In high school, Stephen Bartkiw always juggled his homework with at least two part-time jobs. Usually three. On weekends, during the day, he clerked in a RadioShack store in St. Catharines, Ont., just as the chain was introducing primitive computers. In the evenings, he cooked at local restaurants, mastering the art of cuisine. By the time he graduated in 1980, he knew exactly what he wanted to do: work as much as possible. He strolled out of the classroom and into a manager’s job at a troubled RadioShack store in the community of Dundas, Ont. Within months, the store was generating a profit — and he was still catering and cooking in his spare time. “I have been a workaholic since I was a kid. I love working,” says the 37-year-old chief executive officer of AOL Canada Inc. “I think I would be categorized as type A.” He pauses, almost apologetically. “But I don’t have the time to cook anymore: I do this pretty much 18 hours a day.”
His dedication to the Toronto-based Internet service provider paid off handsomely two months ago when the staid Royal Bank of Canada forged an alliance with AOL’s flamboyant parent, America Online Inc. Talks began last spring when senior bank officials trekked the few blocks from their elegant high-rise offices in downtown Toronto to Bartkiw’s headquarters in a roomy, restored warehouse. For the Royal, anxious to expand its e-commerce capability, the combination of Bartkiw’s expertise and his parent firm’s worldwide client base of 18 million was irresistible. At the announcement, the former RadioShack manager who became a largely self-taught computer nerd shared the spotlight with Royal Bank CEO John Cleghorn and America Online U.S. executives.
It was a startling marriage of convenience. Bank officials took a big step into the electronic world, acquiring a 20-per-cent stake in AOL Canada for $89.5 million. The Royal Bank — with its U.S. banking and brokerage subsidiaries — has also forged a collaborative arrangement with AOL in both nations. Each company will now offer bundles of joint services to potential customers. AOL Canada also gets access to a potentially enormous customer base: the bank has 10 million clients worldwide. “This is a very good deal for both sides,” says Elliot Schreiber, chief operating officer for the Toronto-based think-tank Alliance for Converging Technologies. “The Royal has now invested in someone who understands e-commerce. AOL, in turn, will become the virtual connection to the bank — the context of banking. That will get it directly in touch with more Canadians, offering more services.”
And that is the strategic push which Bartkiw has sought since he joined AOL four years ago. Although 15 million of its 18 million clients reside in North America, AOL has only 130,000 household members in Canada. In contrast, there are 647,000 clients with Sympatico, an Internet service provider owned by five provincial telephone companies, including Bell Canada subsidiary Bell ActiMedia, which owns 75 per cent of it. AOL Canada needed more subscribers — and fast. “The bank deal will give us the opportunity to supercharge our mass-market efforts,” says Bartkiw. “The possibilities are staggering.”
The intense Bartkiw can recognize those possibilities because he has had such varied business experience. Oddly enough, his first real lesson in marketing came after RadioShack, in 1984, when he opened “a high-end restaurant in a low-end neighbourhood” of St. Catharines. A year later, in debt, he closed it. In that same year, he married Patricia, a pharmaceutical technician who has become a full-time homemaker, “the goddess of my life” — and mother of their 22-month-old son Julian. Since then, Bartkiw has put together complete computer packages for small companies, devised an Internet service for doctors, developed an online news service for Southam Inc. — and helped to launch the trial of high-speed Internet service at Rogers Cablesystems Ltd. “This is my passion: interactive services have had a marked impact on my life,” he says.
These days, AOL Canada, its U.S. parent and the Royal Bank are busily devising more possible services. The Royal Bank now has 420,000 clients who use its online banking and brokerage sites. AOL Canada will offer its services to those clients as well — in a deal that Bartkiw will only describe as a “unique combined offer.” AOL will also reach out to the bank’s 6.5 million credit-card customers. And it may install AOL kiosks in the 1,400 branches: representatives would demonstrate online banking and brokerage services — and treats such as instant messaging that AOL provides. “AOL has a very good consumer product and a good track record, but it did not have a good distribution chain in Canada,” says Eamon Hoey, senior partner of Hoey Associates Telecommunications Consulting Services Inc. “Now, they get a significant chain. AOL can even say: ‘Subscribe to AOL — and put it on your Royal Bank Visa card.'”
The deal could also kick start the fledgling Canadian e-commerce industry. Bartkiw calculates that Canada is two years behind the United States in terms of market evolution, with about 17 per cent of Canadian households paying for Internet access compared with about 28 per cent in the United States. He hopes the AOL-Royal Bank partnership will lure more customers to the Net. If there are more AOL clients, more retailers may be tempted to offer goods for sale. “Getting more Canadians online is critical,” he says.
At the Royal Bank, such talk is sweet. The 130-year-old bank suffered a huge blow last year when the federal government blocked its merger with the Bank of Montreal. As a backup strategy, it decided to move far more rapidly into the expanding world of e-commerce. The bank already owns an Atlanta-based online bank, Security First Network Bank, and a New York City-based online brokerage, Bull & Bear Securities Inc. Now AOL’s U.S. customers will be introduced to the Royal’s brokerage and banking services. And AOL and the bank can work together to secure the payments system — so that merchants and customers can do business online with less fear of fraud. “Small business represents a very strong constituency for us,” says Royal Bank vice-chairman Marty Lippert.
The Royal’s deal with AOL has not precluded a deal with another potential partner: Bell ActiMedia. Bell had been examining AOL because an alliance would combine the client base of AOL and Sympatico — and it would provide access to AOL’s U.S. content. But that approach remains on hold: 20 per cent of Bell Canada is owned by Chicago-based Ameritech Corp., which, in turn, is merging with the Texas-based telecommunications giant, SBC Communications Inc., to create the largest U.S. local phone company. So Bell ActiMedia is consulting with SBC to ensure that they find a mutually satisfactory partner to supply content to Sympatico — and state-of-the-art technology for the portal. “We want to do it fast because we want to maintain the leadership role that we have with Sympatico in Canada,” says ActiMedia president Serge Fortin. “AOL definitely has the content — but we have some problems with their technology.”
Meanwhile, the Royal Bank-AOL honeymoon is flourishing. What happens if the traditionally pokey bank culture clashes with the high-speed Internet world? AOL is a highly disciplined business, says Lippert, and the bank has some very entrepreneurial employees. Asked the same question, Bartkiw laughs. “We view this as a long-term deal, kind of a marriage,” he says. “And I plan to be married for a very long time.”