Chapter Thirty-Nine: A Monstrous Talent!

After a brief holiday, William White headed to San Francisco; he was closely watching this cash cow and absolutely did not want any problems to arise.

Apple’s computer sales were outstanding. Although they hadn’t quite reached thirty thousand units, they were very close. Morgan Stanley finally had to face the facts—their valuation had been seriously off the mark.

Morgan Stanley was arguably the most formidable investment bank of the era, yet this time, they risked being pushed aside. The humiliation was palpable.

If Apple’s IPO failed, they could have taken pleasure in the misfortune. But clearly, there was no shortage of interested investors. Nothing untoward was going to happen.

This time, it wasn’t just the great Jobs who was dissatisfied—Markkula was also quite displeased. If the underwriting fees were being questioned, Morgan Stanley might have dismissed it as a joke. Wall Street’s monopoly was far more powerful than Hollywood’s; it’s not as if you could just rent a stock exchange.

Now, though, their understanding of the industry was being questioned. Even Jobs himself had said it—did they really know what a computer was?

In truth, it wasn’t just Morgan Stanley; no one on Wall Street truly understood. The company had seemed ordinary enough—barely managing to sell ten thousand units a month—so how had it suddenly exploded in sales?

Selling over ten million dollars’ worth of products each month was impressive, but it wasn’t exactly world-shattering. Their market share hadn’t even reached forty percent.

So, what was going on?

Not only were Apple’s sales climbing, but other companies seemed to be performing well too. Though their growth wasn’t as rapid as Apple’s, the increase in sales was real.

What baffled everyone the most was the rising profit margin. It made no sense—how could such aggressive promotions not come at a cost?

Damn, the extra profits were coming from software sales.

“Henry, what’s going on with that software company? How many units did they sell in July?”

“Boss, we can’t get exact figures; they’re still a private company, with all shares held by a single individual. There’s no obligation to disclose that information.”

“Damn, I’d almost forgotten. Aren’t they planning a Series A next year? How much are they selling?”

“Ten percent, and not a bit more. Their CEO said that if it weren’t for the IPO, even that wouldn’t be necessary.”

“Tsk, tsk. Damn tycoon—why can’t he be a little less rich?”

“Boss, according to public reports from other companies, they sold at least sixty thousand copies of their software in July. That’s only six million, but their costs are negligible. They’re making a killing.”

“Sigh, is this for real? It feels like I’m listening to a tall tale. Are you sure it’s not some Ponzi scheme?”

“Boss, I’m afraid not. There’s news that Big Blue is planning to enter the industry as well.”

“Damn it. With a company like that in hand, their boss is off making movies. How capricious can you get?”

Henry could only remain speechless; after all, the movies were hugely profitable too. Rough estimates put the earnings at a hundred million—a far higher margin than the software company. As the boss, he could say nothing more.

“Henry, what’s that look for? Am I wrong?”

“Boss, his movie will net at least a hundred million. I simply don’t know what to say about this prodigy.”

Henry’s words prompted the old man to sputter his coffee in surprise.

“Cough, cough—Henry, are you sure you’re not talking about yen?”

“No, I’m not. Barring a surprise like Star Wars, his film will be the box office champion this year.”

“My god, wasn’t his family running a farm? How did such a prodigy emerge from there?”

Many investment banks were discussing William White. Naturally, they all wanted to invest in White Software. No matter how it was valued now, it would surely be more expensive next year.

No one was calling it a shell company anymore; their research and development was clearly formidable. And software sales weren’t their only game—various adapter cards were selling well too.

Granted, all of these were OEM products.

Another notable trait of this company was that its boss seemed reluctant to manufacture anything himself, focusing instead on R&D.

All the main adapter cards on the market came from them—and they were selling well.

Their gross margins were almost absurd—never less than 100%. Though they didn’t have to disclose their results, the public manufacturers producing for them did, making it easy for investment banks to gather information.

Manufacturing was outsourced to others, sales were handled by computer companies—he was making money while barely lifting a finger.

What irked others most was their attitude; they were unsatisfied with their current profit margins. If manufacturers didn’t lower their prices soon, all the orders would simply go to Japan.

If they could develop adapter cards, who was to say they couldn’t build computers too?

Clearly, they just didn’t see sufficient profit, so they had little interest in participating. “Do as you please; we’re not interested in that grind.”

The investment banks were truly vexed by the valuation conundrum. The company’s profit margins were simply too high. Even with ongoing investments, they couldn’t keep pace with its rate of earning.

And it wasn’t just the software company—people wanted to invest in the film company too. But that was even more difficult: with a hundred million dollars in hand, what kind of investment could you possibly offer?

When approached by the banks, William White could only offer a wry smile and decline. He intended to burn through this money first; otherwise, there was no point in raising more—it wasn’t as though he could just deposit it in a bank.

The investment banks were frustrated. Hollywood financing was nothing new; that was a producer’s main job. Everyone else was scrambling for funds, yet this guy had more than he could use.

Hollywood’s big productions were always peculiar—so much so that even the giants couldn’t keep up. Most of the money came from external investors; the majors might only put in thirty percent. Success brought celebration all around; failure meant they all went down together.

Hollywood’s business model was actually quite good, with theater chains taking a very small cut—a rarity worldwide.

In later years, China would become formidable, splitting box office revenue fifty-fifty. Theaters had little choice; taxes were high, and rents in shopping malls were exorbitant. If a film wasn’t reliable, theaters would still lose money.

The only advantage was the sheer population; as long as the film was decent, box office records would eventually be broken.

But that was all in the future. For now, except in a handful of large cities, most places only had outdoor cinemas.

Americans had their own version—the drive-in. Honestly, it was a bit ridiculous: a screen in a parking lot. The movie itself was secondary; the main goal was to provide young couples a convenient place for their trysts.

One had to admit, America of this era was truly wild. Who knows what they were thinking—let’s just hope the sound systems were loud enough, or things would get even rowdier.

Returning to Silicon Valley, William White was pleased to find his micro-database nearing completion. Though there were still some minor flaws, he was quite satisfied.

He decided it was time to teach Larry Ellison a lesson—enough with the provocations. Once his database debuted, he’d see how Ellison could save face.

“Accelerate the testing. Let Apple and the others know—anyone interested should come soon. I’ll give you all at most one more month.”

“Don’t worry, boss, we’ll get it done.”

“Good, very well. Next month, you’ll all receive two months’ salary. Keep up the good work.”

To Americans, everything else is secondary—dollars are what they love most.