Social Network (2)
Sara stared at me as if she couldn’t believe what she’d just heard.
"Facenote?"
"Yes."
Until now, I had made a fortune attacking one company after another. Among them were Thomas Motors, with a market cap of more than $40 billion, Kionos, Japan’s number one semiconductor firm, and GL Entech, the world’s second-largest battery company.
Each one had been a monster in its own right, but Facenote was on an entirely different level.
Facenote was both the name of the world’s most famous social network service and the company that owned it.
What Mike Goldenberg had built in a Harvard dorm as a way for students to connect had quickly spread to neighboring universities and, in just a few short years, evolved into a social networking service used by people all over the world.
Facenote later acquired Linstagram, the image-sharing SNS, and WhosApp, the messenger app, and became a vast social media empire.
At present, Facenote had 2.6 billion users, Linstagram 1 billion, and WhosApp 2 billion, making them the world’s first, second, and third largest SNS platforms by user count.
Even excluding duplicate accounts, that still meant more than one-third of the world’s population used them every single day.
Just as it had once been impossible to imagine a life without the internet, it was now impossible to imagine a life without social media.
Facenote’s current market cap was $1 trillion.
That put it fifth among American companies, behind Enple, NS, Guble, and AMZ.
Even if you looked at the whole world, it ranked sixth. Among companies outside the United States, only Saudi Aramco had a larger market cap.
Revenue was about $82 billion, operating profit $31 billion. The operating margin was an eye-watering 38 percent.
And yet…
Compared with a $1 trillion valuation, it looked almost modest. The reason the stock kept rising anyway was the insane pace of growth.
Just three years earlier, revenue had been barely half of what it was now, and operating profit had been in the red. In only three years, revenue had doubled and profit had exploded.
If you could swallow the world whole, what did short-term sales or profits even matter?
And I had just said I was going to push that company’s stock down.
Sara asked me, "Why?"
I told her the truth.
"There’s another company I want to acquire, and Facenote is standing in the way."
She broke into laughter.
"If anyone else had said that, I would’ve laughed it off. But when you say it, Miru, it doesn’t sound like a joke."
"Well, the other side is pretty formidable."
Sara lifted the materials I’d handed her and gave them a look.
"I’ll review this and get back to you."
Of course, just because I recommended a company didn’t mean they’d buy or acquire it blindly.
Among the companies I’d brought to them, there were both public firms and private ones.
Investing in a public company was as simple as buying the stock, but to invest in a private company, you had to meet with the founder or existing investors and negotiate.
They’d go through their own analysis, and if they had questions, they’d ask.
Back at Continue Capital, I held a meeting with David.
First, we looked over the materials I’d prepared.
The company’s name was Link Labs.
It had been co-founded by Cameron Hawkins, a bioengineering PhD, and Vincent Swanson, a computer science PhD.
There were 43 employees in total. Of those, 31 were researchers.
David said, "Facenote’s CEO Goldenberg has been pursuing this company for quite some time, and acquisition talks are already underway."
"What’s the sale price?"
"It’s expected to be $40 billion."
I let out a low whistle.
"That’s enormous for a startup."
"In fact, the market’s fair valuation is only around $15 billion."
"So Facenote is willing to pay more than double that."
"As you know, CEO Goldenberg gets what he wants."
"He does."
He was a genius, the kind of man who had built Facenote while still an undergraduate at Harvard.
There were plenty of geniuses in the world, but not all of them built giant corporations. Mike Goldenberg, however, had also proved exceptional at running one.
First, he drove out all of his cofounders. It led to several lawsuits, but in the end he took control of the company by himself.
And even before Facenote went public, he was already making aggressive acquisitions.
When he announced that he would buy Linstagram, a lot of people were stunned. After all, Linstagram had only been founded a year and a half earlier, and it had just twelve employees.
At the time, the market valued it at around $200 million to $300 million.
Mike Goldenberg thought that if he wanted to convince the founders, he’d have to make an offer they couldn’t refuse, so he put $1 billion on the table.
People who heard that thought he’d lost his mind.
And the result?
As everyone knows, Linstagram was an enormous success.
The WhosApp acquisition was no different.
The money Facenote poured into that deal was $23 billion.
That was twenty-three times the Linstagram purchase price and more than twice the $10 billion Guble had offered.
That was the point when everyone really thought Mike Goldenberg had gone crazy.
And the result was, once again, a triumph.
Koreans who mostly use Tatok may not realize it, but once you go abroad, you can barely communicate without WhosApp.
And now the company he had set his sights on was Link Labs.
Facenote may have become synonymous with social networking, but it was also the undisputed king of VR.
It invested more heavily than any other big tech company, and its technology was among the best. Six years ago, it acquired Valhalla, a VR device developer, and has been steadily releasing products ever since.
The mainstream VR device today is the HMD—the Head Mounted Display.
Exactly what it sounds like: a display you wear on your head.
By showing each eye a slightly different angle, it tricks the brain into perceiving a two-dimensional image as three-dimensional.
The HMD market had advanced quite a bit, and quite a few related games had already been released.
But the limitations were obvious.
Weight, image quality, motion sickness, and more.
It merely showed 3D images; it was still nowhere near the level needed to make you truly feel as though you were inside a virtual reality, which was what the name implied.
That was why a variety of other VR technologies were being developed as well.
One of them was BCI—Brain-Computer Interface—which directly linked the brain and a computer.
Using brain waves, it could send signals to a computer, and in reverse, the computer’s signals could be read by the brain.
It sounded like something out of science fiction, but it was already being used in the real world, and several products based on it had already appeared.
Things like wheelchairs that let a person with full-body paralysis move by thought alone, or devices that allowed them to type into a computer.
Link Labs was regarded as the leading company in BCI research.
Which was exactly why Facenote wanted it.
It would have been nice to acquire it sooner, but until now it hadn’t even taken outside investment. You couldn’t buy a company that wouldn’t sell.
"You really intend to acquire Link Labs?"
"Yes."
"If your opponent is Facenote, you don’t have a chance."
If I valued Snow Crash at $100 billion and added in our other assets, we’d come to $200 billion.
That was more than enough to play conglomerate games back in Korea. But America was different.
Compared with Facenote’s market cap, our assets were only one-fifth as large.
On their side stood a vast empire. On ours, we’d only just managed to carve out a small kingdom.
In the end, the capital mismatch was so severe that if we went head-to-head in a bidding war, we would lose.
I thought for a moment, then said, "Let’s short Facenote first."
David looked at me. "Are you serious?"
"Yes."
"Why?"
"Call it payback."
"…What?"
I gave a faint laugh.
"I’m joking. It’s just that the stock is far too overvalued right now. And there’s a strong chance a major negative event will hit soon."
"What kind of negative event?"
"Facenote, Linstagram, and WhosApp are all free to use. So where does Facenote’s revenue come from?"
David answered as if it were obvious.
"Advertising."
"Not just advertising—personalized advertising."
If you turned on the TV, ads poured out of it.
Of all those ads, how many actually reached the consumer who might buy the product? For example, ads for sanitary pads or cosmetics meant nothing to me.
But Facenote was different.
"Someone once said: if the product you’re using is free, then you are the product."
David nodded.
"Seth Godin said that."
"Really? Who’s that?"
"An American writer who’s written a lot about marketing."
"I see."
Consumers could use Guble’s search engine, ATube, Facenote, and countless other services for free. In this case, the product of the big tech companies was the consumer.
The videos they watched, the posts they liked, the search keywords they entered—those were all turned into products and sold to advertisers.
The company most advanced in that field was Facenote.
Facenote didn’t just track you while you used the app; it also monitored your browsing history and served you tailored ads.
If you liked cars, it showed you automotive and accessories ads. If you liked celebrities, it showed you concert tickets, or ads for the clothes and cosmetics those celebrities wore and used.
Advertisers preferred Facenote because it could target each individual with such precision and show them only the ads they actually needed.
But…
"Enple has recently been emphasizing the importance of privacy and customer protection policies. Not long ago, it even changed the terms for its app marketplace. I doubt it’s going to keep allowing Facenote to track users."
Until now, Facenote had collected users’ activity records without any real approval process and used them for advertising.
But if a new consent step appeared, then when users launched an app and were asked whether they agreed, most of them would simply press no.
Rather than arguing, David nodded.
"That’s entirely plausible."
"Oh? Really?"
"Yes. Seventy percent of Enple’s revenue currently comes from hardware sales, especially Enphone and other devices, and there are more than a billion active devices worldwide. On that foundation, Enple is aggressively entering the services and advertising markets, so it has no real reason to hand over information about its own users to a competitor like Facenote."
"…"
Honestly, I was a little shocked.
I knew this because I’d regressed with future knowledge, but for him to analyze it and arrive at the same conclusion… was that kind of insight just something you were born with?
As if I’d reached the conclusion myself through analysis, I said calmly, "Facenote will cry foul and call it platform abuse, but if Enple doesn’t outright block it and instead leaves the choice to customers, there’s nothing they can do. In fact, it was strange to collect user data without asking in the first place."
From Enple’s perspective, it would get both the moral high ground of protecting customer information and the practical benefit of exclusive data on its own users.
On the other hand, Facenote would have no grounds to oppose it.
"If Enple moves first, Guble will follow too… and that would deal a huge blow to Facenote’s advertising revenue."
"Exactly."
There was actually one more important reason besides that.
Around this time in the original timeline, an anonymous whistleblower inside Facenote came forward.
Back then, it hadn’t had much effect and had been swept under the rug, but… maybe this time I could make it bigger.
If I handled it well, I might be able to inflict a fatal wound on Facenote.
But because so much had changed because of me, I couldn’t be certain the whistleblowing would happen this time exactly as it had in my first life.
At any rate, the evidence the whistleblower had handed over wasn’t the kind of thing you could gather in a day or two of work, and it wasn’t something an outsider could quietly steal.
It had to be something only someone who had worked inside Facenote for a long time would know. Which meant the whistleblower had to be in Facenote right now.
Was there any way to contact them?
Just as I was thinking that, David asked, "If we short it, how large a position are we talking about?"
"How much capital do we have right now?"
"$42 billion."
"Then let’s use all of it."
"…"