The Conglomerate Family Became A Villain [EN]: Chapter 95

95. Spring and Summer of 1984 (1)

Spring of 1984.

Victoria Corporation dominated headlines in the New York Times and Fortune, its meteoric rise the talk of the town.

“This time, it’s Bank of America.”

Wall Street financiers couldn’t help but be bewildered by this small company that had appeared seemingly out of nowhere.

“I don’t understand how a company with a thousand employees can be worth $10 billion.”

“Indeed. Many companies with 100,000 employees are worth less than $1 billion, let alone $10 billion.”

A middle-aged man with broad shoulders approached the group of financiers who were smoking.

“Are you even doing corporate analysis before saying such things?”

The broad-shouldered man was Herald Kahn, a fund manager from Morgan Stanley.

“Mr. Kahn, we’ve done some basic analysis.”

Herald Kahn raised his voice.

“So, what’s the result?”

“I think it’s absurd.”

The financier with glasses spread his hands and replied.

“In the first quarter, Victoria Corporation’s sales barely exceeded $35 million. At this rate, annual sales would be just over $100 million.”

The man smoking next to him chimed in.

“If annual sales are $100 million, even at the highest estimate, it won’t reach $1 billion. The $10 billion valuation recognized by JP Morgan is a bubble about to burst.”

Some Wall Street financiers whispered that Victoria Corporation was close to a pump-and-dump scheme [a scheme that attempts to boost the price of a stock through false and misleading positive statements, in order to sell the stock at a higher price].

“JP Morgan wouldn’t have touched such a company if that were the case.”

Herald Kahn was a seasoned fund manager on Wall Street. He had never known JP Morgan, a rival of Morgan Stanley, to waste money.

“There might be value in that company that you guys aren’t seeing.”

The two financiers raised their voices, as if they couldn’t comprehend Herald Kahn’s words.

“Value we can’t see?”

“That’s absurd. Victoria Corporation is just a company with $100 million in annual sales.”

Herald Kahn crossed his arms and said.

“If they start a new service with Bank of America, you can’t judge the company based solely on its current sales or profits.”

The financier with glasses adjusted his glasses and responded.

“Even considering that, it’s an outrageous amount. Even if they capture a few more customers from Bank of America, annual sales would be around $250 million. Applying the common IT industry multiple of 7, the corporate value would be less than $2 billion.”

With the financial models of the early 1980s, it was difficult to accurately calculate the true value of Victoria Corporation.

“According to your calculations, Victoria Corporation’s value is inflated by more than five times.”

“It could be more than that.”

Herald Kahn took out a cigarette. The cigarette he took out was a Marlboro, the most popular brand in the United States.

“Then why did JP Morgan and Bank of America approach Victoria Corporation?”

“That’s……”

The two men couldn’t answer Herald Kahn’s question directly.

The financier with glasses looked around and asked.

“Mr. Kahn, do you perhaps know something?”

He was asking if there was some positive inside information they weren’t aware of.

The financier who was smoking also lowered his voice and asked.

“Mr. Kahn, if you’ve heard anything, please let us know.”

Herald Kahn lit his cigarette and replied.

“I haven’t heard anything either.”

The financier with glasses looked disappointed and responded.

“I see.”

Herald Kahn blew out cigarette smoke and said.

“Hoo……. But there is one thing I’ve been thinking about.”

The financier with glasses’ eyebrows shot up.

“What is it? Could you perhaps tell us?”

Herald Kahn was a star manager who had been included in the top five, the Big Five, of Morgan Stanley’s fund managers for two consecutive years.

The financier with glasses was convinced that he had seen something they hadn’t.

‘Herald Kahn seems to think that Victoria Corporation isn’t just a simple bubble.’

Herald Kahn shifted his gaze to the forest of buildings on Wall Street.

“What if we assume that Victoria Corporation’s partnerships don’t end with Bank of America?”

The financier with glasses questioned him.

“Are you saying there are more companies working with them besides JP Morgan and Bank of America?”

Herald Kahn flicked off his cigarette ash and replied.

“Stereotypes are dangerous things. We may be making the mistake of treating Victoria Corporation as just a simple service company.”

The financier with glasses swallowed hard.

“If it’s not just a simple service company, then what is Victoria Corporation…….”

Herald Kahn took another puff of his cigarette and exhaled the smoke.

“Hoo……. What if we think of Victoria Corporation as a company like Visa or MasterCard?”

Visa and MasterCard were companies that dominated the global card market.

Combined, the two companies had a market share of over 70%.

“Are you saying that Victoria Corporation could have numerous partners like Visa Card?”

“It’s not certain. But since JP Morgan invested and Bank of America followed, I thought there might be something there.”

If Victoria Corporation became the Visa card of online financial services, as Herald Kahn suggested, then its current value could be significantly undervalued.

Before that, the financier who was smoking put out his cigarette and said.

“If Victoria Corporation dominates online financial services as Mr. Kahn says, shouldn’t we do something too?”

Herald Kahn stared into space and answered his question.

“That’s for the higher-ups, not us.”

He didn’t think it was something that could be resolved at the fund manager level.

‘Starting with JP Services last year, a new wind is blowing on Wall Street.’

Any company that fails to catch the new wind will inevitably fall behind the times.

Herald Kahn was one of the few Wall Street investors who saw through Jung Hyun-woo’s intentions.

Three minutes later.

Herald Kahn was called in by Howard Robinson, the head of Morgan Stanley’s investment strategy division.

“You called?”

“Oh, Herald, you’re here?”

Howard Robinson was a Latino American and a fund manager who had recorded legendary investment returns. He had already marked Herald Kahn as the next-generation star to succeed him.

“Mr. Robinson, it’s rare for you to call me separately.”

Howard Robinson laughed loudly and said.

“Hahahaha, were we that estranged?”

“Aren’t we not the type to have meals together?”

Herald Kahn was a vegetarian, so he rarely ate with his superiors or colleagues.

“Well, that’s not why I called you.”

Herald Kahn thought a new project was about to begin.

‘Is it something like a spring event?’

It was already April in 1984.

“Are you planning a new product?”

“A new product?”

“An investment product for VIP clients.”

Howard Robinson shook his head.

“That’s not it.”

“Then what is it?”

Howard Robinson sighed briefly at his question.

“Ha, your problem is that you’re too impatient.”

“I just thought it would be more efficient to get straight to the important topic.”

He meant that pleasantries and greetings should be brief.

“Herald.”

“Yes.”

Howard Robinson sighed again at his rigid attitude.

“Hoo, if you were just a little more personable, customers would have voted you the best.”

Herald Kahn had been in the Big Five for two consecutive years, but he had never been selected as the First Man, the top investor at Morgan Stanley.

“I think fund managers should be judged solely on their numbers.”

Howard Robinson shook his head as if he couldn’t change his personality and continued.

“The reason I called you today is to entrust you with a new business team.”

“A new business team?”

Howard Robinson nodded and raised his voice.

“You know about Victoria Corporation, right?”

Before being called here, Herald Kahn had been discussing Victoria Corporation.

‘What a coincidence.’

He lowered his voice and asked.

“Isn’t it an IT company that’s recently attracting attention on Wall Street?”

“We want to create a subsidiary that can play the same role as them.”

Instantly, Herald Kahn’s brow furrowed.

“You don’t mean that project…….”

Howard Robinson interrupted him and raised his voice.

“Exactly that. I thought you were the right person for this project.”

Morgan Stanley’s approach was different from Bank of America’s. Rather than becoming Victoria Corporation’s third customer, they wanted to create their own online service from the ground up.

* * *

“Haa…….”

A very long sigh.

The owner of this long sigh was Sarah. She was in Washington with Jung Hyun-woo.

“It’s like we’re criminals.”

Jung Hyun-woo said, sitting on the stairs.

“You still endured it well.”

Sarah also sat on the stairs next to him.

“We have no choice but to endure it since the other party is the IRS [Internal Revenue Service, the U.S. government agency responsible for tax collection and enforcement].”

Jung Hyun-woo widened his eyes as she sat on the building entrance stairs.

“That looks like an expensive skirt, are you okay?”

Sarah frowned and replied.

“I’m not okay.”

“……”

What kind of psychology is it to say you’re not okay and then sit on the stairs?

“Damn it! We’re not criminals!”

Sarah’s tone became somewhat harsh.

Compared to her, Jung Hyun-woo’s tone was gentle.

“It just means the transaction was unusual enough for the IRS to investigate.”

The U.S. Internal Revenue Service regarded the equity transaction between Victoria Corporation and JP Morgan as an unusual transaction and issued an order to submit various documents, along with an order to come to Washington to explain the transaction.

“They’re underestimating our company.”

Jung Hyun-woo gestured dismissively with his right hand and said.

“We can’t help it. As they said, we only have about a thousand employees.”

In the 1980s, the general public’s perception of IT companies was skeptical. In particular, IRS employees thought that IT companies were receiving exaggerated valuations compared to their actual sales. And some of them suspected wealthy individuals were using IT companies as shell corporations for money laundering.

“JP Morgan is a company that wouldn’t just give money away.”

“The IRS seems to think it’s a contract with a huge kickback.”

Instead of JP Morgan buying Victoria Corporation’s stock at a high price, they suspected Victoria Corporation would return some of the profits to JP Morgan executives as bribes.

It was a simple structure, but JP Morgan was not the kind of company where executives could easily engage in such practices.

“Nonsense!”

Sarah was angry because of the IRS employees’ overbearing attitude. They were already treating the two of them as if they were criminals involved in money laundering.

“Sarah, calm down.”

“Ha……. Originally, I was supposed to comfort Charlie.”

Sarah turned her gaze to Jung Hyun-woo.

Because the two were close, Jung Hyun-woo’s face turned slightly red as she stared at him.

“What’s wrong?”

Sarah replied briefly.

“Old man.”

As expected.

Jung Hyun-woo shrugged.

“Should I have been angrier?”

Sarah clenched her fist tightly and said.

“Someday, I’ll crush those guys.”

It seemed like she still hadn’t calmed down.

“Did those people understand our explanation?”

Jung Hyun-woo explained to them at length how valuable Victoria Corporation was and what future it was building towards.

But most of them didn’t seem to trust his explanation.

“If they keep holding us back, we’ll have to go to court.”

“Is this something that will go to court?”

“Because narrow-minded old men are sitting in those positions!”

It was the moment Sarah punched the air.

“I’m sorry to hear that. Because I’m a narrow-minded old man.”

Sarah and Jung Hyun-woo turned their heads at the same time. The person standing behind them was one of the senior IRS officials who had been questioning them earlier.

“My name is Adam Snyder.”

Adam Snyder was a seasoned IRS investigator nearing retirement.

“My words won’t affect this decision, will they?”

Sarah asked cautiously, and Adam Snyder crossed his arms and replied.

“What affects our judgment is not the young lady’s criticism, but the truth.”

He believed that uncovering the truth was the duty of an investigator.

Adam Snyder turned his gaze to Jung Hyun-woo.

“You’re amazing.”

Jung Hyun-woo raised his voice at his compliment.

“Surely I’m not the youngest to be called here?”

“Rest assured. You’re not the youngest.”

Should he be grateful that he didn’t set the record for being the youngest?

It was when Jung Hyun-woo frowned slightly.

Adam Snyder sat next to them.

The stairs in front of the IRS were wider than the length of a bus, so even though the three of them were sitting side by side, there was no problem with people passing by.

“You see, you weren’t intimidated at all by our pressure interrogation.”

What he praised as great was Jung Hyun-woo’s composure.

“It was a pressure interrogation.”

The IRS investigators had deliberately put the two of them under pressure.

Sarah knew that to some extent. Nevertheless, she couldn’t help but get angry.

“It’s unfair for any reason. We are citizens who have faithfully paid our taxes.”

Adam Snyder raised his right hand.

“Our decision has not yet been made.”

Sarah frowned at his words.

“It feels like we’re unconvicted prisoners awaiting a verdict.”

“Because it was an unusual contract.”

Even after hearing Jung Hyun-woo’s explanation, Adam Snyder didn’t think the contract between JP Morgan and Victoria Corporation was normal.

“JP Morgan is not an easy group of people.”

Jung Hyun-woo explained in the investigation room how difficult it was to persuade JP Morgan, but Adam Snyder didn’t believe his words at face value.

“They are also our rivals.”

He had faced JP Morgan several times during his 30 years of working at the IRS.

He had volunteered to take on this case as well.

Adam Snyder said to Jung Hyun-woo.

“Unlike Miss Hilton, you don’t seem to be very upset.”

“There’s no reason to be upset since I haven’t been penalized yet.”

“Then you’ll be upset if we send you a bill.”

Jung Hyun-woo calmly accepted his words.

“I might think it’s unfair then.”

Adam Snyder had met many people while working as an investigator, but Jung Hyun-woo was unlike anyone he’d met before.

‘His emotional control is remarkable. Maybe he’s a psychopath.’

Young people who are subjected to their pressure interrogation usually get even angrier than Sarah.

However, Jung Hyun-woo stopped Sarah and answered their questions calmly in a clear voice, expressing his opinions. It was a response that was hard to believe he was seventeen.

“If you have time, go to the Natural History Museum.”

He meant that since they had come to Washington, they should take the opportunity to see some of the famous sights.

Sarah thought it was a remarkably nonchalant suggestion.

‘Tsk, that’s why public officials are…….’

Jung Hyun-woo didn’t sneer like her, even in his thoughts. Instead, he stood up and raised both hands high.

“Hoo……. I wish I could, but I have a lot of work to catch up on.”

“A lot of work?”

Sarah said on his behalf.

“Mr. Snyder, Charlie works more than 100 hours a week.”

100 hours a week.

It meant that he was working practically non-stop, only taking breaks for eating, sleeping, and using the restroom.

“That…….”

Adam Snyder looked at Jung Hyun-woo with an incredulous gaze.

‘What kind of work does he do so much at such a young age?’

If a youth protection agency heard this story, they would have taken immediate action, saying it was labor abuse.

Instead of denying Sarah’s words, Jung Hyun-woo twirled his arms around and said.

“Well, I have to get back to work now.”

He was not a person who could be easily judged by Adam Snyder’s standards.