How I Built This with Guy Raz: Advice Line with Steve Case of AOL

Release Date: December 19, 2024
Host: Guy Raz
Guest: Steve Case, Co-founder of America Online (AOL) and CEO of Revolution

Introduction

In this engaging episode of How I Built This with Guy Raz, host Guy Raz welcomes back Steve Case, the visionary co-founder of America Online (AOL) and the current CEO of Revolution, an investment firm dedicated to supporting entrepreneurs outside major tech hubs. The episode delves into Steve's entrepreneurial journey, his transition from building AOL to fostering innovation through Revolution, and offers invaluable advice to budding entrepreneurs seeking guidance on growing their businesses.

Steve Case’s Entrepreneurial Journey

Steve Case begins by reflecting on his early ventures, including an ambitious project in 1983 aimed at downloading Atari games via telephone lines—a precursor to today’s streaming services. Although the project didn't succeed, it set the stage for his subsequent groundbreaking work.

Key Milestones:

• Quantum Computer Services to AOL: In 1985, Steve co-founded Quantum Computer Services, which later became America Online (AOL). Under his leadership, AOL revolutionized internet access by mailing CDs to users, making the internet accessible to millions.

• AOL Goes Public and Merges with Time Warner: In 1992, AOL became the first internet company to go public, and eventually merged with Time Warner. Post-merger, Steve transitioned from CEO of AOL to focus on his new venture, Revolution.

• Founding Revolution: As CEO of Revolution, Steve shifted his focus from building companies to investing in and mentoring the next generation of entrepreneurs. Revolution has made over 200 investments across 100 different cities, emphasizing growth in "Rise of the Rest" cities—those outside the traditional tech hubs like San Francisco, New York, and Boston.

Notable Quote:

"We have to make sure people are able to start and scale companies, no matter where they choose to live, and don't feel like they have to move to one of the coastal tech cities to really have a shot at building a company."
— Steve Case [06:51]

Evolving the Landscape of Tech Entrepreneurship

Guy Raz prompts Steve to discuss the current landscape of starting a tech company compared to the early days of AOL. Steve highlights significant changes:

• Increased Connectivity: Unlike the 1980s when only 3% of people were online, today's entrepreneurs benefit from ubiquitous connectivity, which lowers barriers to entry.

• Heightened Competition: The ease of launching businesses today means increased competition. Success now hinges not just on building a product but on effectively commercializing it and navigating modern regulatory landscapes.

• Policy and Regulation Challenges: Modern startups often face complex regulatory issues, especially in sectors like healthcare, food, agriculture, and financial services, adding layers of complexity not present in AOL's early days.

Notable Quote:

"The good news now is that everybody's connected. The bad news is everybody's connected and everybody's able to launch businesses."
— Steve Case [07:08]

Advice Line: Caller Sessions with Steve Case

The heart of the episode lies in the interactive advice line segment, where entrepreneurs call in seeking guidance. Steve Case provides tailored advice based on his extensive experience.

Caller 1: Sylvia Vieira from San Francisco – Coexist App

Business Overview: Sylvia Vieira calls from San Francisco to discuss Coexist, an app designed to help busy families manage home life by coordinating tasks, sharing notes, calendars, recipes, and more.

Key Challenges:

• Targeting Male Users: While 80% of sign-ups are women, research indicates that men are often the advocates for adopting such technologies in active households.

Steve’s Advice:

• Understanding User Personas: Steve emphasizes identifying and focusing on specific user groups that find the app indispensable, such as tech-savvy individuals, those with conditions like ADHD, and new parents needing better household coordination.

• Enhancing Virality: Suggests creating "killer app" features that drive initial adoption and leveraging these to expand usage organically.

Notable Quote:

"It’s much easier now to start, but the real challenge is differentiating and breaking through the noise."
— Guy Raz [08:15]

Actionable Strategies:

• Targeted Marketing Campaigns: Offer incentives like free trial periods to engage specific groups, such as men in households, to drive adoption.

• Product Bundling: Integrate attractive features or complementary products to enhance the app’s appeal.

Caller 2: Mindy Horowitz from St. Louis, Missouri – MindyKnows

Business Overview: Mindy Horowitz introduces MindyKnows, a membership-based service providing support and personalized concierge services for parents whose children attend college far from home.

Key Challenges:

• Customer Acquisition in New Locations: Difficulty in reaching parents directly due to lack of access to school mailing lists.

• Engaging Community Organizations: Struggling to connect with community organizations that have ties to universities.

Steve’s Advice:

• Pre-College Outreach: Engage parents before their children enroll in college by partnering with high schools and utilizing pre-college transition periods.

• Leveraging Online Communities: Utilize existing online platforms like Facebook groups where parents of incoming college students congregate.

• Simplify Purchasing Process: Implement easy buying options such as one-click purchases and risk-reduction strategies like guaranteed returns to enhance conversion rates among grandparents.

Notable Quote:

"Targeting the parents before the kids go to school can serve as a sort of insurance policy, providing peace of mind even if they don't immediately use the service."
— Steve Case [28:26]

Actionable Strategies:

• Partnerships with Educational Institutions: Collaborate with colleges to offer services as part of their support packages for out-of-town families.

• Expand Service Offerings: Introduce physical products and subscription models to deepen engagement and create recurring revenue streams.

Caller 3: Jason Levi from Las Vegas, Nevada – Cadenza Kids

Business Overview: Jason Levi discusses Cadenza Kids, a company creating early childhood music education products. Their flagship products are board books with QR codes that link to sounds and videos, making learning about musical instruments interactive and engaging for children aged 2-5.

Key Challenges:

• Converting Grandparents: Online ads attract a significant number of grandparents (over 55), but conversion rates among them are low.

Steve’s Advice:

• Simplify the Purchase Experience: Make the buying process as straightforward as possible, perhaps through streamlined online interfaces or simplified checkout processes.

• Targeted Marketing for Grandparents: Focus marketing efforts on channels frequented by grandparents, such as specific magazines or partnerships with organizations like AARP.

• Product Bundling with Instruments: Offer bundles that include both the books and a small musical instrument to increase the product’s appeal and value proposition for grandparents.

Notable Quote:

"Offering a simplified buying process and bundling products can significantly enhance conversion rates among targeted demographics like grandparents."
— Steve Case [43:19]

Actionable Strategies:

• In-Store Demonstrations: Increase presence in physical stores where grandparents are likely to shop, allowing for hands-on demos of the products.

• Expand Product Line: Develop additional products such as games, cards, and puzzles to create a more comprehensive music education suite, fostering ongoing customer relationships through subscriptions.

Final Insights and Reflections

As the episode concludes, Steve Case reflects on the essence of entrepreneurship:

• Perseverance and Passion: Big ideas may face skepticism and require significant time to gain acceptance. Steve emphasizes the importance of sticking with a vision through challenging times.

• Adaptability: Recognizing when an idea may not be viable and being willing to pivot or shut down is crucial for long-term success.

Notable Quote:

"Big ideas take time for people to understand and embrace. Don’t get discouraged by skepticism; perseverance is key."
— Steve Case [48:52]

Conclusion

This episode offers a rich tapestry of entrepreneurial wisdom from Steve Case, touching upon the evolution of tech startups, strategic investment in underrepresented regions, and practical advice for overcoming common business challenges. By addressing real-world problems faced by callers, Steve provides actionable insights that resonate with entrepreneurs at various stages of their journey.

For aspiring entrepreneurs and business leaders, this episode underscores the importance of perseverance, strategic focus, and the ability to adapt in an ever-changing business landscape.

Listen to the full episode on the Wondery App or wherever you get your podcasts.