“So, anyway, IBM screwed up. They thought like you guys do, that the money is in the box. That box will be a commodity in a few years, and IBM will lose its shirt. They make money selling programming and services, not commodity black boxes. Instead, they let Microsoft keep all the sales rights to DOS, the operating system. Microsoft can sell it to anybody who makes a computer. It’s like cars. IBM makes cars, but Microsoft makes the gas. Anybody can build a car, but wouldn’t you rather be in the gas business?”
John caught on first. “Which would you rather do? Sell razors or sell razor blades?!”
“You got it!” I said.
Around me, the others were staring at me and each other, like I had just explained quantum mechanics to them. “Ten years from now, history will look at this decision by IBM as one of the classic screwups in business history. What I want to do is invest with the guy who runs Microsoft.”
“Who’s that?” asked Missy.
“I looked him up. He’s a fellow in Redmond, Washington, named Bill Gates. Microsoft isn’t on the market yet, but when he does an IPO, I want to grab a chunk. If you can look into it, see if he wants to do a private placement now. I would definitely cough up a million or two now.”
“What else comes to mind?”
I shrugged. “It’s almost endless. Sometimes I see a name in the Journal or the news about a company and it makes sense. Sometimes I see one that sounds great and it makes no sense. It’s as important to know who to avoid as it is to know who to buy. Here’s a name for you, Autodesk. You all know I’m building a house. It is going to take an engineer or architect at least two weeks to draw my blueprints by hand. Suppose you can get a computer to do it and then print it out. How long would that take you? How much does it cost to pay for an architect for two weeks? I know the company is working on a new product for this.”
“And this has an effect on the country? The economy?” asked Jake Senior.
I nodded. “Imagine it’s a hundred years ago, and this fellow named Edison has just come up with this product called electricity. How many fortunes were made from that? What happened to the American economy? What if you could invest with Bell and his telephones, or Morse and the telegraph? That’s where we are today. Right now I’ve got a chip in my calculator. Look at cell phones, what will happen to them.”
“You mean those gigantic bricks? Nobody will want one of them,” protested John.
I nodded. At least he knew about them. “It’s a brick now, but apply Moore’s Law. In two years time it will be half the size, two years later, half again. In ten years, it will be the size of my calculator and fit in my pocket.” John’s mouth snapped shut as he started to think about things.
Jake Junior looked thoughtful. Then he asked, “How do I get in on this? Not just me, but the rest of us? Say you’re right. What about us? Can we invest, too?”
I shrugged. “Fine by me. I have no personal problem with you investing along with me. Just remember, timing is everything, and if I get out of something, it means something. Remember, never to gamble more than you can lose.”
“Okay, but it’s not like a few years ago, when you bet everything on oil or silver. You’re a lot more diversified now,” he pressed. I just nodded and Jake continued. “What about the Buckman Group? Can I — we — buy into that?!”
Well, that took me by surprise. I sat there and looked at him, and then looked at the others as well. They seemed surprised, but weren’t protesting. “You’re serious? You want a piece of the action, too? I’ve had my own money at risk here. There won’t be a free ride.”
He waved that off. “No, no, nothing like that. Maybe we could buy shares or something?”
I stared at him. I thought about my answer carefully. “Jake, I don’t want to rain on your parade, but I’m worth almost fifty mill right now. There is no way you can come up with a twenty percent share of that.”
“No, but you’re not against the idea, are you?”
“No, not really, but it won’t be free, either.”
“Can you give me a week or two to think something up? All of us? I haven’t asked the others yet, but now I want to!”
I cocked my head and smiled. “I sure wasn’t expecting this. What about you guys? Do you want in, too?”
John answered first. “Depending on price and terms, yes, I could see doing it.”
“I’ve been watching you since you were a kid. I’m in,” said Missy.
“I’m like John,” said Jake Senior. “It would depend on price and conditions, but yes, I’d at least want to know more.”
I just nodded for a moment, as my mind went at light speed. I had never considered this before. “Okay, a few ground rules. You guys hear them out and then get together and figure this out.” Everybody nodded and I continued, “Rule One — I’m the boss. I’ll have the majority of the funds and I will run things. Rule Two — everybody is going to have to cough up some cash, and it won’t be a trivial amount. Rule Three — if you work for the Buckman Group, you work for me, not anybody else. Think that one through.”
Jake thought it over. “Give us a few weeks to sort it out. Can we do that?”
“Fair enough. Until then, we leave things as they stand. Missy, you look into that Microsoft thing. We’ll meet again next week, and go over the local business items then.” I was intellectually beat, and wanted to go home and think about things. We ended the meeting and I left.
Chapter 71: The Buckman Group
Was this something I even wanted to do? Right now I was worth just shy of $50 million. By 1982 standards that qualified as ‘Fuck You!’ money. If I worked at it, I could see myself at $500 million, which was ‘Fuck the World!’ money. With a team behind me, we could add another 0 to the number. When you get to $5 billion, it’s ‘Fuck the Universe!’ money! Yet to get that kind of money, and not spend my every waking hour thinking about it, I needed a team. No man, not even one with knowledge of the future, can do it by himself.
I didn’t tell Marilyn what the meeting was about, preferring to keep my counsel on it. Besides, she had very little interest in investing or Wall Street. She was much more of a hands-on practical minded person, and not one for high finance. As long as the bills were paid, and I was around to nag, she was happy as a clam.
Instead, I called John the next day, and made arrangements to see him for lunch the following day. We met at a steakhouse in Timonium.
“I was wondering if you were going to give me a call,” he said.
“Were you aware of what Jake Junior had in mind?”
“No. I’m not surprised, but he didn’t ask us ahead of time, or swear us all to secrecy or anything like that,” replied my friend. “What did you think about his idea?”
“I was going to ask you the same question,” I answered.
John smiled. “It’s your business, not ours. It’s your opinion that’s important. Do you have a problem with it?”
I shrugged. “Not in any moral sense. I mean, it’s not like I would have had a problem if any of you had hung on my coat tails on these trades.”
“I think that’s a violation of SEC regs, for Melissa, at least,” commented John.
“Huh. Really? I guess that makes sense.” I thought about that for a second, then asked, “So, what did you think about the idea?”
“It depends. I’d be in favor of the idea, but I need to know the cost and how it would be structured.” I nodded; it was a nice and safe lawyer-like answer, but it made sense. John continued, “The question is how we eventually get the money out? How do we earn any income without selling shares or stocks? As it stands, the vast majority of your money is tied up in equities. Your personal expenditures are relatively low compared to the amount you have invested. You have to juggle your portfolio to buy different stocks, but it’s relatively low key. You don’t actively trade, day in, day out.”