In September, the weather in California remains quite warm. However, in the city of San Jose, which is close to the west coast, there's a hint of coolness in the air.
Henry is reviewing the development plan that Kailena sent via email. In her plan, she outlines intentions to invest $100 million in seed funding for start-up internet companies and recommends investing in game companies. In recent years, the gaming industry has seen a rapid surge in growth and high profitability.
She cites two notable examples: Nintendo from Japan and EA (Electronic Arts) from the United States.
Nintendo is a giant in the video game industry. After releasing the FC game console in 1983, it quickly ascended to the status of the world's leading game company. In 1988 alone, its total sales approached $2 billion, with profits exceeding $500 million!
On the other hand, EA was established in 1982, specializing in the production and distribution of computer games. Though relatively new, the company has rapidly gained traction and is preparing for an IPO on the Nasdaq on October 1 of this year.
After reading Kailena's plan, Henry sat in silence.
He was well-acquainted with both companies, particularly Nintendo.
Most people have played on the red and white console, enjoying classic games such as Super Mario, Contra, and Tetris. During this time, Nintendo reached a level of popularity that made it virtually ubiquitous. Its games were sold worldwide, and characters from those games became household names, with 25 of the 30 best-selling toys globally linked to Nintendo!
By 1992, Nintendo's profits matched those of the entire Hollywood industry, as well as the three major television networks in the United States!
Nintendo displaced Honda and Toyota to become the number one company in Japan!
Such is the magnitude of Nintendo's impact.
As for EA, while not as legendary as Nintendo, it would eventually dominate the computer game industry and become the world's largest developer and publisher of interactive entertainment software, owning the well-known EA Sports and EA Games brands.
Given that Henry couldn't intervene with Nintendo, Kailena recommended that he focus on acquiring EA.
Without hesitation, Henry replied to the email, "Buy EA with all our strength!!!"
To emphasize his point, he added three exclamation marks.
It wasn't long before Kailena responded, "Okay!"
Henry stood up, stretched, and did a set of aerobics—an exercise regimen he had learned in high school. He wasn't sure if it was effective, but sitting in an office chair for long hours made him feel fatigued. If he didn't exercise every day, he worried he might face health issues in the future. After all, he couldn't afford to be a tired ghost!
At first, he thought merely handing all responsibilities to professional managers would suffice, but he soon learned that things were not that simple. If you completely relinquish control, your company might quickly slide into bankruptcy. Others can slowly edge out the company, leaving you with little more than an empty facade! Despite the numerous regulations in the United States, there are still countless loopholes.
Henry needed to stay informed about the development of the companies under him, overseeing important decisions directly and signing many documents himself to ensure their effectiveness. Doing so safeguarded the company from potential deception or mismanagement.
However, this was exhausting, especially with so many companies to oversee...
"It seems I need to hire a private doctor or a nutritionist... The Chinese health regimen is renowned and has a long-standing tradition. I wonder if there's a health expert in the United States. If so, I should definitely bring one on board! Spending a little money for the sake of my well-being is worth it!" Henry couldn't help but lie back in his chair and mutter to himself after completing his exercise routine.
After a few moments of contemplation, he picked up the phone, instructed his subordinates to look into hiring a health consultant, and began investigating options.
The research might take some time, but Henry was young and not in a rush. His most pressing concern at the moment was whether Weifeng Capital could successfully acquire EA. Three days later, Kailena called him with some troubling news.
"Henry, things aren't looking good!"
"What's wrong?" he asked anxiously.
"EA rejected our acquisition proposal!"
"Is the price a problem?"
"No!"
"Then what's the issue?"
"The founders are determined not to sell the company!" Kailena explained.
"If we invest in EA, can we secure a controlling stake?"
"I'm afraid not. The largest shareholders believe strongly in EA's prospects for growth. We would have to offer significantly more to acquire their shares, and with the company going public soon, they won't want to sell. Once they secure funding, it will be even harder for us to buy in!"
"Do you have an estimate for acquiring a controlling stake?" Henry asked, brow furrowed.
Kailena had prepared for this and responded, "At least $350 million!"
"That's quite an amount!"
Kailena continued, "Since it was founded, EA has released over a dozen hit games, particularly popular in the sports genre. Last year, the game 'Madden NFL' became a sensation thanks to its collaboration with the Oakland Raiders' coach, John Madden. Upon release, its sales skyrocketed, gaining significant media coverage, even catching the attention of the 'New York Times' and the 'Washington Post'!"
$350 million?
Henry rubbed his forehead, feeling hesitant.
"$350 million is a conservative estimate. If we want a true controlling stake in EA, we'll likely need to spend more! So, I suggest we look for another target!" Kailena advised.
Looking for another target? Henry shook his head; he wasn't willing to give up on EA, especially given its renown in his previous life.
"Kailena, bring the founder of EA out. I want to speak with him!"
"Okay."
Once the call was ended, Henry fell silent, deep in thought about the acquisition of EA.
The following day, Kailena relayed, "Henry, EA's founder Tripp Hawkins has agreed to meet you at 3 PM at the headquarters of Prestige Capital!"
"Great! I'll be ready!"
Henry then instructed his driver to take him to Prestige Capital. Arriving at noon, he had lunch with Kailena, during which they discussed information about Tripp Hawkins.
Tripp Hawkins graduated from Harvard University and previously served as the head of marketing at Apple during its rise. However, in 1982, he decided to leave and start EA. He possesses ambitious dreams for the company and holds 45% of its shares, making acquisition quite challenging.
Henry frowned after hearing this. "If we can't come to an agreement, we'll abandon the acquisition."
At 3 PM sharp, Tripp Hawkins arrived at Prestige Capital. After exchanging pleasantries, Henry guided him into the conference room.
"Mr. Hawkins, may I ask—do you envision EA becoming the world's leading game company?"
"Of course!" Tripp Hawkins nodded, secretly contemplating Henry's intentions. What did this question imply?
"If that's the case, EA should consider accepting investment from Prestige Capital!" Henry suggested.
"EA can raise capital as it prepares to go public," Hawkins replied. If Henry were simply another venture capital firm, he might consider investment, but since Weifeng Capital had ulterior motives for acquiring EA, he would vehemently oppose it.
"Mr. Hawkins, fostering growth for the company requires more than just funds; it also necessitates connections and opportunities. We have strong relationships with significant players like Cisco, Nicholas Group, Global Online, Isearch, Dell, and many others. If EA accepts our investment, our backing can provide substantial support in terms of online promotion and technology development!" Henry explained persuasively.
Tripp Hawkins was taken aback; he hadn't anticipated that Weifeng Capital would have such robust connections. After pondering briefly, he responded, "If Prestige Capital agrees to retain no more than 20% of EA's total shares, then I will consider it."
Henry's ultimate goal was to acquire EA. If the terms mandated that Weifeng Capital must limit its holdings to just 20%, that hardly served any strategic purpose. Such an arrangement would only net investment returns.
No!
From day one, Prestige Capital had not been just an ordinary venture capital firm, but one dedicated to nurturing businesses under Henry's ownership.
If he was unable to exert control over EA, how could Henry effectively integrate the game industry into his internet empire? That posed a significant problem! Thus, rather than being left with no control, it might be more prudent to support or create a new game company—one that could easily be integrated into his corporate vision!
Clearly, this negotiation had reached an impasse.
After Tripp Hawkins departed, Henry shook his head in disappointment. "What a pity for EA…"
"Are you lamenting not acquiring EA?" Kailena asked.
"No, I'm lamenting EA's future."
"Why's that?"
"Because without me, EA will face some very challenging times…" Henry looked into the distance and spoke softly.
EA was in no way an ineffective company; they excelled particularly in sports games. Other titles were created primarily through acquisitions of additional studios. Henry planned to buy up every prominent studio that EA could acquire in the future, including Distinctive Software, the creators of "Need for Speed"; Origin Systems, known for "Wing Commander"; British studio Bullfrog, which made "Dungeon Keeper"; and Maxis Studio, famous for "SimCity," along with Westwood Studios, who produced "Command & Conquer."