Build the brand, success will follow

Build the brand, success will follow
By Janet Kornblum
Staff Writer, CNET NEWS.COM

NEW YORK--Robert Pittman is way too charming to come out and say it aloud to a room packed with online heavies. But if his speech at a recent online conference had a working title, it probably would have been, "it's the brand, stupid."

Some were surprised by his message. Pittman was telling the industry's biggest players in that Southern drawl of his that AOL's key to success isn't going to be content. It's going to be its brand.

It's the same thing he's been saying all these years as a founder of MTV, as chief executive officer of Century 21, as chairman and CEO of Six Flags Entertainment, and at just about every other job he's packed into his 28-year career. (Pittman says he took his first job at the tender age of 15.)

All these years, though, America Online has been preaching content. After all, the company has said, content is what separates its service from most of the competition. AOL has lots of it, tons of it. Come to AOL and you can read the New York Times, check out the latest computer programs, or do a research paper using its online encyclopedia and gateway to the Internet. That's been the promise of AOL and its main selling point.

So what was Pittman, the man of many careers, getting at? That only when a product--and that can be anything from a cable channel and a real estate company to an amusement park--has a universally recognizable brand name, can it begin to think about conquering the world. It worked at MTV, but will it work at AOL?

With Pittman at the head of its online service, that's what the company is thinking hard about these days.

To be clear, Pittman wasn't saying, as some thought, that content doesn't count. He was saying that people don't come to AOL because it has the best content. They go there because it has a lot of it. And how do they know that? Because they know about the brand. AOL, in other words, is aiming to be the superstore of the Internet, where the products don't have to be perfect or even the best. They just have to be there en masse for the masses to enjoy.

Pittman, sitting in one of AOL's many worldwide offices in New York one recent winter day, explained that his goal is to build AOL into the biggest and best online brand. He said his job is a lot easier than, say, at MTV, because he isn't starting from scratch. AOL already has incredible brand recognition. Sure, it's the company that hard-core Netizens love to hate. But ask any non-Netizen what an online service is and the answer is likely to be "AOL."

Claim to fame: Creating MTV and "getting out of Mississippi."

Career goal: To build and strengthen companies.

Famous attributed quote: "We don't just shoot for 14-year-olds; we own them," in reference to MTV. (Pittman neither admits nor denies having ever said this.)

Hobbies: "Anything that goes fast, is a machine, or is outdoors," including flying, skiing, canoeing, and motorcycle riding.

Critical mass

If they've already built the brand and that's your specialty, then what are you doing? What are your goals? What's your mission?
Our job is to continue to grow this business, to take advantage of the tremendous lead that we've got, the big brand we've got, to make it a business, make it more appealing and useful for the consumer, to make it rewarding for the employees. I think in any business you usually have several levels. If you do one without the others, you will fail. You must figure out a way to serve all of those, find a strategy, a way to skin the cat that works for all of those constituencies, not just for one.

But if you really wanted to, you could retire, right? Why not sit back and take it easy?
You know what it is? I started working when I was 15. I love going into businesses that I don't know much about but sound interesting for some reason. And there's always the financial challenge on one end; there's the creative challenge on another; there's the manpower challenge in between...all focused on a customer and trying to figure out how we serve that customer in a unique way. I find it to be remarkably stimulating for my brain and it makes me feel alive...I get a good, warm feeling out of it.

What I don't enjoy doing, as you probably can tell from my career, is that once something really gets successful and we actually have real power, I don't want to be there anymore because I'm not interested in being powerful. I'm interested in being creative and being challenged. The hardest times are the most fun times. So you also bond with people; you make friends for life in those sort of experiences when you're in the trenches with someone.

Having an opportunity to come and be in that experience at AOL was irresistible. So I deferred living in Telluride for a few more years.

You've spoken about the concept of reaching critical mass and what that means for a company. Is AOL at that point?
[AOL is] way beyond critical mass. Nobody else is quite there. Probably AOL had critical mass around 4 or 5 million subscribers. We got large enough, we penetrated enough of the country, and we began to get enough scale and enough of a lead over other people. It begins to be self-perpetuating and we're beginning to get that kind of momentum behind the service.

You've also said the online service industry is like cable television, an industry you come from. You said consumers behave largely the same way across industries. But how can that be true? On cable you have a closed network. Only a certain number of players can make it in. In the Internet space, you can have an infinite number of players. Aren't the rules different?
Consumer behavior is the underlying thing, and what we're all trying to do is solve it. Some people have--some haven't--realized that in this world you can have a cable network and [an online] network, but if you can't get carriage by someone or get aggregated with someone else, you're not going to get many users.

What we're finding in the Internet is the same thing. There are all these people saying, "Wow, I've got a Web site!" And then reality sets in and they find that no one is using it. Well, the reason no one is using it is because they're not part of any aggregated package. They're standing out in the free and expecting people to get to them.

I know lots of the content providers who are old friends, and they're saying, "Hey, we'd like you to give us some sort of profile on AOL so we can get more traffic." I say, "Fine, we can do that." But there are going to be a limited number of spaces.

In the cable business, there are a limited number of networks that have 60 million subscribers, but there are about a gazillion networks out there. Most of them have less than a million subscribers and they won't make it.

The reality is that most of the Web sites out there today aren't going to make it, either. That's the hard, cold reality.

Speaking of reality, how are you going to keep AOL competitive, especially in light of all the problems you've been having with busy signals and the fact that you failed to anticipate how overwhelmed the network would become? Do you think it's going to affect AOL's long-term situation?
Well, it did not affect us in a long-term way because we're past the worst of it now, and it's getting better every day. Everybody who was bitter, mean, and nasty is calling back and saying, "It's a lot better...Thanks."

We're not where we want to be yet. We're continuing to build capacity at a faster rate than normal to get ahead of it.

I know you joined the company just as it went to flat-rate pricing, but do you think AOL could have done things differently?
I came in as that was happening. and I went back and asked our people, "Let's do an analysis of why that happened and where did we go wrong." As I looked, I said, "You know what? They did a pretty good job of forecasting."

The problem is it's very difficult to forecast the unknown. The good forecasts in life are where you're saying "Well, somebody else did that--what happened to them? Let's try to apply it here." But there is nothing else like this.

It is unbelievable to think that our members doubled their usage on the service. This wasn't caused by new members signing up; this problem was caused by our existing members doubling their usage. And that's a pretty astronomical number to think about.

I actually think it teaches us a lot about our relationship with the customer. I was talking to some of the folks at Coca-Cola who had a very similar experience with New Coke. When they switched to New Coke, the user didn't split and go to Pepsi. The member got mad and said, "Give me back my old Coca-Cola!" And with us, our members didn't split. They got mad at us and said, "Fix it!"

They held our feet to the fire, but you know what? That's like a family. If I did something wrong with my dad when I was a kid, he didn't throw me out of the house.

Likewise, we have members who held our feet to the fire on this and we deserved it. They deserved to have AOL the way they're accustomed to it, and I don't think there's anything wrong with them being mad or holding our feet to the fire. It's absolutely the right reaction.

Given that you couldn't predict how the unlimited access plan would affect your service, how can you ever plan for the future in a business like the Internet, where things change hourly?
We can forecast a lot about consumers by just understanding how they behave. They're going to behave in this business the same way they behave everywhere else.

They're not going to suddenly be interested in convenience and brands everywhere except here. Of course they're going to be interested in it here.

Convenience is what's making this business. So that part becomes very forecastable. When you start getting into issues like how much of this capacity will you need, you can forecast that.

What you can't do is [forecast] how much more will my members use the service if I go to unlimited pricing. Other people did unlimited pricing and their usage didn't double. What that also tells us is--surprise, surprise--AOL is in a category by itself. Our members do all things a lot more, so we have to plan it a little differently, but it's difficult to forecast those sorts of elements.

Now, this isn't an unsolvable problem. It is a temporary problem because you know exactly what you have to do: You have to add more modems than expected to serve the people. So we do it.

NEXT: Content deposed

Content deposed

In your speech today, you talked a lot about content, saying that it is not an online service's most valuable asset. In other words, you were saying it is no longer king. That was pretty surprising, coming from an AOL executive.
I don't think content in this business is what it is in the television business. At AOL, we're giving people convenience in a box. People don't need to know more about the news or more about their computer; they don't need more places to talk to people. What they need are more convenient activities. And what's winning here is content that is more convenient.

What we're about is [this]: if I like to go out to bars just to talk to people and drink a couple of beers, I [could also] go to a chat room. That's more convenient than going out to the bar. If I'm a kid and I've got to do a term paper, instead of going to the library I go search the Internet for my subject. That's a lot more convenient. If I've got to book a trip next week somewhere, instead of calling my travel agent and trading phone calls for an hour or a day or two days, I now just book it myself. It's a lot more convenient.

Everything we're doing is a more convenient version of what's out there. We pull it all together and it's one-stop shopping for convenience. Now, do you need content for that? Of course you do. But people aren't coming here because of the content. They got the content in most cases somewhere else in another form.

They're coming here because the content is more convenient in this format and in this usage. And so our basic selling proposition of AOL is convenience in a box.

What happens when someone else develops convenience in a box that's equal to America Online or better?
Then the problem is they have to get a better brand, at least as good a brand.

On a more personal note, can you talk about some of your personal goals?
It's hard to separate them from the company's goals because I come in to do a mission. I have a life beyond AOL. I have a group of friends who don't really know what I do for a living and don't care. So that's my balance in the world. I have a son that I'm very close to and love very much.

When I come into a company, my goal is really to figure out what the company needs to do and help achieve that. In any company I'm in, it's about people, the product, and the quality of the product. At our place, it's member services, member quality. If I'm in the theme park business, it's our visitor experience. At the end of the day, that's sort of the root of it. If you make people happy, you'll have a successful product. They will say good things about you and you'll win over time.

You've got a lot of successes under your belt. Do you have any failures, anything that didn't work out well?
I think every success also has embedded failures. What you have to do is learn from your mistakes and you keep plowing through. I worked for this wonderful fellow named Steve Ross, who was the founder of Warner Communications. He started two funeral homes with his father-in-law and turned [that] into Warner Communications. [He was] a great entrepreneur.

Steve used to say, "At Warner Communications, you'll never be fired for making a mistake. At Warner Communications, you'll be fired for not making a mistake, because if you're not making a mistake, it tells me you're not trying anything new and the product we've given you to manage is going to wither away."

So I think within every success I've had there have been plenty of failures. At AOL we've got plenty of failures, but the overall effect is success. I think what we don't want to do is stop with the failures, but we want to say, "That's part of the learning experience, part of getting ahead. Let's learn from it, let's keep going."

How will you judge your success at AOL? It sounds like your M.O. is to build a place and leave. Does that mean that when you leave, AOL will be set?
Every place I've left has been set when I left. When I go into a place, I try to develop a growth strategy. I try and turn that into an operating plan and then build a culture that perpetuates that strategy. If I do those things successfully, I don't have to be there anymore. I've done my job. Now, sometimes it's fun to be there and sometimes I stay.

But that's the real challenge of, I think, any CEO in a high-growth business. That's really what I'm focused on. There's an enormous amount of manpower development around that culture. Part of building the culture is manning the plan, putting the right people in the right jobs to make that plan turn into reality, and working with them on achieving it. By the way, I always find that if you help other people achieve their goals, they'll help you achieve a bigger goal.