Exploiting Hollywood 1980.

Chapter 1591 Netscape Moment
"Why did Netscape's IPO price double to $28?" Doug didn't quite understand and asked his wife what was going on.

"The stock was strongly favored by funds. They decided to double their holdings a few days before the first day of listing." Donna pouted and said to the speakerphone, "Ronnie, what price do you plan to buy at the opening?"

Ronald and his cousin Donna took a day off today through their stockbroker to prepare for Netscape's first day of listing and make some money by trading stocks.

The two were in Los Angeles and New York respectively, and kept in touch by phone. However, before the market opened, Ronald saw the IPO prospectus and realized that Netscape was so popular.

"Shhh, I'm really being looked down upon by Jim Clark of Netscape."

Ronald still remembers that when he wanted to invest in Netscape, Jim Clark told him to just buy some shares during the IPO. He was still holding back because from the plot in his dream, Netscape's stock was worth investing in. If he was not allowed to invest, he could still make a lot of money even if he bought it on the first day of the IPO.

Now the original issue price of US$14 has become US$28. How much room for growth is there?

You know, although Netscape has achieved an annual revenue of 4000 million US dollars, it has not yet achieved profitability due to marketing and R&D. Such a non-profitable company should be worthless according to traditional valuation.

But the new Internet economy seems to be a hot topic that everyone is chasing after. Everyone is extremely optimistic about the future. Even if it is not profitable now, it will definitely be profitable in the future.

You say there is a risk? Come on, Netscape now occupies 70% of the entire browser market, and the market share is still rising. When everyone uses Netscape browser to surf the Internet, wouldn't it be a huge profit if you just charge a little money?
Moreover, the number of people using the Internet is growing at a rate of 120% per year, and is expected to exceed million by the end of this century. Adding the number of other Internet users around the world, this can be a billion-person business.

For a business of this magnitude with billions of users, the price is not important. What is important is to get as many people as possible to use your tool. With a billion users, charging a little money to any one of them is a big business.

Some analysts are still comparing Netscape and Microsoft. Both are infrastructure businesses, but Netscape's user accumulation speed is much faster than Microsoft. Some analysts point out that this is a new business model, and the Internet will forever change the valuation model of listed companies.

In the future, Internet listed companies will no longer look at their revenue and profits, but at their potential for future development.

In short, it’s time to overturn the ancient business model!

"That's logical, right? Anyway, the IPO is really popular. There are so many people who subscribe, and the oversubscription is more than 10 times. It's even more popular than when Ronald's DDH was listed."

Ronald didn't care. As high-net-worth clients of Goldman Sachs, he and Donna both had some opportunities to buy IPO company stocks. However, Netscape was very popular, and Morgan Stanley was their main underwriter. Most of the pre-market quotas were allocated to various mutual funds, pension funds, etc.

As a non-major underwriter, Goldman Sachs was not given much quota. Ronald and Donna prepared $100 million to purchase these stocks at the beginning. However, due to fierce competition, they could only get a few tenths of the quota. After several rounds of competition, the two could only buy less than 200,000 shares of Netscape at the issue price.

So, Donna will ask Ronald to make the final decision on how much to invest when the market opens.

"You decide. I don't understand. Anyway, it's so popular that I think Microsoft's Gates is very nervous. He even returned to Seattle early from Sun Valley. Their competing product, IE, hasn't been released yet."

"Okay, I don't think it can double again. It's unlikely to close above $50 today. We'll buy in batches at 32, 35, and 38..."

As the market opened, everyone sat down and waited for Netscape's stock price to move. Jim Clark kept a low profile, and finally, Marc Andreessen, a 24-year-old programmer, rang the bell on behalf of Netscape at NASDAQ.

Mark Anderson, wearing a green shirt and with a round baby face, just waited for the opening time to come, then pressed the button to start the Nasdaq trading for the day.

Just when everyone was very nervous, Richard walked into Ronald's study with a letter in his hand, looking very urgent.

"Sorry, I have some important matters to take care of here." Ronald said to Donna and her husband on the other end of the phone. He and Richard walked to the other end of the room and started discussing in a low voice.

"Eisner sent a letter to all board members..." What Richard held in his hand was a faxed copy of a letter, which was sent to him privately by Ronald's friend on the board of directors.

It contained some comforting words from Eisner to the directors, telling them that his heart bypass surgery had been a great success and that after a few weeks of rest, he would be able to return to normal work.

However, the most important part of the letter is in the second half of the second page. Eisner said that there are only two people in Hollywood who can replace him in the daily management of Disney, especially after the acquisition of ABC TV.

One is Barry Diller, the former chairman of QVC, but he withdrew from the Hollywood battlefield due to the failure of the acquisition of Paramount. The other is Ovitz, the CEO of CAA. He will try his best to bring Ovitz into Disney as an important management partner.

When explaining why he hired Ovitz from CAA, Eisner said humorously that he hoped to introduce CAA's culture of close team-first shareholders and bring loyalty to Disney, because at Disney, stabbing in the back is as common as eating at home...

This is too exaggerated...

Ronald saw that this was like pointing his finger at some people on the Disney board of directors and scolding them. You Judases, it's time to find a strong manager like Ovitz to deal with you.

It turns out that when Katzenberg was in office, he pampered you and your representatives in the company's senior management too much, allowing you to receive high dividends from Disney and oppose Eisner's rule. Now it's time for Ovitz to teach you how kind I was in the past.

After all, Richard is still relatively young. Under Ovitz's prestige, he is not sure whether Ovitz can become the second-highest president of Disney like Katzenberg. If Ovitz succeeds, the partners represented by Richard will be questioned by CAA...

"Don't worry, Richard. We all know who Eisner is. He was the one who drove away a capable person like Katzenberg, just because Katzenberg might be a potential competitor for his current position, regardless of whether Katzenberg actually took any substantial action to seek his position..."

Ronald knew very well that most of the top executives in Hollywood studios were people who were more adept at political maneuvers. People with outstanding production abilities, such as Katzenberg, Madavoy of TriStar, and Frank Price of Columbia in the early years, were always defeated by Eisner, Guber, and other people who were only good at appearances.

Ronald has been in Hollywood for so long, and as the chairman of DDH, he has become more and more clear about these political tactics.

Even though Eisner now praises Ovitz as the most powerful producer and manager in Hollywood, when he actually takes office, all those tricks will come out.

"I thought so too..." Richard was still worried. If there were two types of people in the brokerage industry, Richard would be a proficient business person like Katzenberg, who focused on serving clients and considering the long-term interests of the stars.

Such talents can unite everyone well in a platform with stable business and no ambitious people. But under a boss like Ovitz who likes bullying, they will not be promoted well. People like Ovitz always like to play tricks on subordinates who can't beat him.

"Let's wait and see. If you keep in touch with our friends at Disney, I think there will be some dramatic changes soon."

The friends Ronald mentioned were the Bass family, the largest shareholder in Disney. Sid Bass once gave Ronald some shares in Disney, and the two had more contact and appreciated each other.

One of his daughters, Hyatt Bass, had just graduated from Princeton University. Because her family owned Disney, she became deeply interested in Hollywood (who wouldn't be interested in a girl who had just graduated from college?).

Because of Ronald's various directorial works in Hollywood, Hyatt Bass became his fan. Sid Bass doted on his daughter, and since Hyatt wanted to play in Hollywood, he asked Ronald to be her mentor and help take care of his daughter in Hollywood.

Ronald agreed immediately and found a very good mentor for Hyatt, the famous producer and art director Polly Pratt. Pratt started from set design and costume design to art director, screenwriter, producer, and she was the best teacher for Hyatt.

Hyatt also respected the teacher and shared his privileges, such as a full-time driver and chef, with the teacher. The two became close friends regardless of age. In this way, Ronald was well-informed inside Disney.

Now within Disney, Chief Financial Officer Stephen Bollenbach, the company's general counsel Sandy Litvak, and Joe Ross, who is in charge of production operations, are all keeping a close eye on the position of president that Katzenberg did not get after he was fired.

In addition, since Eisner himself also serves as CEO, the position in which Ovitz was assigned in the past can roughly predict how long Ovitz can stay at Disney.

"Ah..."

While talking to Richard, another loud shout was heard over there. Ronald thought something had happened and ran over to take a look.

It turned out to be Donna's voice on the phone. Nasdaq had just started trading, and Netscape's stock price suddenly rose after the opening, with almost no trading volume.

"What's wrong? Is there something going on with Donna?" Diane heard the voice, opened the door and asked Ronald.

"Donna's forecast was a little off, and our business plan may not be very successful."

Ronald chuckled and insulted his cousin. The several support prices set by Donna were exceeded by Netscape's stock quotes within a few minutes.

Moreover, there was no transaction price all the way up, but the buying volume kept rising. It seems that not only the big funds and high-net-worth clients who pre-ordered before the market opened, but also the ordinary secondary market were enthusiastically pursuing the stock of this unprofitable company.

"Ronnie, you're still laughing? Diane, is that you? Your husband lost his chance to make quick money and you're still laughing at me..." Donna immediately complained to her bestie...

"Donna, I can't help you. I usually don't care about these things. Ronnie, Donna is also doing this for you..."

Ronald had no choice but to surrender. "Let's see. It's impossible for the price to keep rising on the first day of trading. I estimate that it will rise to over 50 at most. We still have a chance to buy..."

Who knew that Ronald's words of comfort would also fall through. Netscape's stock continued to rise, breaking through 50 and 60 in succession, more than doubling the opening price of 28, and finally quickly exceeded 71 US dollars, only then did normal transactions appear.

"Come on, no one can buy it today."

This situation was beyond Ronald and Donna's expectations. Netscape's stock price had doubled again after doubling its issue price at such a fast speed. Those who were still willing to buy at this time had to be religiously devoted to Netscape's prospects.

Neither Donna nor Ronald had such faith in the Internet economy. In addition, when Warren Buffett answered questions about Netscape, he simply said that he didn't understand it, so he wouldn't buy it.

Ronald always felt that this new theory of operating at a loss and achieving high valuations based solely on imagination of the future was not very solid, so everyone temporarily canceled the plan to buy stocks on the open market.

Fortunately, I have already bought more than 28 shares at the price of $, which is a small success. At least, I can brag about it among my friends.

……

"Did you buy Netscape stock?"

"No, I saw the closing price was still 58 dollars, I didn't dare..."

The next day, when Ronald went to work at Daydream, he found that the staff were also talking about Netscape's stock.

Daydreaming Many young people are familiar with Internet browsers. Yesterday, the 24-year-old founder, Mark Anderson, stole the spotlight in all major media. Everyone was talking about whether the company had a great stock god who bought this god stock.

When I arrived at the office, I saw that the Wall Street Journal had given Netscape a front-page report.

“Netscape Moment—it took GE 43 years to become a $27 billion company, and Netscape got close to that size in just one day!”

The New York Times also reported on Netscape's IPO, "The best opening day in Wall Street history for a stock of its size."

The most exaggerated one was the Los Angeles Times, "California's second gold rush in 150 years!"

Ronald smiled at first, because he had bought Netscape shares, and he was the first to discover gold. But then he smiled bitterly, because he still bought too little.

A few days later, Richard came again with the following message:

"Ovitz has already agreed to let Eisner join Disney..."

"Oh, what position?" Ronald became interested. Now that Ovitz was officially gone, Richard and his team could take over CAA.

"I don't know. He didn't announce it. He just said he would work with Eisner to fill some gaps for Disney."

"Hey..." Ronald understood that Ovitz would still use his best strategy of working first and discussing compensation later. He would first agree to Eisner's help at Disney, and then, after he really got into Disney, he would use the inside information he got to make a big offer.