Game Theory (1)
The internet, which emerged in the latter half of the twentieth century, transformed human life on a fundamental level.
Riding the wave of digitalization, IT companies grew at a breathtaking pace.
In the past, the companies with the largest market capitalizations were the ones that produced tangible goods—energy, automobiles, steel, and the like. But once the twenty-first century arrived, those places were taken by IT companies such as Enple, Guble, NS, and AMZ.
People now spent most of their lives inside the internet. Civilization itself had reached the point where it would be hard to imagine continuing without it.
The future was on the internet, and at its center stood cloud.
Alex Preston placed an extremely high value on the growth potential of cloud services.
The IT giants were already in the arena, locked in fierce competition.
AMZ’s ZWS, NS’s Azure, and Guble’s Big Storage were known as the cloud Big Three, and they were swallowing up the market at speed.
But the more a market grew, the more opportunities it created within itself. He was looking to break into that market when he met Rolf Buchi.
Rolf Buchi had the program he had developed, Minerva, and the reputation of being a Silicon Valley genius. Alex Preston had the capital and the ability to deploy it.
The two of them were, by any reasonable measure, an ideal match.
And in fact, Cooloud grew at a speed few could even hope to replicate, steadily eating into the Big Three’s market share. Customers were satisfied with the services Cooloud provided and gladly paid for them.
Alex thought he had found the best partner possible.
That was true right up until the moment before everything collapsed.
I can’t believe I went into business with an idiot like this.
When you ran an IT company, patents and copyright disputes were impossible to avoid.
Every time one of those problems came up, it was Alex’s job to resolve it.
And yet he had failed to solve the most important patent of all. In fact, he had never even thought to question it in the first place.
The core program that formed the very foundation of the business had been stolen.
Buying up a patent at a bargain price and then using it to attack a company was a classic patent troll tactic.
No, if anything, it would have been better if it had fallen into the hands of a patent troll. At least then money could have solved the problem, one way or another.
But what the other side wanted was Cooloud itself.
To contain the situation, Alex first met with the lawyers at the Preston family’s law firm. After reviewing the documents, every one of them shook his head.
“The evidence is far too strong.”
“There’s no room to wriggle out of this.”
“There aren’t any loopholes in the rights acquisition contract, either.”
Of course there weren’t. David Lockhart himself was both an investor and a lawyer. There was no way he would have left a weakness in the contract.
“For now, the best option is to drag out the lawsuit as long as possible, but...”
Even that was a poor excuse for a solution.
A cloud company had to provide stable services.
But what if it was mired in a patent lawsuit, with no way of knowing when its core program might be shut down? Who would keep doing business with a company like that?
And this wasn’t even just a matter of patent infringement. There was a moral stain attached to it as well. If the lawsuit dragged on, Cooloud’s image would sink straight to the bottom.
Cooloud had never once turned a profit since the day it was founded.
And yet it had still been valued at $100 billion because its technology and growth potential were recognized as overwhelming.
In fact, the scale of its losses had been shrinking quickly.
The current losses were being created by investment, and if they wanted to, they could have generated profits at any time.
It was all made possible by Minerva.
Without Minerva, how far would the company’s value fall?
Alex had poured every dollar of the investment capital assigned to him into Cooloud, and then gone further, drawing on the family fortune as well. He had invested $500 million when the company was founded, then added another $1.2 billion later, and finally brought in an investment from the group’s PrestigeA PE, selling 20 percent of the company for $3.2 billion.
That meant he had invested a total of $4.9 billion in Cooloud.
As a rule, private equity investments aim for a 100 percent return over five years. A hundred percent sounds enormous, but on an annualized basis, that’s only around 14 percent.
Once you subtract all the costs and labor expenses, the actual return comes out to a little over 10 percent.
VCs, however, were a different story.
Because the risk was so much higher, a successful investment didn’t just return two or three times the capital. It could be ten times, even a hundred times over.
If he kept growing the company as far as possible and then succeeded with an IPO, the $5.9 billion he had invested could become $50 billion—maybe even $100 billion.
Victory was right in front of him now. Everything was within arm’s reach.
And yet...
Some hand had come out of nowhere and seized him by the ankle.
If he failed now, that would be the end of it. He would be completely pushed out of the Preston family’s succession structure.
The sense of unease he had felt at their very first meeting had proven to be real.
Was he already aware of Cooloud’s weakness back then?
They had intended to take Cooloud over from the very beginning.
If he had caught on at the time, he might have been able to prepare a response in advance, but it was already too late for that now.
How did they find out?
Rolf Buchi was supposed to be the finest genius developer in Silicon Valley. That was why no one had ever doubted the fact that he had developed Mimir.
Everyone had been deceived by his skill and reputation, including his partner.
But...
How did they discover something I, after three years of working beside him, never noticed? How on earth did they do it so easily?
Come to think of it, everything else had been the same way.
They had exposed the fund’s insolvency. They had blown up the Thomas Motors scandal. And now this.
It was as though they could see right through his palm, identifying the weak point with perfect precision and striking only there.
And this guy was a completely ordinary office worker not that long ago? That makes no sense.
Was he a plant?
The whole thing was so unbelievable that all sorts of absurd possibilities kept flashing through his mind.
There had been plenty of companies that wanted to buy Cooloud over the years. They had all waved huge sums of money and begged to be allowed to purchase it.
But this opponent was different.
They were gripping his weak point and threatening him into selling. Call it an acquisition if you liked, but it was no different from extortion.
As long as they’re the ones who want the acquisition, they won’t be able to sue or reveal the truth right away.
Alex had no intention of handing the company over for a pittance.
Strictly speaking, this wasn’t the company’s fault. It was Rolf Buchi’s personal fault. Alex himself had simply been deceived by his partner’s lies.
If Rolf resigns as co-CEO and leaves before the problem breaks, maybe I can minimize the damage.
If Rolf was removed, then even if the other side tried to expose the truth, the impact would be minimal.
That would also create room to negotiate with Continue Capital over the use of Minerva.
And if the negotiations fall apart and we can’t use Minerva anymore, Syd should be able to handle that somehow.
Couldn’t they make a similar program by copying it in a way that avoided copyright infringement?
Besides, the market was overflowing with cloud-related companies. If they needed a piece of technology, they could always just buy it.
If that failed, then they would have to sell the company. Even without Minerva, there would still be plenty of companies willing to buy Cooloud.
Whatever else happened, the conclusion was the same: Rolf had to be removed from the company as quickly as possible.
Rolf Buchi had once been the very symbol of Cooloud. Even now, he handled all of its publicity and external affairs.
But now he had become Cooloud’s single greatest weakness. If they wanted to save the company, they had to get him out, and fast.
Alex kept his thoughts hidden and said to Rolf, “Cancel everything on the schedule for now. I think it’s best if you stay away from the office until this is sorted out. Treat it like a vacation and rest for a while. I’ll look for a way to fix this in the meantime.”
Rolf nodded weakly at that.
Cooloud’s current corporate value was $100 billion.
It had only recently been talked about as being worth $70 billion, and already another $30 billion had been added to that figure. And since that wasn’t even the price at which any stake had been sold, its actual value had to be even higher.
In the first timeline, when Cooloud received investment right before its IPO, the company had been valued at $150 billion. Even at that price, investors had lined up to buy in.
Either way, let’s assume Cooloud was worth $100 billion.
That would be enough to place it immediately at number two on the KOSPI if it were listed there, and among the top five private companies in the United States.
And that made sense, because in the cloud market it stood just below the Big Three.
David asked me, “But do you really intend to acquire it for $5 billion?”
“Can’t it be done?”
Until just last week, Continue Capital’s total capital had stood at $127 million. But thanks to the Thomas Motors trade, we had made a profit of $5.042 billion.
After subtracting the related expenses and investing another $100 million in a company called Nextrogen, our current capital was roughly $5.068 billion.
That was over 6 trillion won.
If I just sat around doing nothing from this point on, I probably still wouldn’t spend even half of it. But in the financial world, it was a substantial amount of money.
David answered flatly, “Impossible.”
“Why?”
“For two reasons. First, even if he gave up on using Minerva and split the company apart to sell it piece by piece, it would still fetch more than that.”
I nodded.
“Right. The customers, the know-how, the sales network, the data he’s built up over the years—all of that is an asset.”
“Second, Alex Preston has invested $4.9 billion in Cooloud alone. If he sells for anything less, he’ll take a loss, so there’s no way he’ll agree to it.”
“Fair enough.”
It was a company worth more than $100 billion. No matter how tightly we had him by the throat, acquiring it for $5 billion was going to be difficult.
“Then how far can we drive the price down?”
“How far do you want to drive it down?”
“……”
I felt like I’d had a conversation like this before, when buying a phone or haggling over a used car.
“As you know, acquiring Cooloud is completely different from any investment we’ve made up to now.”
Until now, our investments had meant putting capital into companies that wanted it and buying up equity. This time, though, we were trying to force an acquisition on a company that didn’t want to sell.
“Have you ever done a hostile M&A before?”
“No.”
Back in the first timeline, I’d only ever watched other people do it.
M&A itself wasn’t easy, and hostile M&A was harder still.
Hostile M&A meant carrying out an acquisition without the other side’s consent.
In truth, most M&A deals happened with both sides’ agreement, so there weren’t that many cases where things were pushed through by force.
The defending side would use every method at its disposal.
“If you were Alex Preston, what would you do?”
He thought for a moment, then answered, “I’d get Rolf Buchi out of the company as soon as possible and erase any connection to him.”
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