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How I Screwed Yasser Arafat out of $2mm (and lost $100mm in the process)
- jwh 16y ago"...if you have to raise thirty million to start your business, its probably not a good business (at least for me)." I've lost count of the number of articles I've read saying "Startup XYZ Inc just raised $X million!" and a dearth of the "Startup ABC Inc made $X million profit on revenues of $Y million" kind. It's refreshing to see an article on HN that points out the obvious: if you have such a good business, why doesn't it make any money?
- vidar 16y agoArticles do not get written unless the company pushes for it. They need the publicity when they raise the money, not when they are making money. Its quite simple, really.
- jaltucher 16y agoThats totally it. "raising money" is a marketing event for many companies. And then the list of investors put you on a status hierarchy so that you become first in line when Google goes shopping. Or so the CEOs think. I'm almost embarassed when any company I invest in announces their funding. Thats not the real world. The real world is buying something low and sell high. I learned this many times over, some times the hard way.
- davidw 16y agoThey don't have to report that sort of thing until they're public, correct? That might be part of it.
- cperciva 16y agoMoral of the story: When you get a phone call from someone you don't know, working for a company you've never heard of, saying they want to buy your company, be very very careful.
- brc 16y agoOr insist on an all-cash deal.
- cperciva 16y agoInsisting on an all-cash deal doesn't avoid the fact that you've wasted a lot of time if the deal falls through -- and I'm guessing that swindlers like this have an even higher than normal deal-falling-through rate.
- jaltucher 16y agoFirst off, nobody swindled anyone of anything. Ahh, I shouldn't even be responding to you.
- cperciva 16y agoYou phoned 20 companies and said that you wanted to buy them. You promised them ten million dollars which you didn't have. You promised them ten million dollars worth of stock which you knew was worthless (while telling them that it would be worth a hundred million dollars). You lied, many times over. Maybe to you that's just "being a good salesman"; but to me, that's simply unacceptable.
- acqq 16y ago> phoned 20 companies and said that you wanted to buy them Not a lie. He actually did buy the company which responded. For more than it received from the former bidder. > You promised them ten million dollars which you didn't have. Most of the purchases are made without the hard cash in the bank.
- cperciva 16y agoNot a lie. He actually did buy the company which responded. True, but he didn't want to buy 20 companies. Do you think it's reasonable for a man to ask 20 women to marry him, based on the premise of "19 of them will probably say no"? For more than it received from the former bidder. Only if you accept his completely fictitious stock valuation. Most of the purchases are made without the hard cash in the bank. Sure, but I'd hope there's usually a fairly clear path to obtaining the cash -- clearer than turning around and selling (part of) the company you just bought.
- flog 16y ago2 dollar millimeters? Is this "mm" some odd Americanism?
- deleted 16y ago[deleted]
- ars 16y agoNo. It's a financial thing. It looks odd to Americans too. And BTW, you could have googled that yourself in two seconds.
- jaltucher 16y agoI used to just say "2M" for $2 million but an editor I had once at thestreet.com said you have to do "$2mm". I don't know whats right worldwide.
- _delirium 16y agoIn general-audience journalism, $2M or $2m is a lot more common, I believe, though $2mm / $2MM is also used, but less frequently. In finance-industry news it seems to be the opposite. Compare: http://news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=%22%242m%22 http://news.google.com/news/search?aq=f&pz=1&cf=all&... vs. http://news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=%22%242mm%22 http://news.google.com/news/search?aq=f&pz=1&cf=all&...
- eli 16y agoWell, you would never say "$2M" to mean $2,000, so either one works and it's really just a matter of house style.
- samatman 16y agoIf you are ordering a manufactured good, however, 2M definitely means 2000. There was some hilarity in ordering the first round of MakerBeam parts arising from this; we thought we were going to be getting 2 meter long beams, for a panicked minute.
- acqq 16y agoThe simplest bio of the author: http://apps.thestreet.com/cms/rmy/biography.jsp?authorId=1005630 http://apps.thestreet.com/cms/rmy/biography.jsp?authorId=100...
- corin_ 16y agoSentences such as: There were companies going public then with zero dollars in revenues that were now worth over a hundred trillion dollars. and Jerry Levin might very well have been at the table next to us buying AOL right in front of our eyes. Make me cringe. Am I being an idiot to assume that anyone with this kind of success (sure, this story didn't end well for him, but still extremely successful in his attempts to bring in money) ought to be able to write it up in such a way that it doesn't read like a schoolboy's work of fiction?
- acqq 16y agoYes it certainly sounds like a fiction, but it's really entertaining. I've found the plain bio of the guy here: http://news.ycombinator.com/item?id=2134825 http://news.ycombinator.com/item?id=2134825 If anybody knows something useful apart from what he wrote about himself: http://www.jamesaltucher.com/about/ http://www.jamesaltucher.com/about/ please add here.
- jaltucher 16y agoI should mention two things: A) every ounce of the story is true. If you read through my blog you'll see there is no fiction. Many people sometimes question the stories but, for better or for worse, I tend to throw myself into various situations. B) if you have any questions on my bio, feel free to ask me. Or, I would also advise, checking out the rest of jamesaltucher.com for the answers.
- maayank 16y agoI fucking want to write like this guy. James, do please tell how you got your writing to be as it is. (no cynicism)
- wildwood 16y agoYou can probably start here: http://www.jamesaltucher.com/2011/01/how-to-steal-and-get-rich/ http://www.jamesaltucher.com/2011/01/how-to-steal-and-get-ri...
- patrickk 16y ago"...and Dennis something or other who just sold a huge Irish telecom company and was worth a random billion or so." He's talking about Denis O'Brien, a telecoms billionaire: http://en.wikipedia.org/wiki/Denis_OBrien http://en.wikipedia.org/wiki/Denis_OBrien
- ajju 16y ago> traveling for business almost never generates more revenues This is not true at all. If you are selling expensive software to enterprises (or organizations of any kind), the only effective way to do it is to travel to their office and give an in person demo. At least the author acknowledges he didn't deserve to make any money. If he had deployed his deal making skills for a company that actually created value, he would have ended up making a ton of money. This assumes it wasn't just the dot com euphoria driving the deals of course.
- arvinjoar 16y agoAmerican Psycho but with lighter humor. There's definitely some similarities. I'd love to read a book lightly based on the author and his adventures during the bubble.
- jaltucher 16y agoI don't think you will be disappointed by my other experiences I write about in my blog at jamesaltucher.com
- pmorici 16y agoIs it just me or does this article have a pretentious tone to it? Also if you follow the line of thinking in the last paragraph to it's logical conclusion then a lot of people were "screwed" out of their millions of dollars.
- codingthewheel 16y agoI felt the same way, but I interpreted it as the writer's subtle mockery of his earlier "hotshot" self. Towards the end he notes that he made no money off the deal, and that he deserved to make none.
- zaidf 16y agoAnd they say what is going on right now is a bubble?
- nir 16y agoIt still is. Not nearly as big as the dot.com one (it was the first bubble, the economy was in better shape, etc) but still a bubble. We're in a bubble-bust industry. It will be this way for some time.
- danielsoneg 16y agoI think any industry that can show the kind of returns this industry does - "Two Guys in a Garage" Become "$200Bn Market Cap" in about a decade - is going to inspire mania. It's not necessarily a broken model - all farmville jokes aside, I'd wager the overall value of the enormous amount of social well-being that's been spawned by even the few companies that have made it out of the valley far exceeds the money lost to the busts - but the whole place is leverage incarnate.
- nir 16y agoYeah, I'm not saying it as judgmentally, just that it is what it is. It's similar to Hollywood, in a sense - an industry where a product can earn you a lot of money or nothing at all, and it's hard to predict which is which.
- burgerbrain 16y ago"Not nearly as big as the dot.com one" Give it time man. Give it time.
- seanalltogether 16y agoAs I was reading this I kept trying to think of why I knew the name Vaultus, it was so familiar. And then it hit me. They made the first iphone app for one of our clients, they use some sort of proprietary java system that compiles to iphone blackberry and android and it's TERRIBLE, which is why we came in to build the second version natively. So reading how thrown together their company is explains a lot about how thrown together their software is.
- InfinityX0 16y agoHoly shit, thanks to cturner who posted this. This is going to be the best new blog I find in 2011. This guy is not only a very talented writer and storyteller, he also has a shit ton of stories to tell. Dynamite combination.
- cturner 16y agoI took it straight from a financial times site I follow. http://ftalphaville.ft.com/ http://ftalphaville.ft.com/ But thanks all the same :)
- asmithmd1 16y agoInteresting that Aether gets mentioned in this article. They raised about $2B in a stock offering at the height of the late 90's bubble and by buying and selling companies they parlayed that into about $100M a few years later. If it were in a movie you would think it was un-believable but in 2004 the still CEO decided to invest the money he had left in leveraged mortgaged backed securities: http://findarticles.com/p/articles/mi_m0EIN/is_2004_June_8/ai_n6060195/ http://findarticles.com/p/articles/mi_m0EIN/is_2004_June_8/a... EDIT: here is a link to a better overview of Aether. Someone should write a book about this company: http://articles.baltimoresun.com/2004-07-22/news/0407220158_1_platinum-existing-businesses-wireless http://articles.baltimoresun.com/2004-07-22/news/0407220158_...
- aubergene 16y agoHe mentions the Shakespeare & Company on Broadway, but the photo is of Shakespeare & Company in Paris.
- jaltucher 16y agoWell, I wanted to buy both. Why not?
- luckymurari 16y agoP4Wn3d! But does that make the story worthless?? I think, No!!
- jayliew 16y agoI'd love to hear more stories like this one - except from successful tech startup founder/CEOs :) Not that this one wasn't interesting; it was.
- EGreg 16y agoWhat are you doing now?
- jonah 16y agoD) Hiring smart people doesn’t work if you aren’t smart. Everything ultimately comes form the top down.
- tstyle 16y agoThis guy's blog reminds me of Tucker Max, some proud to be a*hole who writes well and is hilariously entertaining. http://www.jamesaltucher.com/2011/01/how-to-lose-all-your-friends/ http://www.jamesaltucher.com/2011/01/how-to-lose-all-your-fr...