Chapter 344: Laying the Internet Framework

San Francisco Bay Area.

In the headquarters of Igrit Corporation, located near Stanford University in Palo Alto.

Simon arrived in San Francisco on April 23, and a conference room within the company's office was occupied for meetings attended daily by various people.

Aside from the top executives of Igrit, Steve Case, CEO of America Online headquartered on the East Coast, flew in, occasionally joined by executives from Cisco, Oracle, SUN, and Microsoft. Eventually, even the Bay Area media picked up on the activity.

Simon didn't disappoint the media, releasing a significant announcement on his second day in San Francisco; Westeros Corporation would invest an additional $50 million to acquire an additional 50% stake in America Online.

With this transaction, Westeros Corporation's stake in America Online increased from 25% to 75%, achieving absolute control.

This move had been set in motion even before Simon's arrival in San Francisco.

Over the next few years, missteps in the internet sector could cost him the early advantage, thus ensuring absolute control over America Online, a crucial element in his internet strategy, was essential.

To achieve this, James Lebrecht made a firm stance during the proposal: if the other shareholders of America Online didn't agree to this investment, Westeros Corporation would withdraw and support other similar enterprises instead.

Initially, America Online's executives and shareholders, including Steve Case, disagreed with Westeros's sudden demand to increase its share. However, because Simon didn't seek full ownership and left 25% of the shares with the original shareholders, coupled with Westeros's resolute attitude, America Online eventually accepted Westeros's terms.

Following this investment, America Online's headquarters would also relocate from the East Coast to San Francisco.

In a villa in the Woodside hills near Palo Alto, after a week of meetings, it was now April 28, Saturday, and Simon had not yet returned to Los Angeles.

Around noon, James Lebrecht arrived at this mountain mansion, where Jennifer greeted her father in the courtyard before they both entered the villa.

Upstairs, in a somewhat sparse study, Simon stood with his arms folded in front of a large whiteboard, deep in thought. The board was densely written with various terms using a black marker.

Portal websites, instant messaging, email, personal homepages, online news, e-commerce, online forums, online gaming, cloud computing, big data, search engines, firewalls, online payments...

Some terms were immediately clear to James, while others were puzzling.

Only years later, when the concepts on this whiteboard were realized, would James truly understand the immense value of these ideas.

Seeing that her daughter showed no intention of disturbing Simon and instead looked at the young man with a hint of admiration, James sighed internally about her outward focus and cleared his throat to announce his presence.

Simon turned around with a smile, extending his hand, "Good afternoon, Jim."

After shaking hands, James gestured towards the whiteboard, "So this is what you've been discussing with everyone?"

"Some of it, not all," Simon replied, "We can only implement a small part of it for now."

Stepping aside, James moved closer to examine the board more closely.

James had already proven his capabilities over recent years, and Simon didn't keep much from him. Pointing at some of the key terms he had circled, Simon explained, "In the coming years, Igrit Corporation, in cooperation with America Online, will focus on operating portal sites, email, personal homepages, online news, forums, and online gaming. Some of these features started development last year, which you're aware of."

James nodded.

Portal websites essentially meant setting a graphical interface browser homepage, designated as IE (Internet Explorer), serving as a gateway for internet surfing.

However, James knew the current internet content was scarce, and Simon's envisioned portal would need to produce much of its content independently.

In contrast, email was a highly practical feature developed by Igrit Corporation.

Hollywood's demand for mail delivery was enormous, with major studios and talent agencies maintaining their mailrooms, where new employees often started their careers.

If email systems could be implemented across these businesses, it could significantly enhance their operational efficiency.

The new Daenerys Malibu Studios, set to open next month, had already customized Igrit's email system. James realized that if this service could be expanded, it could become a major revenue stream for Igrit in the coming years.

Every company's growth requires solid revenue and profits.

With that thought, James added, "Apart from Igrit's basic software services, email, online news, and gaming could adopt a subscription model. Portal sites, personal homepages, and forums could rely on ad revenue, though that would require a significant user base, unlikely in the next few years. Moreover, Simon, if you plan to release web technology for general use, Igrit's developments could easily be replicated."

"Competition is good," Simon

 replied casually. "If a company lacks competitors, it's doomed to stagnate, which isn't beneficial for its growth. Besides, we already have a head start. If we lose to competitors with such advantages, it's our own fault."

As a professional manager concerned about his employer's interests, James had suggested more than once that Simon limit the licensing of web technology or adopt a fee-based model, like some other commercial networks already in operation.

However, Simon knew that it was precisely the complete free release of the web in 1993 that spurred the internet industry's explosion, with companies like Cisco, America Online, and Yahoo rapidly rising under this backdrop.

Restricting web technology or adopting a fee-based model could lead the technology to become obsolete like other paid networks.

After further discussion, they were reminded by Jennifer that lunch was ready, and they went downstairs together.

As they settled at the dining table, James noticed two tall maids serving lunch and couldn't help but glance disapprovingly at his daughter sitting quietly next to Simon.

Compete, foolish girl.

After the maids left, Simon picked up his cutlery and asked James, "How's it going with Cisco?"

According to the original timeline, Cisco was supposed to go public in February of this year.

However, due to Westeros Corporation's involvement, Cisco's IPO was postponed until now.

After securing absolute control of America Online, James immediately shifted his focus to Cisco.

Currently, Cisco's equity structure was simple: founders Leonard Bosack and Sandy Lerner owned 30%, Sequoia Capital owned 30%, Westeros Corporation held 15%, and two other Silicon Valley venture capital firms held 15% and 10%, respectively.

Thus, it was an equity structure that could easily be privatized.

Apart from Westeros Corporation and the Bosack couple, venture capital firms like Sequoia Capital, due to their business nature, preferred to cash out quickly rather than hold long-term stakes in a company. Hence, after their investments in companies like Apple, Cisco, and Oracle paid off, Sequoia was no longer among the major shareholders of these firms.

This nature of venture capital gave Westeros more opportunities to increase its stake in Cisco.

In fact, the shareholders agreed to Westeros's request to delay the IPO largely for this reason.

Under federal securities law, there are numerous restrictions on the reduction of large shareholders' stakes after a company goes public.

Although they could still sell shares privately post-IPO, no one could be certain of a company's trajectory after going public. It's possible that the market value post-IPO could be lower than during privatization.

After concluding negotiations with America Online's shareholders, James began contacting Cisco's stakeholders to discuss acquisition matters.

Hearing Simon's question, James set aside his frustration with his daughter and replied, "Sequoia Capital's three entities have agreed to sell us half of their stakes. If this transaction is completed, our ownership in Cisco will increase to 42.5%. However, there's now an even better opportunity."

Simon nodded, waiting for James to continue without rushing to ask about the price.

Regardless of whether it went public, with Simon's current strength, buying out Cisco wouldn't be an issue. The company's current revenue was only around $50 million, and based on prior estimates, its market value was expected to be around $300 million if it went public.

$300 million, whether by pooling overseas funds or continuing to use bank loans, was easily manageable for Westeros Corporation.

Therefore, Simon wasn't overly concerned about the cost; he trusted James not to disadvantage him. Moreover, given Cisco's growth prospects, paying a 100% premium or more would still be worthwhile.

James continued, "Here's the situation: Cisco's founder, Leonard Bosack, has been increasingly at odds with Cisco's CEO, John Morgridge, and the venture capital firms are very displeased with Bosack. He is likely to be ousted by the board soon."

Simon, reminded of something, recalled events from memory.

According to his recollections, due to ideological conflicts with Cisco's shareholders and management, Bosack and his wife Sandy Lerner left Cisco in 1990, subsequently selling most of their shares.

James's next words confirmed this: "I've already contacted the Bosack couple, and they seem to anticipate their departure is inevitable, so they're considering selling their shares."

Simon paused his meal, asking, "All of it?"

James shook his head, "Probably half. If it weren't for our interest in the company, other private equity firms would be happy to cash out early. Now, because of Westeros's involvement, other shareholders have higher expectations for Cisco. Thus, they won't completely let go. However, on the other hand, we won't face much resistance in gaining control of the company."

Simon immediately understood.

Westeros Corporation had become a prestigious brand due to Simon's rapid rise to wealth in just a few years, benefiting many businesses involved with it.

Thus, whether

 it was Cisco or America Online's shareholders, they wouldn't insist on maintaining control over these companies because they believed that handing control to Simon would likely yield greater returns. Likewise, to ensure future profits, they naturally wouldn't completely relinquish their stakes in the companies.

This phenomenon began with Simon's acquisition of Gucci.

After all, not many people are fools in this world.

Even when Bill Gates and Paul Allen agreed to transfer 10% of Microsoft's shares to Westeros Corporation, and companies like Intel continued to increase their stake without much resistance, it was largely for this reason.

Simon hadn't planned on fully owning these companies.

For companies like Microsoft and Intel, Simon's stake was primarily for investment purposes. He was aware of these companies' potential for future growth but knew he lacked the experience and capability to manage them and had no intention of vying for control. To convey this stance, Simon authorized Bill Gates to vote with the shares he held in Microsoft after increasing his stake.

However, for Cisco, America Online, and Igrit, Simon planned to maintain complete control.

These three companies—Cisco as a network equipment provider, America Online as a network service provider, and Igrit as a content provider—represented a complete internet industry chain.

If it were ten years later, Simon would face significant antitrust pressures, and the federal government would never allow him to control these three industry-shaping giants. He likely wouldn't have the capital to control these companies then.

Now, similar obstacles didn't exist.

The internet industry was still nascent, with some recognizing its potential, but the scale of its future development was uncertain.

By starting his plans now, when the internet industry peaked at the century's end, his control over the three companies would be an established fact.

And while he needed to achieve absolute ownership now, Simon didn't plan to hold a majority stake in these companies indefinitely, unlike Gates and Allen. All three companies were slated for IPOs.

Even if faced with antitrust investigations later, with proper planning and sufficient allies, the pressure on these three companies would likely be less than that on Microsoft.

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