The president glanced around at the assembled officials. ‘OK. So what do we do?’
‘We talk to him,’ said the national security advisor. ‘If we can’t dispossess him of this thing, then we try to make him an ally. Let’s see if the security on this thing is tight. Let’s see if he’ll cooperate and make sure it isn’t used for anything but commercial purposes.’
‘And let’s scare the shit out of him about what we might do if he puts a foot out of line,’ said the president. ‘Tell him we’re going to be watching every damn thing he does. Tell him when he’s on the can, Uncle Sam’s going to be watching him wipe his ass. And if we don’t like the way he does it, Uncle Sam’s gonna come after him and wipe it for him. I’m serious. Make sure he understands he can do things the easy way, or we can make his life hell.’
‘We’ll talk to him,’ said the attorney general.
‘Tell him.’
‘We’ll say whatever we legally can, Mr President.’
‘What else?’ said the president. ‘Sue, you’re still checking the legal possibilities, right?’
The attorney general nodded. ‘You know, this company has gone out and built this program – which seems to be a program of enormous power, an absolutely exceptional piece of software engineering – and, frankly, I’ve got to say, it’s something the United States government should have done for itself. Someone was always going to do this. It should have been us, Mr President. Instead of spending whatever we spend on fighter planes and aircraft carriers that have no one to fight…’ she glanced pointedly at the national security advisor ‘…because no one else’s fighters and carriers are anywhere near as good as ours, we should have spent some money on this.’
‘How much did it cost?’
‘A few years back they went out for investment capital and took in around six hundred million,’ said Garcia. ‘I’m guessing that’s what it was for.’
‘Six hundred million,’ said the attorney general. ‘What is that? Nothing. Not even a speck in the defence budget. This is like … it’s like leaving a bunch of college kids to invent the atom bomb. It’s absurd. The idea that—’
‘It’s done,’ said the president impatiently. ‘What’s your point, Sue?’
‘You ask what the government should do, Mr President? Simple. It should buy Fishbowl.’
The idea wasn’t taken seriously. To the extent that he even considered it, the president had no intention of taking the political hit for spending up to $100 billion of US taxpayers’ money to gain control of a program that had cost barely half of 1 per cent of that sum to develop.
Andrei Koss was invited to meet James Monks and the deputy attorney general. The Fishbowl legal team wasn’t surprised by the request. While there was nothing illegal about FishFarm 2.0, they had warned Andrei that it might well garner attention from the Department of Justice, who would probably be interested in the rectitude of Fishbowl’s commercial operations.
Andrei went with Jenn McGrealy and two of the Fishbowl lawyers. A good part of the conversation was devoted to questions about the nature of the program: what it was being used for, and its security arrangements, most of which Andrei was happy to answer. There were questions about himself, his political leanings, his personal beliefs, which the lawyers tried to intercept but which, again, he was prepared to answer. There were questions about whether he planned to license the program or even sell the company, the first of which he had no intention of doing and the second of which he had not even contemplated. Yet nothing was asked about the clients of Fishbowl that were using the program or the products being advertised or what was being said about them, which was what the lawyers had told him to expect and which they had decided that he would decline to answer. All in all, Andrei and everyone else on the Fishbowl side of the table found it a somewhat puzzling meeting. At certain moments they were aware of a sense of menace in the air, with opaque references to close scrutiny from the Department of Justice and undefined lines that couldn’t be crossed.
As Andrei met the Department of Justice officials, debate about Fishbowl was dividing the security establishment. The United States political process, even aspects of its national security, it seemed, were now potentially hostage to the whim of a 27-year-old Stanford dropout who found himself with virtually unlimited funds at his disposal, the seemingly most powerful propaganda tool the world had ever seen, and the free choice of how to deploy it. And there seemed to be no legal way to get it out of his hands. Some within the security establishment leaned towards a strategy of robust containment, leaving Koss free to deploy the program commercially but pressuring him to ensure that other uses would be neutral with regard to domestic politics and aligned with US government policy abroad. Others saw a policy of containment as a temporary fix at best and, at worst, one that would allow Koss the time to develop and refine the program so that it became even more dangerous. They were actively seeking a way to control it.
Diane McKenrick, six years on from Denver, was still a senator, was still chair of the Senate Homeland Security Committee, and was therefore fully aware of the debate.
38
AS THE FURORE over FishFarm 2.0 receded from the Fishbowl campus on University Avenue, the question of Fishbowl’s IPO came surging back. For years Andrei had refused to answer publicly questions about his plans for an IPO. Internally, in the years when the palotl program was under development, he and Chris had consistently told Pete Muller and Robert Leib that they wanted to wait until further software development was complete. When that wore thin with the two board members, they had said they were waiting for the decimation of Homeplace to be complete, since that would add value to Fishbowl shares. But now, both within and outside Fishbowl, everyone assumed that Andrei had been waiting for the launch of the palotl program, and with that complete, the sale of Fishbowl stock through an IPO was only a matter of time.
Robert Leib, who knew as much as anyone about timing an IPO, argued that the time was ripe. Chris said that if Bob believed it was time to float, it probably was. Controversy over Farming 2.0 had died down, Leib pointed out, but it was still new enough to be exciting, and experienced analysts would realize that future revenue streams from the new program would be colossal. The buzz around it would lift the offering into the realm of an iconic, perhaps unprecedented internet float. The market for tech stocks, he also felt, was reaching one of its periodic peaks. If an IPO of the magnitude of Fishbowl’s was going to achieve its full price, there had to be plenty of cash looking for an investment home. Time it wrong and that cash would be locked up elsewhere, with the result that the IPO would come in under-priced. The market was perfect, awash with cash. Wait another year or two and that might change.
Andrei respected Leib’s sense for the market. But Bob Leib, after all, was an investor, with an interest in extracting the maximum return on his stake. Andrei had other considerations. He talked to another couple of tech CEOs he had got to know and they didn’t dispute Leib’s assessment, but they did advise Andrei to think carefully about whether he wanted to lead a public company. They had gone the IPO route and while they now each held shares worth $1 billion-plus, they emphasized the impact it would have on the way he ran Fishbowl. The company, and Andrei himself, would be under microscopic scrutiny day in, day out. And whereas now he could simply shrug his shoulders and ignore such scrutiny, he wouldn’t have that luxury once Fishbowl was listed on an exchange. There would be a legal minimum of information that he would be obliged to provide and that minimum was a lot more than Fishbowl was accustomed to giving out. He would have legal duties towards his shareholders. If anyone told him it made no difference to be publicly listed, they said, they either had no experience of it or they had an agenda of their own.
Their words weighed heavily with Andrei, as heavily as Leib’s recommendation in favour of an IPO. If Andrei did float the company, he would realize at least a billion of the value of his shares as a cash dividend on the day of the IPO, with many billions more in the value of the s
tock that he held. But he didn’t need those billions of dollars. He still lived with Sandy in the condo off University and had only a couple more pieces of furniture than the day he’d moved in. The car he drove was five years old. Having that kind of money in the bank would just complicate his life. Neither did he need the thrill – or the burden, as he envisaged it – of turning up in richest-people-on-the-planet lists. What he did value was his freedom to run Fishbowl the way he chose, and steer it towards the vision he had for all of the things that it could do in the world – a vision that had expanded dramatically with the creation of the palotl program and the non-commercial uses to which it could be put once it was further developed.
He called Kevin and Ben to ask each of them what they thought. They both had large stakes in the business and, although they didn’t have seats on the board, he thought they had a right to be heard. Even without the IPO, both of them had reaped rewards from Fishbowl ownership and were now wealthy men. Fishbowl was awash with cash and Andrei had arranged multi-million dividend payouts in the last couple of years, largely to ensure that they both had something to show for their early years at the company, since he himself had no need for the even bigger dividends that washed up in his bank account.
Kevin’s own venture, which had morphed into a palotl-based social gaming application that ran on top of Fishbowl and other networks, was also starting to earn some revenue, although it was a long way short of profitability. He was the more enthusiastic about an IPO. He told Andrei that he agreed that the market was hot and said that Andrei should go ahead. Ben seemed unconcerned either way. He was getting towards the end of his PhD in psychotherapy and had started his clinical training, and spoke with detachment about Fishbowl. Listening to him, Andrei had a sudden, painful recollection of the night Ben had come over and told him he was leaving. Ben didn’t give a direct answer about whether he thought Andrei should do the IPO. He seemed more interested in understanding what it meant to Andrei, whether he was ready for it, whether he was doing it for the right reasons.
The ongoing conversation about the IPO between Andrei, Chris and Bob Leib continued over the next few months. Every week or two Leib would produce some new snippet of market information that supported his contention that now was the time for the IPO, Andrei would hesitate, while Chris told him that they were already under the scrutiny of Wall Street and it wouldn’t be so different anyway. Leib and Chris grew closer as they pushed for the IPO. To add to the financial rationale, Leib argued that Andrei had an obligation to go public, that this incredible thing that he had built had become established so deeply within the infrastructure of people’s lives that they had a right to own a part of it, just like they had a right to own their own house.
Andrei looked at Leib sceptically when he heard that one. It was the first time he had seen this apparently sentimental, philosophical side to the venture capitalist, and reminded himself, as he found himself increasingly having to do, that LRB and its partners had a 6 per cent stake in Fishbowl and stood to make a return of 1,000 per cent from a successful float, not an insignificant portion of which would accrue to Robert Leib personally. Leib’s wealth hadn’t been accumulated through sentimentality. Besides, when the feeding frenzy of the float was over, the vast bulk of the stock, as Robert Leib knew better than anyone, would be in the hands of investment funds, institutions and wealthy individuals like Leib himself. At best, only a tiny portion of Fishbowl’s users would own stock, and Andrei didn’t think that would make any kind of a difference at all.
Perhaps Leib sensed Andrei’s scepticism. ‘Look,’ he said the next time they spoke, ‘there’s also the question of what this means for you personally, Andrei. Being CEO of a publicly quoted corporation is not the same as being CEO of a private concern – especially if you’re the CEO of one of the most valuable corporations in the world. There’s a certain prestige that goes with that. A certain status. You’re putting yourself forward for public scrutiny, that’s true, but in return, that buys you a platform – the right to be listened to in a way that you’ll never be listened to now. Andrei, you have a vision for the world. You should have that platform. Your vision deserves it.’
Sandy, now an anthropology fellow at Stanford, thought he should get on with it. At some point, she said, there was going to be an IPO. Everyone said the timing was good. May as well bite the bullet. She grew increasingly impatient as the issue dragged on and they had a number of terse conversations. In part, these were an outlet for other frustrations that she hadn’t voiced.
Sandy had been with Andrei for eight years, since before he had founded Fishbowl. She had been living with him in the condo for almost half that time. There had been moments when she had been on the verge of walking out, and she didn’t think that Andrei was even aware of it. Friends were asking why she put up with him – those who didn’t ask assumed it was for his money. Sometimes, Sandy didn’t know herself. Andrei had always kept her away from any limelight that Fishbowl might have thrown, which was OK with her, but she felt that she had put so much into supporting him as he built Fishbowl from the very beginning, and she didn’t know if he recognized that. He took no real interest in what she was doing. He asked her about it, but a month later he’d ask her the same thing and she could see he had forgotten. Yet she knew that she would never meet anyone like Andrei again, and she understood why sometimes he was so preoccupied that he barely knew she was there. Perversely, that was part of his attraction. She thought that she did love him, but had begun to wonder if that love was actually a manifestation of some kind of Florence Nightingale complex that she had developed towards him. If they did stay together, she knew, she would always be the one putting in more. Sometimes she doubted he could survive without her. That probably wasn’t a healthy thing in a relationship.
Yet she hadn’t walked away. And it was eight years now. Eight years and not once had they talked about marriage.
In the meantime, since the markets were expecting the announcement of an IPO, the analysts beadily watching Fishbowl interpreted whatever they saw as preparation for it. Fishbowl had a war chest heaving with cash. Andrei acquired a crowdfunding site called Playstarter for half a billion dollars in cash and stock. Robert Leib regarded it as an overpayment, and even Chris was doubtful. Playstarter had never made a dime and it was unclear that it ever would. Andrei argued that crowdfunding – the practice of raising funds for new ventures by pre-selling product to willing purchasers – was a form of Deep Connectedness, and that FishFarm could radically improve the efficiency of the operation by bringing awareness of the offerings to millions more people than Playstarter had ever been able to.
He also went after a small competitor site called Finder, which had developed an interesting model of connectedness based on an innovative compatibility algorithm. Fishbowl tried to replicate the service and put Finder out of business, but the other site had developed a growing following that wouldn’t budge. It was easier to buy them out. The founders were a pair of MIT students a couple of years younger than Andrei. Remembering his response to the $100 million offer Mike Sweetman had made him – not small enough to persuade him that Fishbowl had no future but not big enough to seduce him to sell – Andrei got on the phone and offered a billion dollars for their creation, arguing that they would never have the scale to be anything other than niche. They took the cash and the Finder network was merged into Fishbowl.
The market viewed both of these acquisitions as overpriced, but with everything being assessed through the prism of an upcoming IPO, they were generally viewed as housekeeping operations designed to strengthen Fishbowl’s competitive position. It would have taken more than a couple of questionable acquisition prices to put a dampener on the Fishbowl story.
Yet Andrei still hadn’t decided on the IPO, and the discussions within Fishbowl went on. He could have put an end to them if he had adamantly refused to consider the matter further, but Leib’s argument about the platform for his vision that an IPO would give him was one that had st
uck, and if he wanted that platform, he couldn’t help wondering if Leib was right in saying that now was a moment in the market that might not return for another five years.
Chris was talking to investment banks. Andrei was aware of it but didn’t know what Chris was saying to them. He only knew that he was constantly being asked to join meetings that Chris had set up with Goldman Sachs, J.P. Morgan, Morgan Stanley, Mann Lever, Merrill Lynch, Deutsche Bank … The routine three guys in suits would turn up with bound copies of their pitch book outlining why they would do a better job of taking Fishbowl to the market than any of their competitors – who had already turned up, or were soon to turn up, with near identical pitch books in their hands. Chris started talking about J.P. Morgan as being the natural choice and Andrei got the feeling that he was continuing to meet with them and was becoming friendly with one of their executive directors, William Larkin, whom he referred to as Billy. He was always quoting Billy’s views about the state of the market.
In the financial press, speculation over a Fishbowl IPO was constant. It had moved from speculation about whether the IPO would happen to talk about the likely level of the share price. The IPO was the only thing Andrei got asked about. He never gave a lot of interviews but now he stopped altogether.
Eventually, at a meeting of the board – which consisted only of Andrei, Chris and Bob – Leib told him that he had to decide. The speculation was starting to damage the company.
‘How can it damage us?’ replied Andrei irritably. ‘It’s got nothing to do with what we actually do.’
‘If you let it go much longer,’ said Leib, ‘if and when you do decide to go to IPO, people will wonder whether there was a problem that made you uncertain. They’ll wonder what’s happened to that problem now. They’ll think you’re trying to do the IPO before everyone can see it.’
‘I’ve already said a couple of times publicly that my only concern over an IPO is whether it will be good for the business and our users.’
Fishbowl Page 36
