Web Masters Episode #44: Barry Appelman

If you were on the Internet in the early 2000s, you probably used AOL Instant Messenger. But did you know AOL didn’t want it to exist? Hear why on this episode of Web Masters¬†featuring AIM’s creator, Barry Appelman.


So long, AIM, we'll miss you - The Verge

Barry Appelman:

You know, people were always social, there were chat rooms and message boards. But this really accelerated the speed of human interaction in all venues. And on computers without buddy lists and instant messaging, it was just much slower and more difficult. And speed of interaction is one of the things that really makes a difference with humans. It’s like sending email versus being in the same room. The nature of the communication. I mean, there are different kinds of communication. You have text messaging communication and then you have in the room communication. And then you have [inaudible 00:00:39] email communication. And they each have different characteristics, but it’s clear that the rapid messaging has benefit over email, but messaging is off the cuff.

Aaron Dinin:

That was Barry Appelman talking about the importance of rapid text-based communication. Hard as it is to imagine now, there was a time not too long ago when you couldn’t instantly send a message to basically anyone on the planet. Of course, now you pick up your phone and dash off messages to friends and family and coworkers using text or iChat, or WhatsApp, or WeChat, or Facebook Messenger, or any number of other services. But none of them, not even plain old SMS text messaging, popularized instant communication. That honor belongs to AOL Instant Messenger, perhaps better known as AIM.

And Barry Appelman? Well, he was the man who created it in secret because he knew his bosses wouldn’t like it. Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Welcome to Web Masters. This is the podcast that teaches about entrepreneurship by exploring the stories of the internet’s earliest and most impactful innovators.

I am your host, Aaron Dinin. I’m a serial entrepreneur. I teach entrepreneurship at Duke University, and well before all of that, I was an undergraduate in college back in the early 2000s, where I, and pretty much everyone I knew, used AOL Instant Messenger almost religiously. Heck, I used to instant message my roommate who was literally sitting at a desk directly beside mine in order to ask him what he wanted for dinner.

So yeah, AOL Instant Messenger dramatically and fundamentally impacted the way people communicated. But it almost didn’t happen. We’re going to find out why by speaking with the creator of AIM, Barry Appelman. But before we can do that, I want to take a minute to thank our sponsor.

Web Masters is being brought to you thanks to the incredible support of our sponsor, Latona’s. Latona’s is a boutique mergers and acquisitions broker. They help people buy and sell cashflow-positive internet businesses and digital assets.

That includes things like Shopify stores, Amazon FBAs, domain portfolios, content websites, SAS apps, and any other type of online work-from-anywhere internet business. If you’ve got a profitable internet business you’re thinking of selling, reach out to the team at Latona’s, and they can help you find the perfect buyer.

Or maybe you are the perfect buyer just looking for the perfect business. Latona’s can help you too. You can check out up to the minute listings of all the businesses they’re helping sell right on their website. That’s Latona’s.com. L o t a n a s .com.

In order to understand the importance and impact of AIM, let me start by providing a bit of context in case you weren’t there to experience it yourself. In the early days of the consumer internet, America Online, AOL, wasn’t just the 800 pound gorilla of the internet industry. In a lot of ways and for a lot of people, AOL was the internet industry. This episode’s guest Barry Appelman talked a bit about this. When we spoke.

Barry Appelman:

AOL pretty much brought the US to the idea that you could log on and do stuff online. I mean, at the time, AOL was the internet, is what people used to say.

Aaron Dinin:

Of course, AOL wasn’t the internet. Not that you need me to tell you that. But to understand the story of AIM, you need to understand that AOL was what’s known colloquially as a walled garden. In other words, not only was AOL decidedly not the internet, it didn’t even give users access to the internet. At least not the full internet.

Instead, AOL users lived within the AOL ecosystem. Their email, content, message board, search, it was pretty much all internal. The one thing that anyone could use, whether or not they were AOL members, was AOL Instant Messenger. Barry was the person responsible for that, and it didn’t make the higher-ups at AOL very happy. Understanding why he did it requires understanding a bit about his background working on the early internet as part of IBM.

Barry Appelman:

I was at IBM when MCI, IBM, and University of Michigan and [inaudible 00:05:23], the three companies bid on it. Michigan provided the operations center, IBM provided the routers and MCI provided the bandwidth. It was a T1 network that universities and other people could sign up for. Eventually it was open to corporations, and that was the beginning of the internet. And I was at IBM research. My group did the routers and the routing protocol along with some other people.

Aaron Dinin:

The group Barry referencing here was part of a team working out of IBM’s Thomas Watson Research Center. That group was helping set standards for the early internet, and the decisions they made ultimately played a critical role in making the internet the global platform it is today.

Specifically, IBM had been focused on building networks using their own internal standards, and it was Barry and his group that pushed the company toward using TCP/IP standards that were compatible with existing networks. And remember, IBM was, well, the AOL or Google or whatever other 800 pound gorilla of its heyday. If IBM had insisted on using its own standards, computer networking might look a lot different than it does now. This all means that Barry was committed to a broad, universal internet with open standards. In that context, it’s a bit odd that he wound up at AOL, a company that worked hard to keep users locked inside its own walled garden.

Barry Appelman:

And the reason I went to AOL was, of course, like everything else, is luck and circumstance. I was ready to do something, to leave IBM. But what happened was my boss at IBM became the development executive of AOL, which was really weird because he was a really old guy and everybody else was young. So he needed another old guy. He is materially older than me, but it’s really weird that he got that job, he always said. Mike Connors was the guy, and he took somebody who’s more well known in the AOL book, Matt Korn, who started out working for me at IBM, and then later was my peer at IBM.

And Connors took him to be head of operations at AOL when we had not many people, and then they worked on me for months to get me to come over there to do development. And so I went over there.

Aaron Dinin:

And what was your official role or job title at AOL?

Barry Appelman:

I don’t know what exact title I had. I had the same job all along, but I kept on getting promoted because there were more people under me. Basically I’m at my peak by some metric, but not very useful in terms of actually doing anything. Having a lot of people work for you doesn’t mean you’re actually doing anything. Can mean you’re just a walking disaster area. So at my peak, I had probably over 700 people in development. So my peak title, I always SVP of development, and CTO at one point.

Aaron Dinin:

So Barry went from researcher at IBM, where he was pushing hard for open internet standards, to CTO of AOL, a company that was notoriously focused on operating an exclusive and proprietary system. Maybe that seems a bit strange until you consider that Barry is also the person responsible for AOL releasing what was, in its day, one of the world’s most popular pieces of publicly available software.

So even though the people making business decisions for AOL were obsessed with keeping users subscribed into a closed system, Barry was one of the few people at the company who recognized that if they wanted any sort of longevity, it would need a very different business model.

Barry Appelman:

The internet was becoming a bigger thing. By ’96, it was a good idea to offer this outside of the walled garden, because you could expand the number of users who would use it to a much greater extent. The free part, of course, is what the business didn’t really like. And the cannibalization. But a line that is certainly not from me by any means, but I certainly appropriated it, is that in a business, if you don’t cannibalize yourself, somebody else will. If you can be cannibalized and you don’t do it, somebody will. And then you’ll be gone.

Aaron Dinin:

Sounds pretty much like the story of AOL, right? But that’s not Barry’s fault. Barry had a different vision, and it’s one he tried to subtly push the company toward. He did it via instant messaging. Now, to be clear, Barry and AIM by no means invented instant internet-based messaging. Even though the term dates to around 1990, the history of the concept goes back to the early days of networked computers. In fact, if you remember our episode with Ira Fuchs, that’s Web Masters episode number 32, his system, BITNET, had instant messaging capabilities when it launched all the way back in 1981. And even by then, instant messaging was well-established technology. Also, speaking of Ira Fuchs and BITNET, Barry and Ira’s paths crossed for a time while they actually worked together on BITNET.

Barry Appelman:

I was at the City University of New York and the idea was to set up, and they had 13 or 17 campuses. So he created BITNET inside the university, and then IRA convinced the guy at Yale to do it. And I convinced the number two guy, which was Penn State. I convinced the director at Penn state to sign up. And then after that it started to steamroll.

Aaron Dinin:

I know BITNET had instant messaging, did that impact your interest in creating AIM?

Barry Appelman:

Well, the reality is, is that messaging between logged on people has existed for a very long time before buddy lists and AIM and stuff like that. So messaging between people, I would never claim any credit for it. But it was interesting, because in Ira’s thing you could actually message somebody. I think it was called an S message. I can’t remember my own name sometimes, but there was a messaging capability which didn’t involve sending files to people. If I remember correctly, AOL had a messaging service between people. That wasn’t the innovation, sending messages. You could even… There was a locate command on AOL, which allowed you to see if somebody was logged on. And then if they were logged on you could send them a message, or if they weren’t logged on, you’d send them a message, and it’d say they’re not logged on, right? If you knew the person’s screen name as AOL called it.

Aaron Dinin:

Wait. So AOL already had an instant messaging service before you even created AIM?

Barry Appelman:

So remember the environment we’re in at the time. At that point, everything was dial-up. When that was created, the world was pretty much dial-up, and it was a big issue to differentiate AOL from other online services. One of the things we knew was that we had the idea of presence in AOL. We knew when people were online. And remember that people weren’t online all the time, because their modems were online. Now AOL went from charging hourly to a fixed rate. So people could be on longer, but a lot of people didn’t have two phone lines. They didn’t want to leave the computer on all the time, and they’d unplug it from the wall because it took electricity when it was plugged in, even though it was off.

The idea of the buddy list, really, was AOL had the ability to see whether somebody was online. The idea of having these lists of who’s online is really sort of a user interface innovation. It showed who was online and it showed the people you cared about. You know, you had your list of people. So it totally changed the way people communicated, because they could see when their friend came online and they could talk to them. And they didn’t have to keep on going locate, locate, locate, locate, locate. “Are you there? Are you there? Are you there?” You know?

Aaron Dinin:

Did you catch that? Barry’s innovation wasn’t instant messaging. That had existed for a long time. It even already existed within AOL. Barry’s innovation was what was called the buddy list. Prior to that point, you could message people on AOL, but you’d have no idea if they were actually there. The buddy list told you whether or not your contacts were online. Admittedly, that’s a seemingly small difference, but it’s tied to a huge and important technological paradigm shift. Specifically, Barry launched the buddy list right as people were moving from sometimes being connected to the network, to always being connected.

Barry Appelman:

AIM was really recognition that people were connected all the time, but yet they weren’t at their computers all the time. And some other people at AOL had the idea of the away message, which became a massively popular thing. Because even though their computers were connected, they weren’t sitting there anymore.

Aaron Dinin:

Again, teleport yourself back to the mid 1990s. If you had a computer and internet access, you weren’t always at your computer. And if you were at it, you weren’t necessarily online. But you were starting to be.

That marked beginning of the transition toward where we are now as a society. For example, I live in a world where my wife doesn’t think twice about texting me because she knows my phone is close by and I’m going to see her message within a few minutes. In fact it’s so expected I’m going to see her message, that when, for whatever reason, I don’t, it can create problems. I’ll be at, say, the grocery store. She’ll text me to pick something up for her. I’ll miss the message, and she’ll be annoyed when I don’t bring home what she wanted. Anyway, the point is Barry recognized this cultural shift as it was happening and decided to take action. He did it in a way that was very un-AOL.

Barry Appelman:

AIM was a standalone, outside AOL client. AIM almost didn’t get launched. The powers that be tried to kill it. It was done in secret by me. I don’t know if you’ve heard that story.

Aaron Dinin:

No, please tell it. That’s exactly the kind of stuff we all want to hear about.

Barry Appelman:

Well, there are two pieces to this. One is, first of all, the first incarnation of buddy lists, as it was named, was done inside the AOL client. And by the way, the AOL client, if you [inaudible 00:16:42] to think about, it was really a browser with sort of a JavaScript protocol, right? You could send equivalent of JavaScript to the client and get it to do things. So we could put in buddy lists into the client without shipping a new client. We only had to ship the JavaScript, sort of the page to the client. That’s why nothing is really new. It just has different languages and is more or less popular, but the architecture is similar. So it first existed and shipped to customers in ’96 as a product in the walled garden of AOL. AIM was the second burst of that.

The idea occurred in ’94, but it took me a little while to get it going. And you can see that, I think, on the webpage. There are a couple of rewrites of it after the first version. So I had suggested to my lead manager, developer, or whatever that we should build a standalone internet version. We talked about design points and other stuff, you know, it became a discussion. And then AIM shipped in ’97, I think. We decided to do the standalone version, and I don’t know why, but basically it was done in secret. Nobody else in management knew what was going on. The development team worked in my conference room. And we stole a couple of people in a client group who were in Boston so they weren’t on campus so nobody would exactly notice, and they were kind of underutilized anyhow, to build the AIM client.

So they built the AIM client. An entire new backend architecture was developed for the service side because the design points were way more than the AOL infrastructure could handle. I forget what the design point was, but it was a big number. Not big, certainly, by today’s standards, but the architecture would have scaled to whatever, because it was a more scalable version. It was designed to be scalable. The guys even built their own innovative TCP stack to handle a large number of connections because the Unix kernel really isn’t designed for that. So it was all done in secret.

Aaron Dinin:

So how’d you eventually launch it? I mean, it couldn’t have stayed secret forever, right?

Barry Appelman:

And at some point I had to tell people. And that’s of course when the shit the fan because we had done this thing. I was maybe a VP or SVP, I don’t remember at the time, but other people in not the development side of the house really didn’t want to see this happen. They were very into the walled garden. And a guy named David gang, who was the product manager who is supposed to be in charge of product at AOL, we had done this without him. And when we told him about it, he got on board and somehow finessed them to let it out as beta. It’s a beta test. And of course, once you let something out, it never can be put back in the box. And that’s how AIM got released.

Aaron Dinin:

Okay. So it got released as a beta, but grew really fast. How did AIM get so big? Especially because it sounds like AOL wouldn’t have been very interested in marketing it.

Barry Appelman:

Well, the answer to that, I think, is pretty straightforward. It’s word of mouth. We allowed people at the time to have the same screen name on AIM and AOL. So a lot of AOL users just switched to AIM. I mean, a lot of them. You know, at one point I think there may have been a hundred million screen names. Cut that in half. 50 million. There was a lot. It was word of mouth. I mean, people were getting their broadband connections, they’re getting rid of AOL, but they had AIM. And they could keep all the same friends, and they kept the same friends and they kept their social network. And their social network, of course, is key to people. And it’s very sticky.

Aaron Dinin:

Barry’s description of AIM as being like a social network is a pretty good comparison. After all, if you think about it, most social networks have member-to-member messaging features, and a good number even have instant messaging built in. That’s not surprising because messaging and instant messaging are important components of social networking. But as you heard, even though AIM was incredibly sticky for its users because of those social networking types of aspects, the fact that people could use AIM without belonging to AOL made it easier for AOL members to cancel their subscriptions. As you’d expect, AOL wasn’t very happy about this, but Barry thinks it was one of the company’s biggest mistakes. To Barry, those people leaving AOL because of broadband, but still using AIM represented a huge opportunity.

Barry Appelman:

They were able to preserve their social network and go over to the internet and their broadband connections, and they were happy as clams. And it grew like wildfire because AOL was so strong. But then along the way it was losing itself. Some executive above my pay grade, he decided that AOL members couldn’t keep their screen names on AIM. The beginning of the end. He was in charge of the revenue for AOL, and he figured people were leaving and this would keep them on. You know, it’s like one of these mistakes people make. Good guy. Done very well. But on top of that, the other mistake AOL made is they didn’t let people keep email when they left AOL. Some of us were in the, “How stupid can you get,” category. But basically the reason that Yahoo exists at all is because people went to Yahoo for email, or Hotmail, when they went on the internet and just dropped AOL.

So those are the kinds of mistakes companies make, but that’s not about entrepreneurship because that’s way downstream. When you have stockholders, and executives are committed to revenue, and they’re not going to be there forever, so they don’t… I don’t know. It’s just one of those things that happens where you’re not willing to cannibalize yourself. AOL could have kept all its email people and still been the email place. They could have also done something with search, but in any event, AIM grew by word of mouth and it was powered by AOL, and it was powered by teenagers. You know, that’s how people grew up. On Aim.

Aaron Dinin:

To be fair, I can understand AOL’s frustration with AIM. I mean, it must’ve cost a fortune to operate, right? Did you ever even try to monetize it?

Barry Appelman:

There were attempts to monetize it. There were a lot of things we wanted to do. I visited Tencent early. Went to China to see Tencent to try to learn from them. And they had copied… Have you heard of ICQ?

Aaron Dinin:

Yeah, it was kind of like, well, AIM, but not part of AOL. Another chat service, right?

Barry Appelman:

Yeah. ICQ is a copy of buddy lists. You may have heard of Yossi Vardi. His son and two other guys, or three other guys were working at a company AOL point in Israel. They saw a buddy lists before it was released on AOL, and decided to build an internet version. They launched before AIM and became very popular in Europe. So buddy lists on AOL launched. We started working on AIM, but they had a bit of a headstart because they had seen buddy lists on AOL. And it was just, same thing, different implementation. And then Tencent copied ICQ. And they called it Q2. They’d been a little bit successful, Tencent. So I went there to learn how they were monetizing things and what they were doing. And we actually had some Tencent games on, I think, AIM or AOL. I can’t remember, it might’ve been AOL. They were very big on micropayment monetization, which I think was successful. But we had a lot of ideas, better user directory, being able to post more stuff and things. And the powers that be wouldn’t allow that stuff. So that’s how it goes.

Aaron Dinin:

You’re saying the AOL management didn’t really have the vision for it, or we’re too busy thinking about other things? Is that the gist?

Barry Appelman:

I mean, we want to do a bunch of things, but people will focus more on making money. Although one significant thing AIM had was, in AIM and AOL, if you knew the person’s screen name, you could add them to your buddy list. So it was a bit of a stalking function. In fact, there are jokes that you can read somewhere that originally it was called the stalker feature. There are executives who admitted later that when they first heard that we had done buddy lists, they were like, “Why would anybody ever want to use this?” That’s what happens when you see new things, right? Either people say it’s obvious when something new comes along, or they go, why would anybody want that? Only a few people go, “Whoa, just what I wanted.” And then eventually everybody says, “Oh, we knew it all along.” You know the whole story.

Aaron Dinin:

To be fair to AOL, as AIM continued growing and growing and growing, it had as many as 63 million users at one point, which was a heck of a lot back then, they did eventually make a big commitment to the instant messaging space. As the name suggests AOL Instant Messenger, AOL standing for America Online, means that the majority of its users were in, well, America, specifically the United States. AOL saw the instant messaging space as an opportunity to expand their international footprint. But to do that, they either had to brute force their way into the European market, which would be difficult, or they could make an acquisition. They chose option number two, ultimately deciding to buy ICQ, the AIM clone that had become the biggest instant messaging service in Europe.

Barry Appelman:

The price was about $400 million. It was the biggest single startup in Israel at the time. And it was a lot of money in general for technology in those days.

Aaron Dinin:

So what happened? Obviously AIM didn’t become a global messaging platform after that. What went wrong?

Barry Appelman:

Instead of the business owners or me managing ICQ as well, they were pretty much prevented from doing anything with ICQ, and preventing interoperability between AIM and ICQ. Prevented. Even though ICQ infrastructure had to be moved to the AIM infrastructure because the ICQ didn’t scale. So we had it running on the same platform, but we couldn’t inter-operate. Hence the global vision of connecting the systems and fixing a bunch of ICQ stuff didn’t happen. Game over. It doesn’t mean that we would have won, that we wouldn’t be the WhatsApp today. You can’t know that. But it absolutely prevented that from happening, and ICQ was sold for 100 to 200 million, I think. So much for that.

Aaron Dinin:

Reading between the lines a bit, you sound kind of regretful. Is that a fair characterization?

Barry Appelman:

I should have fought harder. I kind of let other people fight the battle, but I should’ve fought harder on the ICQ thing. It might’ve helped the company more. And then we may have been able to push harder to do some of the other things that would have been more Facebook-like. But it didn’t mean you’d be successful. It just means that you would have had more fun, and more development.

It would have been good to fight harder so that we could do more experimentation and more innovation than we were allowed to do. That, I think, would have been good for everybody. Because innovation, in the end, raises the tide and floats everybody’s boat. I don’t know.

If we had been able to do more things, we might’ve been able to bring more things to people sooner and not wait for the next crowd to figure it out. It’s about people, and making people’s lives better through what you do. That was the goal. And I think AOL really did that in all its guises, walled garden or whatever. And then its business model got run over, not the concept of what it was trying to do. It got run over by the web and a hundred million other people being able to generate content with lower barrier to entry. And they got run over by broadband.

Aaron Dinin:

Yes, America Online did get run over by broadband, and yes, it’s just a shell of what it once was. And yes, AIM no longer exists. It was shut down by AOL’s then owner, Verizon, in December of 2017. But, at least for Barry, the important thing is that the concept behind AIM continues to live on

Barry Appelman:

My goal in coming to AOL was to bring products to people that would benefit people. In other words, that would improve their lives, that would help them. And what’s the first thing that people do, is communicate. And the fact that it’s lived on, its incarnation continues, says a concept of this really helped man, so to speak. And all the guys who built it and I certainly feel this was a good thing. We did a good thing. We made things possible, like many other technologies that could not have been done without that technology at that time. Just couldn’t been done.

Same way eBay did something that changed the nature of how people sold stuff, were able to sell stuff. This changed the way people communicated. And it was in the interregnum between no computers and smartphones. That gap. We filled that gap. Now smartphones have taken over that space. I mean, when you talk to 20 somethings, what do they say? What do you use Facebook for? Facebook messenger. They don’t use Facebook. Facebook Messenger, in a sense, lives on, even though they have their cellphones. Because they still sit on their computers, interacting with other people. Identical to AIM. It was a different implementation, doesn’t really matter. But the point is we not only built something, we built something that lives on. The copies of it live on providing that service to people.

Aaron Dinin:

The impact of AOL Instant Messenger definitely lives on. In fact, the next time you message someone with Facebook Messenger or WhatsApp or Slack, or even send a plain old-fashioned text message, don’t forget to thank Barry Appelman and his team at AOL. They’re the people that made instant messaging, well, just a normal part of life. I also want to thank Barry for taking the time to speak with us and share the story of AIM here on Web Masters. If you have any thoughts, comments, or feedback about the episode, please share them with us over on Twitter. We’re @webmasterpod. You can find me there too. I’m @aarondinin. That’s A-A-R-O-N-D-I-N-I-N. I also write lots of articles about startups, entrepreneurship, and business. You can find everything at aarondinin.com.

A quick thanks to our audio engineer, Ryan Higgs for pulling together this episode.

Thanks to our sponsor Latona’s for their support. Don’t forget, if you’re interested in buying or selling an internet business, be sure to visit latonas.com.

And finally, a request to all of you. If you liked this episode, please help us out by telling other people about Web Masters, and be sure you’re subscribed to Web Masters on your podcasting app of choice. Seriously, go do it right now so that you’re sure to get the next episode as soon as it’s released. That’s coming soon, I can’t wait. I hope you can’t wait either. Unfortunately, we’re all going to have to wait because, well, it’s time for me to sign off.