The Tail Wags the Dog
Clearly, a major variable had occurred in Japan. Fortunately for Yoo Jae-won, it had unfolded in a direction that benefited him. Achieving the target two months ahead of schedule meant the Nikkei index had plunged far more steeply than before. That was why it had already hit the 14,000 line two months early.
—What would you like to do? Vincent Greenhill asked, seeking instructions. Yoo Jae-won paused to think.
The target for the Nikkei futures investment had been $16 billion. A return exceeding 400 percent. Wall Street investors would have been stunned if they knew. This was less investment than outright speculation. Yet for Yoo Jae-won, who already knew how the Nikkei would move, it had been a measured position that kept greed in check. Had he invested more aggressively—recklessly, even—he could have aimed for 500 or 600 percent gains. He had chosen not to push further. He had no desire for ID Investment to be remembered in history as a speculative hedge fund. When others later reviewed the trades, he wanted the decisions to appear rational, even if people called him Doctor Doom.
“Liquidate,” Yoo Jae-won said firmly once he had organized his thoughts. He could have held the position longer to maximize profits, but with a major variable now in play, no one could predict how the Nikkei would react. The $16 billion already secured was nothing to dismiss lightly.
“After liquidation, don’t transfer everything. Leave about $3 billion in place.”
Yoo Jae-won had no intention of sitting idle when an even greater opportunity might arise. He would keep the principal and withdraw only the profits. Even so, that still amounted to a staggering $13 billion. At the current exchange rate of 780 won to the dollar, that was roughly 10 trillion won—an enormous sum. With that kind of capital, he could acquire not only the California cable companies Henry Samuel of NextCom had long coveted, but Comcast itself, which covered the entire United States. He could even purchase major studios such as Columbia Pictures or Paramount. Of course, he could not buy them all at once, and he would have to choose just one, but even that would be extraordinary.
—Understood. I will execute immediately.
Vincent Greenhill, his mind already racing, was about to end the call when Yoo Jae-won spoke again.
“One more thing. Once liquidation is complete, send me the full trading histories of all the investment managers. Also, the daily transaction volume data for the Nikkei futures.”
—That will be an enormous amount of data.
“That’s fine. I need it for personnel evaluations and bonus calculations. Send the raw data as is.”
—Understood.
At the mention of evaluations and bonuses, Vincent Greenhill immediately understood. While the data would indeed serve that purpose, Yoo Jae-won’s true intent was to analyze the sudden volatility in the Nikkei. Even if the raw files were large, they posed no problem for him. The statistical functions he had built into his own spreadsheet could turn them into clear, readable charts. The larger the dataset, the more accurate the analysis would be, so he welcomed it.
“Did the test go well?”
When the call ended and Yoo Jae-won stepped out of the car, Michael Bolt and Greg were waiting.
“Yes! The ride quality and handling are excellent. Balance is good, and the brakes are stable.”
Greg gave a thumbs-up at Yoo Jae-won’s question. Michael Bolton shrugged as if the result were only natural. It was. For over two months, Michael Bolton and two employees had poured everything into building a single prototype. They had mounted wheels and motors to the frame, then tested it countless times. Since Michael Bolton’s build was similar to Greg’s, poor results had never been a possibility.
“May I try it now?”
“Yep!”
This time Greg handed over the handlebars without hesitation. Yoo Jae-won was about to press the pedals when Michael Bolton, ever meticulous, insisted on explaining every control—the accelerator, brakes, and turn signals—in far greater detail than he had given Greg. A helmet and knee pads were also required. As the sole investor, Yoo Jae-won received extra attention regarding safety. In Korea, helmets were optional even for motorcycles, but American traffic laws were strict. Even in a casual suit, the helmet and knee pads made for a comical sight. Still, once he mounted the bicycle and twisted the accelerator, any irritation vanished.
The electric motor delivered strong torque and acceleration. The speed climbed with every twist. The empty lot was too small to push the limits, yet the performance itself rivaled electric bicycles from the twenty-first century. Balance was excellent; braking never felt unstable.
“It’s perfect. We could release it as is.”
After the test ride, Yoo Jae-won raised both thumbs. The satisfaction was unmistakable. Time and funding invested generously in an engineer had returned excellent results.
“Yes, I’m confident in the quality. The issue is price. Who would buy an electric bicycle costing over $100,000? Only someone like you, Chairman.”
Economics remained the core problem. Carbon-fiber frame, Japanese gearbox, racing wheels and brakes, plus a laboratory-grade lithium battery—the parts alone were exorbitantly expensive. That was not all. A separate charger was required, as large as an 1980s household transformer. Despite its size, it was inefficient. Recharging a fully depleted battery took roughly eight hours. Lithium-battery technology was still in the proof-of-concept stage, so high-speed charging know-how was lacking. Between the charging issue and the price, mass adoption was impossible. Yet, as with all technology, time would solve these problems.
“Take this.”
Satisfied with the prototype, Yoo Jae-won asked Greg to load it into the car. While Greg carried the electric bicycle to the trunk, Yoo Jae-won pulled an envelope from his jacket pocket and handed it to Michael Bolton.
“What’s this?”
Michael Bolton tilted his head as he accepted it.
“A bonus. I’ve separated your share and the employees’ shares. Keep yours and distribute the rest.”
“Thank you!”
The word “bonus” brought an instinctive expression of gratitude. Yoo Jae-won had acquired Lightning Bolt for $300,000, which meant Michael Bolton had earned that amount in a single transaction. Yet debts from the reckless electric-bicycle venture had quickly consumed the windfall. Fortunately, his salary at ID Technology exceeded what he had earned at GM, so he was not completely broke. For a salaried employee, an unexpected bonus was the best possible news, and Michael Bolton’s face lit up.
“I’ll also send additional development funds. Keep working on the next model. This one is good, but there are still many areas for improvement.”
“Yes! I will definitely complete a model that captures both price and performance!”
After delivering his first creation to Yoo Jae-won, Michael Bolton had worried that the project might end there. Yoo Jae-won’s instruction to continue development dispelled that anxiety. The worry had stemmed from not knowing Yoo Jae-won well. Yoo Jae-won had not acquired Lightning Bolt merely as a hobby. Although every component was currently handmade, once mass production lowered unit costs and battery prices and charging speeds improved, the bicycles would become everyday tools. In twenty-first-century Silicon Valley, many people commuted by bicycle or electric bicycle. If the price became reasonable, widespread adoption was entirely feasible.
More importantly, Yoo Jae-won’s vision for Lightning Bolt did not end with electric bicycles. Electric cars. He could already picture vehicles bearing the Lightning Bolt logo speeding along the roads. Electric bicycles and electric cars belonged to the same industry. The frame would be more complex and more convenience features would be added, but the core drivetrain components remained the battery and motor. Starting from electric bicycles, Lightning Bolt would find entering the electric-car market easier than traditional automakers developing them from scratch.
Leaving the delighted Michael Bolton behind, Yoo Jae-won returned home. There he immediately installed a rack for the electric bicycle in the entranceway, with Greg assisting. Greg’s hands were remarkably careful. During the test ride he had been tough, but now he handled the machine as though it were porcelain. The change had begun after he learned its price from Michael Bolton. Even loading it into the car required extreme caution. At over $100,000—more expensive than a Mercedes—it was only natural. If Yoo Jae-won had been an ordinary person, someone would have told him to simply drive a car instead.
Greg’s meticulousness prolonged the simple task. Mounting the off-the-shelf rack from the supermarket, securing the charger, and plugging it in should have taken three minutes, yet it took ten.
“Thank you for your hard work.”
Such thoroughness was also a virtue, so Yoo Jae-won felt only gratitude. Although the battery was not fully depleted, he connected it to the charger anyway, then sat down in his familiar study. He powered on the computer, launched ID Talk, and saw a notification that an email had arrived. It was the raw data from Vincent Greenhill—eleven files in total. One belonged to Vincent Greenhill; the remaining ten contained the trading records of the investment managers. All files were in ID Spreadsheet format and followed the same structure. True to Yoo Jae-won’s preference for standardization, ID Investment’s reporting and raw-data formats had long been fixed, so even an unexpected request caused no confusion.
“Let’s see. The file size is quite large.”
The total came to 10 MB. Without ADSL, transmitting that over a modem would have been impractical. ID Group was different. Thanks to Henry Samuel of NextCom, the internal network had been upgraded to ADSL. Theoretical speed reached 1 Mbps—128 kilobytes per second. In practice, with various obstacles and line noise, actual throughput hovered around 70–100 kilobytes per second. Still, that was twenty times faster than ISDN, so even a 10 MB compressed file could be transferred in minutes.
Yoo Jae-won decompressed the files and opened them.
“Fast.”
Thanks to the Pentium CPU, the documents loaded far quicker than on a 486. Intel was scheduled to release the chip at the end of May and was already taking advance orders from major computer manufacturers, though pricing had sparked debate. Two models were planned: a 60 MHz version at $898 and a 66 MHz version at $999—prices for purchases in lots of one hundred. Retail customers buying single units would pay around $1,200. Even the large computer makers balked at the cost. Because motherboard prices were also high, complete systems would start at a minimum of $6,000. No matter how impressive the performance, the price held little appeal for consumers interested only in gaming.
Yoo Jae-won himself had played a role in that market. The Glide X2 3D library developed under John Carmack of ID Software, along with the 3D cards that hardware-accelerated it, had shifted expectations. The 3D acceleration chips had been designed around the 486, so peak performance still occurred on that platform. Manufacturing differences created some variation, yet even the cheapest cards could process 300,000 polygons per second. They also featured 4 MB of texture memory dedicated to 3D and accelerated bilinear filtering. The visual impact was undeniable.
Virtual Boxing, released alongside Android 1.0, had been updated with the launch of the 3D cards. Boxers that once resembled wooden dolls now moved like real human beings. Motion became smoother and more realistic. Graphics that had already been shocking took another leap forward. Consequently, even the most affordable 3D cards, priced above $300, sold out rapidly.
Many game developers were making the abrupt transition from 2D to 3D. Although modeling and programming in three dimensions felt unfamiliar, assets created once could be reused indefinitely, improving development efficiency. The most anticipated title remained Doom 2, built entirely in a 3D environment. A playable demo had been released to promote the 3D cards; despite its massive size, downloads poured in. Praise continued unabated. The official release was slated for December or January of the following year, yet distributors, desperate for product, had swarmed ID Software and created chaos. Electronic Arts felt the heat most acutely. The company had grown fat on successive blockbusters secured through its contract with Yoo Jae-won, yet after Doom it had produced no comparable hits and its market share was shrinking rapidly. Without its licensed sports titles—American football and Major League Baseball—it would have already fallen to second place. Terrified, EA’s president Hawkins had offered an enormous upfront payment and demanded advance rights to Doom 2’s sequel as well. Yoo Jae-won, under no immediate pressure, was deliberately delaying negotiations to drive the price higher.
From the second quarter of 1992 onward, 3D cards would dominate. The crucial point was that even when current 3D cards were paired with Pentium PCs, performance gains over the 486 remained modest. Only when cards scaled to match the Pentium’s processing power would the situation change.
“How did I end up here?”
Yoo Jae-won shook his head to clear the wandering thoughts and refocused on the monitor. With sharp eyes he began processing the raw data using advanced spreadsheet functions. Roughly an hour later, he reached a conclusion.
“As expected, the copycats were the problem.”
He had suspected as much the moment he received Vincent Greenhill’s call on the car phone. ID Investment’s move into Japan was already well known. Investment firms and financial analysts could even guess the form the investment had taken. The real-time data published daily by the Nikkei made the pattern obvious. Moreover, Yoo Jae-won had never hidden his intentions. He had entered the Nikkei market and openly bet on a decline using futures and options. When asked why, he had answered plainly: Japan’s real-estate bubble was collapsing, bank failures would follow, and the real economy would suffer, triggering a recession. Investors and funds that had been uncertain grew convinced once the index began its freefall, just as he had predicted.
In a global investment market where enormous sums changed hands, no individual or organization with reliable information would remain idle. Smaller players moved first, followed by the big money. The momentum grew into a powerful current, eventually influencing the stock market itself through the derivatives market. The largest share of the investment market had always belonged to stocks with history and tradition. Yet the profits from futures and options multiplied so quickly and so dramatically that their influence soon eclipsed the underlying equities. Data showed that several major players had even short-sold large-cap Nikkei constituents, driving prices lower and amplifying the index’s decline to maximize their own derivatives gains.
“The tail is wagging the dog.”
In Yoo Jae-won’s view, the Nikkei was now oversold. Persistent selling by large players had frightened retail investors into dumping shares. The damage to the Japanese economy was severe. Surging interest rates raised financing costs, credit tightened, and otherwise healthy companies collapsed under liquidity crises.
“Strange. I don’t feel particularly bothered.”
His own intervention had made the Nikkei’s fall steeper and its impact on the real economy stronger. A twinge of guilt might have been expected, yet none arose. Perhaps after witnessing so many atrocities committed by Japan in his previous life, this level of consequence no longer stirred his conscience. Instead, countless ideas for turning the situation to his and ID Group’s advantage flooded his mind—so many that choosing the best approach became difficult. He spent another hour sifting through the investment data to select the most suitable strategy.
“All right. This is it.”
Yoo Jae-won settled on two responses. First, he would purchase shares of fundamentally sound companies with proprietary technology that had been oversold. Second, he would establish an even stronger short position in Nikkei futures. One common mistake among novice investors was trying to catch a falling knife—buying an asset simply because it had already dropped sharply, expecting an imminent rebound. Most of the time the decline continued and they became trapped. The current Nikkei was exactly that. It had reached the line he had set when he began investing, yet the speed and magnitude of the drop far exceeded the previous timeline. The scale of speculative capital that had followed him into Japan was also substantial. If he applied pressure once more, Japan’s already faltering economy would stagger again. Afterward, he could whistle while collecting valuable spoils and bring the operation to a perfect close.