HOW AOL LOST THE BATTLES BUT WON THE WAR

AMERICA ONLINE DEFIED THE TECHIES, CATERING TO THE CHATTING MASSES. ITS SURPRISING DEAL COULD MAKE CEO STEVE CASE'S STRATEGY LOOK BRILLIANT

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The anchor for this success is a truism as relaxed as Case's laconic charm: easy is better. In a world of overfeatured, tech-heavy computers and Internet gadgets, Case built a business on the simple idea that the electronic world should be easy to use. "The geeks don't like us," Case said last week as he kicked back in his Dulles, Va., office, sporting a new green CompuServe shirt. "They want as much technology as possible, while AOL's entire objective is to simplify." It was Case, for instance, who introduced the first graphical interface to the online world in 1985, allowing users to point their mouse arrows at whatever they wanted and click to get it.

Simplicity has let AOL build an electronic community that includes not only the geek next door but the geek's parents and grandparents as well. It's a place where a generation of Florida retirees has found that the keyword Jewish links to the "Ask a Rabbi" feature, where teens can buy MTV clothes and where Business Week and the New York Times come free with a subscription to AOL. (TIME is available on CompuServe; other Time Inc. publications are carried on AOL. Time Inc. has a joint venture with AOL to develop a health site called Thrive.) Case hopes for a service that is as clean, organized and trouble free as the manicured suburbs that surround AOL's Dulles headquarters. "There's an inside Silicon Valley syndrome that is out of touch with what consumers want," Case says. "Our market is everybody else." Internal research suggests "everybody else" could push AOL to 25 million members by 1999. Says Case, once a PepsiCo marketer: "We want to be the Coca-Cola of the online world."

In a sense, Case has spent his whole life preparing to build and run a multibillion-dollar business. His childhood on the island of Oahu was sprinkled with the fiscal adventures of a boy to the cash register born. With his older brother Dan (now 40 and CEO of Hambrecht & Quist, an investment firm that specializes in technology), Case started his first business before he had fully mastered a bicycle. The venture was a variation on a classic model: converting backyard lemons to lemonade. Next the brothers started Case Enterprises, which peddled everything from seeds to watches. Case Enterprises stumbled--"I can't understand why no one wanted to buy Swiss watches from a 12-year-old and an 11-year-old," Dan jokes--but it gave the boys a feel for the joys of capitalism. "From the beginning," Steve says, "it was clear I'd be an entrepreneur."

Upon graduation from Williams College (where he started four businesses, including a lucrative airport shuttle), Case leaped into a life in corporate America. Working for giants like PepsiCo and Procter & Gamble, he chafed at the implacable peculiarities of management, but he also took careful notes. At P&G, for instance, he had a front-row seat for corporate marketing. He still chuckles about the P&G executives so dazzled by the success of Bounce--a tissue impregnated with fabric softener--that they jumped to the odd conclusion that the idea might work for hair care. The result was a conditioner-impregnated tissue. Case helped invent a catchy slogan--"Towelette? You bet!"--and then watched the product implode. "Consumers," Case says, "are smart. Good marketing can only get you a trial. If the product's bad, sales will go over a cliff."

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