On the way as dad drove the rental car from Stanford University, crossing the San Mateo Bridge over the San Francisco Bay toward Oakland, he asked what kind of potential Yahoo had.
From dad’s perspective, he couldn’t understand investing as much as 500,000 dollars in a shabby site that just collected homepage addresses by category.
He had allowed the investment in Amazon.com because he understood the commercial purpose of selling books online through frequent conversations with Jefferson Bezos, but Yahoo seemed to have no revenue model at all.
“The internet is something everyone in the world can access. But without any guidance, people wouldn’t be able to utilize it properly. Yahoo acts like a guide who answers directions.”
“I understand that it’s essential for people using the internet, but I’m not sure if you can make money just by giving directions.”
“Ultimately, in internet business, think of it as how many people visit that equals money. There’s a technical term called traffic, and soon, you’ll be able to charge money like radio or television ads. Also, you could get paid in exchange for showing certain homepages at the very top.”
Dad seemed to half-understand, but since it was money his son had earned directly in America, he decided not to interfere no matter how it was spent.
Even if the investment money was lost, he thought it would be a great experience since he was still young.
Yahoo officially establishes the company in 1995 and goes public on NASDAQ in 1996, right?
Yahoo rides the dot-com bubble properly with the title of the number one portal site in usage. Yahoo, receiving attention from Wall Street, starts IPO at $13 per share, showing a 154% rise to $24.50 on the first day.
Later, it peaks at $118.75 at the end of 1999, then crashes below $10 with the collapse of the dot-com bubble.
It survives the bubble’s aftermath, but cannot withstand the pursuit of the latecomer Google and eventually yields the top position.
While Google concentrates investment in search engine development, Yahoo sticks to the outdated method of manually classifying and entering categories of each site using manpower.
Though it develops its own search engine later, it cannot catch up to the already widened gap with Google.
From mid-1999, I can gradually sell off stocks little by little to avoid shocking the market.
It still requires waiting five years, but in five years, Jaesung would still be at an age attending high school. And although Yahoo becomes a textbook example in MBA courses for a company that declines by focusing on business expansion and diversification rather than technology development, there was reason to maintain friendships with the founders who earn big money.
Since Jeremy Yang is of Chinese descent, he has considerable connections in China.
Yahoo fails in most investments and mergers, losing investment money, but hits the jackpot in China. Thanks to Jeremy’s decision, after 2005, it invests in the Alibaba Group, receiving 30% shares for 1 billion dollars.
As Alibaba successfully goes public on the New York Stock Exchange, the 1 billion dollars grows to 60 billion dollars.
Though it sells 15% shares mid-way for 6 billion dollars when funds are needed, the remaining 15% alone provides funds reaching 30 billion dollars, becoming a great help to the declining Yahoo.
The problem is that capital gains tax is so huge that it exceeds Yahoo’s weight class, leading to selling stocks, reorganizing the company, and formally ending the business.
With taxes on realized gains alone exceeding 10 billion dollars, management and shareholders ponder tax-saving measures, eventually selling everything including the brand name to Verizon in 2017 for 4.48 billion dollars, changing the company name, and transforming into an investment firm.
Afterward, it conducts large-scale shareholder dividends, burns most assets, applies for corporate dissolution, and disappears into history.
The Yahoo brand name remains after being sold here and there, but its past glory fades, continuing merely as an ordinary portal site.
Jeremy quietly secures a few solid investments. I should get help when investing in China too.
Jaesung, planning to build assets with the dot-com bubble, intended to invest in China, which starts seriously growing in the early 2000s.
While reviewing the plan starting with Yahoo and expanding to China, they arrived at a computer company located between Oakland and Berkeley.
“For a computer company, the building looks pretty.”
“This place mainly makes graphic-specialized computers, so it has strong artistic colors.”
“So, this time, you want to invest in a computer company? It’s a name I’ve never heard before.”
“Actually, the computers made here are expensive ones used by industry professionals, so they don’t have much value. Rather, the 3D animation made for promotional purposes has much more potential.”
Since he usually couldn’t spend much time with his son who followed him to America due to a busy schedule, while in San Francisco, he went together to a computer company Jaesung wanted to see.
“How may I help you?”
“I have an appointment for an investor meeting. I’m James Yoo.”
The lobby staff confirmed the name and guided them to the executive office, and Jaesung’s eyes sparkled looking at the devices and cartoon prints displayed around the company.
As Jaesung entered the executive office full of anticipation, the expected person welcomed dad with a wide smile on his ill-mannered face.
“Welcome. Welcome to Pixar, where we create dreams and hope.”
“I’m Yoo Seokhoon. This is my son James, who is very interested in your company.”
The company CEO frowned upon hearing that an Asian middle schooler, not the intellectual-looking rich dad, was interested in his company.
“Kid, do you even know what kind of computers we make here?”
“You make hardware for graphic image work and 3D rendering software, right? One unit costs 125,000 dollars, so ordinary people can’t use it, but I know it’s used here and at Disney Animation Studios. I have one NeXT workstation made by your other company. It became the last model since production stopped last year.”
“Hmm. Not an ordinary kid. At least you did your homework before coming to meet me.”
Seeming pleased with Jaesung’s answer, he relaxed his frowned face, extended his hand to Seokhoon, and introduced himself.
“I’m Steven Jobs, CEO of Pixar. So, how much investment are you considering?”
“The investment will be decided by my son after touring your company. He recently sold a license to Microsoft and has some assets, so it won’t be a small amount.”
Surprised a bit upon hearing Jaesung sold a license to Microsoft, Steven replied.
“Even if you sold a license to a company that used to subcontract under me, it doesn’t change much.”
Though he answered annoyingly due to his personality, Steven Jobs personally guided Jaesung and Seokhoon, explaining ongoing projects.
With sky-high self-esteem and an eccentric personality, Steven Jobs would normally ignore an Asian middle school investor, but he had no choice since he desperately needed even a penny right now.
After being chased out of the Apple he created in 1985 for villainous acts, Jobs took the high-performance workstation division NeXT with him.
The year after leaving Apple, in 1986, George Lucas, suddenly caught in a divorce lawsuit and needing quick cash, sold the computer division, which Jobs bought for 10 million dollars.
Originally asking for a much higher price, but knowing the need for quick cash, Jobs bargained down the price.
Jobs, highly valuing Pixar’s 3D capabilities, planned to generate revenue by selling high-performance hardware, but the public couldn’t accept the 125,000-dollar price.
They developed sophisticated 3D and image rendering programs for general consumers, but the public mainly used less sophisticated but easier-to-use and cheaper Adobe products.
Not giving up on the money-eating hippo Pixar is what changes Jobs’ future.
Sales were much lower than expected, leading to continued deficits, but the promotional 3D animation “Luxo Jr.” presented at a computer graphics conference won the top prize and was even nominated for an Academy Award.
Fascinated by the animation combining technology and art, Jobs supported making one animation per year regardless of profit, but Pixar’s finances showed no signs of improvement.
After acquiring Pixar, he personally invested over 50 million dollars—more than half the cash received from leaving Apple—but neither hardware nor animation generated significant revenue.
Eventually, in 1991, Pixar proposed co-producing animations with Walt Disney Studios, and in an advantageous position, Disney owned the IP, paying only 12.5% of profits while retaining production rights.
Thus, a big project began, but finances worsened instead, and Jobs was at a timing considering selling the company to a close business acquaintance.
In such a urgent situation, Jobs personally guided the first-time investors and showed the site where Toy Story was being produced.
“Making 3D images with computers without drawing by hand is truly amazing.”
“It’s still at the level of first commercial production, so it’s awkward, but the technology will advance quickly. Computer graphics will become the mainstream soon.”
“A kid with good eyes. That’s why you came running to invest after recognizing my company.”
Though Jobs’ nonsense slipped in occasionally, to Seokhoon who didn’t know the future, Pixar’s work site was a new experience.
“This technology could be applied to medicine too. Right now, students study looking at human anatomy diagrams drawn on paper, but creating three-dimensional images, it would be a great help.”
“You must be a doctor.”
“I’m a professor at the University of Washington School of Medicine.”
The University of Washington’s medical school is known as prestigious even in America, so Jobs looked at Seokhoon differently.
“Come to think of it, your skin is rough and your complexion is bad, it seems you have health issues, so I recommend getting a checkup.”
“I know my body well, so don’t worry about it.”
“Dad. This gentleman is a famous vegetarian even in America.”
Jaesung naturally knew Jobs well, but dad didn’t know him at all since he hadn’t returned to Apple yet.
Steven Jobs, who co-founded Apple in the past, was chased out of the company he created due to his eccentric personality that no one understood, but now, after working with Pixar’s technicians and artists for 10 years, his personality had softened a lot.
Moreover, since Pixar’s funds had long hit rock bottom, he was welcoming Jaesung and Seokhoon as kindly as possible.
Unaware of this, Seokhoon thought Jobs was a strange person, but Jaesung knew it would be hard to approach Jobs if not now, so he had pushed to come.
“So, how much do you want to invest? You know at least that my company has a contract with Walt Disney Studios to prepare works, right?”
“I know that Disney handles distribution and takes most of the copyright and profits.”
“Arrogant kid. I didn’t like you from the start.”
Knowing Jobs passively dislikes people, middle schooler Jaesung wasn’t hurt at all and said what he wanted.
“I want to make a direct investment in Pixar, not the Toy Story currently in production.”