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Tech

Facebook is AOL, Twenty Years Later

It was an election year. An exciting new company, founded just seven years ago, was ready for its big IPO, a symbolic gesture to the world that they had officially made it. Many were curious about this new “walled garden” community that was sweeping...

It was an election year. An exciting new company, founded just seven years ago, was ready for its big IPO, a symbolic gesture to the world that they had officially made it. Many were curious about this new "walled garden" community that was sweeping the nation, and the new technologies that it promised. In time, the burgeoning internet company would reach soaring heights, valued at over $100 billion.

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But this was March 19, 1992, and the company was American Online.

In its inaugural day of trading, the young company's shares closed at $14.75 in trading on the Nasdaq, 28.3% above the $11.50 it was priced at.

A comparison of stats (provided by Portfolio.com):

AOL

Founded: May 24, 1985
*Original name: Quantum Computer Services
IPO date: March 19, 1992
Market cap at IPO: $61.8 million
Total revenue end of fiscal year 1992: $26.6 million
Number of full-time employees in 1992: 97
AOL members in 1992: 181,000
Most visited chat in 1992: 900 people took part in the discussion with the Reverend Billy Graham

Facebook

Founded: February 4, 2004
Original name: The Facebook (Facemash)
Total revenue end of fiscal year 2011: $3.7 billion
Number of full-time employees in 2011: 3,000+
Facebook monthly active users: 845 million
Most fans: Texas Hold'em Poker (43.9 million), Facebook (43.6 million), and Eminem (38.7 million).

The two companies, at least at the time of their IPOs, were clearly on different stratospheres. Relative to Facebook, AOL arose from much humbler begins. There was no hype back then; nobody knew what the Internet was. "We were the first Internet company to go public, and the roadshow then was really just trying to explain to people what this was, why it would be important," said AOL founder and former CEO Steve Case. "People thought it was kind of a hacker, hobbyist, nichey business."

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Without the proper words to describe it, The Wall Street Journal at the time called simply "a provider of computer-based consumer services." Of course, 10 years later, the company was worth $150 billion.

Yet despite being two decades apart, the two companies, AOL and Facebook are eerily similar. Case, too, believed his golden bullet was the community while also building the company around a closed platform. And perhaps more pressingly, both services, despite being immensely popular, were generally panned by harsher critics. AOL is remembered for crappy dial-up service and millions of wasted CDs more than anything else. For Zuckerberg, Case has some experienced advice.

"Focus … on where product is going and what customers are looking for," warns Case. "Be careful on acquisitions. Make sure they really are strategic and logical. When you have a large currency there's a temptation to use it to acquire businesses that add some confusion to large business."

No one will doubt Zuckerberg's focus on product but has he ever given "what customers are looking for?"

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