American History 1988
Chapter 326 - 316 Exchange

Chapter 326: Chapter 316 Exchange

"I heard you have some good news to tell me as well." Three hours later, Dean had already arrived at AOL’s headquarters in Virginia.

"Well, you’re faster than I thought." Steve put down the pen he was holding and stood up to join him in the sofa area.

After getting a cup of coffee, Dean got comfortable and changed his position.

"You know, my plane can take off at any time."

"Wow, that sounds like you’re tempting me with another reason to buy a private jet."

Steve Case joked with him as AOL’s stock prices surged that year.

With his net worth, he really could consider a private plane.

"Believe me," Dean stirred his coffee, "it saves you a lot of time.

You don’t need to arrive at the airport an hour in advance, fifteen minutes is enough.

Plus, a private jet has a faster cruising speed—what usually takes five hours of flight time now only requires three."

"Hmm," Steve nodded convincingly, "I’ll call my financial advisor later."

"Smart choice." Dean made himself at home and took off his coat.

"So... let’s talk about AOL."

"Yes!" Steve snapped his fingers and then handed some materials next to him to Dean.

"This is the latest statistics on AOL’s user numbers, it’ll surprise you."

Seeing his mysterious expression, Dean was also intrigued.

Casually flipping through the materials in his hands, Dean soon showed a surprised look as well.

"2.12 million! That’s truly an unexpected number."

Dean remembered that last year, when discussing the carpet-bombing marketing strategy with Steve and his team, both sides estimated that AOL would have 1 million customers by the end of the year.

But now the data in his hands told him that the final result was more than twice the initial estimate.

"Aha~" Steve nodded proudly, "Why else do you think AOL’s market value was able to quickly break through 5 billion dollars."

As a publicly-traded company, AOL needed to publish financial reports every quarter.

Its explosive customer growth caught Wall Street’s attention and quickly became a darling for investors.

For any listed company, once your number of customers exceeds 1 million, you don’t have to worry about trading volume in the secondary market anymore.

Especially for a newly listed company like AOL, these next few years will be a period of rapid growth.

Moreover, various organizations and research institutions have indicated that America’s number of internet users has already broken through ten million.

As the de facto largest ISP, AOL is very likely to adopt a winner-takes-all approach in the future.

With such a significant market increase, AOL’s stock price soared once again after the release of the latest quarterly financial report.

In just over six months, its market value more than doubled.

Even Byte Company never achieved this, and The Wall Street Journal even gave AOL the front page.

No wonder Dean jokingly talked about considering a private jet as soon as he walked in the door.

For a billionaire with a net worth of over 1 billion dollars, this was just a small thing.

"So all this is thanks to the carpet-bombing campaign?" After looking at the data, Dean gently put them down.

"You could say that," Steve Case nodded, "Dean, your advice was right on the money."

AOL’s great success was key to Dean’s marketing advice from the beginning.

Otherwise, with the old tactics, who knows how long it would have taken to achieve a user growth of 2 million.

For Dean’s gratitude, it was no big deal to him, after all, he was also one of the major shareholders of AOL.

Instead, he was more interested in the details of the data.

"What’s the value of users attracted by these means?"

The carpet-bombing method of promotion has a very high cost.

If user loyalty is too low, it could negatively affect AOL’s financial reports.

However, Steve’s face showed a relaxed smile, "Worth every penny!"

He picked up a floppy disk marked with the AOL logo from the table in front of him and waved it.

"To acquire one registered user, AOL spent an average of 35 dollars on them.

This includes disk production costs, advertising costs, and distribution costs.

But ultimately, our return is 175 dollars spent by each user, over six months."

It goes without saying that a user acquisition cost of 35 dollars is quite steep.

But the customer lifetime value they bring in return is also significant, and this is not the end.

After subtracting this part of the cost, AOL still has more than 100 dollars of gross profit per user.

This is why its market value was able to break through 5 billion dollars in just half a year.

Given this growth rate, Steve is even hoping to double this year’s market value again.

billion dollars, what a delightful number.

Dean was also surprised by the effects these ground promotions brought."

"If we continue this pattern and spread AOL to other states,

maybe its growth rate will set new records, supported by concrete data from the CIX Alliance."

After all, with more than ten million internet users, AOL has only captured just over ten percent.

"It’s not that simple," Steve shook his head, "like I said on the phone, there’s good news and there’s bad news."

"Microsoft?" Dean raised his eyebrows.

Steve nodded solemnly, "Gates is putting plans into action, I’ve heard such news from other telephone companies."

The dream of AOL reaching a market value of 10 billion dollars hadn’t been realized yet, but a shadow had already been cast over it.

According to Steve’s information, Microsoft was already negotiating with other telephone operators, planning to offer dial-up services similar to AOL.

Steve Case didn’t consider this to be baseless speculation, and quickly became highly alert after making inquiries from various sources.

If it were any other company joining the ISP fray, perhaps AOL could afford to be indifferent.

But the opponent was Microsoft, a behemoth with a notorious reputation, having crushed far more than just one enterprise.

Especially before AOL went public, there had been an unpleasant encounter with Gates.

Steve Case still remembered the aggressive words Gates had said.

"I can buy 20% of your shares, or all of them, or I can enter this industry and bury you!"

At the time, he had dismissed Gates’s arrogance with a laugh, but now that the latter was truly ready, Steve Case could finally feel the pressure.

There was no choice; Microsoft was simply too massive. By early ’94, its market value had already exceeded 33 billion dollars.

If Gates invested just one-tenth of Microsoft’s resources into the ISP business, that would be enough to give AOL a hard time.

So after much deliberation upon receiving the news, Steve decided to consult with Dean on a strategy.

Out of all the people he knew, Dean was the only one familiar with Microsoft and had sparred with them.

"Although I still don’t know what Microsoft plans to do, the name ’Microsoft’ alone is impossible to ignore."

Steve Case looked deeply concerned, The Wall Street Journal had already listed Microsoft as the greatest software company.

Facing such an opponent, no one could remain calm.

Of course, there were exceptions, like Dean right here.

"Steve, you’re too nervous," Dean said, leisurely sipping the coffee in his hand.

"That’s Microsoft~" Steve spread his hands, "the company you acquired, Micrpro.

And now the shaky WordPerfect is the perfect proof.

As for those companies that disappeared quietly before they even had a chance to emerge, there are even more."

"That’s because they didn’t have their own moats, but AOL is different."

Dean pointed to the floppy disk that Steve had just picked up, "We already have over 2 million users.

Without a doubt, we are America’s largest ISP.

We offer not just internet services but also a wealth of content."

Although the AOL client has its limitations, once users accept it, they are unlikely to switch ISPs.

That’s because they’re accustomed to the pre-arranged news content AOL provides, from weather to stocks.

A moat doesn’t have to be a technological barrier; it can also be online content or user habits.

"I understand what you’re saying, Dean, but I still feel uneasy." Just thinking about Microsoft’s terrifying financial power made Steve lose sleep.

"Then we must strike first!" Dean offered his advice without any hesitation.

"What do you mean?" Steve’s eyes lit up.

He liked the certainty and confidence in Dean’s eyes. The latter was recognized by everyone as the only person who could hold his own against Gates.

"Before Microsoft officially launches their service, execute a more thorough carpet-bombing campaign.

Remember, I’m talking about a nationwide carpet-bombing, not some minor skirmishes on the East Coast."

The method Dean suggested made Steve take a sharp breath.

Nationwide carpet-bombing? How many floppy disks would that require?

Strangely, the first question that popped into Steve’s mind was exactly that.

"Isn’t that cost-prohibitive? There are more than 160 million people in America.

To make everyone aware of AOL, even collecting all the floppy disks in the world would not be enough."

"Then don’t use floppy disks, switch to CD-ROMs; they’re cheaper."

Dean shrugged nonchalantly, "Today’s home computer systems can already support multimedia playback.

Before Microsoft formally introduces their ISP services, spread CD-ROMs marked with AOL’s brand to every nook and cranny, including Seattle."

At this point, forget about subtlety — speed, efficiency, and decisiveness are the true essence.

Only by seizing the majority of the market can AOL have ample ammunition to face the formidable Microsoft.

Otherwise, waiting for the latter to gain a foothold and then unleash their financial might... Well, the outcome of that is uncertain.

Every time Steve heard Dean’s suggestions, he was shocked, but upon further reflection, they seemed quite reasonable.

Because he was very clear that once users choose a service provider, they usually won’t change it for a considerable time.

This period could be as short as a few months or even as long as a year.

If AOL could secure customers through this method first, then Microsoft’s potential market for online services would be quite limited for a considerable time.

After careful consideration, Steve thought this approach was worth a try.

AOL’s market value had already exceeded 5 billion dollars, even if they spent several times their previous marketing expenses, they could support this campaign.

"Actually, there’s another method that could completely deprive Microsoft’s online services of their competitive edge."

Suddenly, Dean’s eyes became inscrutable.

He had plenty of tricks up his sleeve, but in exchange, he also wanted to secure some resources from AOL.