Chapter 29: Investing in Learning
Lee Hak-jae grew increasingly cautious.
“Yes, they say he gave them 4 billion won.”
“Four billion? That’s outrageous!”
“There’s a rumor spreading in Chungmuro that the Sunyang Group is entering the film industry. It’s quite a hefty initial investment.”
“Rumors are just that—rumors. No need to worry.”
Chairman Jin began to rub his throbbing forehead.
“Should we intervene?”
“Can you?”
“A production company is like a developer in construction. Without a contractor, you can’t make a movie. You need to gather a lot of staff for each part.”
“Cut off their support, you mean?”
“Yes.”
“Hmm…”
The hand rubbing his forehead paused.
“Leave it.”
“Excuse me?”
“They need to fail to learn. Spending money out of sentiment is a mistake.”
Lee Hak-jae was taken aback. The chairman’s concern wasn’t for his son but solely for his grandson.
“Are you talking about Do-jun?”
“Yes. Even if it’s his own father, he’ll learn that money shouldn’t be spent on lost causes. If he spent 4 billion to harden his resolve, it’s a cheap lesson.”
“But what if the movie succeeds?”
“He’s been a layabout all his life. Not everyone can run a business. If making movies were easy, why do so many fail? Even seasoned producers and directors often flop. How could he succeed?”
Unlike Chairman Jin, who was certain of failure, Lee Hak-jae had a different perspective.
There are countless cases where unknown directors achieve box office success.
If it succeeds?
Rather than being angry about a wayward son, Chairman Jin would likely grow fonder of his grandson, Jin Do-jun, who recognized the potential in someone he had dismissed.
Whether the film fails or succeeds, Chairman Jin would probably end up smiling.
“But Hak-jae.”
“Yes, Chairman.”
“Young-jun is graduating next year, right?”
The sudden question about his eldest grandson made Lee Hak-jun hesitate. How old was he again?
“Send him to Germany after he graduates.”
“Germany? With the current situation there, is that wise?”
In September 1989, the Monday demonstrations that began in Leipzig had sparked democratization protests across East Germany.
To appease the protesters, East Berlin’s party secretary, Günter Schabowski, announced a policy of travel freedom at a press conference.
Then, something monumental happened.
An Italian journalist asked, “When will the border opening take effect?” Mistaking the question for travel freedom, Schabowski made the fatal error of saying, “Immediately, without delay.”
The Italian journalist, not fluent in German, misunderstood and reported back home that the Berlin Wall was being dismantled.
The news spread to the U.S. and then to West German television that night, prompting Germans to flock to the Berlin Wall.
Armed with tools, they began to tear down the wall. Not just Berlin, but all of Germany was descending into chaos.
“The fall of the Berlin Wall is a symbol of change in Eastern Europe. He should witness it firsthand and find opportunities within that change.”
“Isn’t he too inexperienced? Shouldn’t he gain some experience here first?”
“Experience is better gained in Germany. In a rapidly changing world, he’ll learn more in a short time.”
Was this his true intention?
Lee Hak-jae couldn’t shake his doubts. Was the goal to build experience or to expose Jin Young-jun’s incompetence?
“Understood. I’ll prepare a position at the Frankfurt branch.”
Satisfied, Chairman Jin spoke more cautiously.
“And… I’m thinking of setting up an electronics factory in East Germany. What do you think?”
Confident that East Germany would collapse, Chairman Jin was quick to act. With West German money flowing into East Germany, it would become a massive new market.
Lee Hak-jae knew what the chairman wanted.
Building a home appliance factory was something that could be done with a snap of the fingers. If it were that simple, he would have instructed the president of Sunyang Electronics instead.
There was another motive.
“I’ll meet with Representative Park to discuss it.”
“Yes, give them what they want and get what we need.”
The plan was to build the factory with government funds.
The justification could be anything. Supporting the underdeveloped East Germany was plausible, and the method of support would be a production plant that could create jobs.
Not entirely, but the goal was to use as much government money as possible to build the factory and later absorb it as Sunyang’s asset. It was a familiar strategy.
Those in government shouldn’t be stingy with public funds if they want to line their own pockets. And conglomerates like Sunyang, which leave no loose ends, are the best at making that happen.
“Here’s the investment contract. Take a look. Let’s see your English skills.”
Oh Se-hyun smiled with curiosity, but I had no intention of playing along.
“I can’t read such technical content. Just explain it to me.”
He seemed a bit disappointed, but I didn’t mind. In the past, I only reported the essentials. It’s a boss’s privilege to receive only the key points.
“Is it too difficult?”
Oh Se-hyun picked up the contract again.
“First, the total investment is nine million dollars. I firmly said no more. This is the limit allowed by the previous investors.”
“How much per share?”
“Forty cents.”
I was a bit surprised. I had expected sixty cents. Knowing that it would be listed on NASDAQ next year at a face value of thirty cents, I thought they’d demand at least double.
“Is it a good price?”
Feigning ignorance, I asked, and Oh Se-hyun shifted into the mode of a precise reporter.
“Dell Computer plans to list at a face value of thirty cents next year. The expected price at the time of listing is double, and it will fluctuate over time. But the average price is sure to be over forty cents.”
“Then it’s a good deal.”
Michael Dell had no choice but to offer favorable terms.
The shares I secured would eventually end up in Michael Dell’s hands. The more shares he secured, the stronger his control would be.
The only thing Michael Dell missed was how much faster the stock price would rise than he anticipated. Because of that, I’ll make a fortune.
“So the negotiation was easy. The hard part was this.”
Oh Se-hyun pulled out another thick stack of English documents.
“I’ve shortlisted candidates for the remaining six million dollars.”
He paused while explaining the investment candidates.
To explain the reasons for investment, terms like PER, PBR, PSR, WACC, net asset value assessment, expected future cash flow, and discounted cash flow method would inevitably come up, so he seemed a bit troubled.
“Let me simplify it. Safe investments and slightly adventurous ones.”
“Where are the safe investments?”
“In the medical field, like Pfizer, Johnson & Johnson, and Boston Scientific. They consistently make profits, so their stock prices are stable, and they offer good dividends. Especially in medicine, it’s hard for latecomers to catch up, so it’s a solid choice.”
In the fiercely competitive manufacturing sector, a single flagship product can cause stock prices to fluctuate.
But in the medical field, stock prices soar with each new drug and rarely fall, making it a fortress. It’s a top choice for stability.
“The slightly risky but promising one is Microsoft.”
Microsoft risky? The great Bill Gates?
Hadn’t they already succeeded with DOS in partnership with IBM?
He must have misunderstood my surprised look.
“Unfamiliar, right? Honestly, I’m not well-versed in computers either.”
“Why is it risky?”
“They’ve been releasing new operating systems, but the market response hasn’t been favorable. According to information, a third version is coming out next year, and if it fails, it’s hard to predict what will happen. There’s also a rumor that IBM is developing its own OS and might part ways with Microsoft.”
Was it Windows 3.0 or 3.1 coming out next year? I can’t quite remember.
It doesn’t matter. It’s only a difference of a year or two.
Windows 3.0 introduced virtual memory, significantly enhancing multitasking capabilities, and with improved graphics card performance, it offered a more beautiful and vibrant interface.
Starting with 3.0, IBM PC compatibles, with their relatively low prices and expandability, would rise as strong competitors to the expensive Apple Macintosh, and Microsoft would dominate the global PC market, pushing the powerful Macintosh to the fringes.
Having lived through the era when Apple became an absolute powerhouse again with the iPod and iPhone, it’s truly fascinating. There are no eternal winners.
“Uncle, who recommended Microsoft?”
“Rachel did. You met her, right? From the New York office?”
“Oh, that lady?”
“What? Lady? Haha. She’s only thirty. If Rachel heard that, she’d be furious.”
I had a feeling that Rachel would be the top talent at Miracle Investment.
“So, what should we do?”
“What do you think, Uncle?”
“I’m drawn to Rachel’s opinion.”
Oh, that’s unexpected. He clearly said he wasn’t familiar with the field. Yet he’s considering the investment.
“It might sound strange, but I have a gut feeling. Rachel’s confidence seems right. It keeps drawing me in.”
As I continued to look at him curiously, he let out a small laugh.
“Hehe. Of course, the backup data was solid too. The numbers make it worth the risk. And… your luck isn’t ordinary, so I thought, why not bet on it?”
“Then let’s do it. I’m a magnet for good fortune, so it’ll work out. Hehe.”
They laughed together, but there was a glimmer of anticipation in Oh Se-hyun’s eyes. He was about to receive a return hundreds of times greater than his expectations. After all, didn’t he own a 2% stake?
It was time to move on to the next step.
“Uncle, I have a favor to ask.”
“Sure, what is it?”
“You know that land in Bundang? The one that’s still left…”
“What? That land? It’s been going up, hasn’t it?”
“Has it? I wouldn’t know… Anyway, please sell it.”
He waved his hands in surprise. The land prices were skyrocketing by the day.
“Huh? Why sell it? Just hold onto it. You can sell it when it peaks.”
It’s not that I don’t know. But I can’t afford to miss out on something more important just to make a few extra billion won.
“Then what about the company in New York? Should it just sit idle?”
“What? Oh…!”
Oh Se-hyun slapped his knee in realization.
A hefty sum of fifteen million dollars would be poured into just two companies. And there was no telling when it would be recouped. It would have to sit for at least a few years.
We can’t have the company’s four talented employees just staring blankly at stock charts, can we?
“So that money will be the capital Miracle manages.”
“Yes. But use only half and keep the other half.”
Strictly speaking, I don’t know much. I’m merely using fragments of future knowledge. If I didn’t know the future, would I have invested in Dell Computers and Microsoft?
My current knowledge and skills don’t even come close to those of a woman named Rachel.
Half of the money from selling the remaining land will become my tuition. Every action they take in the investment decision process will be my textbook, and Oh Se-hyun, a talent from the formidable company PowerShares, will be my tutor.
With them, I’ll experience and learn about the global real economy. Even if I lose all that money, it won’t be a waste.