Why you should care
Sometimes the best place to be is in the shadow of the Golden Boy.
Let me set the scene: January 10, 2000. The NASDAQ was nearing an all-time high, Napster was exploding, Google had just hired its first in-house chef, and some observers were wondering if the bubble was about to burst. At a press conference in New York City, two CEOs hugged behind the podium moments after announcing one of the biggest media deals in history: the merger of print and television giant Time Warner with Internet service provider America Online. “YOU’VE GOT DEAL,” blared the New York Post.
The merger had been negotiated in secret by the two companies’ chief executives, Steve Case and Gerry Levin. Case had led AOL through a massive expansion and still-more-massive 80,000-percent rise in its stock price. Levin was a successful executive who styled himself after Time magazine founder Henry Luce and hoped to ensure old media’s place at the head of new media’s table. Like many such deals, it would be a merger in name only: AOL’s bubble-inflated stock was worth nearly double that of Time Warner’s, which put AOL in charge. The deal was publicly announced after just three days of due diligence by the companies’ business and legal teams.
The whole story of the deal is a fascinating tale, full of more hubris and surprise turnarounds than you can count. But for me, the story of the dealmakers’ top lieutenants is the most compelling. AOL’s president and chief operating officer was Robert Pittman, a brash but successful turnaround executive most famous for founding MTV at age 27. Levin’s No. 2, a paunchy, quiet guy named Richard Parsons, was cut from a different cloth.
The competition between these two favored sons is, for my money, the most instructive story to come out of the deal. Pittman was the Golden Boy, real magazine cover material. He’d been a significant mover in music, television and popular culture. A 1990 issue of New York magazine featured him and his then-wife Sandy as the “Couple of the Minute.” In the early 1990s he’d led a business group within Time Warner and headed real estate company Century 21 before joining AOL in 1996.
Parsons, on the other hand, was a black Republican who’d served all of his party’s presidents since Nixon. Known to his colleagues as both a peacemaker and dealmaker, he grew up in Brooklyn and Queens, played basketball at the University of Hawaii and got a job as a staff lawyer for New York governor Nelson Rockefeller. This cemented a connection with one of America’s leading families that stretched back generations, as Parsons’s maternal grandmother had spent years as a groundskeeper at one of the Rockefeller estates.
The CEOs who spun together the AOL Time Warner deal both entered into it with an eye on their legacies.
When Rockefeller was appointed U.S. Vice President, Parsons followed him to D.C. In 1977, he transitioned to corporate law and was recruited by a longtime Rockefeller aide to join the Time Warner board in 1991, and tapped by Gerry Levin to become the company’s president in 1995.
The CEOs who spun together the AOL Time Warner deal both entered into it with an eye on their legacies. Case, despite his company’s success, was itching to try something new. Levin, whose son had been murdered a few years earlier in a botched kidnap/extortion scheme, was looking for a more meaning-filled life once his media empire was secure.
In the afterglow of the merger, Pittman would have been anyone’s pick for Most Likely Successor. He was cutting-edge, world-changing media personified, and he didn’t shrink from the spotlight. Parsons was a great guy to have on your team but — with a smaller portfolio than his co-COO Pittman — seemed Most Likely to Be Passed Over.
And then April 4, 2000, arrived. It was the most volatile day in NASDAQ’s history, launching the dot-com crash. By the end of the month, AOL’s shares were trading at 60 percent of their 52-week high. Naysayers turned up the volume, and the Washington Post reported that AOL had based its numbers on improperly inflated ad revenue. Investigations were launched, but the deal still went through. Within the company, though, discontent rose. The Time Warner people were seeing their own IRAs plummet along with AOL’s stock, and they chafed at the category-combining “synergy” advocated by Case and Pittman. And though it was less known at the time, it turned out that Case and Pittman had not been getting along since before the merger. For both senior executives and the rank and file, the Golden Boy had become a lightning rod. Pittman’s reign as the alpha COO was in trouble.
Pittman would have been anyone’s pick for Most Likely Successor. Parsons seemed Most Likely to Be Passed Over.
Meanwhile Parsons was making his move. When Philip Morris recruited him to become its CEO, the quiet guy in second place finally had the leverage he needed to convince AOL Time Warner’s leadership to hand him the crown. In December 2001, the board forced Levin to retire, and named Parsons CEO. There was a lot of damage to undo, but by all accounts Parsons was the man for the job. He made peace among the divisions by tossing the “synergy” concept and encouraging each business unit to become best in class. In 2003 Parsons announced that the company would be ditching the AOL name. As much as $200 billion in shareholder value had vanished in the deal and the crash, but Time Warner managed to survive as an industry leader. Pittman lasted just a few months as Parsons’s COO before resigning. He went on to work in private investment before becoming chairman of Clear Channel in 2010. Parsons left Time Warner to become chairman of Citigroup from 2009 to 2011; these days he’s pushing for the rebirth of Harlem’s Jazz scene.
For me, the takeaway from the Parsons story is that loyalty and tenacity are two sides of the same coin. Whenever you find yourself in second place, stay present and stay valuable, both for yourself and for the people you work with. Connections and goodwill can get you far, but often the secret of staying power is simply staying. If a flashier rival is taking the credit, he’s also lining himself up for the blame when things go wrong — and you’ll be ready to step in.