Bruce's swing sent the white golf ball arcing cleanly into the distance.
Michael Moritz watched it fly and smiled. "Nice shot. A few months away from the course and somehow you've gotten better."
Bruce gave him a sideways look. "Michael, are you complimenting me, or showing off? You just sank an eagle."
Michael laughed. "That was a sincere compliment. I'm not reckless enough to irritate the man who signs my checks."
Bruce snorted.
"I don't believe for a second that you dragged me out here on a weekend because you're afraid of getting fired. So say it. What's important enough that you couldn't wait until Monday?"
Michael adjusted his glove and smiled.
"Well, since it is the weekend, I figured I'd let the boss relax a little first. Then, while we happened to be relaxing, I could bring up a few work-related matters."
Bruce laughed. "There's an old Chinese saying for that. The fox finally showed its tail."
Michael blinked. "What does a fox have to do with anything?"
Then he gave up on it with a shrug.
"Never mind. Chinese sayings are always more complicated than they need to be." He looked at Bruce and got to the point. "Fine. I'm here to ask for more money."
Bruce stopped walking and looked at him.
"More money? The last time we spoke, you told me you'd already raised close to twenty million. Add my thirty million, and Phoenix Capital has fifty million to work with. That's not enough for you?"
Michael shook his head. "It isn't."
Bruce studied him for a moment.
"What are you trying to buy?"
"Netflix. Founded in 1997, based in Los Gatos. They're an online video rental company."
As he spoke, Michael motioned to his assistant, who stepped forward and handed over a prepared file from her briefcase. Michael passed it to Bruce.
Bruce opened it and read.
By the time he finished, he understood exactly what he was looking at.
Netflix.
A future giant.
Among ordinary people back in China, it would never be as widely recognized as Google, Amazon, Microsoft, Apple, or Facebook. But in the American internet sector, it would become one of the real heavyweights.
Bruce was not especially interested in bringing Netflix fully under his control. But as an investment, it was clearly attractive.
He closed the file and looked up.
"How much are you planning to put in?"
"Fifty million."
Bruce raised an eyebrow.
"That much?"
Michael nodded.
"The U.S. home video rental market is worth around twenty-three billion dollars. And Netflix is one of the most promising online players in the space."
Bruce cut in.
"You don't need to sell me on the company. I trust your instincts. What I care about is this: if we put in fifty million, how much do we get?"
"Twenty percent," Michael said. "They want to raise fifty million to buy Blockbuster and complete the online-offline distribution network. This is the only window we'll get to take a meaningful position."
Bruce nodded slowly.
"How short are you?"
"Fifty million."
That earned him a look.
Bruce stared at him. "You burned through everything in a few months?"
Michael looked mildly embarrassed.
"Yes. But the money wasn't wasted. These were structured investments. Most of them were already on the roadmap back when I was still at Sequoia."
Bruce's interest sharpened.
"All right. Walk me through it. What have you been buying?"
Michael answered without hesitation.
"Rotten Tomatoes, two hundred thousand, for forty percent."
"TripAdvisor, one hundred fifty thousand, for thirty-eight percent."
"Craigslist, six hundred thousand, for twenty-three percent."
"Salesforce, four hundred fifty thousand, for thirty-three percent."
"Overstock.com, three hundred twenty thousand, for twenty-five percent."
"PayPal, two hundred twenty thousand, for fifteen percent."
Bruce stopped again.
"PayPal?"
Michael looked at him, caught the change in his expression, and smiled.
"Don't tell me you were planning to go after that one too."
Bruce laughed.
"I've had Wendy keeping an eye on it. I just hadn't moved yet. You beat me to it." He looked at Michael with real approval. "Which tells me I was right to put Phoenix Capital in your hands."
Of the companies Michael had just listed, Bruce only recognized a few immediately, Rotten Tomatoes, TripAdvisor, and PayPal. The others mattered less. Those three alone made the strategy a winner. And among them, PayPal mattered the most.
Bruce had lived long enough to see what Alipay and WeChat Pay became. Because of that, his interest in PayPal actually ran deeper than his interest in Netflix or even eBay. Like Google, it belonged in the category of companies he wanted in his orbit no matter what.
Michael smiled. "So I ruined one of your plans?"
Bruce waved it off.
"Nothing that dramatic. It just means I'll have to pay more later."
Then he tapped the Netflix file again.
"Back to Netflix. If we increase the size, can we push for more equity?"
Michael narrowed his eyes. "So you do like the company."
Bruce smiled. "No. I like your judgment."
For a future winner, Bruce did not need control to be interested. At the current price, more exposure was enough.
Michael held his gaze for a second, then nodded.
"I can try. No guarantee."
"That's fine. If it works, great. If not, twenty percent is still a serious position."
Michael nodded, then smiled again.
"Looks like the publishing business really is printing cash for you."
Bruce glanced at him. "You've been reading the numbers?"
"Of course. You're my boss." Michael chuckled. "And I'll say this: your talent as a writer is at least as impressive as your business instincts. National Treasure especially. The way you structure the plot is excellent."
Bruce laughed. "So now I've picked up another fan."
They both smiled.
Then Michael said, "If you've got excess capital on the side, I can recommend three more targets."
Bruce glanced at him.
"Private equity targets?"
Michael nodded.
"Yes. All three are larger businesses. Phoenix Capital can't swallow them, and the return multiple wouldn't be as explosive as some of the internet deals. But they're excellent companies."
Michael Moritz's eye for investments had already been proven by history. Bruce trusted that.
"Go ahead."
Michael started listing them.
"First, Biogen Idec. A biotech company focused on therapies for neurological disease."
"Second, Celgene. They're working on oral and small-molecule treatments for cancer and immune disorders."
"Third, MegaChip Electronics, a semiconductor design and manufacturing company."
Bruce glanced at him.
"Two biotech names. Looks like you've gotten interested in the sector."
Michael nodded.
"Ever since you brought it up, I've been watching it closely. You were right. Biotech has the same kind of structural upside the internet does. Maybe not identical, but close. It's also protected by strong technical barriers. Once a company gets a real product through, it can scale fast, the way Gilead and Amgen did.
"Biogen Idec and Celgene both have first-rate research capability. The problem is size. At this point, a full acquisition would cost more than two hundred million dollars. Phoenix Capital can't handle that."
Bruce thought it through, then shook his head slightly.
"Everybody can see a good company once it becomes obvious. Even if we want in, that doesn't mean they'll sell."
Michael shrugged.
"That's what downturns are for. The Nasdaq collapse and the broader U.S. slowdown are the opportunity. It's still worth testing."
Bruce nodded, then shifted focus.
"I'll have someone make contact. But tell me about this MegaChip Electronics. What caught your attention there?"
He was interested in biotech, but capital was finite. With the Enron short already in motion, choices had to be made.
Michael answered carefully.
"I almost missed it at first. I was doing work on Qualcomm when I ran into something strange. MegaChip's CDMA division appears to hold licensing rights to most of Qualcomm's core CDMA patent portfolio."
Bruce stopped dead.
His eyes narrowed sharply.
"You're sure?"
Michael was taken aback by the intensity of the reaction, but nodded.
"I'm sure. Though to be clear, MegaChip isn't Qualcomm. Most of the money from the CDMA standard still flows back to Qualcomm."
Bruce looked at him steadily.
"Then why bring it to me?"
Michael smiled.
"Because scarcity has value. In investing, that matters. CDMA still has room to expand internationally. And Qualcomm's licensing fees are high. Some players may decide MegaChip is the cheaper path."
Bruce nodded slowly.
What Michael still did not fully grasp was just how valuable CDMA really was going to become.
Later, once smartphones took over the world, Qualcomm would use CDMA2000 patent dominance to build an empire around baseband chips and integrated mobile SoCs. The company's strategy of bundling basebands with application processors would help it crush Texas Instruments, dominate the high end of the mobile chip market, and force even Apple to deal with it on Qualcomm's terms.
In the end, Qualcomm's hold over communications standards and baseband chips would earn it a long list of colorful names from the market: patent troll, modem tyrant, industry parasite.
But no matter how much people cursed it, they still paid the Qualcomm tax.
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