[Chapter 855: The Frenzied Market]
Bill Gates was not William White. While William White could accept competition from Yahoo, Gates could not tolerate the existence of two browsers.
What was particularly troubling was that Netscape had garnered a following among high-end users. William White might have seen a 50/50 situation, but Gates knew they were actually showing him some grace with a 70/30 split. The crucial part was that the majority of that 70 percent were high-end users.
After a trip around Silicon Valley, Bill Gates found himself bewildered. In the past, when people talked about high tech, semiconductor and software companies were the first things that came to mind. But things seemed to have changed. Semiconductors had become traditional, and software companies--office software, databases, operating systems--were now also categorized as traditional sectors.
If Gates realized that was how Silicon Valley defined high tech, he would have been dizzy. "What on earth are your criteria?" he might have wondered.
Someone nearby spoke dismissively, explaining that this was the era of the internet economy. If a company didn't have an 'E' in its name, how could it even claim to be high tech?
"That's just hype. You haven't even figured out your profit model; how can you call yourself a high-tech enterprise? This is just the economics of attention you're into--nothing more."
"$3 billion still isn't enough? Are you kidding me?" Gates protested.
"Sir, we got the news from Morgan Stanley; they are just as shocked," one of his aides replied.
Gates was stunned, completely abandoning the idea of an acquisition. It wasn't that he couldn't come up with the money; it was just unnecessary.
Meanwhile, the old-timers at Morgan Stanley were also scratching their heads. As for Pixar, that was one thing, but a company valued at $1 billion? That was not his concern.
"Andy? Netscape at $4 billion? If I remember right, their initial funding was only a little over $10 million. And how much software have they sold so far?"
"Sir, it can't be more than $20 million. If that's the case, Microsoft should be worth $40 billion."
The Morgan Stanley veteran couldn't comprehend it all; every one of them seemed like an anomaly.
"Is this market still the market we know? Are they quoting prices in yen or something?"
"Sir, they've completely lost their minds. The venture capital floating around Silicon Valley is close to $8 billion."
"So, William White holds half of that?"
"Not quite, boss; his funds have narrowed their investment focus. Occasionally, they might still make some moves."
"Alright, it appears our criticisms were not unfounded. If Netscape is worth $4 billion, then So Easy and ICQ shouldn't be valued so low."
"Sir, the disagreements mainly center around internet companies. When we suggested a valuation for Cisco, they seemed unhappy but just haggled. As for these two internet firms, they went straight for insults. Goldman Sachs fared worse; they kicked them out and didn't even allow them to attend the press conference."
"Okay, Andy, arrange for these big shots to play ball. Something is off here; there's definitely a problem."
Inflated valuations were meaningless. One could say Netscape and Pixar were being fanciful, but one couldn't say the same about William White.
The inflated prices leading to failures were not unheard of; typically, the second IPO suffered a collapse.
William White was one of them, so it was inconceivable that he wouldn't understand. After all, he kept a close watch over his stocks. What Morgan Stanley bought only had partial voting rights.
Not buying? Good, have a nice day. Believe it or not, I could sell it to the Japs for a 10% profit.
Big companies always took advantage of their customers; that was a universal truth. When one's stock was valuable, it was a pleasant feeling, but why was it so valuable?
Netscape had barely sold $20 million worth of software; what gave William White the right to such valuations?
So Easy and ICQ? They'd burned through $500 million without seeing a dime in returns. It was no wonder so many investors were nervous. If someone said there was no risk, then between Netscape, So Easy, and ICQ, there was definitely a $10 billion valuation.
Were all his other investments crashing and burning while only these three justified their cost?
What? You didn't invest in those three? If that's the case, you're the blind one; it has nothing to do with anyone else. That old-timer was very sure that if those three successfully went public, that venture capital landscape would see explosive growth.
Investment banks couldn't comprehend it, and the head of the Federal Reserve was also feeling dizzy. Here I am, struggling to bail out Mexico, and I've already got a headache. $50 billion needed government backing, and you're just casually mentioning over $10 billion?
Attention economics?
Sure, that came up in a Harvard course once, but that amount was just outrageous, wasn't it?
"Can't figure it out? You should have a chat with William White," Paul Volcker laughed as he looked at Alan Greenspan. Perhaps Greenspan ought to take some advice from him.
"Paul, that slick little guy? Don't expect to hear a single truthful word from him. I just mentioned it was a bit overheated, and he mocked me."
"Ha ha ha, dear Alan, Buffett had it worse; he was flat-out accused of pretending to understand."
"Alright, I have no defense; I believe Buffett has none either. His accomplishments at the Oscars won't leave anyone doubting that anomaly."
Learning never stops, and saying it is easy. But for someone in the position of Greenspan or Buffett, even trying to sit down and read was nearly impossible.
Computers were indeed nice, making data statistics convenient and receiving emails even better. But what about the profit model? Was it really dependent on a handful of professional users?
If one couldn't make sense of something, it would be wise not to invest in it. Buffett understood this truth. If one rushed into things, they might find their later days just as precarious.
What? Did he just get scammed?
Well, that wasn't even his personal money. His wealth had long been redirected to charitable foundations. You could tell him the stock market plunged again, and he wouldn't care.
By the way, our new drug worked; you could live at least another fifteen years.
Trust me; that was probably the sentence Buffett most wanted to hear.
Forget Buffett at 89; Bill Gates, Mark Zuckerberg--who wouldn't spend big money for longevity drugs?
In William White's eyes, it wasn't necessary at all. Quality of life was important, sure, but if it just meant lying in a wheelchair, then what was the point of all that effort?
What if one jumped timelines again?
According to the law of conservation of energy, even in death, energy wouldn't disappear.
So, is there a parallel universe out there?
That was hard to say.
Living to 108, still hoping the doctor would save you? Well, honestly, that didn't sound entirely exciting. If an elder's energy ran out completely, would that leave them in trouble? Would they have to beg?
"Ha ha, the poorest can only ever beg. One doesn't die; eventually, fortune will come around. This sky won't remain neglected. As for that parallel universe, who knows, maybe they'll become beggars there too."
Whether one liked it or not, Silicon Valley was becoming more vibrant, and that was an undeniable fact. As for whether there was a bubble in it, that was actually a false dilemma.
Just like the current situation--more than $10 billion being thrown around meant a mix of good and bad. There would always be those who made a fortune alongside those who lost everything.
If you asked the successful investors, they would surely tell you the market was healthy. If you asked those who crashed, they would surely advise caution.
These arguments were ultimately meaningless; one only needed to know one thing: semiconductors were a sunrise industry, and the internet was no different. Instead of getting hung up on whether a bubble existed, it made more sense to understand the characteristics of successful companies.
*****
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