He turned the crank again. The can smelled of solder and it had a pleasant weight in his hand. The mill beside him hummed, and on his screen, the parts he’d CADded up rotated in wireframe. Suzanne was at his side and he’d just built something completely teh awesome. He’d taken his shirt off somewhere along the afternoon’s lazy, warm way and his skin prickled with a breeze.
He turned to take Suzanne in his arms. God he loved her. He’d been in love with her for years now and she was his.
“Look at how cool this thing is, just look.” He used a tweezer to change the registers again and gave it a little crank. “I got the idea from the old Princeton Institute Electronic Computer Project. All these comp sci geniuses, von Neumann and Dyson and Godel, they brought in their kids for the summer to wind all the cores they’d need for their RAM. Millions of these things, wound by the kids of the smartest people in the universe. What a cool way to spend your summer.
“So I thought I’d prototype the next generation of these, a 64-bit version that you could build out of garbage. Get a couple hundred of the local kids in for the summer and get them working. Get them to understand just how these things work—that’s the problem with integrated circuits, you can’t take them apart and see how they work. How are we going to get another generation of tinkerers unless we get kids interested in how stuff works?”
“Who’s the kid taking ticket money?”
“He’s a fan, that kid that Perry met in jail. Death Waits. The one who brought in the Disney stuff.”
He gradually became aware that Suzanne was rigid and shaking in his arms.
“What’s wrong?”
Her face was purple now, her hands clenched into fists. “What’s wrong? Lester, what’s wrong? You’ve left a total stranger, who, by his own admission, is a recently terminated employee of a company that is trying to bankrupt you and put you in jail. You’ve left him in charge of an expensive, important capital investment, and given him the authority to collect money on your behalf. Do you really need to ask me what’s wrong?”
He tried to smile. “It’s OK, it’s OK, he’s only—”
“Only what? Only your possible doom? Christ, Perry, you don’t even have fucking insurance on that business.”
Did she just call him Perry? He carefully set down the Coke can and looked at her.
“I’m down here busting my ass for you two, fighting cops, letting that shit Freddy smear my name all over the net, and what the hell are you doing to save yourself? You’re in here playing with Coke cans!” She picked it up and shook it. He heard the works inside rattling and flinched towards it. She jerked it out of his reach and threw it, threw it hard at the wall. Hundreds of little gears and ratchets and rods spilled out of it.
“Fine, Lester, fine. You go on being an emotional ten-year-old. But stop roping other people into this. You’ve got people all over the country depending on you and you are just abdicating your responsibility to them. I won’t be a part of it.” She was crying now. Lester had no idea what to say now.
“It’s not enough that Perry’s off chasing pussy, you’ve got to pick this moment to take French leave to play with your toys. Christ, the whole bunch of you deserve each other.”
Lester knew that he was on the verge of shouting at her, really tearing into her, saying unforgivable things. He’d been there before with other friends, and no good ever came of it. He wanted to tell her that he’d never asked for the responsibility, that he’d lived up to it anyway, that no one had asked her to put her neck on the line and it wasn’t fair to blame him for the shit that Freddy was putting her through. He wanted to tell her that if she was in love with Perry, she should be sleeping with Perry, and not him. He wanted to tell her that she had no business reaming him out for doing what he’d always done: sit in his workshop.
He wanted to tell her that she had never once seen him as a sexual being when he was big and fat, but that he had no trouble seeing her as one now that she was getting old and a little saggy, and so where did she get off criticizing his emotional maturity?
He wanted to say all of this, and he wanted to take back his 64-bit register and nurse it back to health. He’d been in a luminous creative fog when he’d built that can, and who knew if he’d be able to reconstruct it?
He wanted to cry, to blubber at her for the monumental unfairness of it all. He stood stiffly up from his workbench and turned on his heel and walked out. He expected Suzanne to call out to him, but she didn’t. He didn’t care, or at least he didn’t want to.
Sammy skipped three consecutive Theme-Leaders’ meetings, despite increasingly desperate requests for his presence. The legal team was eating every spare moment he had, and he hadn’t been able to get audience research to get busy on his fatkins project. Now he was behind schedule—not surprising, given that he’d pulled his schedule out of his ass to shut up Wiener and co—and dealing with lawyers was making him crazy.
And to top it all off, the goddamned rides were back up and running.
So the last thing he wanted was a visit from Wiener.
“They’re suing us, you know. They raised venture capital to sue us, because we have such deep pockets. You know that, Sammy?”
“I know it, Wiener. People sue us all the time. Venture capitalists have deep pockets, too, you know—when we win, we’ll take them to the cleaners. Christ, why am I having this conversation with you? Don’t you have something productive to do? Is Tomorrowland so fucking perfect that you’ve come around to help me with my little projects?”
“Someone’s a little touchy today,” Wiener said, wagging a finger. “I just wanted to see if you wanted some help coming up with a strategy for getting out of this catastrophe, but since you mention it, I do have work I could be doing. I’ll see you at the next Theme-Leaders’ meeting, Sam. Missing three is grounds for disciplinary action, you know.”
Sammy sat back in his chair and looked coolly at Wiener. Threats now. Disciplinary action. He kept on his best poker face, looking past Wiener’s shoulder (a favorite trick for staring down adversaries—just don’t meet their eyes). In his peripheral vision, he saw Wiener wilt, look away and then turn and leave the room.
He waited until the door had shut, then slumped in his seat and put his face in his hands. God, and shit, and damn. How did it all go so crapola? How did he end up with a theme-area that was half-shut, record absenteeism, and even a goddamned union organizer just the day before, whom he’d had to have security remove. Florida laws being what they were, it was a rare organizer brave enough to try to come on an employer’s actual premises to do his dirty work, no one wanted a two-year rap without parole for criminal trespass and interference with trade. The kid had been young, about the same age as Death Waits and the castmembers, and had clearly been desperate to collect his bounty from SEIU. He’d gone hard, struggling and kicking, shouting slogans at the wide-eyed castmembers and few guests who watched him go away.
Having him taken away had given Sammy a sick feeling. They hadn’t had one of those vultures on the premises in three years, and never on Sammy’s turf.
What next, what next? How much worse could it get?
“Hi, Sammy.” Hackelberg wasn’t the head of the legal department, but he was as high up in the shadowy organization as Sammy ever hoped to meet. He was old and leathery, the way that natives to the Sunbelt could be. He loved to affect ice-cream suits and had even been known to carry a cane. When he was in casual conversation, he talked “normal”—like a Yankee newscaster. But the more serious he got, the deeper and thicker his drawl got. Sammy never once believed that this was accidental. Hackelberg was as premeditated as they came.
“I was just about to come over and see you,” Sammy lied. Whatever problem had brought Hackelberg down to his office, it would be better to seem as though he was already on top of it.
“I expect you were.” Were came out Wuh—when the drawl got that far into the swamps that quickly, disaster was on the horizon. Hackelberg let the phrase hang there.
Sammy sweated. He was good at this game, but Hackelberg was better. Entertainment lawyers were like fucking vampires, evil embodied. He looked down at his desk.
“Sammy. They’re coming back after us—” They-ah comin’ back aft-ah us. “Those ride people. They did what we thought they’d do, incorporating into a single entity that we can sue once and kill for good, but then they did something else. Do you know what they did, Sammy?”
Sammy nodded. “They’re countersuing. We knew they’d do that, right?”
“We didn’t expect they’d raise a war-chest like the one they’ve pulled together. They have a business-plan built around suing us for the next fifteen years, Sammy. They’re practically ready to float an IPO. Have you seen this?” He handed Sammy a hardcopy of a chic little investment newsletter that was so expensive to subscribe to that he’d suspected until now that it might just be a rumor.
HOW DO YOU GET RID(E) OF A BILLION?
The Kodacell experiment recognized one fundamental truth: it’s easy to turn ten thousand into two hundred thousand, but much harder to turn ten million into two hundred million. Scaling an investment up to gigascale is so hard, it’s nearly impossible.
But a new paradigm in investment that’s unfolding around us that might actually solve the problem: venture-financed litigation. Twenty or thirty million sunk into litigation can bankrupt a twenty billion-dollar firm, transferring to the investors whatever assets remain after legal fees.
It sounds crazy, and only time will tell whether it proves to be sustainable. But the founder of the strategy, Landon Kettlewell, has struck gold for his investors more than once—witness the legendary rise and fall of Kodacell, the entity that emerged from the merger of Kodak and Duracell. Investors in the first two rounds and the IPO on Kodacell brought home 30X returns in three years (of course, investors who stayed in too long came away with nothing).
Meanwhile, Kettlewell’s bid to take down Disney Parks looks good—the legal analysis of the vexatious litigation and unfair competition charges have legal scholars arguing and adding up the zeros. Most damning is the number of former Disney Parks employees (or “castmembers” in the treacly dialect of the Magic Kingdom) who’ve posted information about the company’s long-term plan to sabotage Kettlewell’s clients.
Likewise fascinating is the question of whether the jury will be able to distinguish between Disney Parks, whose corporate citizenship is actually pretty good, from Disney Products, whose record has been tainted by a string of disastrous child-labor, safety, and design flaws (astute readers will be thinking of the “flammable pajamas” flap of last year, and CEO Robert Montague’s memorable words, “Parents who can’t keep their kids away from matches have no business complaining about our irresponsibility”). Punitive jury awards are a wild-card in this kind of litigation, but given the trends in recent years, things look bad for Disney Parks.
Bottom line: should your portfolio include a litigation-investment component? Yes, unequivocally. While risky and slow to mature, litigation-investments promise a staggering return on investment not seen in decades. A million or two carefully placed with the right litigation fund could pay off enough to make it all worthwhile. This is creative destruction at its finest: the old dinosaurs like Disney Parks are like rich seams of locked-away capital begging to be liquidated and put to work at nimbler firms.
How can you tell if you’ve got the right fund? Come back next week, when we’ll have a Q&A with a litigation specialist at Credit Suisse/First Boston.
“There’s litigation specialists at Credit Suisse?”
He was big, Hackelberg, though he often gave the impression of being smaller through his habitual slouch. But when he pulled himself up, it was like a string in the center of the top of his head was holding him erect, like he was hovering off the ground, like he was about to leap across the desk and go for your throat. His lower jaw rocked from side to side.
“They do now, Sammy. Every investment bank has one, including the one that the chairman of our board is a majority shareholder in.”
Sammy swallowed. “But they’ve got just as deep pockets as we do—can’t we just fight these battles out and take the money off of them when we win?”
“If we win.”
Sammy saw his opportunity to shift the blame. “If we’ve been acting on good legal advice, why wouldn’t we win?”
Hackelberg inhaled slowly, his chest filling and filling until his ice-cream suit looked like it might pop. His jaw clicked from side to side. But he didn’t say anything. Sammy tried to meet that cool gaze, but he couldn’t out-stare the man. The silence stretched. Sammy got the message: this was not a problem that originated in the legal department. This was a problem that originated with him.
He looked away. “How do we solve this?”
“We need to raise the cost of litigation, Samuel. The only reason this is viable is that it’s cost-effective to sue us. When we raise the cost of litigation, we reduce its profitability.”
“How do we raise the cost of litigation?”
“You have a fertile imagination, Sammy. I have no doubt that you will be able to conceive of innumerable means of accomplishing this goal.”
“I see.”
“I hope you do. I really hope you do. Because we have an alternative to raising the cost of litigation.”
“Yes?”
“We could sacrifice an employee or two.”
Sammy picked up his water-glass and discovered that it was empty. He turned away from his desk to refill it from his filter and when he turned back, the lawyer had gone. His mouth was dry as cotton and his hands were shaking.
Raise the cost of litigation, huh?
He grabbed his laptop. There were ways to establish anonymous email accounts, but he didn’t know them. Figuring that out would take up the rest of the afternoon, he realized, as he called up a couple of FAQs.
In the course of a career as varied and ambitious as Sammy’s, it was often the case that you ran across an email address for someone you never planned on contacting, but you never knew, and a wise planner makes space for lots of outlier contingencies.