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ExecutiveBiz: After years of charging subscribers for Internet access and other content, much of the content on AOL will be free in 2005. Why is that?
Ted Leonsis:
Let me begin by stating the obvious. AOL is an enormously successful enterprise with revenues exceeding $8 billion – and with profits of more than $1.5 billion. We send more than 29 million bills out to consumers each month and our network of properties reaches 112 million unique visitors per month. And we are growing our margins and profits rapidly.
But, the interactive market is in a period of transition, as the narrowband ISP business – while still enormously profitable – continues to decline. We have positioned ourselves well to hold share in that business with fabulous new products, our AOL 9.0 Security Edition and our AOL PC. This business will fund our growth in other areas.
Meanwhile, we have successfully repositioned our business for the future. We have completed a successful restructuring of our company into four business units aligned along the growth opportunities we see in the emerging "multi-band" market.
The greatest of these growth opportunities is in the high-margin and rapidly growing audience business, which I now head along with my role as vice chairman of the corporation. We have put the wind behind our back in this key growth market. We grew our advertising businesses more than 40% in the third quarter. We have rebuilt the business to $1 billion during the year. We're going to accelerate that growth next year.
Already, our 112-million strong audience across our access and web services makes AOL the number two player in the audience business. Our goal is to further grow our share by managing all these access and audience products as one network.
Going forward, we will develop even more and better world-class content, leverage it across our network, with a revitalized AOL.com as the cornerstone, grow our total audience share and fully monetize it, thereby capturing our fair share of the expanding online advertising pie. Our group consists of AOL, AOL.com, AIM, Mapquest, Netscape, ICQ, Moviefone, and other brands.
ExecutiveBiz: What new and interesting projects are you working on this year?
Ted Leonsis:
Our core project for the next year is to develop a world-class, full-featured and compelling AOL.com as the nerve center of a revitalized and integrated AOL Network, along with the compelling, multiband program that will appeal to and meet the needs of every member of today's online family in every area of their lives.
ExecutiveBiz: What is your view of baseball in DC?
Ted Leonsis:
The emotional answer is "it's about time!" Baseball belongs in our nation's capital.
From a business and civic perspective, I'm convinced baseball can bring important benefits. I'm confident that the new team and stadium will attract the same kind of commercial and social development to its planned Southeast location as the MCI Center has attracted to it surroundings. The MCI Center has not only boosted business, it has brought new life to inner NW as a place to be, and not just before and after games. The city should be very grateful to Abe Pollin for this great civic-minded act.
ExecutiveBiz: Do you support the current plan for the stadium financing?
Ted Leonsis:
The debate over the stadium financing did raise some important questions about the relative value of public financing of sports facilities versus other government services that are worthy of discussion and further study. But it was poorly timed: right or wrong, Major League Baseball had made its requirements clear and the District had agreed to those conditions in pursuing a team. I would point out that the MCI Center was privately financed, although the District invested in improvements to enable its construction and operation. In the end, every such endeavor is a combination of public and private action and the key is to find the mix that produces the greatest benefit for the cost. But I will say: "real men build their own arenas with their own money :-)" !
ExecutiveBiz: What is your advice for entrepreneurs?
Ted Leonsis:
I'm reminded of the scene in the movie The Graduate in which Mr. McGuire, the family friend, leans over to the Dustin Hoffman character and says to him, "I just want to say one word to you - just one word ... plastics." My biggest piece of advice to entrepreneurs also centers around one word: "Internet." While four years ago it was fashionable to say that the Internet phenomenon was overblown, the reality is that everything we once said about the medium is proving true, and its full promise is just now being realized. There isn't any area of life that it won't touch, and many of the most successful entrepreneurs will be those who find ways to tear down the last barriers to realizing its full potential.
At the same time, there are a number of things I have learned about life in general that I believe are key to a successful career.
First, it's OK not to have all the answers. Entrepreneurs have to learn to live with being wrong, and realize that sometimes the greatest successes are born of failure.
Second, don't believe the experts. So don't ever assume anyone else is smarter than you or knows more than you. Do your own reasoning and research. And always listen to your consumer.
Third, have a game plan. Know where you are going, what risks you are going to take, and why. And write it down. I personally have a list of 101 things I want to do in life. Some were whimsical, like catching a foul ball at a major league baseball game. But the vast majority are dead serious. They include family matters like getting married, and raising healthy and self-actualized children, and providing for my parents. And they include business goals – like starting and selling a successful business and creating $1 billion in value in a company. And of course, owning a sports franchise. So far, I've checked off 71 items on that list. That list gave me a structure and a focus in life and in my business.
Fourth, do the little things right. A lot of things that we learned when we were young really are the key to success in life. Early to bed, early to rise. Respect your elders. Do unto others as you would have them do unto you. Be polite to everyone. I once had someone write a million-dollar investment check to help save my business just because I was polite to him when I met him at a reception.
Finally, remember, there's always a third act. Don't get too far up with the ups, or too far down with the downs.
ExecutiveBiz: You are involved in many charitable efforts in the area. Why is giving back so important to you?
Ted Leonsis:
To those whom much is given, much is expected. Giving back is important to me because of the way I benefited from people investing in me. Things didn't start out in too promising a manner for me, as the son of a waiter and a secretary from a working-class town – especially after my high-school guidance counselor told my parents that I was "not college material." But they believed in me, and I also had a great mentor at Georgetown University, Father Durkin, who recently passed away at 100 years old. Father Durkin invested everything he had in me – himself. He taught me to believe in myself and to use my abilities to the utmost. Because of his involvement and support, I finished at the top of my class. So I make a point not just of investing money in people and organizations – anyone can write a check – but investing something much more valuable: time. Some of my favorite charities are headquartered right here – See Forever, Hoop Dreams, Best Buddies, Network for Good.
The good news is that the Internet makes it easier than ever to help. Anyone can write an email, or answer an IM. It makes it possible for even the busiest executive to mentor someone learning to read, a special needs child or a young person needing help, support and inspiration to move above the deprivations of inner-city life.
For more information about
America Online, Inc., visit
www.aol.com.
To read a detailed biography,
please click here.
Interview with Ted Leonsis conducted by JD Kathuria.
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