There was a time when Excite@Home was considered to be one of the ‘safe bets’ of the Internet revolution. Based around one simple service offering – the delivery of high-speed net access – investors were quick to see its potential.
Then, bolstered by investment dollars, Excite@Home decided it wanted to be something bigger, and purchased a variety of online media properties including the Excite Web portal and Blue Mountain Arts in an attempt to build on AOL-style empire.
Although the company was once the leading cable Internet access provider, it fell behind the competition once it had broadened its ambitions. According to CNET journalist Ben Haskett, the demise of Excite@Home ‘bordered on Greek tragedy,’ with a history filled with tense boardroom skirmishes, illconceived acquisitions and executives who governed the operations from afar.
‘Excite@Home was largely a victim of its own grandiose ambitions, as well as of a convoluted ownership structure that kept too many cooks in the kitchen,’ Haskett wrote in his post-mortem of the company.
The merger of Excite and @Home(which was originally called just that) has been viewed as a critical mistake, although the motives were clear.
William Hearst III, one of the Silicon Valley venture capitalists who helped to found the company, said:
I felt the merger was a good idea at the time because I thought that when you’re building a consumer marketplace, you need to have one-stop shopping. One of the promises of the @Home idea was that you’d have a national brand, not a different brand in every marketplace. And as AOL has proven, if you have an e-mail product and a content product and a telecommunications product and a software product all under one single point of responsibility, you can build a very big company.
That, I think, was the motive for the Excite merger: to build a company trying to produce a uniform consumer experience but on broadband instead of dial-up.
The merger didn’t work though. Disputes between the telecom and media divisions meant that many management staff walked out. In addition, the company’s CEO was running the business from Boston, more than 3,000 miles away from the Silicon Valley operation, which inevitably caused difficulties. It should also be noted that although Excite@Home offered cable Internet access, it offered this access over another company’s cable lines, those of AT&T. Indeed, AT&T were the controlling shareholders, a fact which created further friction and conflicts of interest. For instance, according to Hearst, AT&T ‘didn’t share the content vision.’ The problem was also one of timing. The dot.com collapsed once the company started to diversify. ‘By the time the company decided to look at spinning off Excite, the marketplace had deteriorated,’ explains Hearst. ‘And meanwhile, the demand for broadband was growing so rapidly that the capital was needed to sustain the quality of service of the business.’
Perhaps the biggest problem, however, was marketing. Following the merger, Excite@Home simply wasn’t able to differentiate itself or provide Internet users with a valid enough incentive to switch to their service.
In January 2000 Red Herring magazine reflected:
Excite@Home hasn’t exactly lived up to its name. Continual rotation of its advertising and messaging has sent this portal’s brand identity into big-time obscurity. The company was on to something with its witty ‘anyone can do it’ TV campaign, but it disappeared in a blink. Yahoo is our whimsical guide; Info seek our all-knowing soothsayer. Excite@Home is more like a politician on the fence.
Lessons from Excite@Home
Avoid too many cooks. Hearst says: One of the lessons is that you can gain a tremendous advantage by partnering with big, well-established companies, and people are going to continue to do that. But those companies are going to find it very difficult to put their new start-up venture ahead of their own corporate responsibilities. So when you have a start-up controlled by big, established companies, it’s going to be a little different than a real, standalone start-up.
Don’t over-reach. Excite@Home’s ambition to become the next AOL meant that it over-reached itself, spending money it couldn’t afford.
Differentiate the brand. Ultimately, consumers didn’t have a clear idea of what the Excite@Home brand stood for. It meant everything and nothing, and as a result it failed.