Business Trip (3)
In the past, every IT company had to maintain its own servers.
But installing and operating them took a tremendous amount of money and manpower.
Unless a company was large enough to make it worthwhile, running its own infrastructure was brutally inefficient for a smaller outfit.
That was when cloud computing came onto the scene.
There was no need to build servers from scratch; you simply rented as much as you needed. It was efficient, cheap, and the market exploded almost overnight.
The market was now worth roughly $300 billion.
It was still growing by 20 to 30 percent every year, and a third of all IT spending was tied to the cloud.
No wonder the Big Three had all crossed the $1 trillion market-cap mark so easily.
The industry was enormous and still expanding so fast that cloud startups were springing up all over Silicon Valley even now.
Most of them rented space in the Big Three’s data centers.
Since the structure was one in which the Big Three could share in the upside as those startups grew, they were usually happy to support them.
But once those startups tried to stand against them, they turned into enemies without hesitation.
That was why Alex Preston and Rolf Buchi had always prioritized cooperation with the Big Three. Sid, however, had overturned that approach the moment he became CEO and started marching to the beat of his own drum.
It was only natural that the Big Three would feel uneasy about that kind of move.
They had started pushing back so blatantly it was almost comical. The most damaging move was that they had begun restricting how data stored in their cloud could be used.
Snow Crash’s greatest strength was its ability to gather and use data fragmented across different clouds without becoming dependent on any single provider.
But if those partnerships were cut off, that advantage disappeared.
“The contract period still has time left, so they haven’t cut us off outright yet. But if this keeps up, the business could become difficult to sustain.”
The reason Snow Crash was valued at $100 billion was purely because of its future growth potential.
By market share and revenue, it still wasn’t at a level where it could truly go head-to-head with the Big Three.
“Sid naturally refused their demand to pull the service, I’m assuming?”
“That’s right.”
David nodded as he spoke.
“AMZ is the one taking the hardest line. They even went so far as to call it a betrayal that we expanded our service area this time.”
“I suppose they could see it that way.”
After all, Snow Crash had been the one to invade their turf first.
“They’ve also made a bid to acquire us while imposing sanctions.”
I was taken aback by that.
“They’re pressuring the company and offering an acquisition at the same time? That’s not an offer—that’s coercion.”
David gave a bitter smile and nodded.
“That’s the way big corporations often do things.”
“True enough. When FaceNote acquired Lynstagram, they threatened to release a similar service if their offer was refused.”
“An offer is one thing—you can always reject it. The problem is that the other side is AMZ.”
The company had started as a small online bookstore and grown into an e-commerce giant recognized around the world.
Seen that way, it was easy to assume retail was its core business, but its real engine was cloud computing.
AMZ was a pioneer in the cloud market.
At first, it had simply rented out its own server capacity to marketplace sellers, then realized how much money that could make.
So it founded ZWS, Z Web Service, and began to open up the cloud market in earnest.
It was, for AMZ, a stroke of pure genius.
Platform companies usually accepted losses in the early days, undercutting everyone until they had seized a certain amount of the market, and only then raised prices.
But AMZ had done the opposite: it kept lowering prices even further and expanded its share without limit.
That was possible only because ZWS generated staggering profits that could support the strategy. In fact, 65 percent of AMZ’s earnings came from its cloud business.
“And it seems they separately contacted CEO Lucas as well, to try to recruit him.”
Until a few months ago, the name Sid Lucas had been almost unknown.
That was because Rolf had carefully kept Sid’s genius from becoming public knowledge. He had also taken every accomplishment Sid made and wrapped it in his own name.
But his fraud had been exposed, and everything previously attributed to him had turned out to be Sid’s work after all.
IT companies and investors had all turned their attention to Sid Lucas at once.
In manufacturing, one skilled worker can’t really do the work of ten. But in IT, one genius can do the work of ten thousand—or a hundred thousand.
That was why IT companies pulled out every trick in the book to attract talent.
Acquiring a company with only a handful of employees for hundreds of millions of dollars was all about securing that talent.
Sid was the kind of genius who had turned Snow Crash into the fourth-largest cloud company in the United States within just a few years. Of course they wanted him, no matter what it took.
“Apparently not only AMZ, but all kinds of other places have been making offers too. I heard some even put blank checks on the table. Honestly, when I saw you give CEO Lucas ten percent of the company for free before, I couldn’t quite make sense of it.”
If Snow Crash was worth $100 billion, then ten percent of it alone was worth $10 billion.
And he had given that away with no conditions attached, not even as stock options.
“Looking at it now, I suppose you’d say that was a good decision?”
At my words, David gave a faint smile.
“Yes.”
Either way, nothing about the situation was easy.
Perhaps because of how serious things had become, David looked deeply troubled.
I tried to put him at ease.
“There’s no need to worry too much.”
“Do you have a way out of this?”
He looked as though he was hoping I had some kind of solution tucked away.
To be honest, I did.
“Companies always chase profit. If we can prove that Snow Crash’s service is superior to the Big Three’s, won’t they eventually come over to us?”
“The problem is whether we can hold out until then.”
If we had enough capital, we could keep pouring money into it and endure indefinitely. But we didn’t have that kind of cushion yet. If losses piled up like this, we would eventually collapse under the weight of them.
“This is something we’ll have to face sooner or later anyway. If we keep relying on the Big Three for data usage like this, our dependence on them will only get worse.”
“So then?”
“We need to go on-premises too.”
“You mean build our own data centers?”
Constructing data centers required massive capital.
It wasn’t just a matter of putting up a building and installing chips. You had to bring in power, build out internet lines, and deal with all sorts of legal issues surrounding data storage and management, which meant working closely with the government, local authorities, and everyone in between.
“As it happens, I already discussed this with Chairman Yoo Jae-ho.”
David looked slightly startled.
“With Yuseong Electronics?”
“Yes. I suggested that we build data centers and collaborate on them together.”
Thanks to me, Yuseong Electronics had made a staggering amount of money.
Not only had I helped them acquire Dongwoo Precision and a fabless company, I’d also inflated their slush fund twice over. Unless he was an idiot, he wasn’t going to ignore my suggestion.
By now, he was probably already holding a meeting with his executives about entering the data center business.
“If it’s Yuseong Electronics, they’d make an excellent partner. They have capital, and they’ve got branches all over the world.”
David muttered it more to himself than to me, then looked up with a surprised expression.
“Were you planning this collaboration from the beginning?”
“Well… something like that.”
To be honest, when I first met him because of Dongwoo Precision, I hadn’t been thinking this far ahead.
But Yuseong Electronics was Korea’s top chaebol group. On top of that, they were one of the world’s top three semiconductor companies. I had figured that if we got close, it would definitely pay off.
If things really came to it, I could always ask Yuseong Electronics for help—but that would be the absolute worst-case scenario.
The best outcome was to solve this crisis on our own.
In any case, standing still wouldn’t make the problem disappear.
“For now, I think I need to meet the person in charge at ZWS. Set up a meeting.”
* * *
The meeting was arranged quickly.
I left Senior Dongho and Kim Beom-seok at headquarters and boarded the plane alone.
On the way to my destination, I read through the materials on ZWS.
The Big Three together controlled about 60 percent of the global cloud market. Of that, ZWS alone held 32 percent, more than ten points ahead of NS in second place.
In the U.S. market alone, its share was over half, at 54 percent.
That kind of absurd dominance had been made possible by entering the market back when nobody even had a proper concept of what cloud computing was.
First-mover advantage, I supposed.
Maybe it would be different later, but for now, it was too risky to make an enemy of a company like this.
I let out a quiet sigh to myself.
My decision to acquire Snow Crash and make Sid CEO was, in the original future, something that had never happened.
Knowing the future and following it step by step was easy. But once I started changing it, all kinds of unpredictable things began to happen.
This situation was probably one of them.
The world really wasn’t so easy after all.
Had I rushed things too much?
But if it hadn’t been then, there would never have been another moment when I could have taken Snow Crash into my hands.
Give me just three years, and I could overtake AMZ and rise to become the world’s number one cloud company. At that point, wouldn’t AMZ be the one pleading with us?
Thinking that way, I closed the materials I’d been reading.
Unlike most major IT giants, which kept their headquarters in Silicon Valley, AMZ was based in Seattle.
It had moved there seven years ago, when the company was still headquartered in a smaller city.
The effect had been enormous.
From there, AMZ had grown at a staggering pace and become one of the five largest companies in the world. Seattle, in turn, had reaped the rewards in full.
AMZ employed 40,000 people and had created more than 100,000 related jobs. More than 250,000 visitors came each year just to see AMZ.
The average income of Seattle’s workers was even higher than New York’s, and in just a few years the city’s population had risen by nearly 20 percent.
I looked out at the forest of towers rising in the heart of that massive city.
AMZ had started with just four buildings, then bought the ones around them as its workforce expanded, and built new ones until the number had grown to thirty-four.
It felt like the fortress of an empire.
I walked into the building.
* * *
Because the appointment had already been arranged, I was led straight to the meeting room.
After waiting there for a moment, a man came in.
He was a white man in his late thirties, lean and about six feet tall. He wore glasses, jeans, a T-shirt, and sneakers.
I was genuinely surprised.
I had expected to meet, at most, someone from the investment division, but an unexpected face had shown up instead.
That felt like a real ambush.
He held out his hand to me.
“It’s a pleasure. I’m Harrison Yonabel.”
“Nice to meet you. I’m Han Miru.”
After we exchanged greetings, we took our seats.
“I’ve heard you’re a co-CEO together with Mr. Lockhart.”
“That’s right.”
“To be honest, I only found out when I got contacted this time. But you’re quite famous in Korea.”
“Not really.”
The way he said that told me he had clearly done some research on me.
I had also looked into ZWS before coming here, so I knew who he was.
Harrison Yonabel.
An engineer from Georgia Tech, thirty-eight years old.
He was none other than the CEO of ZWS.
“I didn’t expect you to come in person.”
“I happened to have some time free.”
Even with Continue Capital having made its name lately, he was not the sort of man you could easily meet. There had to be a reason he had come here himself.
“I’ve heard about Continue Capital several times. You’re known for successfully pulling off difficult investments. Looking at it now, it seems Mr. Lockhart wasn’t the only one making those moves.”
“I didn’t do all that much.”
“No need to be modest. I also followed your latest shareholders’ meeting with interest. A friend of mine works at Elliott Management, and he had nothing but praise for it. After hearing that, I wanted to meet you. That’s why I came.”
“Thank you.”
Born into a good home or not, he was still a man who had risen to the top of the world’s largest cloud company on the strength of his own ability.
Maybe that was why there was so much confidence in his expression and gestures.
“So what brings you here?”
I got straight to the point.
“I’d like you to cancel the sanctions against Snow Crash.”