Cooloud (2)
“Who’s that?”
In response to Rolf’s question, Alex gave him an explanation.
“He was an investor who worked at Victory Investment. He pulled off several major deals.”
After hearing the whole story, Rolf tilted his head.
“Isn’t he just washed up now?”
“He’s not someone you should look down on that lightly. He’s very capable.”
“But I heard the company went under. How can he still be capable?”
“Because that wasn’t his fault.”
Alex came from a family with enough clout to give him relatively accurate information about Wall Street, and that meant he also knew exactly how Victory Investment had gone bankrupt.
“So what are you going to do? Don’t tell me you want him as an investor?”
“No.”
Alex knew his older brother had gone out of his way to hire the man, and that he had even spread nasty rumors about him in the process.
He had heard that the recruitment attempt had failed, but he hadn’t expected the man to show up in Silicon Valley.
Just how good was he, if they went that far to get their hands on him?
If his brother wanted him, then he probably wasn’t ordinary. The thought stirred Alex’s curiosity.
All the better if I can bring him over to my side.
If David Lockhart became his man, what kind of expression would his older brother make then?
Alex smiled.
“Still, he must have gone through a lot of trouble to get here. I don’t see any reason not to meet him once.”
Fortunately, the answer came back: they would meet us.
We called for Iver and headed to Cooloud’s headquarters in San Jose.
The outside looked like a warehouse, but once we stepped inside, the ceilings were high and the whole place opened up around us. We were led straight to a conference room.
After a short wait, two white young men came in.
Alex Preston.
He was twenty-seven, the same age as me.
He stood an astonishing 195 centimeters tall. A masculine face. Broad shoulders, thick arms. I knew he had played quarterback for Harvard’s football team.
I’d once read an interview where he said that if he hadn’t become an investor in my first life, he would have become a football player instead. Seeing him in person, I could believe it. He looked like he would have done well as an athlete.
The man beside him was Rolf Buchi.
He was twenty-nine.
He was a little shorter than Alex, but at 183 centimeters he was still a strikingly handsome man. Blond hair, blue eyes. He was so good-looking that people said his face had played as much of a role in his rise as a Silicon Valley star as his genius had.
And yet, for some reason, he gave off a distinctly petty, grasping, and cheap feeling. Maybe that was only because I already knew what kind of man he was.
Both of them looked far older than their age.
Well, if you have more money than I do, you’re an adult in my book.
While the children of chaebol families in Korea were running around causing scandals one after another, young founders like these were driving the growth of new industries in the United States.
“Hello.”
“It’s a pleasure.”
We exchanged greetings and sat down.
Alex looked at David and me and asked, “I heard you left Victory Investment, but I never expected you’d go on to start a new investment firm. What kind of place is Continue Capital?”
On paper, David and I were the co-CEOs of Continue Capital.
Since they would already know plenty about David Lockhart, they would probably be far more curious about me.
He’s probably wondering what kind of guy I am. If I keep quiet, do I just look like some rich Asian guy?
To outsiders, it would probably seem that I provided the capital while David ran the firm. Which, to some extent, was true.
David answered exactly as we had prepared.
“It’s a new investment firm. At the moment, we’re focusing primarily on venture capital.”
“How large are your assets under management?”
“Not very large at the moment.”
“Do you have any well-known limited partners?”
“That isn’t something we’re in a position to disclose yet.”
LP meant Limited Partner.
It referred to the investors who put money into an investment firm.
In the case of a fund launched by a famous investor, sovereign wealth funds or pension funds would sometimes step in and provide the capital.
Simply being backed by a famous LP could raise an investment firm’s value. Unfortunately, Continue Capital had not taken outside money from anyone, so there was nothing to disclose.
After asking a few more questions, Alex nodded as though he had roughly sized us up.
Now it was my turn to ask.
“I’d like to know more about Cooloud.”
Alex explained.
“Cooloud is a cloud-based data platform. We provide a service that lets companies manage and use all the data they need for their operations with ease.”
Data created inside a company gathered in the cloud. If you collected and analyzed that information, you could use it for all kinds of purposes.
At this point, it wasn’t an exaggeration to say that even companies that weren’t in the IT industry were directly or indirectly tied to the cloud.
“Aren’t there a lot of companies offering similar services?”
AMZ’s ZWS, NS’s Aiser, and Guble’s BigStorage.
The Big Three that controlled 60 percent of the global cloud market also provided their own data warehouses to corporate clients.
Most people thought AMZ was just an online shopping company and NS a software company that made Windoers and Office, but in reality more than half of both companies’ revenue came from cloud business.
The reason so few people knew that was because cloud services were mostly B2B.
“Cooloud’s strength is its powerful compatibility. To that end, the cloud Big Three are working closely with us. We also provide the cheapest and most accurate information.”
Rolf said it with a self-satisfied air.
“That’s all possible because of Minerva.”
Minerva was Cooloud’s core program, and also the name of the cloud service Cooloud operated.
“I know about Minerva, but I’d like to hear an explanation from you directly.”
“That’s easy enough.”
He explained with confidence.
“Minerva is an artificial intelligence program I developed. You could call it the heart of Cooloud. The results change completely depending on what data you collect and how you interpret it.”
When you do statistics, if you collect the wrong sample or interpret it incorrectly, you can end up with a result that makes no sense at all.
There’s a term for this: survivorship bias.
During World War II, the U.S. military analyzed the fighter planes that had returned from enemy territory. Most of them had been hit on the wings and fuselage.
The experts concluded that the wings and body of the aircraft needed to be reinforced, but one statistician argued the exact opposite.
The engines and cockpits—the parts that had not been hit at all—were the ones that needed reinforcement.
If you thought about it for even a moment, you could see he was right. The planes that had taken hits in the wings and fuselage had returned safely, but the planes hit in the engine or cockpit had been shot down and never came back.
It was a textbook case of drawing the wrong conclusion from the wrong sample.
Similar examples were easy to find even now.
Not long ago, one of Korea’s delivery apps released customer statistics showing that men in their twenties and thirties made up an overwhelming share of orders. Looking only at that figure, it would be easy to assume that women simply didn’t order delivery much.
But one thing you had to consider was that when a man and woman ordered food together at home or in a room, the man usually placed the order.
And when a group at a workplace or gathering ordered together, the person in charge usually paid. In those cases, too, it was often a man. There were also women living alone who registered themselves as male out of concern for crime or privacy.
So you couldn’t look at the statistics alone and conclude that women didn’t use delivery apps much.
“The solution to these problems is an AI program capable of deep learning. It judges the situation and delivers an accurate analysis without needing correction values entered one by one. There were quite a few errors at first. But by analyzing the causes of failure and learning from them, it now produces results that are more accurate than those of human experts.”
I asked in admiration, “If the company is worth 100, how much of that would you say Minerva is worth?”
Rolf smiled.
“More than 50. Without Minerva, Cooloud wouldn’t exist. On the other hand, if you had Minerva alone, you could build a new Cooloud from scratch.”
That was a remarkable amount of confidence.
Then again, if you were the developer of Minerva, you’d have every right to be that confident.
“Is there a reason you named the program Minerva?”
“As you know, Minerva is the goddess of wisdom in Greco-Roman mythology. Doesn’t it suit the program I built?”
“It does.”
In truth, there was another name that suited it even better. If I told him that, he’d probably be stunned.
Alex added, “Once a client uses our service, they don’t leave Cooloud. We’ve already secured more than a thousand customers, and among them are several companies valued at over $10 billion. Next year, we’re aiming to double that number.”
That wasn’t an unrealistic goal.
If a manufacturing company wanted to double production, it had to build twice as many factories and hire twice as many people.
But a cloud company didn’t need factories or people. It only needed enough server capacity to handle its clients.
The more I heard, the more appealing the company became.
So before it grew even larger, I needed to take it over.
“The reason I came here today is because I want to invest in Cooloud.”
“How much were you thinking of investing?”
I looked at the two of them and said, “I don’t want to make a simple equity investment. I want to acquire Cooloud.”
They seemed a little startled, as if they had never expected me to bring up an acquisition.
Alex asked with interest, “What kind of acquisition price are you thinking?”
“How about $70 billion?”
It wasn’t exactly a joke, but Rolf laughed out loud anyway.
“Ha! Only $70 billion?”
Alex smiled as well.
“I’m sorry, but we have no intention of selling the company. And even if we did, we certainly wouldn’t hand it over for a bargain price like $70 billion.”
He called $70 billion a bargain.
The fact that he said it like that told me the story about him overturning Redstone’s investment must have been true.
Glancing sideways, I saw that even David looked flustered. From his expression, he seemed to be thinking, You don’t have that kind of money, so what are you talking about buying a company?
He wasn’t wrong. I didn’t have $70 billion sitting around.
“Then how much would make you willing to sell the company?”
“Well. If it were around $100 billion, I suppose I could think about it.”
Considering that once they went public the following year they would be valued at more than $280 billion, that wasn’t such a crazy number.
Of course, I had to account for the fact that they would also raise a massive round before that and issue 30 percent new shares.
When they eventually listed, the two founders sold some of their old shares and each reduced their stake to around 20 percent. Even so, that was still enough to put them on the list of the world’s richest people.
“I see. Then an acquisition would be impossible.”
“If we ever end up looking for investment, I’ll contact you.”
“Yes. Thank you.”
There might be an opportunity around the time they issued new shares, but by then the company’s valuation would already be three times higher than it was now.
Waiting until then would be stupid.
If I didn’t act now, I would never get another chance to acquire this company.
“Since I’m here already, would it be all right if I took a look around the company?”
Alex gave me a friendly smile.
“Of course. Follow me. I’ll show you around.”