Christopher Reich - The First Billion

Inside the lounge, the two men sat down, agreeing almost immediately that the chairs were wonderfully comfortable. Settling himself in, Kirov delved into his pocket for a sterling-silver cigarette case. “Sobranie?” Opening it, he offered the case to Gavallan. The cigarettes were long and black, the two-headed Russian eagle stamped boldly above a shiny gold filter. One head faced east, the other west. In Russia, danger had always come from within and without.

“No thank you,” said Gavallan. “I don’t smoke.”

“I know, I know,” pleaded Kirov, as he slipped one into his mouth and lit it with a matching silver lighter. “But a man should be allowed one vice.” The brows jumped excitedly under the curtain of blue smoke. “After all, we are not saints!”

Kirov drew thoughtfully on the cigarette, inhaling for what seemed an eternity before expelling the smoke in neat flutes through his nose. “I have spoken with a few of your competitors these last days,” he said offhandedly. “As you can imagine, a good many are anxious to work with us. Please don’t think me rude, but I was hoping you might be able to tell me why I should consider someone outside of New York. Someone so much smaller.”

Gavallan made it a point never to discuss his competitors—comparisons conveyed weakness and insecurity. “True, we’re a smaller company,” he said, launching into a pitch he’d given a thousand times, “but we think our size is one of our advantages. We choose our clients with great care and we like to think they exercise the same scrutiny in choosing us. Our record in the Internet sector is second to none. Of the forty-two companies we’ve taken public in the last four years, more than fifty percent are trading at significant multiples of their offering price. Not one has gone belly-up. We’re selective with whom we work, Mr. Kirov. Black Jet’s name on a prospectus has come to indicate a certain quality. We’re deeply committed to the companies we offer our investors. The clients for whom we do choose to work receive the complete and dedicated resources of our company.”

“So you choose your clients?”

“I prefer to think that we choose each other. Hopefully, bringing Mercury public will be the first step in a long relationship between our two groups.”

“So you wish to work with Mercury? You are sure?” Kirov’s amused tone indicated he hadn’t heard this approach before and just might be buying into it.

“It would be a privilege. And I think I can promise that in the current environment, Black Jet could insure that a Mercury offering would be a home run.”

Kirov nodded approvingly. If nothing else, he looked to be enjoying the courtship. He questioned Gavallan about Black Jet’s ability to manage so large an offering, its relative inexperience in working with international companies, and its commitment to supporting the stock once it began trading. He asked about Black Jet’s analyst, inquiring whether he was on Institutional Investor’s first team (he was, at a salary of four million a year!), and was curious to know if the larger funds would be buyers of the stock, meaning if they would look to build a long-term position in Mercury.

In short, he asked all the right questions. Either he’d been briefed by his chief financial officer or he’d already sat through a dozen of these pitches.

Gavallan addressed each of Kirov’s concerns in turn. Knowing he was at a disadvantage to the bulge bracket firms, which could commit a sales force double the size of his own to the IPO and promise a hundred-million-dollar kitty to keep the float active, the stock price above water, he concentrated on Black Jet’s strengths: its topflight research team; its position at the vanguard of the new economy; its close ties to the nation’s largest mutual funds. In the end, though, it came down to personality. Everybody on the street was offering the same services, more or less. It was a question of whether Kirov liked Miss August or Miss November.

At the close of Gavallan’s comments, Kirov placed his hand atop the American’s and gave it several pats. “I have received advice from people close to me—people I trust—that you are good man. That your company may soon be very big, very powerful. Like Mercury, I think.” Another pat to let him know they were on good terms. “I like you, Mr. Gavallan. You are young. You are ambitious. I sense you are honest, even if you are arrogant.” He laughed quietly. “You choosing your clients. Very good. I must remember to use that myself one day. But I must have a reason to explain to my own shareholders why I choose your company. We, Russians, like big names. BMW, Gucci, Rolex. We feel we must carry these brands with us to prove our legitimacy. Again our inferiority complex; excuse us. But if I may speak frankly, Black Jet is not yet such a big name.”

“You’re right, sir. We have only nine years behind us. I hope many more will follow.”

“I am sure of it. Absolutely positive,” Kirov declared collegially, but the next moment he was wincing, lowering his eyes. The reassuring hand returned to its owner’s armrest. “But so much is at risk. It is a critical moment for my country. For so long, we have been held back, our heads pressed beneath the water. Now that we are free, I fear we are terribly greedy. We want to suck in great mouthfuls of this oxygen we call liberty. We claim democracy as ours. We crave progress. Personal progress. Progress measured on the human scale. A phone for every house. Running water. Showers that function. Toilets that flush. Proper medical care. Hospitals stocked with adequate antibiotics, surgical dressings, and sufficient blood. We demand the latest technology.

“You see, technology is our lifeline to the West. We cannot afford to fall farther behind. The Russian people are smart and curious. They are voracious in their hunger for knowledge. We are not a nation of peasants. We are a nation of Ph.D.’s, of scientists, of doctors, and businessmen. Every new PC brought into an Eastern European household is a soul saved from our autocratic past. Every home that logs onto Red Star has a window into the future. And once they see it, they will not let go.” Kirov leaned closer, his eyes sparkling with hope. “In the past, weapons and ignorance kept East and West apart. But the arms race is finished. It is time technology and the quest for knowledge bring us together. The race to advance humankind has begun, and its progress will be measured in computers, not missiles. Over time we will evolve into a single empire, a democratic union of all peoples…” Abruptly, Kirov stopped. He was breathless, and a sheen of perspiration clung to his forehead. His forgotten cigarette had burned down to his fingertips, a two-inch section of ash drooping precariously toward the carpet.

Gavallan found he was breathless, too. Kirov had spoken into his heart. He had addressed all his unsatisfied selves: the conscientious benefactor, the penitent sinner, the advocate of change happiest when striving. He had touched not only his dreams but his desire to dream, which was even more important. In a world scarred with cynicism, Kirov dared to have ideals.

The Russian fixed him with a challenging gaze. “Do you believe, Mr. Gavallan?”

“Yes,” said Gavallan, without hesitation. “I do.”

Kirov said nothing for a few seconds, his black eyes burning into Gavallan. He had the gift of silence, of dignifying thought for thought’s sake. Just then, he noticed the cigarette and rushed to put it out. He smiled, embarrassed, and the evangelist became once more the man. “I’m sorry to say you have put me in a difficult position,” he said. “I have very much enjoyed our chat, but I have a late dinner with the president of one of those big names we Russians so like. He has flown in from New York to see me. I think he will promise me the moon if I ask him.”