How do you bounce back after engineering a merger widely considered the worst in history? If you're Steve Case, you keep swinging for the fences. In 2000, Case, then chief executive of AOL, decided to buy Time Warner for more than $160 billion in AOL stock. The market cap of the combined companies at the time of the merger: $350 billion. Today, almost $300 billion of that value is gone, and Time Warner's stock price has been stuck in the high teens for most of the past five years. Although the media generally blame Case for the mess, he privately believes that the strategic logic of the merger was correct and that Time Warner bungled the management of the new entity. He had spent 20 years building and running AOL, but he stepped down as C.E.O. right after the deal, handing the job to Time Warner's Jerry Levin. Case remained chairman until he resigned in January 2003.

These days, he's trying to build his new company, Revolution, into a global megabrand. (Read about Revolution's diverse set of properties.) He hopes that the component called Revolution Health will transform America's health-care system and that another, dubbed Revolution Money, will drive what is potentially the biggest change in credit cards since they were introduced almost 60 years ago. Case was inspired to get involved in health care after his brother died from brain cancer in 2002—he has said that he found navigating the maze of treatment options utterly baffling. But despite claims that his new venture would, as the name indicates, revolutionize the medical industry, that division's first major initiative, a consumer-oriented website, has been slow to catch on. Management announced 60 layoffs in October. Still, Case says it's a long-term investment. And he insists Revolution is in growth mode; it has hired in other divisions and now employs more people than it did before the layoffs.

Case funds Revolution almost entirely from his own fortune, which has been estimated at about $900 million. He talked with Condé Nast Portfolio contributing editor Kevin Maney at Revolution's Washington, D.C., offices, which resemble the interior of an Arizona spa. Wearing khakis and a blue button-down shirt, and with his hiking boots propped up on a coffee table, Case began by talking about Facebook. (As of the interview on December 14, he had 976 Facebook friends, Maney among them. "I get so many requests," Case says. "I finally decided that if I know the person, I'll add them. If we have 10 mutual friends, I'll add them. Otherwise, I won't.")

An edited transcript of the interview follows.

I hear you get inspiration from what Richard Branson has achieved with Virgin.
I took a step back and said, What's the right way to structure Revolution? And I did have a great respect for what Branson has done with Virgin. He built, over 20 or 30 years, a powerful consumer brand, and now when he enters a new market, he can jump-start what he's doing with the brand. I think that's clever.

How did you wind up creating Revolution?
When I stepped down as chairman of AOL Time Warner, I wasn't intending to launch a slew of new businesses. I intended to focus more on the Case Foundation and more on the family side, and I did quite a bit of both. But it just became clear to me that I loved building businesses, particularly ones that could empower consumers in a new way and disrupt industries. Revolution is not supposed to be another venture capital or private equity firm, both of which tend to have pragmatic, relatively short-term horizons. I'm trying to build iconic companies over decades with much more of a built-to-last mentality.

And you financed it with your personal wealth?
If I was going to spend a lot of time on it, I really wanted to have a longer-term horizon, which led to a conclusion to fund it with my own money. I wanted to take on challenges where maybe you won't hit a home run every time, but you still try to. If you're trying to hit home runs, you're going to strike out sometimes. Most people, these days, are trying to hit doubles.

Speaking of swinging for the fences, one part of your company is Revolution Money, which is trying to reinvent credit cards.
The credit-card business really hasn't changed much in decades. There are a few large incumbents—Visa, MasterCard. It's certainly illogical that a credit card would have your name on it and your signature on the back, so if you dropped it on the street, somebody else could use it. It would be more logical to have an anonymous card that didn’t have your name on it and required a PIN in order to verify that it's your account. But this is the classic chicken-and-egg situation, because it makes sense only if you can get lots of merchants accepting it and lots of consumers using it—which is hard.

That division is also taking on Western Union and PayPal?
We're launching Revolution Money Exchange on Facebook and AIM, so that you can transfer money to your friends and family for free. We hope some of the people who use it will then, over time, become Revolution credit-card holders.

It seems like an expensive proposition. What do you sink into something like that?
Well, I don't want to get into specifics. Overall, with Revolution, we've committed $500 million. The largest portion has gone to health care. But what we're doing with Revolution Money is a significant investment. We've brought in partners and investors like [former U.S. Treasury secretary] Larry Summers, [ex-Charles Schwab C.E.O.] David Pottruck, and [ex-Fannie Mae C.E.O.] Franklin Raines, as well as some institutional investors like Citigroup. Collectively, we've invested a significant amount of money—mostly ours but not entirely ours.

What do you hope Revolution Health will become?
It's bold, but we hope to help play a role in revolutionizing health care. We think the answer is to put the consumer back at the center, empowering consumers. It starts with the Revolution Health website. We've developed the No. 2 referencing health network in the country. WebMD is still No. 1, but we feel like we're closing in on them. [Editor's note: If HealthTalk and SparkPeople, two sites Revolution recently acquired, are included, Revolution Health is actually ahead.]

But there are other pieces…
There's a series of businesses we've invested in. For instance, Revolution Rewards gives incentives for the right kind of behavior, and we have a telephone service we call Nightingale. It's sort of an OnStar for health—somebody who's on your side to navigate through a scary, bewildering system.

How can a website alter something as huge as the health-care system?
Go to Google and type in "diabetes," and you get 130 million hits back. What are you supposed to do with that? Someday, just as people have buddy lists or their stock portfolios on their screens, we want them to have a health dashboard—monitoring how they and their family members are doing across a variety of metrics and recommending actions that can move the wheel in terms of better health at lower cost.

I just had a flashback. I remember, in the 1990s, you were talking about AOL in terms of a dashboard.
I'm not saying I have any new ideas! [Laughter]

But it does sound as if you're using some of the same tactics.
I'm sure there are interviews I did 20 years ago in which I talked about how we make an interactive service easier to use and fun and affordable, and how we really bring the consumer dynamic into play. They're the same principles you can apply to other industries that seem ripe for change.

Anything else about this remind you of the old AOL days?
It's a 10- or 20-year journey. AOL didn't happen overnight either. For years, we were trying to explain to people why we thought, someday, consumers would want PCs, why we thought modems should be built into PCs, and why we thought ideas like email or instant messaging or e-commerce would resonate. Most people thought we were crazy.

What's different about building a company this time around?
It's easier now because I have capital that I can invest, and I have a reputation, so people want to do business with us. But the core principles that were driving me at AOL 20 years ago are very similar to the principles driving me today.

Is Facebook the new AOL?
No. I think if there is a current AOL, it's probably Google. At its peak, AOL really was defining a lot of the industry trends and was king of the hill.

Do you think AOL can come back?
Yeah, I think it can. It's been difficult to watch, given that seven years ago, it was the most important internet company on the planet, and now it's not nearly as relevant. Just over two years ago, I wrote in the Washington Post that Time Warner should split into four companies and let AOL go back to its roots and focus on things like community and social networking. I don't think there’s been anything that changes my view on that.

Would you ever want to take AOL back if Time Warner made it available?
Probably not. That was then; this is now.