Speaker 1: if you went to about dot me and you searched

257
00:15:28,800 --> 00:15:32,160
Speaker 1: for me, presumably you would find links to all the

258
00:15:32,160 --> 00:15:34,640
Speaker 1: different ways that I have an online presence, and I

259
00:15:34,680 --> 00:15:37,120
Speaker 1: can cultivate that, I can decide which ones they share

260
00:15:37,120 --> 00:15:40,520
Speaker 1: and which ones they don't, and like Bibo, this acquisition

261
00:15:40,960 --> 00:15:44,440
Speaker 1: ended up not being a great fit. Tony Conrad, who

262
00:15:44,520 --> 00:15:47,280
Speaker 1: was one of the co founders of about dot me,

263
00:15:48,040 --> 00:15:51,400
Speaker 1: was able to buy back majority ownership of the site

264
00:15:51,520 --> 00:15:54,320
Speaker 1: from A o L in two thousand thirteen, and it

265
00:15:54,320 --> 00:15:57,760
Speaker 1: had been two years and a month since a o

266
00:15:57,920 --> 00:16:00,440
Speaker 1: L had bought the company. The detail else of the

267
00:16:00,440 --> 00:16:03,240
Speaker 1: two business transactions how much A o L paid for

268
00:16:03,280 --> 00:16:04,920
Speaker 1: it and how much Conrad had to pay to get

269
00:16:04,960 --> 00:16:08,160
Speaker 1: it back were never made public, but Conrad did tell

270
00:16:08,200 --> 00:16:10,760
Speaker 1: The New York Times that he paid a fraction of

271
00:16:10,800 --> 00:16:13,680
Speaker 1: what A O L had paid for the company back in.

272
00:16:15,520 --> 00:16:18,760
Speaker 1: So once again, a O L buys a company and

273
00:16:18,800 --> 00:16:21,000
Speaker 1: then sells it off at a fraction of what it

274
00:16:21,040 --> 00:16:23,720
Speaker 1: paid for it once it realizes this wasn't a good

275
00:16:23,720 --> 00:16:26,560
Speaker 1: fit after all. It seems to be a pretty common theme.

276
00:16:27,600 --> 00:16:30,960
Speaker 1: In two thousand eleven, A O L made another big

277
00:16:31,080 --> 00:16:34,680
Speaker 1: media acquisition when it bought The Huffington Post for about

278
00:16:34,720 --> 00:16:39,720
Speaker 1: three hundred fifteen million dollars. Arianna Huffington's, the founder of

279
00:16:39,760 --> 00:16:43,120
Speaker 1: the Huffington's Post, was named a O L Content Chief,

280
00:16:43,200 --> 00:16:46,280
Speaker 1: and she held that position until two thousand sixteen, when

281
00:16:46,320 --> 00:16:48,800
Speaker 1: she would step down from A O L to concentrate

282
00:16:48,880 --> 00:16:52,280
Speaker 1: on a new startup called Thrive Global. The Huffington's Post

283
00:16:52,320 --> 00:16:56,320
Speaker 1: acquisition was in February two thousand eleven. In April two

284
00:16:56,320 --> 00:16:59,680
Speaker 1: thousand eleven, A O L would cut nine hundred staff

285
00:17:00,000 --> 00:17:03,000
Speaker 1: from The Huffington's Post. Now that included two hundred jobs

286
00:17:03,040 --> 00:17:06,280
Speaker 1: in the United States and seven hundred jobs in India.

287
00:17:06,440 --> 00:17:09,480
Speaker 1: Tim Armstrong told reporters that the company's goal was to

288
00:17:09,520 --> 00:17:13,520
Speaker 1: move toward having s of a o L staff working

289
00:17:13,560 --> 00:17:18,040
Speaker 1: in editorial or other content divisions like tech Crunch. The

290
00:17:18,080 --> 00:17:22,080
Speaker 1: Huffington Post is still part of the overall company. Armstrong

291
00:17:22,160 --> 00:17:24,920
Speaker 1: was guiding a o L to focus more on creating

292
00:17:25,040 --> 00:17:29,000
Speaker 1: content and then advertising against that content, and it was

293
00:17:29,040 --> 00:17:34,879
Speaker 1: working as recently as Internet subscriptions made up of a

294
00:17:34,960 --> 00:17:38,800
Speaker 1: o L's revenue, but with Armstrong's changes, that was shifting

295
00:17:38,880 --> 00:17:44,000
Speaker 1: more toward revenue from advertising, which is good because again

296
00:17:44,200 --> 00:17:47,920
Speaker 1: the dial up service was not going to increase year

297
00:17:47,960 --> 00:17:51,360
Speaker 1: over year. In two thousand thirteen, the company posted its

298
00:17:51,440 --> 00:17:55,639
Speaker 1: first revenue gains year over year since two thousand five,

299
00:17:56,480 --> 00:17:59,360
Speaker 1: them in the company was finally growing again from revenue.

300
00:18:00,160 --> 00:18:03,399
Speaker 1: The company continued its course by acquiring a video ad

301
00:18:03,440 --> 00:18:07,840
Speaker 1: company called adapt dot tv for four hundred five million dollars.

302
00:18:07,880 --> 00:18:10,640
Speaker 1: It actually was able to pull market share away from

303
00:18:10,680 --> 00:18:14,200
Speaker 1: Google this way, and in a o L would post

304
00:18:14,280 --> 00:18:20,120
Speaker 1: a one six million dollar profit. Also in al began

305
00:18:20,200 --> 00:18:23,560
Speaker 1: to face pressure from investors to make another really big move.

306
00:18:24,000 --> 00:18:28,360
Speaker 1: The pressure came from an American hedge fund called Starboard Value.

307
00:18:28,840 --> 00:18:32,440
Speaker 1: The organization owns shares and numerous companies, including A two

308
00:18:32,480 --> 00:18:36,040
Speaker 1: point four percent ownership of a O L. And it

309
00:18:36,080 --> 00:18:39,320
Speaker 1: was using its stake to influence how those companies are run,

310
00:18:39,640 --> 00:18:42,280
Speaker 1: which is something shareholders do all the time. You can

311
00:18:42,359 --> 00:18:46,159
Speaker 1: vote because of your shares, although the amount of influence

312
00:18:46,280 --> 00:18:50,080
Speaker 1: you can exert is based on how many shares you hold.

313
00:18:50,520 --> 00:18:53,240
Speaker 1: If you hold one share and a company has millions

314
00:18:53,280 --> 00:18:56,480
Speaker 1: of shares out in the market, your vote probably isn't

315
00:18:56,480 --> 00:18:59,320
Speaker 1: going to make a whole lot of difference. Starboard is

316
00:18:59,359 --> 00:19:02,719
Speaker 1: sometimes called an activist investor because it takes such an

317
00:19:02,760 --> 00:19:05,479
Speaker 1: active role in steering the course of the companies that

318
00:19:05,600 --> 00:19:09,240
Speaker 1: it invests. In The specific direction that the investors wanted

319
00:19:09,280 --> 00:19:12,280
Speaker 1: to push A O L toward was in a merger

320
00:19:12,359 --> 00:19:17,119
Speaker 1: with Yahoo. Starboard was similarly putting pressure on Yahoo because

321
00:19:17,200 --> 00:19:20,399
Speaker 1: it had steak in Yahoo as well. Spoiler alert, by

322
00:19:20,440 --> 00:19:23,879
Speaker 1: the way, those two companies AOL and Yahoo would eventually

323
00:19:23,960 --> 00:19:28,160
Speaker 1: be brought together, but not through this method. At the time.

324
00:19:28,640 --> 00:19:32,080
Speaker 1: Armstrong would refer to the proposed merger as quote a

325
00:19:32,240 --> 00:19:36,439
Speaker 1: dead notion end quote. And then we get to and

326
00:19:36,520 --> 00:19:40,640
Speaker 1: another really big change for A O L. Armstrong had

327
00:19:40,680 --> 00:19:44,400
Speaker 1: been leading the company since two thousand nine. His leadership

328
00:19:44,440 --> 00:19:46,840
Speaker 1: was marked by both success in the form of guiding

329
00:19:46,880 --> 00:19:50,000
Speaker 1: a o L too year over year revenue gains and

330
00:19:50,200 --> 00:19:54,159
Speaker 1: some failures like the mess with Patch, but overall a

331
00:19:54,320 --> 00:19:56,639
Speaker 1: O L was in much better shape as a standalone

332
00:19:56,680 --> 00:20:00,480
Speaker 1: company adapting to the realities of a broadband connected Internet

333
00:20:00,840 --> 00:20:03,200
Speaker 1: than it had been when it was under the umbrella

334
00:20:03,280 --> 00:20:06,800
Speaker 1: of Time Warner. In two thousand fifteen, another company would

335
00:20:06,800 --> 00:20:10,240
Speaker 1: step up to change things, and that company was Verizon.

336
00:20:11,640 --> 00:20:16,200
Speaker 1: Verizon is a telecommunications conglomerate that traces its history back

337
00:20:16,240 --> 00:20:19,359
Speaker 1: to A T and T. In the eighties, the United

338
00:20:19,359 --> 00:20:22,080
Speaker 1: States Justice Department ordered A T and T to break

339
00:20:22,160 --> 00:20:24,639
Speaker 1: up the system of companies that had been under the

340
00:20:24,760 --> 00:20:28,359
Speaker 1: Bell system. It's named after the Bell Telephone Company, and

341
00:20:28,440 --> 00:20:32,080
Speaker 1: ultimately it's named after Alexander Graham Bell. A T and

342
00:20:32,119 --> 00:20:35,440
Speaker 1: T was originally one of the companies under the American

343
00:20:35,480 --> 00:20:38,480
Speaker 1: Bell Telephone Company, but then A T and T would

344
00:20:38,520 --> 00:20:41,680
Speaker 1: go on to acquire the assets of its parent company

345
00:20:41,720 --> 00:20:45,880
Speaker 1: and become the new parent company back in eight By

346
00:20:45,880 --> 00:20:48,960
Speaker 1: the nineteen eighties, the U. S Government had determined that

347
00:20:48,960 --> 00:20:51,560
Speaker 1: the Bell system was a monopoly and ordered A T

348
00:20:51,640 --> 00:20:54,040
Speaker 1: and T to break up the system so that there

349
00:20:54,040 --> 00:20:58,240
Speaker 1: would be multiple competing companies operating the telephone service Bell

350
00:20:58,320 --> 00:21:01,080
Speaker 1: Atlantic was one of the is that was broken up

351
00:21:01,200 --> 00:21:05,520
Speaker 1: in this process. Bell Atlantic itself consists of four smaller

352
00:21:05,560 --> 00:21:09,399
Speaker 1: telephone companies, or it did at the time, and eventually

353
00:21:09,600 --> 00:21:13,080
Speaker 1: Bell Atlantic would become Verizon in two thousand. That was

354
00:21:13,119 --> 00:21:17,840
Speaker 1: when Bell Atlantic merged with another telecommunications company called GTE Corporation,

355
00:21:17,960 --> 00:21:21,879
Speaker 1: and thus Verizon was born. Verizon acquired A o L

356
00:21:22,400 --> 00:21:26,720
Speaker 1: for four point four billion dollars in cash, a huge

357
00:21:26,720 --> 00:21:30,040
Speaker 1: amount of money, but a pittance compared to the hundred

358
00:21:30,080 --> 00:21:33,399
Speaker 1: sixty billion dollar deal that had taken place between A

359
00:21:33,520 --> 00:21:37,320
Speaker 1: O L and Time Warner. Analysts said that Verizon's motivation

360
00:21:37,400 --> 00:21:40,840
Speaker 1: was likely fueled by a slowing mobile market. At the

361
00:21:40,840 --> 00:21:44,120
Speaker 1: time of the acquisition, Verizon was sitting at number fifteen

362
00:21:44,240 --> 00:21:48,000
Speaker 1: on the Fortune five D list. Today it's down to sixteen.

363
00:21:48,160 --> 00:21:52,600
Speaker 1: Still still not bad, but success depended heavily on growing

364
00:21:52,640 --> 00:21:56,040
Speaker 1: the mobile market, and as more people by mobile phones,

365
00:21:56,560 --> 00:22:00,520
Speaker 1: the demand was was decreasing, right there fewer people who

366
00:22:00,600 --> 00:22:04,160
Speaker 1: don't have a mobile phone. Grabbing a O L, which

367
00:22:04,240 --> 00:22:08,080
Speaker 1: was making real progress in online advertising must have looked

368
00:22:08,080 --> 00:22:11,479
Speaker 1: like a pretty sweet deal. But we've seen that before

369
00:22:11,680 --> 00:22:15,600
Speaker 1: in this series, haven't we. Where companies have thought, oh,

370
00:22:16,000 --> 00:22:18,120
Speaker 1: we'll just get this other company that's already got its

371
00:22:18,200 --> 00:22:21,920
Speaker 1: hand in in this industry, and then we can just profit.

372
00:22:22,600 --> 00:22:25,240
Speaker 1: So what actually happened, Well, I'll tell you, but first

373
00:22:25,320 --> 00:22:35,800
Speaker 1: let's take another quick break to thank our sponsor. Tim

374
00:22:35,920 --> 00:22:38,639
Speaker 1: Armstrong stayed in the driver's seat at A O L.

375
00:22:38,920 --> 00:22:42,359
Speaker 1: Upon the Verizon acquisition. The company continued to focus on

376
00:22:42,400 --> 00:22:46,240
Speaker 1: ad revenues, and it also launched a news service called One.

377
00:22:46,960 --> 00:22:50,600
Speaker 1: One represented a unification of a O L's various ad products,

378
00:22:50,640 --> 00:22:53,879
Speaker 1: including the ones the company had acquired by buying other companies,

379
00:22:54,480 --> 00:22:58,520
Speaker 1: kind of making a central, one stop shop for advertisers.

380
00:22:58,560 --> 00:23:01,280
Speaker 1: According to a tech Crunch p on the product, the

381
00:23:01,320 --> 00:23:04,119
Speaker 1: idea was that advertisers could use that tool to optimize

382
00:23:04,160 --> 00:23:07,680
Speaker 1: campaigns across all of a O L's capabilities, which would

383
00:23:07,680 --> 00:23:12,280
Speaker 1: include television, video, web based ads. So you would come

384
00:23:12,359 --> 00:23:14,200
Speaker 1: up to A O L and say, I want to

385
00:23:14,240 --> 00:23:18,040
Speaker 1: run an advertising campaign about this product. Here's my budget.

386
00:23:18,480 --> 00:23:21,000
Speaker 1: How can we make the best use of this so

387
00:23:21,040 --> 00:23:24,000
Speaker 1: that we reached the most people. While searching for stories

388
00:23:24,040 --> 00:23:27,160
Speaker 1: about A O l that were centered around this particular

389
00:23:27,200 --> 00:23:30,040
Speaker 1: time of its history, one thing that jumped out at

390
00:23:30,040 --> 00:23:34,000
Speaker 1: me was how many media outlets posted surprise takes on

391
00:23:34,000 --> 00:23:37,040
Speaker 1: the fact that in two thousand fifteen, a o L

392
00:23:37,160 --> 00:23:42,040
Speaker 1: still had two point one million customers using dial up service.

393
00:23:42,840 --> 00:23:45,000
Speaker 1: You know, i'd said back in two thousand seven that

394
00:23:45,200 --> 00:23:49,200
Speaker 1: was still having you know, millions of people. Two thousand fifteen,

395
00:23:50,560 --> 00:23:53,960
Speaker 1: still two point one million people using dial up. Now,

396
00:23:54,680 --> 00:23:58,560
Speaker 1: the surprise that the media reacted with strikes me as

397
00:23:58,560 --> 00:24:02,080
Speaker 1: a little elitist. Actually, it strikes me as a lot elitist,

398
00:24:02,480 --> 00:24:04,640
Speaker 1: because it can be very easy for people like me,

399
00:24:05,160 --> 00:24:07,120
Speaker 1: someone who lives in a large city, or at least

400
00:24:07,280 --> 00:24:11,840
Speaker 1: a decent sized city, to forget that broadband penetration isn't

401
00:24:11,960 --> 00:24:15,840
Speaker 1: uniform throughout the United States. There's still some areas that

402
00:24:15,920 --> 00:24:19,720
Speaker 1: have very limited broadband support. And then not everyone is

403
00:24:19,800 --> 00:24:22,840
Speaker 1: using the internet to watch episodes of Stranger Things or

404
00:24:22,920 --> 00:24:27,480
Speaker 1: download the latest Red Dead Redemption game. Some people, uh,

405
00:24:27,680 --> 00:24:31,640
Speaker 1: maybe they're older, and maybe they have less experience with technology.

406
00:24:32,040 --> 00:24:34,920
Speaker 1: A o L represents something they're comfortable using, they know

407
00:24:35,000 --> 00:24:37,800
Speaker 1: how it works. They're not ready to move over to

408
00:24:37,880 --> 00:24:43,320
Speaker 1: something else. So it's no surprise that there's still customers there. Uh,

409
00:24:43,359 --> 00:24:47,159
Speaker 1: that there are two million, Maybe that's surprising, but that

410
00:24:47,280 --> 00:24:49,440
Speaker 1: was the case at least in two thousand fifteen. The

411
00:24:49,520 --> 00:24:52,560
Speaker 1: last time I saw a report on this was dated

412
00:24:52,560 --> 00:24:55,320
Speaker 1: two thousand seventeen and the number had not changed. It's

413
00:24:55,320 --> 00:24:58,760
Speaker 1: still it's still said two point one million subscribers. So

414
00:24:59,000 --> 00:25:01,640
Speaker 1: I don't know if that those two thousand seventeen reports

415
00:25:01,640 --> 00:25:04,080
Speaker 1: were based on the exact same information that just hadn't

416
00:25:04,119 --> 00:25:08,760
Speaker 1: been updated. In two thousand sixteen, Verizon announced that it

417
00:25:08,840 --> 00:25:14,560
Speaker 1: intended to acquire Yahoo, more specifically Yahoo's Internet assets, because

418
00:25:14,600 --> 00:25:19,359
Speaker 1: the company is another big, big company, and some of

419
00:25:19,480 --> 00:25:23,600
Speaker 1: Yahoo was tied up in investments with Ali Baba. That

420
00:25:23,640 --> 00:25:27,719
Speaker 1: part of Yahoo would be renamed out Baba, so that

421
00:25:27,760 --> 00:25:30,200
Speaker 1: part would not be picked up by Verizon. Verizon would

422
00:25:30,200 --> 00:25:33,560
Speaker 1: just pick up the Internet part of Yah Who's business.

423
00:25:34,000 --> 00:25:36,199
Speaker 1: So now that desire to bring a O L and

424
00:25:36,280 --> 00:25:40,240
Speaker 1: Yahoo together could finally come true. It wasn't through a

425
00:25:40,280 --> 00:25:43,639
Speaker 1: merger directly between AOL and Yahoo. It was from a

426
00:25:43,720 --> 00:25:47,960
Speaker 1: third company buying both of those properties. Now, the deal

427
00:25:48,160 --> 00:25:52,360
Speaker 1: was for four point four eight billion dollars to buy Yahoo.

428
00:25:52,840 --> 00:25:56,760
Speaker 1: It was not a smooth process. Yeah Who was a

429
00:25:56,800 --> 00:26:02,359
Speaker 1: troubled company. It had been struggling to remain relevant over

430
00:26:02,400 --> 00:26:07,159
Speaker 1: the past several years, and just months after Verizon and

431
00:26:07,240 --> 00:26:12,879
Speaker 1: Yahoo had announced this upcoming deal, this this planned acquisition,

432
00:26:13,040 --> 00:26:16,040
Speaker 1: Yahoo revealed that it had been the target of hackers

433
00:26:16,720 --> 00:26:20,480
Speaker 1: and that a serious data breach, I'm talking one of

434
00:26:20,520 --> 00:26:23,520
Speaker 1: the biggest data breaches of all time had taken place,

435
00:26:24,000 --> 00:26:29,200
Speaker 1: affecting potentially five hundred million people half a billion people.

436
00:26:30,440 --> 00:26:34,160
Speaker 1: The deal somehow stayed in place even in the wake

437
00:26:34,680 --> 00:26:39,600
Speaker 1: of that announcement. It did get marked down because originally

438
00:26:39,600 --> 00:26:42,840
Speaker 1: the deal was for four point eight billion dollars. They

439
00:26:42,920 --> 00:26:45,600
Speaker 1: marked off about three fifty million dollars off of it

440
00:26:46,240 --> 00:26:50,520
Speaker 1: upon the completion of the deal. A year later, Marissa Meyer,

441
00:26:50,560 --> 00:26:52,920
Speaker 1: who was the CEO of Yahoo she had come over

442
00:26:52,960 --> 00:26:57,280
Speaker 1: from Google, resigned. Tim Armstrong would head up this combined

443
00:26:57,400 --> 00:27:00,720
Speaker 1: company of A O L and Yahoo. Tim Armstrong would

444
00:27:00,760 --> 00:27:03,560
Speaker 1: head up the combined company of A O L and Yahoo,

445
00:27:03,600 --> 00:27:06,520
Speaker 1: and that combined company got a new name. It was

446
00:27:06,560 --> 00:27:11,879
Speaker 1: called and still is both O A T. H, a

447
00:27:12,000 --> 00:27:16,400
Speaker 1: name that a lot of people met with Ye Anyway.

448
00:27:16,440 --> 00:27:20,520
Speaker 1: The deal would also mean layoffs, frequently that does happen

449
00:27:20,560 --> 00:27:25,000
Speaker 1: with mergers. The Washington Post reported that two thousand former

450
00:27:25,119 --> 00:27:27,960
Speaker 1: Yahoo or A O L employees would lose their jobs

451
00:27:27,960 --> 00:27:32,480
Speaker 1: as these two businesses merged, and the various departments were reorganized,

452
00:27:32,920 --> 00:27:36,600
Speaker 1: and while the Yahoo acquisition was slowly developing, before it

453
00:27:36,640 --> 00:27:40,800
Speaker 1: had become finalized, a o L was still buying stuff

454
00:27:41,280 --> 00:27:45,399
Speaker 1: in the company purchased a content company called Riot r

455
00:27:45,600 --> 00:27:48,600
Speaker 1: y O T. That's a company that makes specialty films

456
00:27:48,600 --> 00:27:52,119
Speaker 1: and documentaries for formats like VR or three D sixty

457
00:27:52,160 --> 00:27:57,359
Speaker 1: degree film, and Tim Armstrong would hire a guy named

458
00:27:57,640 --> 00:28:02,439
Speaker 1: k Guru gol Roppin as the chief operating officer of

459
00:28:02,480 --> 00:28:06,440
Speaker 1: OATH He had been a global managing director with Ali Baba,

460
00:28:06,480 --> 00:28:09,639
Speaker 1: and while Armstrong didn't know it, he had also just

461
00:28:09,760 --> 00:28:15,359
Speaker 1: hired his own replacement. According to various news stories, Armstrong

462
00:28:15,480 --> 00:28:19,320
Speaker 1: had wanted to convince Verizon to spin off OATH as

463
00:28:19,320 --> 00:28:21,960
Speaker 1: its own independent company, sort of the same way that

464
00:28:22,000 --> 00:28:25,760
Speaker 1: Time Warner had spun off A o L a decade earlier.

465
00:28:26,920 --> 00:28:30,480
Speaker 1: Then Armstrong would be heading up a really big content

466
00:28:30,600 --> 00:28:35,320
Speaker 1: and advertising company with powerful assets, free to pursue its

467
00:28:35,320 --> 00:28:40,840
Speaker 1: own businesses, not tied down to Verizon. But Verizon's leadership

468
00:28:41,040 --> 00:28:45,400
Speaker 1: never really saw eye to eye on that vision. Lowell McAdams,

469
00:28:45,440 --> 00:28:49,120
Speaker 1: who was the CEO of Verizon, announced in June of

470
00:28:50,520 --> 00:28:52,720
Speaker 1: that he was going to step down. He led the

471
00:28:52,760 --> 00:28:56,280
Speaker 1: company precisely for seven years. He stepped down on his

472
00:28:56,360 --> 00:29:01,200
Speaker 1: seventh anniversary of taking the CEO position over at Verizon,

473
00:29:01,280 --> 00:29:04,800
Speaker 1: so he steps down. His replacement was the guy who

474
00:29:04,840 --> 00:29:09,320
Speaker 1: had been the ct O of Verizon, Hans Vestberg. Hans

475
00:29:09,360 --> 00:29:14,040
Speaker 1: Vestberg had previously been the CEO of Ericsson. Well after

476
00:29:14,080 --> 00:29:19,760
Speaker 1: the transition, Vestberg decides to reorganize Oath, and Armstrong saw

477
00:29:20,000 --> 00:29:23,760
Speaker 1: much of his responsibilities stripped away and handed over to

478
00:29:23,840 --> 00:29:30,200
Speaker 1: Go Roppin. And so in September two eighteen, Armstrong announces

479
00:29:30,800 --> 00:29:34,040
Speaker 1: he's resigning from Oath and Go Robin then took the

480
00:29:34,080 --> 00:29:37,360
Speaker 1: helm of Oath. He becomes the new CEO of the company.

481
00:29:37,640 --> 00:29:42,160
Speaker 1: Thus Armstrong had hired his own replacement. Now the day

482
00:29:42,160 --> 00:29:46,400
Speaker 1: that I record this, which is in December two eighteen,

483
00:29:46,880 --> 00:29:50,720
Speaker 1: Oath is in the news again. Verizon filed papers with

484
00:29:50,760 --> 00:29:55,240
Speaker 1: the Security Exchange Commission the SEC. Two. This is something

485
00:29:55,280 --> 00:29:57,280
Speaker 1: that all publicly traded companies have to do. They have

486
00:29:57,320 --> 00:29:59,920
Speaker 1: to file paperwork with the SEC to let them know

487
00:30:00,120 --> 00:30:03,760
Speaker 1: about things like how much money they make. It's a

488
00:30:03,800 --> 00:30:10,160
Speaker 1: transparency thing. So in this filing, the Verizon has written

489
00:30:10,200 --> 00:30:14,760
Speaker 1: off four point six billion dollars pre tax, and that

490
00:30:14,920 --> 00:30:18,080
Speaker 1: right off is the result of Verizon buying Yahoo and

491
00:30:18,240 --> 00:30:21,840
Speaker 1: A A O L. And then realizing that apparently these

492
00:30:21,840 --> 00:30:25,240
Speaker 1: companies are actually worth less than what Verizon had paid

493
00:30:25,240 --> 00:30:28,560
Speaker 1: for them. Essentially, they overpaid for those companies and they

494
00:30:28,560 --> 00:30:32,000
Speaker 1: need to write off four point six billion dollars because

495
00:30:32,200 --> 00:30:38,840
Speaker 1: of the the shortfall here. So once again we get

496
00:30:39,480 --> 00:30:42,760
Speaker 1: this very familiar story. One it seems like history really

497
00:30:42,840 --> 00:30:46,680
Speaker 1: is repeating itself. Vesperg doesn't seem terribly interested in the

498
00:30:46,720 --> 00:30:50,080
Speaker 1: media side of Verizon's business, and by that I mean Oath,

499
00:30:50,960 --> 00:30:54,160
Speaker 1: So right now it looks a little grim in the

500
00:30:54,200 --> 00:30:57,680
Speaker 1: short term for people who work at Oath. Verizon is

501
00:30:57,680 --> 00:31:01,360
Speaker 1: offering up a voluntary separation pro Graham. That's a nice

502
00:31:01,360 --> 00:31:04,360
Speaker 1: way of saying, we need we need some of you

503
00:31:04,360 --> 00:31:06,480
Speaker 1: guys to leave. We need a lot of you guys

504
00:31:06,520 --> 00:31:10,000
Speaker 1: to leave, and we're offering up a package. If you

505
00:31:10,040 --> 00:31:12,920
Speaker 1: take this package, you're gonna get some compensation, You're gonna

506
00:31:12,920 --> 00:31:17,040
Speaker 1: get some severance pay uh, And we don't have to

507
00:31:17,080 --> 00:31:19,480
Speaker 1: have the pain of going through a list and deciding

508
00:31:19,480 --> 00:31:22,080
Speaker 1: who we're going to lay off. So this is to

509
00:31:22,120 --> 00:31:24,320
Speaker 1: try and take as many of those people out of

510
00:31:24,360 --> 00:31:27,920
Speaker 1: the decision making process of who do lay off as possible.

511
00:31:28,880 --> 00:31:32,120
Speaker 1: But if they don't meet the goal for the number

512
00:31:32,120 --> 00:31:35,400
Speaker 1: of people who depart, they will start laying off employees.

513
00:31:35,960 --> 00:31:38,760
Speaker 1: The estimate right now is that the company expects to

514
00:31:38,800 --> 00:31:43,440
Speaker 1: shed ten thousand, four hundred employees total. This is all

515
00:31:43,480 --> 00:31:47,800
Speaker 1: a Verizon, not necessarily just from Oath. By June two

516
00:31:47,800 --> 00:31:52,480
Speaker 1: thousand nineteen. As for OATH specifically and that filing, Verizon

517
00:31:52,600 --> 00:31:57,160
Speaker 1: said that the company quote has experienced increased competitive and

518
00:31:57,240 --> 00:32:00,920
Speaker 1: market pressures throughout two thousand eighteen that have resulted in

519
00:32:01,000 --> 00:32:05,280
Speaker 1: lower than expected revenues and earnings. These pressures are expected

520
00:32:05,320 --> 00:32:08,440
Speaker 1: to continue and have resulted in a loss of market

521
00:32:08,480 --> 00:32:13,280
Speaker 1: positioning to our competitors in the digital advertising business end quote.

522
00:32:13,840 --> 00:32:17,440
Speaker 1: So in other words, what it's sort of saying is, Hey,

523
00:32:17,520 --> 00:32:20,880
Speaker 1: those guys who are in charge earlier, you know, not us,

524
00:32:21,160 --> 00:32:23,920
Speaker 1: but those other guys who used to lead the company.

525
00:32:24,080 --> 00:32:26,560
Speaker 1: They thought we were going to do way better than

526
00:32:26,600 --> 00:32:29,440
Speaker 1: what we actually are doing right now. But they weren't

527
00:32:29,440 --> 00:32:33,040
Speaker 1: able to anticipate the market conditions or how well our

528
00:32:33,080 --> 00:32:35,840
Speaker 1: competitors were going to do. But we, you know, the

529
00:32:35,880 --> 00:32:38,440
Speaker 1: new guys who are in charge now we have to

530
00:32:38,520 --> 00:32:41,800
Speaker 1: deal with the mess that they left, and we also

531
00:32:41,880 --> 00:32:44,080
Speaker 1: understand it's going to be really tough over the next

532
00:32:44,080 --> 00:32:48,680
Speaker 1: few years. That's essentially what their filing says. And it's

533
00:32:48,680 --> 00:32:51,880
Speaker 1: a warning this that says, don't expect us to turn

534
00:32:51,920 --> 00:32:55,920
Speaker 1: this around overnight. So what is going to happen next

535
00:32:56,200 --> 00:33:00,600
Speaker 1: for oaths, or specifically to a o L. That's something

536
00:33:00,680 --> 00:33:04,080
Speaker 1: of an open question as I record this episode, and

537
00:33:04,120 --> 00:33:06,360
Speaker 1: maybe by the time you hear it it will have

538
00:33:06,400 --> 00:33:09,880
Speaker 1: been answered it. Maybe that Verizon will decide to spin

539
00:33:09,920 --> 00:33:13,280
Speaker 1: off the company after all, because Vestberg doesn't really seem

540
00:33:13,280 --> 00:33:18,200
Speaker 1: all that interested in developing a media company. It's not

541
00:33:18,480 --> 00:33:22,480
Speaker 1: likely to go away because the company still does generate revenue.

542
00:33:22,480 --> 00:33:26,000
Speaker 1: It's not like it's hemorrhaging money left and right. It's

543
00:33:26,040 --> 00:33:29,320
Speaker 1: just not the transformative property that Verizon was hoping it

544
00:33:29,360 --> 00:33:32,400
Speaker 1: would be when it made the acquisition, which again, I

545
00:33:32,400 --> 00:33:35,920
Speaker 1: think you could argue convincingly would be the full history

546
00:33:35,960 --> 00:33:38,200
Speaker 1: of a o L. Baron's, by the way, has an

547
00:33:38,280 --> 00:33:42,280
Speaker 1: article that cites Wells Fargo analyst Jennifer Fritzscha and she

548
00:33:42,360 --> 00:33:46,040
Speaker 1: wrote that quote, the hype of OATH has been over

549
00:33:46,120 --> 00:33:49,280
Speaker 1: for some time. While we believed in the white board

550
00:33:49,480 --> 00:33:53,160
Speaker 1: concept of OATH offering a new digital advertiser of choice,

551
00:33:53,240 --> 00:33:56,640
Speaker 1: beyond Google and Facebook. We think this has been an

552
00:33:56,720 --> 00:34:00,360
Speaker 1: uphell fight for Verizon without a significant amount of gale

553
00:34:00,360 --> 00:34:04,959
Speaker 1: and content ownership end quote. And that's the story of

554
00:34:05,000 --> 00:34:07,600
Speaker 1: a o L so far, from a startup in the

555
00:34:07,720 --> 00:34:11,279
Speaker 1: nineteen eighties that provided a bulletin board like service to

556
00:34:11,360 --> 00:34:15,080
Speaker 1: Commodore sixty four users all the way up to a

557
00:34:15,120 --> 00:34:21,480
Speaker 1: cog in an enormous multibillion dollar global corporate machine that's

558
00:34:21,520 --> 00:34:24,640
Speaker 1: giving off a little smoke at the moment. The upcoming

559
00:34:24,680 --> 00:34:27,680
Speaker 1: departures and layoffs will likely mean things will continue to

560
00:34:27,840 --> 00:34:30,759
Speaker 1: change for folks over at a o L. But hopefully

561
00:34:31,360 --> 00:34:33,800
Speaker 1: those who are working in the content side will continue

562
00:34:33,800 --> 00:34:37,799
Speaker 1: to have gainful employment. As someone who creates stuff for

563
00:34:37,840 --> 00:34:42,120
Speaker 1: the internet, podcasts, the occasional article. I feel a lot

564
00:34:42,120 --> 00:34:45,359
Speaker 1: of empathy for people who work at other companies that

565
00:34:45,400 --> 00:34:48,040
Speaker 1: go through these big changes. I've gone through changes like

566
00:34:48,080 --> 00:34:51,480
Speaker 1: that multiple times myself. I've been very fortunate so far,

567
00:34:51,880 --> 00:34:55,160
Speaker 1: but you can't take that for granted. Those things can

568
00:34:55,280 --> 00:34:58,400
Speaker 1: really shake things up, and it's it's a huge impact

569
00:34:58,719 --> 00:35:02,600
Speaker 1: on the lives of old people. So I hope it

570
00:35:02,640 --> 00:35:06,239
Speaker 1: turns out for the best for everybody concern. That is

571
00:35:06,280 --> 00:35:08,919
Speaker 1: the conclusion of the a o L story so far,

572
00:35:10,000 --> 00:35:13,840
Speaker 1: America Online probably has several years left in its history.

573
00:35:13,880 --> 00:35:15,719
Speaker 1: I sure hope it does. I hope it doesn't just

574
00:35:15,760 --> 00:35:18,360
Speaker 1: go away, so I'll probably have to do an update

575
00:35:19,200 --> 00:35:21,480
Speaker 1: a follow up episode at some point in the future.

576
00:35:22,160 --> 00:35:25,600
Speaker 1: But this was a really fascinating story to look into,

577
00:35:25,840 --> 00:35:30,880
Speaker 1: very complicated from a business perspective, but interesting and and

578
00:35:30,960 --> 00:35:35,920
Speaker 1: connected to so many other companies, whether directly through mergers

579
00:35:35,920 --> 00:35:39,759
Speaker 1: and acquisitions or through competition. If you guys have any

580
00:35:39,800 --> 00:35:43,000
Speaker 1: suggestions for future episodes of tech Stuff, maybe it's a technology,

581
00:35:43,080 --> 00:35:45,640
Speaker 1: maybe it's another company story you would like to hear about.

582
00:35:46,080 --> 00:35:48,880
Speaker 1: Maybe there's someone I should interview. Why not let me

583
00:35:48,920 --> 00:35:51,680
Speaker 1: know send me an email. The email address for the

584
00:35:51,680 --> 00:35:55,680
Speaker 1: show is tech Stuff at how stuff works dot com

585
00:35:55,800 --> 00:35:58,560
Speaker 1: or head on over to tech Stuff podcast dot com.

586
00:35:58,640 --> 00:36:01,040
Speaker 1: That's our website. You got to find other ways to

587
00:36:01,080 --> 00:36:04,239
Speaker 1: contact me through there. Like on social media, you also

588
00:36:04,280 --> 00:36:06,640
Speaker 1: find information about the show. You'll see a link to

589
00:36:06,719 --> 00:36:09,640
Speaker 1: our merchandise page over at t public dot com slash

590
00:36:09,680 --> 00:36:12,120
Speaker 1: tech stuff. That's where you can buy all sorts of

591
00:36:12,120 --> 00:36:15,759
Speaker 1: goodies with the tech Stuff logo and various designs on it.

592
00:36:15,880 --> 00:36:18,120
Speaker 1: Every purchase you make goes to help the show and

593
00:36:18,160 --> 00:36:21,520
Speaker 1: we appreciate it, and I'll talk to you again really

594
00:36:21,640 --> 00:36:30,120
Speaker 1: soon for more on this and thousands of other topics.

595
00:36:30,400 --> 00:36:41,480
Speaker 1: Is It, how stuff Works dot com