Free Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling, Cal Fussman Page A
Authors: Tom Breitling, Cal Fussman
out of the future. Never mind that the company connected to the idea coming from the genius in a T-shirt might have little chance of success. To many of the bankers on Wall Street, it seemed like more of a risk to be left behind.
A big-time analyst like Oppenheimerâs Henry Blodget would make an outrageous assessment of a youngster like Amazon. com, predicting in December 1998 that its stock would hit $400 a share. A month later, after a feeding frenzy of investment, the stock had soared 128 percent, and it did pass $400! When Amazon grew in leaps and bounds, it spread hope that every company would do the same. It was crazy. Without showing a hint of ever having been profitable, an online procurement company called PurchasePro that was started by a guy who showed Steve Wynn workout techniques actually surpassed the value of Wynnâs Mirage!
I guess you could compare it to an untested athlete out of high school getting drafted and signed for way more money than a professional whoâd proven himself as an all-star for a decade.The kid out of high school had the power to shape the future. The kid wearing a T-shirt in a garage suddenly had enough money to buy a mansion in Silicon Valley and an original copy of the Declaration of Independence.
Only time can provide true perspective of what we were living through. Hundeds of books have been written about the Internet Bubble, but as I look back now it still boggles the mind. The dot-com valuations were so out of whack during this speculative frenzy that seven years later the NASDAQ Composite would have to appreciate 105 percent to climb back to where it was at the height of The Crazy. Ed watched in disbelief as companies that had nothing to do with the Internet sent their stock climbing simply by changing their names to include a dot-com at the end. Again and again, he issued warnings in his quarterly letter to investors that a day of reckoning was coming. But amateur investors were becoming instant millionaires, and even the savvy were seduced. At the height of the hysteria, Ed wondered how The Crazy could get any crazier. He picked up a business magazine and found out. Barbra Streisand had jumped into The Crazy and was now making a fortune herself as a day trader of Internet stocks. At first, Ed could only shake his head in ridicule when he read that the diva was buying the same stocks that he was shunning. But when he reached the part where fashion designer Donna Karan had pushed aside her money manager and turned to Barbra, he actually hurled the magazine across his office and into the trash.
Ed saw the Internet Bubble for what it was: a new type of gold rush. Wall Street was simply sifting through the different ideas and companies to find the ones with real value. Like in any gold rush, the people who are sure to get rich are the ones selling the picks and the shovels. It was lucrative for Wall Street when an analyst like Henry Blodget dreamed up and affixed anastronomical value to Amazon or any other Internet company. The higher the value, the greater the fee his bank would collect when it launched an initial public offering.
So it was both the best time to go public and the worst. Hundreds of millions of dollars were being handed out on Wall Street as casually as drinks at a bar. Just get in line. If you owned any sort of company linked to the Internet during The Crazy, you were insane if you didnât go public. But there would be consequences for those companies that couldnât produce later on, not to mention for the people whoâd invested in them.
All the old rules of business were changed overnight by the Internet. Value was no longer based on performance in the present, but on potential performance in the distant future. This was a little complicated for us. Our company was founded before the Internet. We were more than just an idea in a garage. We were an actual business that was using the Internet to sell rooms. So we had to understand how Wall
A big-time analyst like Oppenheimerâs Henry Blodget would make an outrageous assessment of a youngster like Amazon. com, predicting in December 1998 that its stock would hit $400 a share. A month later, after a feeding frenzy of investment, the stock had soared 128 percent, and it did pass $400! When Amazon grew in leaps and bounds, it spread hope that every company would do the same. It was crazy. Without showing a hint of ever having been profitable, an online procurement company called PurchasePro that was started by a guy who showed Steve Wynn workout techniques actually surpassed the value of Wynnâs Mirage!
I guess you could compare it to an untested athlete out of high school getting drafted and signed for way more money than a professional whoâd proven himself as an all-star for a decade.The kid out of high school had the power to shape the future. The kid wearing a T-shirt in a garage suddenly had enough money to buy a mansion in Silicon Valley and an original copy of the Declaration of Independence.
Only time can provide true perspective of what we were living through. Hundeds of books have been written about the Internet Bubble, but as I look back now it still boggles the mind. The dot-com valuations were so out of whack during this speculative frenzy that seven years later the NASDAQ Composite would have to appreciate 105 percent to climb back to where it was at the height of The Crazy. Ed watched in disbelief as companies that had nothing to do with the Internet sent their stock climbing simply by changing their names to include a dot-com at the end. Again and again, he issued warnings in his quarterly letter to investors that a day of reckoning was coming. But amateur investors were becoming instant millionaires, and even the savvy were seduced. At the height of the hysteria, Ed wondered how The Crazy could get any crazier. He picked up a business magazine and found out. Barbra Streisand had jumped into The Crazy and was now making a fortune herself as a day trader of Internet stocks. At first, Ed could only shake his head in ridicule when he read that the diva was buying the same stocks that he was shunning. But when he reached the part where fashion designer Donna Karan had pushed aside her money manager and turned to Barbra, he actually hurled the magazine across his office and into the trash.
Ed saw the Internet Bubble for what it was: a new type of gold rush. Wall Street was simply sifting through the different ideas and companies to find the ones with real value. Like in any gold rush, the people who are sure to get rich are the ones selling the picks and the shovels. It was lucrative for Wall Street when an analyst like Henry Blodget dreamed up and affixed anastronomical value to Amazon or any other Internet company. The higher the value, the greater the fee his bank would collect when it launched an initial public offering.
So it was both the best time to go public and the worst. Hundreds of millions of dollars were being handed out on Wall Street as casually as drinks at a bar. Just get in line. If you owned any sort of company linked to the Internet during The Crazy, you were insane if you didnât go public. But there would be consequences for those companies that couldnât produce later on, not to mention for the people whoâd invested in them.
All the old rules of business were changed overnight by the Internet. Value was no longer based on performance in the present, but on potential performance in the distant future. This was a little complicated for us. Our company was founded before the Internet. We were more than just an idea in a garage. We were an actual business that was using the Internet to sell rooms. So we had to understand how Wall
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