Free Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling, Cal Fussman Page B

Street’s new rules varied from the old and how they might affect us.
    The concept that the bankers put forth made sense. Yet at the same time it went against everything I always thought a business was supposed to do. How much money your company was making no longer mattered. You were not being judged upon a multiple of your earnings. The analysts wanted the Internet companies that they were taking public to spend so much on marketing that they couldn’t possibly make money. The important thing was to use that marketing money to make your company the leader in its niche. In the short term, there would be losses. But when your company became wildly popular, the initial marketing costs would subside. Down the road, your company would reap enormous profits.
    In January 1999, Tim and Captain John sat down with vicepresidents from CIBC Oppenheimer. Blodget, the bank’s big-time analyst, valued the company that Tim had started with a desk, a chair, a phone, and a pillow at $400 million.
    We knew Blodget’s numbers were crazy, but if he was willing to give us this sort of valuation, how could we not take it? During The Crazy, you could only wonder if a bank down the street would come up with a figure that was even crazier.
    â€œWhat the hell,” Captain John said to Tim. “Let’s walk down the street and listen to Prudential.” There, Tim and Captain John heard that our company was worth only $200 million. “Holy mackerel,” Captain John said, “we just lost $200 million walking down the street.”
    When Tim told Prudential about our $400 million valuation, the guy at Prudential threw up its hands. “Whoa, wait a minute, don’t do anything yet. Let me talk to our analyst. He’s in the Far East.” Next thing Tim knew, a ringing phone woke him at 3:30 AM . After quickly sharpening his pencil, the analyst in Asia apologized for overlooking certain aspects of our business, and corrected the valuation to $350 million.
    â€œAre you ready for this?” Tim told us the next morning.
    â€œOne phone call,” Captain John marveled, “and we found $150 million!”
    We decided to go with CIBC Oppenheimer and a second-tier bank, Piper Jaffray. The highest number usually won during The Crazy, and we liked Oppenheimer’s vice-chairman, Nate Gantcher. Nate seemed at home when he visited us in Las Vegas. Our rottweiler, Bally, had taken a nap with her head on Nate’s shoe during a talk in our office. Moments like those meant something to Tim and me. Even when Blodget was lured away by a rival bank and replaced by a young guy who seemed a little jittery in his presentations, we stuck with Nate. We’d shaken Nate’s hand. Once we’d given our word, we’d never goback on it. In the city that grew up outside the law, a man’s word is all he’s worth.
    But in the end, the loss of Blodget was a blow. Things became even more complicated when the market grew choppy. The pressure was on Tim when he headed east toward New York and over to Europe to help the bank raise funds for the IPO.
    Lorenzo’s brother, Frank, told Tim if he wanted to go up against the Goliaths, he needed to look the part. “Request a private plane from the banks in order to help arrange financing,” Frank advised. “That will make them take you seriously. The trip is going to be grueling. Ask the banks to load the plane up with whatever you need to make the trip as comfortable as you can.” Tim flew off on his mission in a Challenger 601 stocked with Johnnie Walker Blue and Fruity Pebbles cereal.
    I held down the fort in Las Vegas while Tim worked his ass off between bowls of Fruity Pebbles. It’s no exaggeration to say he was taking a physical pounding as he crisscrossed the country and flew over to Europe. On a stop in Paris, he stepped out of a limo to make a presentation and put his briefcase down behind the trunk. The driver didn’t see him and