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The Street

Lee Gruenfeld
Fiction / Literature | Doubleday | Hardcover | March 2001 | $23.95 | 0-385-50150-1

Chapter One

April 1

James Vincent Hanley hated his job and therefore his life.

That combination was not terribly unusual, especially in the financial world, where what you did for a living could easily account for half your waking hours and the after-effects could pretty much wreck the other half.

Hanley worked in the institutional sales division of Schumann-Dallis, a powerhouse nicknamed "The Virgin" because the address of its monolithic black building was Three Maiden Lane in the Wall Street district of Manhattan. Hanley's specialty was moving great gobs of money around whenever a hi-tech company was involved in an IPO, an initial public offering, the process by which a corporation that was privately owned sold itself to the public at large.

Back in the good old days, companies went public in order to raise enough money to expand. In exchange for giving up exclusive control, the private owners sold off minority ownership in the form of stock and used the proceeds to buy more steamships or build new factories or acquire other companies in the interest of empire building. In order to do that, investors traditionally insisted on seeing five years of audited financials and at least three years of consistent profitability.

But things had changed. Companies were going public primarily so their owners could cash in - or out, as was increasingly the case. And whereas the old-line industrialists steeled themselves to reluctantly cede ownership in companies they'd struggled to build up over decades, today's brand of entrepreneur gleefully jumped into the IPO fray so they could reap billions out of companies that sometimes hadn't even had a full year in business.

Nowhere was this practice more rampant than in the Internet arena. One company, an "incubator" called IdeaConnexion and run by CEO Burton Staller, was in business strictly to start up new Internet-based companies and then sell them off within twelve months.

James Vincent Hanley, who'd been involved in three of Staller's deals, spent his days gritting his teeth as he allocated blocks of shares in Internet startups, creating instant paper billionaires as he himself was forced to scrape by on subsistence wages of barely $300,000 a year.

On this, April Fool's Day, Hanley was in a particularly foul mood. One of the guys in the department had run a gag ad in the Wall Street Journal announcing an IPO for a new company whose purported objective was to allow people to auction off their organs to patients awaiting donors. An hour ago they had all been having a good laugh, but since then Hanley's multi-line phone had been jammed by calls from clients wanting to invest because the company was called and would be operating on-line. Hardly any of them even asked questions about the new venture. Some of them just wanted wire instructions for transferring funds. The phony ad hadn't even listed Schumann-Dallis as an underwriter, and people were practically breaking down the doors to dump money into it. One client called from a cell phone, and Hanley could hear him battling with two flight attendants who were trying to grab the phone away because they were still on departure from JFK.

Right now, every light on Hanley's phone console was blinking. His buddies were routing calls his way because Hanley was considered a chameleon, with a gift for articulation that allowed him to instantly snap into whatever verbal mode the immediate situation required. He could spout utterly nonsensical but high-sounding business jargon in one breath, then turn around and banter in Brooklyn-ese with a hot dog vendor in the next. The one thing he couldn't do very well was hide the intelligence and street smarts that made it all possible.

With no way to stop the ridiculous calls, he reached down below his desk and yanked the thick phone wire out of the wall, indelicately failing to release the little plastic retainer pin first and thereby taking some plaster with it, then sat and morosely contemplated the madness.

Geeks with half his brains were driving Ferraris to chic little food stores in Palo Alto to buy $1,500 bottles of balsamic vinegar. High school dropouts had their own fleets of Gulfstreams. One guy he knew, a run-of-the-mill programmer, was having trouble getting phone connections to his parents in Vietnam, so the last time he'd gotten through, he'd just left the phone off the hook. The line had remained open, continuously racking up international long distance charges, for the last four months.

An industry segment that was barely identifiable at the start of the last decade was now driving the entire market. Companies that hadn't even existed a year ago, and which had laughably puny sales and frightening net losses, would go on the market at $10 a share and hit $100 by lunchtime, sometimes ending up capitalized at values several times those of venerable giants that had been founded a century before. Even a serious downturn in tech stocks, which should have served as a frightening warning to return some sanity to the market, backfired utterly: as the segment slowly and steadily recovered, speculators took it as a sure sign that this market was invincible and could bounce from anything, and they dove back in with renewed vigor. Investors never even read the required SEC filings; they just held out their checkbooks and asked the maximum amount they could buy. Announce a delay of one month in the shipping date of a new chip and the market's net valuation could drop by half a trillion dollars in a matter of hours.

Unthinkably large sums of money were being dumped into houses of cards whose foundations were not only perilously shaky but sometimes almost impossible even to define. It was vastly more out of control than the dizzying margin spiral prior to the horrific crash of 1929 that preceded a world-wide plunge into a decade of desolation, but what was really pissing off James Vincent Hanley was the fact that he was sitting in front of a (now defunct) phone in a windowless room on Maiden Lane in south Manhattan working his ass off 80 hours a week to funnel those truckloads of money into everybody's hands but his own.

Miserable and dejected, he half-listened as the broker in the next cubicle conducted an impatient, clipped conversation with a client.

"How the {expletive} should I know what they do, Harold...what am I, a Caltech professor? It's an Internet startup and I got eighteen more calls backed up here from people with their checkbooks out, so if all you're gonna do is ask me a lotta...okay...okaaaay, now you're talking, so how, no, forget it. I said forget it! The max is a hundred thousand and...because those're the goddamned rules, that's why, you want me to lose my job? Now, you want in or...what? What? No, your wife can't also go in for a hundred thou...Harold, your wife's been dead for two years! Harold...I'm hanging up, Harold! You hear me, I'm hanging up! Okay, that's better. I'm faxing you the wire instructions. The money's gotta be here in an hour or..."

Hanley stood up and looked into the cubicle on his left. Tony Favuzzo, headset stuck in his ears, punched a button on his phone, listened for less than two seconds, then rolled his eyes up at Hanley and dropped his head back wearily. "It was just a joke, Mr. Thornton." He squeezed the mute button and said to Hanley wearily, "Another hour of this and I'm gonna auction my freakin' soul on the Web." He let go of the button. "An April Fool's gag. Uh huh. Yes, I'm sure it's actually a pretty good idea, as far as I know, nobody's registered on the Internet yet. No, I have no idea how to...certainly, Schumann-Dallis would be glad to handle the underwriting if you decide to..."

Hanley looked around. Cubicles stretched in all directions. The din of a hundred conversations floated upward, and all around the room drifted the unmistakable odor of money. Boatloads of it, moving from port to port and traveling so swiftly it left barely a trace in those places where it had set down momentarily before floating off again. Once there had been factories, railroads, oil wells and real estate to denote where money, like a wolf urinating on a tree, had marked its territory. Great buildings, vast complexes, mighty steamships, even entire cities gave substance to the power of the dollars that had built them.

Now? Whoopie!.com, which consisted of barely more than a few dozen desktop computers and as many employees, was worth more on paper than Sears. Twice as much, if truth be told.

Hanley looked back at his own desk, his computer terminal, his phone and the bits of plaster littering the space below his chair. The word broker came from the French brocour, one who "broaches" a barrel of wine and sells it off by the glass or bottle, and he wished he were in that business right now so he could guzzle his whole supply by himself.

"Mr. Hanley!"

He recognized the nasal voice even before he turned around. It was the president of one of the startup companies Schumann-Dallis was handling. In existence for only eight months, it was about to go public.

"Arnold!" Hanley called back with unfelt amiability. He quickly reached for a book sitting on his shelf - a leather-bound copy of A Financial History of New York, one of several thousand Schumann-Dallis had given to all its employees the Christmas before - flipped it open and turned it upside down over the plaster mess on his carpet before turning and walking rapidly to make sure the new client didn't notice anything amiss.

"We're taking Mr. Plotkin on a little tour of the department, Jim," the senior account executive escorting the client said.

"That's nice." Hanley shook hands with the imminent billionaire. "Listen, let me take him around, okay?"

"You sure, Jim?"

"No problem. C'mon, Arnold."

As they left the account exec, Hanley said, "Arnold, you mind if I ask you something?"

"Sure, Mr. Hanley." The worldly unwise Plotkin still hadn't figured out that a corporate CEO and major client of the firm didn't need to address a salesman as Mister. "What do you want to know?"

Hanley ran his hand through his hair. He was six feet tall, or at least he had been before he'd started this job. Now, he felt like he'd shrunk an inch or two, whether from terminal ennui or a slightly stooped and beaten posture he couldn't tell. His thick, sandy hair, once a source of considerable pride, had become a nuisance of late, and he'd taken to letting it grow far too long before he cut it far too short, the better to stretch out the intervals between time-wasting haircuts. He'd even given up his participation in the compulsory young-Wall-Street-hotshots fashion competition, the stress of correctly anticipating the trends having overwhelmed the fleeting satisfaction of senseless victories. Only the over-priced haberdashers in lower Manhattan were winning that ongoing war, and he'd grown tired of subsidizing their entry fees.

Now that he had the soon-to-be-legendary Arnold Plotkin all to himself for a few minutes, Hanley wasn't exactly sure what it was he wanted to know. "Look, I, uh, I'm not much of a technical whiz, see?"

"Yeah." Plotkin pushed his thick glasses higher on his face, grimacing and revealing badly neglected teeth in the process. He rubbed his nose and stepped nervously from one foot to the other. Here was a man - a kid, really - clearly more comfortable talking to his laptop than to people. "That's okay. Most people, they're not so smart in computers."

"Right. Okay, what you do, what your software does, it helps people find what they want on the Web, right?"

"Uh huh."

"But there are all these search engines already. Dozens of them. I use them myself, and they're very good, so what is it your stuff does that's so different?"

"Jeez, Mr. Hanley," Plotkin said, scratching at the rear end of his worn corduroys. "You're gonna be part of the IPO team, didn't you even look at our stuff?"

"What for?"

Plotkin blinked at Hanley a few times, realizing he'd been asked a good question. "Okay. Well, what happens is, sometimes a user enters some search parameters, and they don't say exactly what he thought they said."


"Like...okay, okay..." Plotkin bent forward and shook his hands, not unlike a first-grader called on to answer a question in class and struggling to find the right words. "Let's say you're writing a paper for school and you want to find out something about the planet Saturn, okay? Like maybe, I don't know, how big it is, okay?"


"Okay. So you go to a search engine and you enter in Saturn and size, and what it does, it comes back and it's got like five hundred sites and you click one and it says Saturn has a wheelbase of fourteen feet! Get it? You see what happened? It thought you meant the car, see? It thought you meant the car and it gave you the size of the wheelbase!" Plotkin giggled, sort of a cross between a snort and a death rattle, and pushed at his glasses again. Hanley nodded, and tried to force a smile of his own.

"What my software does," the Rockefeller-in-waiting explained, "it figures out what you really meant because it knows what other stuff you've been asking while writing this paper, and it knows what you really mean is the planet and not the car, and so what it does, it reformulates the query for you and submits it again."

He beamed triumphantly and folded his arms across his chest.

Hanley look confused. "But all he had to do was go back and enter the word planet, and maybe not car, and hit it again. End of problem." Surely no piece of software could possibly do as good a job of searching for something as the user himself.

Plotkin's grin disappeared. "But you're a sophisticated user."

"Sophisticated?" Hanley exclaimed with unintended derision toward an important client. "My senile grandmother could figure that one out!"

"But she wouldn't have to," Plotkin argued. "My software would do that for her."

"That's all your stuff does?" Hanley sputtered in disbelief. "It figures out what it thinks somebody really meant and then does the search?"

"Actually, no," Plotkin said uncomfortably. "It doesn't do the search, just, uh, feeds it back to whatever search engine you were using in the first place." He sniffled a few times. "Only better," he hastened to add.

Hanley could only stare at him incredulously. They were about to take this company public, probably to the tune of two billion dollars.

He didn't want to insult the client but he had to understand. "Are you telling me that all your software does is something a user could learn to do himself, and better, in about fifteen minutes?"

Plotkin, who'd clearly had enough of this conversation, scratched his rear again. "Users are lazy and stupid, Mr. Hanley," he said as he began to turn away. "And there's no money in making them smarter."

And thus had this socially inept geek neatly encapsulated the essence of an entire industry segment.

Hanley went back to his cubicle and sat down. He thought for a few minutes. He retrieved A Financial History of New York from beneath his desk and idly flipped through the pages as he swept away plaster dust, pausing at a particularly stirring introductory chapter entitled "The Great Tulip Catastrophe." He read it, then he went back and read it again, and then he thought some more.

That's when he got the first faint glimmer of "The Idea."

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