In the third week following its IPO, Daenerys Entertainment's market value surpassed $120 billion on July 13, buoyed by the phenomenal success of "Forrest Gump." Although the stock's rise began to slow, some highly optimistic Wall Street analysts predicted that the company's stock price could reach $65 within the next year. Based on Daenerys Entertainment's total shares, a $65 share price would mean a market value exceeding $150 billion.
Many industry media outlets endorsed this projection, noting that even at a $150 billion valuation, the company's price-to-earnings (P/E) ratio would only be about 57 times its recent earnings forecast. While a P/E ratio of 57 might seem excessive for companies in other industries that have reached their growth ceiling, it was considered reasonable for Daenerys Entertainment, known for consistently producing commercial successes.
However, there were dissenting voices. Notably, Bloomberg, a prominent financial news company, published a critical analysis. The article scrutinized Daenerys Entertainment's current situation, arguing that despite its apparent vibrancy, the company had likely reached the pinnacle of its industry potential. Specifically, Bloomberg analysts highlighted that even if the company's core film business, which already dominated half of Hollywood, continued to produce blockbuster films, its growth potential was limited.
Moreover, they warned that any significant downturn in the film sector, the engine of Daenerys Entertainment's diversification strategy, could lead to a swift decline for the company. Thus, despite the global film industry's current boom and no immediate signs of trouble for Daenerys, Bloomberg argued that a more reasonable P/E ratio for the company would be between 20 and 30 times. The current P/E ratio above 45 and a market value exceeding $100 billion suggested a substantial bubble.
Bloomberg analysts attributed this phenomenon to an irrational market adulation for Simon Westeros's personal wealth-building achievements, cautioning that investment should be guided by reason rather than blind faith.
Bloomberg, though not yet at its peak influence as Simon remembered, already rivaled any major financial media outlet in its impact. Thus, when the article urging investors to be rational about Daenerys Entertainment's stock was published on the morning of July 14, the company's stock price immediately dropped over 1% at the opening and remained volatile throughout the day.
Though Bloomberg's article seemed to be merely an objective analysis, the company had recently exhibited a subtle hostility towards the Westeros system, which keen observers could discern.
The root of this animosity lay in the activities of AlphaBeta, a company founded by Girl B. Simon had come to New York on Tuesday after spending a day in Ohio to attend an internal evaluation meeting for AlphaBeta's financial information software, Alia.
Despite AlphaBeta's initial focus on targeting lower-level traders and small to medium-sized financial firms, the impending launch of Alia had clearly unsettled Bloomberg, a company that had carved out a unique niche in the financial news sector. Although Bloomberg refrained from publicly commenting on Alia, Michael Bloomberg, the company's founder, had privately expressed a determination to protect its patented business model and intellectual property at all costs.
The context of these statements was clear. Bloomberg had faced competition before, but none had been able to challenge its innovative information terminal model. This time, however, the situation seemed different.
Anyone paying attention to AlphaBeta could see Simon's commitment to the startup. He had personally selected top financial analysts and software developers from Cersei Capital and Egret to support AlphaBeta. Over the past six months, Simon had made several public appearances with Girl B at Manhattan's financial circles.
As the software's launch approached, a marketing team from Egret's software sales department had quietly moved into AlphaBeta. Meanwhile, Cersei Capital, Morgan Stanley, and Goldman Sachs, three of Wall Street's biggest names, had quietly tested Alia and recently signed contracts to purchase the software.
With millions of financial professionals in the U.S. alone and many more globally, Bloomberg's terminals, which cost $15,000 per year, had only recently surpassed 20,000 installations. Even major firms like Cersei Capital, Morgan Stanley, and Goldman Sachs couldn't afford to provide Bloomberg terminals to all their traders. In contrast, Alia, offering simpler services at a much lower cost than traditional stock quote displays, was an ideal financial software for widespread deployment among regular employees.
Alia's pricing was straightforward: $150 per month or $1,500 per year. This cost was manageable even for individual investors with a casual interest in the stock market. In comparison, Bloomberg terminals, priced at $15,000 annually, were far beyond the reach of lower-level financial professionals who might earn only a few tens of thousands of dollars a year.
Currently, most major Wall Street firms used only a few hundred Bloomberg terminals. However, they had collectively ordered 1,500 units of Alia software, indicating more than just Simon's influence; it reflected a significant leap forward, outpacing Bloomberg's early days by far.
Simon had provided only limited guidance on Alia's development, focusing more on funding and resources. However, Janet, who had grown more attentive to the project due to Simon's interest, described the software as impressive. The fact that Cersei Capital and other firms had signed purchase agreements after testing Alia suggested the software had been well-received even before its official launch.
The involvement of major Wall Street players like Cersei Capital underscored the software's credibility, setting up Alia for a strong market entry. To further promote Alia, Girl B had planned to offer free trial versions to several American universities.
Looking at the broader landscape, Bloomberg had emerged from an era where unwarranted success was rare. The company had initially relied on Michael Bloomberg's Wall Street connections, securing a software development contract with Merrill Lynch before even having a product prototype. Merrill Lynch later became a shareholder in Bloomberg, helping to promote its terminals across Wall Street, significantly contributing to the company's current success.
While Girl B lacked the same extensive Wall Street network, she had the Westeros system as a formidable backer. This, combined with AlphaBeta's pre-launch agreements, had put Bloomberg on high alert.
The Westeros system had proven successful in many sectors, and Bloomberg's terminal business had not yet achieved the market dominance it would enjoy in later years. The recent Bloomberg editorial calling for rationality in assessing Simon's business miracles reflected Michael Bloomberg's unease about Alia's potential impact.
AlphaBeta's headquarters were located in Greenwich, Connecticut, mainly for cost savings and tax benefits.
Returning from Manhattan to Greenwich on Thursday afternoon, Simon visited AlphaBeta's headquarters to discuss a potential rebranding.
As Alia entered the trial phase, both Girls A and B felt that the name "AlphaBeta" lacked the simplicity and memorability of "Alia," aligning with Simon's original vision for the product.
The new company name was already prepared: Alia.
Simon understood the underlying intentions of the two women. Renaming AlphaBeta to Alia would effectively make it the fifth "woman" in the Westeros system, following Daenerys, Melisandre, Egret, and Cersei, further boosting market confidence in the software.
Names like Alia, common as they were, required registration in line with Western business practices. Girl B had secretly acquired or registered the Alia trademark in key markets such as the U.S., UK, Japan, and Australia, costing over $230,000—expenses that could have been tenfold if the purchases had been made under AlphaBeta's name, a Westeros subsidiary.
Even if the company didn't rebrand, acquiring the Alia trademark was essential for launching the software globally, making the expense unavoidable.
Including the costs associated with the trademark, AlphaBeta had spent over $18 million in the past six months, nearing the depletion of the $20 million flower pot fund available to Girls A and B.
Simon had paid close attention to this. Unlike Instagram, which the D girls co-founded with minimal startup costs, developing a financial information company required hiring top professionals, building extensive databases, designing complex financial analysis models, purchasing external data and news services, and more.
$18 million was already quite frugal.
Bloomberg had spent over $4 million developing its first terminal over eight months in the early 1980s, roughly equivalent to $10 million today.
Bloomberg's dominance in the financial information industry largely stemmed from this high barrier to entry, deterring new competitors. New startups often couldn't afford the massive initial investment required, and even if they did, getting Wall Street's approval was challenging. Financial firms, handling vast sums of money, were reluctant to use products from unknown startups.
Older companies like Dow Jones or Reuters, bound by established business models, couldn't pivot to products like the Bloomberg terminal without disrupting their core business, allowing Bloomberg to grow unchallenged.
Today, Bloomberg's client base had just surpassed 20,000, far from the 300,000 it would one day reach, with its data and social ecosystem yet to solidify. This presented an opportunity for the Westeros system.
Simon recognized the financial information industry's potential multi-billion-dollar market. With ample capital and connections, he was determined to enter this field, posing a significant threat to Bloomberg.
At AlphaBeta's headquarters, in a conference room, Simon reviewed several new company logo designs prepared by Girl B. After some discussion, they settled on one, effectively finalizing the decision to rename AlphaBeta to Alia.
"Cersei Capital's orders, along with the expected revenue from Alia's launch, should sustain your operations. Unless necessary, I won't provide additional funding in the short term. Becky, your focus should be on refining and updating the software based on feedback from our three major clients, laying a solid foundation for at least a year before pursuing broader market expansion."
After the meeting ended around 6 PM, Simon prepared to leave, offering this advice to Girl B.
The rapid expansion of the Westeros system over the years was remarkable,
yet Simon was fundamentally a patient and methodical strategist.
Cersei Capital's early order of 1,500 units, even with a 20% discount, averaged an annual fee of $12,000 per unit, generating $18 million in revenue for Alia, matching the flower pot fund's investment over the past six months.
Financial information companies require extensive investment to develop their offerings. For example, Bloomberg had over 500 journalists globally, a significant expense. While Girl B's company currently relied on partnerships with other media outlets for financial news, building its news team would take time.
For now, steady growth was the prudent path. With $18 million in revenue and additional income from other clients post-launch, Alia could sustain operations and modest expansion.
The company, soon to be renamed Alia, had a shareholding structure where Girl B held 15%, Girl A 5%, and another 10% was allocated to key executives, with Westeros Company holding 70% through the flower pot fund.
As long as the company remained self-sufficient, the partners' shares would not be diluted.
Though their stakes seemed modest, Simon's decision to allocate 30% of the company's equity was generous, considering the significant early investment required. At the current valuation, this 30% stake was worth $6 million.
Moreover, these shares represented just the initial equity; if Alia succeeded, these holdings could make many stakeholders multimillionaires.
Simon's decision not to inject more capital into Alia was partly to encourage patience and avoid complacency but also to prevent further dilution of the partners' shares.
Many business owners urge their employees to adopt a "wolf mentality" while neglecting the reality that wolves need meat. Expecting employees to perform like wolves while feeding them like sheep is both narrow-minded and foolish.
Having experienced much in two lifetimes, Simon was aware of his own potential for selfishness but consistently reminded himself to avoid such narrow thinking.
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