Chapter 78: A Bold Method
Chapter 78: A Bold Method
My impression of Elon Musk, after visiting the Tesla factory and meeting him, was that he was an innovative genius.
A man who wants to change the world, who makes plans and then puts them into action.
‘All I’ve thought about was making a lot of money. I never thought about changing the world.’
Is this what it means to be an extraordinary genius?
While I was investing in the New York Stock Exchange and reaping profits, Tesla was producing more and more vehicles.
Deeply impressed, I had a conversation with Elon Musk over coffee after the factory tour.
“I think people need to work hard. To change the world, you have to work 100 hours a week.”
“A hundred hours?”
“If you’re really serious about working, I believe even 100 hours isn’t enough. These days, I sleep at the Gigafactory. It’s to solve problems and take things one step forward at a time.”
He came across as a workaholic whose pace ordinary people couldn’t possibly match.
“Corona is a complete fraud.”
“Excuse me?”
“Social distancing is basically fascism. Creating a panic over an infectious disease is stupid and idiotic. It doesn’t harm young people, especially children.”
“…”
I got the impression that he spoke rather recklessly.
‘He’s exactly like his persona on Twitter.’
I wanted to hear about Tesla’s business vision, but he talked more about SpaceX’s rockets.
An unpredictable genius.
That must be how he’s managed to accomplish so much.
* * *
Touring Tesla, one thing became crystal clear to me.
‘Tesla and Nikola are fundamentally different.’
Nikola hasn’t produced and sold a single vehicle.
When Tesla announced the Cybertruck, they announced the Badger.
I discussed this with Oh Myeong-woo on the way back to San Francisco.
“There’s some truth to the claim that Nikola is a fraud.”
“Right.”
“The statistics don’t lie.”
“Statistics?”
“There’s a proven saying in Korea. You have to be careful of car salesmen, phone salesmen, and insurance salesmen.”
It means that used car dealers, mobile phone store clerks, and insurance agents often use deceptive tactics.
Of course, not all of them are like that, but it was true that there were many victims.
I myself had been ripped off three times buying a cell phone.
“Tesla is the real deal. So, statistically, Nikola is probably a fake.”
“How does that make any sense?”
“Statistics don’t lie.”
While I brushed off Oh Myeong-woo’s words, I thought there was a grain of truth to them.
Because Tesla is real, it’s possible for companies to emerge that copy what they see.
A fast-follower strategy.
It’s about imitating new products or technologies.
In the mobile phone market alone, Isung Electronics achieved massive sales in the mobile sector thanks to quickly following Apple.
The problem with Nikola was that it was a company with no production or technological foundation whatsoever.
‘I knew it. I need to sell every last share.’
Riding in the back of the Rolls-Royce, I took out my phone and sent a text.
- Kim Shin: I’m planning to sell all of my Nikola shares.
A reply came immediately from Trevor Milton, the chairman of Nikola.
- Trevor: What? Are you serious?
- Kim Shin: Yes.
- Kim Shin: I plan to sell them via a block deal within the week. I’ll look for a buyer myself, but I’ll consider it if you can find a friendly partner, Chairman.
After about ten seconds of silence.
- Trevor: Your reputation is spreading through California and Wall Street. Judging by what you’ve accomplished so far, you’re a remarkable investor.
- Trevor: But pulling your investment from Nikola proves you’re not as skilled as you think.
- Trevor: If you had held on to Nikola, your returns would have been twice as high by now. You succeeded through sheer luck, not skill.
- Trevor: I’ll be watching to see how long your luck lasts.
“Wow…”
Seeing him spew such venom in an instant, I wondered if this was the American style.
I showed this text to Oh Myeong-woo as well.
“He’s an honest guy.”
“You think so?”
“It’s the classic move of a thug.”
* * *
- Ellie: We’ve received an offer to purchase the Nikola shares.
I got help from JPMorgan to sell off all my Nikola shares.
I wanted to get rid of them as soon as possible, so I paid the commission fee to dispose of them.
‘So this is the end of my ties with Nikola.’
I felt far more relief than regret.
I also had a relationship with JPMorgan from the 500 million dollar call option trade.
Since multiple financial institutions were involved, they didn’t settle accounts daily.
- Kim Shin: What’s the current value of my call options?
- Ellie: It’s about 4.5 billion dollars. Are you going to exercise your rights today?
4.5 billion dollars.
The 12 billion dollars I invested in the New York Stock Exchange was still climbing, and the return on the options had reached 900%.
It felt like I owned a bottomless vault.
‘I shouldn’t get complacent.’
Nevertheless, I felt no need to close out the call options just yet.
I was confident the stock prices would rise even more once the COVID vaccine was released.
* * *
As the phase 2 clinical trials for the vaccine progressed, a new concern arose.
It was something no one had mentioned.
‘After it passes phase 3 trials, which verify its safety and efficacy, we’ll have to sign production contracts.’
It takes a considerable amount of time to prepare for vaccine production and begin manufacturing in earnest.
The problem was that in the meantime, COVID would continue to spread, leading to more deaths and severe cases.
Korea and other Asian countries were faring relatively well, but the damage in the United States and Europe was severe.
- Kim Shin: If we were to produce the vaccine, what would you estimate the unit cost to be?
- Lee Ho-yeon: I’m sorry, but I’m not very familiar with that area.
There was another expert who knew this field well, though not specifically about COVID.
President Yoo Seok-tae, the CEO of Leons.
The man who, with his insane expansion capabilities, hit the jackpot by producing masks during the COVID pandemic.
- Kim Shin: President Yoo, it’s been a while.
- President Yoo Seok-tae: Wow! Look who it is. Hahaha. You been well?
- Kim Shin: Yes, I’m doing well.
We were majority shareholder and president.
But we’d grown close eating gukbap together since my days at Arcor.
These days, I found people who treated me so casually to be even more precious.
- Kim Shin: You know about the COVID vaccine developed by the company I invested in, right?
- President Yoo Seok-tae: Of course! It’s been all over the news. I even watch YouTube while working at the factory.
There were a staggering number of YouTube videos about the COVID vaccine and me.
- Kim Shin: If we were to manufacture the COVID vaccine, what do you think the unit cost would be?
I figured Leons, which handled OEM manufacturing for various pharmaceuticals, would have a good idea.
- President Yoo Seok-tae: I heard it’s a protein subunit vaccine, right?
- Kim Shin: Yes.
- President Yoo Seok-tae: It can’t be easy to make a vaccine that quickly. The development technology these days is really something else.
- President Yoo Seok-tae: Pfizer and Moderna are incredible, but I believe the protein subunit method is ultimately more stable.
- President Yoo Seok-tae: Anyway, the production cost depends on the volume. We’d have to do the exact calculations, but with pharmaceuticals, if it costs 5 million dollars to make a million units, it might cost 7 million to make two million.
- President Yoo Seok-tae: The cost of setting up the factory equipment, the complexity of the process, sourcing raw materials, production volume… all these things determine the price.
- Kim Shin: It doesn’t have to be exact. Could you give me a rough estimate?
- President Yoo Seok-tae: I’m not sure, but maybe around 8 dollars per unit?
- Kim Shin: I see.
8 dollars per unit.
The cost to produce 100 million units would be around 800 million dollars.
‘Once the vaccine is complete, 100 million units won’t be enough.’
We’d need at least 300 million units.
It was a rough, back-of-the-envelope calculation, but it meant I’d need about 2.4 billion dollars in funding.
‘What if I place an order to produce 300 million vaccine units now, before it passes the phase 3 trials?’
Having so much money myself, a bold thought crossed my mind.
Starting vaccine production even one day earlier could save that many more lives.
Of course, the risk was even greater than investing in stocks.
‘What if it fails the phase 2 or 3 trials?’
The order for 300 million vaccine units would become completely useless.
A staggering 2.4 billion dollars would vanish into thin air.
It would also be a problem if Pfizer’s or Moderna’s vaccines were deemed more stable and effective.
In the pharmaceutical industry, it was standard practice to begin production only after a vaccine had passed phase 3 trials and its efficacy was proven.
Vaccines and new drugs had a very high probability of failure.
But with an infectious disease posing such a serious threat, I wondered if it wasn’t worth taking the risk and moving quickly.
After all, the only one who would suffer a loss would be me, not anyone else.
‘Invest 2.4 billion dollars. If it succeeds, I can save many lives. If it fails, it all becomes zero.’
From a purely financial standpoint, it was a move that made no sense.
But it was something that could save hundreds of thousands of lives.
Dr. Lee Ho-yeon’s lifelong goal.
Perhaps this would be the most valuable investment I could ever make.
- Kim Shin: Dr. Lee Ho-yeon.
- Lee Ho-yeon: Yes.
- Kim Shin: We’re going to start vaccine production. Please begin the preparations.
- Lee Ho-yeon: What?
* * *
I first told Lee Jong-yeop, who was always by my side, about the COVID vaccine production plan.
“You probably think it’s a crazy idea, don’t you?”
“Not at all. I knew you would do something like this. This is exactly why I decided to follow you to America.”
Lee Jong-yeop smiled, looking inexplicably proud.
“Alright. Then pull up a list of all the vaccine contract manufacturing companies in the world.”
“Right now?”
“Yes. Let’s get this done as fast as possible.”
I told Ellie about the plan as well.
I thought she might know several contract manufacturers and could help with the contracts.
- Ellie: That’s a very risky method.
- Kim Shin: You think so?
- Ellie: Yes. Even if you don’t do it. Or how about requesting a grant from the government?
She said funding might be available from the White House or the U.S. Congress.
- Kim Shin: Would the grant come through immediately?
- Ellie: It’s a government budget, so it would take some time, right? But for COVID vaccine production, they’d likely expedite it.
There was no such thing as a free lunch.
I had a feeling that receiving government support would mean having to deal with interference in everything from production to distribution of the vaccine.
- Kim Shin: It’s a high-risk method, so if the grant money is wasted, it would likely cause a controversy.
- Kim Shin: I’ll just use my own money.
- Ellie: You seem to have a penchant for enjoying risky investments.
- Kim Shin: Yep. That’s me.
* * *
Until now, I’d never been inspired by anyone.
But after meeting Elon Musk, I realized I’d become bolder.
‘You just have to do what you can. If you just hesitate, nothing gets done.’
I could fail, but in my case, isn’t it better than doing nothing for fear of failure?
The country with the highest concentration of vaccine contract manufacturers was India.
Recently, South Korean pharmaceutical companies had been building drug manufacturing plants as their next growth engine.
- President Yoo Seok-tae: Give me six months, and Leons can produce up to a billion doses. Whether it’s by completely overhauling the factory equipment or acquiring another vaccine manufacturer.
- Kim Shin: Unfortunately, I can’t wait that long.
- President Yoo Seok-tae: Right. Time is money, so it can’t be helped. I’ll introduce you to Isung Biologics. I’ll also talk to DK Bioscience.
- Kim Shin: Oh, wow. You have connections there too?
It wasn’t that I looked down on Leons, but the difference in corporate scale was enormous.
- President Yoo Seok-tae: Of course. We met and shook hands at the Pharmaceutical and Bio Association.
- President Yoo Seok-tae: They probably know my name, at least. It would be hard for me to get their CEO on the phone, but if I say you need to see them, I think I can connect you.
Isung was South Korea’s largest conglomerate.