[Chapter 857: A Shift in the Wind]
"Fulton, with the recent investment craze, hasn't Greenspan stopped talking about bubbles?"
Fulton chuckled ruefully. He had long been labeled as someone who didn't understand the economy, so what could he say? What would he dare to say?
"Cough, cough. Look at Buffett's investments; he still focuses on traditional industries. But lately, he hasn't commented much. Also, Goldman Sachs and Morgan Stanley have surprisingly reversed their usual strategies. Not only have they increased their stakes in tech stocks, but they've also ramped up their venture capital investments. Rumor has it that Morgan Stanley is in talks to acquire Sequoia Capital."
"What gives? What's going on?"
Fulton thought to himself, "It's simple. They've become jealous."
"Sir, the Netscape roadshow has gone exceptionally well. There's talk that the final offering price could be adjusted upward."
"Insane! Thirty billion dollars and they aren't satisfied? I thought it would sell for fifty million this year, maybe a thirty million profit. That's a hundred times price-to-earnings ratio. Good grief, if the stock jumps after going public, I'd even agree there's a bubble."
At this point, Fulton didn't know what to say. If Netscape was priced so high, then William White's two companies could hardly be left behind.
"Sir, that's probably why. If there's profit to be made, what's there to discuss?"
"Fine, whether it's valuable or a bubble, I just hope they can go public successfully. Whether Netscape thrives or flops, it'll be a milestone event."
William White was now certain that those old-timers must be bewildered. A thirty billion valuation wasn't for a small company. For one that had only been around for less than two years, it was nothing short of miraculous.
If one calculated based on return on investment, Netscape's returns were far higher than ICQ and So Easy. With a total investment of just under twenty million, it was now valued at thirty billion and still climbing.
This wasn't even investing; it was gambling. Based on these investment ratios, one success made up for ninety-nine failures, yielding substantial profits.
Bubble? Sure, why not! For three times the profit, capitalists would sell their souls. A hundred times? They could be manipulated into any form.
The market wave of 1995 was coincidental. Many countries in the Americas wouldn't recover for at least three to five years. Initially, Europe had some schadenfreude, but the collapse of Barings Bank brutally ripped apart the illusion of prosperity in European banking.
With a profit of one hundred fifty million in '94, suddenly losing over ten billion was terrifying. Awful risks were involved.
"Oh, that's just a case study. It doesn't represent the whole."
"Ha! You folks keep chatting, I'm outta here. If it ends up being a complete loss, it really will be game over."
Contrary to what was believed, it seemed there was no place safer than America. "Quick, let's move! If we're late, there may not be any opportunities left."
The sudden change caught the Federal Reserve off guard. All those years of quantitative easing had led to a lot of money printing.
"Allen, have you considered this thoroughly? If things go poorly, can we not tinker with the peanut industry?" Paul Volcker was at a loss. National-level investment funds alongside nearly fifty trillion in various speculative funds were all surging toward America.
What could Greenspan say? He wanted them to invest in real estate, but it seemed that bunch was disinterested.
Those old-timers were overthinking it; America wasn't Japan. If the housing market couldn't hold, there wouldn't be any government intervention. As for banks, don't even think about secured loans; they would surely demand more collateral right away.
Was there anything worthwhile investing in?
Of course! Such as high-end office buildings or landmark properties. Those castles and luxury mansions weren't bad either.
Unfortunately, most of what was desirable was in the hands of those from Japan. American newspapers claimed they intended to buy up America.
Cough. That statement is misleading; they wanted to buy up the world.
After Japan's real estate bubble burst, why was the yen still rising?
The reason was simple: their top conglomerates and trading companies hadn't taken significant hits. America was aware of the bubble, and the Japanese weren't fools either. Or perhaps, when the market cooled, the last naif would be left out in the cold.
"Paul, it seems that guy wasn't wrong when he said I didn't understand economics."
"No way! He mentioned Buffett, which doesn't really involve you. Do you plan to ride his coattails?"
Greenspan shot a glum glance at the old-timer. All he could do was shake his head and smile ruefully.
"Honestly, old buddy, I really don't get this internet thing. You know? That Netscape company has been in business for less than two years, and their sales are just over twenty million bucks. A thirty billion valuation? That's just nuts! I seriously don't understand; I guess I'll need to find time to learn."
"Your information is outdated. I've heard subscriptions are very enthusiastic; they may raise the price again."
The two old men sat in silence. It seemed peanuts had messed things up again. Capital was indeed flowing back to America, but the projects they wanted others to invest in weren't being favored.
"That Bill Gates idiot, he even lost with a browser tied to the system. Dammit, I knew I shouldn't have got into graphic processing."
Jobs' disdain for Gates was no secret in the industry. As for Larry Ellison across the table, his sentiments were quite similar.
"I feel like this might be a trap laid by William White. Look at So Easy and ICQ; William White flat-out refused to sell. Now, just take a look; they've turned into the two Netscape companies."
"Man, William White is slippery, no doubt about that. But your reasoning is flawed. First-mover advantages, monopolistic positions, and system tie-ins? If it weren't for the garbage software, I really can't imagine a reason for failure."
"Hahaha, Bill's gotten a little cocky. I've heard he's currently on a hiring spree."
Jobs nodded silently. Regaining a lead wasn't easy. Habits took a week to form, and as long as Netscape didn't make any reckless moves, Microsoft would struggle for opportunities.
In truth, Apple's browser wasn't much better either. If these fools continued this way, it could very well lead to another Wang An computer.
A simple roadshow had plunged Silicon Valley into chaos. As for Greenspan and Buffett's warnings, no one seemed to care anymore.
You neither understood computers nor the internet, and yet you wished to preach. Did you know America would have one hundred fifty million computer users next year?
With 250 million Americans, minus the elderly and children, there were at most 200 million. Three-quarters of the population either used computers or regularly interacted with them.
Goodness! If one hundred million users frequently used the internet, can you imagine what that means?
Voices of doubt vanished overnight. Forget others; even William White looked shocked.
Wait, are you folks planning to pull another fast one?
Is there a bubble?
William White believed there was. The current venture capital landscape was becoming increasingly difficult. Not to say his White Fund had investment intentions; even projects that had been kicked to the curb still attracted investors.
In the end, negotiations now required exclusivity agreements. "Damn, we're almost done, and you think adding another million bucks can steal it?"
Come on; can we retain some dignity here?
Of course, since the need for exclusivity agreements, the number of opportunists coming around had noticeably decreased. Now that the market looked good, no one wished to be constrained; the ideal scenario would be everyone sitting down and bidding.
*****
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