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Chapter 4 - The IPO, June 29-30, 1999 - Episode 4
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Email, June 30, 1999 (continued)
From: Eve Gross [mailto:eveg@hackoff.com]
Sent: Wednesday, June 30, 1999 12:09 PM
To: Larry Lazard
Subject: CNN
Lar:
They want to do an interview tonight about the IPO! Want to do it?
Eve
From: Larry Lazard [mailto:larryl@hackoff.com]
Sent: Wednesday, June 30, 1999 12:10 PM
To: Eve Gross
Subject: RE: CNN
Yeah! But check with Aaron what I can say and what I can’t. It’s still technically the quiet period.
From: Aaron Smyth [mailto:aaronsm@hackoff.com]
Sent: Wednesday, June 30, 1999 12:20 PM
To: Larry Lazard
Subject: Privileged attorney-client communication
Larry:
I talked to the lawyers at Barcourt and they’re not happy about you doing anything on CNN in the quiet period. The SEC could get upset; could claim you’re hyping the stock.
Aaron
From: Larry Lazard [mailto:larryl@hackoff.com]
Sent: Wednesday, June 30, 1999 12:22 PM
To: Aaron Smyth
Subject: RE: Privileged attorney-client communication
What the fuck. When did they repeal the first amendment? I know I can’t hype the company. But I can quote from the prospectus and I can talk about the industry. I know what I’m doing.
What happens if I do it and they don’t like it? Are they gonna undo the IPO? Stock keeps going down like it is, the IPO will undo itself.
From: Aaron Smyth [mailto:aaronsm@hackoff.com]
Sent: Wednesday, June 30, 1999 12:23 PM
To: Larry Lazard
Subject: RE: RE: Privileged attorney-client communication
Larry:
Can I come over and talk to you about it?
Aaron
From: Larry Lazard [mailto:larryl@hackoff.com]
Sent: Wednesday, June 30, 1999 12:23 PM
To: Aaron Smyth
Subject: RE: RE: RE: Privileged attorney-client communication
Come
#
“Larry, look, they’re not being unreasonable,” says Aaron a few minutes later. “You know what the rules are, but the press doesn’t have to follow them. They’re going to try to get you to say more than you’re supposed to. You might look stupid if you DON’T say anything; you’ll get in trouble if you DO. My advice is let it go. There’ll be another chance.”
“The fucking trading desk is supposed to HELP the stock,” says Larry. “It’s falling like a rock. It’s at eighteen. They’re not doing their job and now they don’t want me to do mine. How’re people supposed to buy the stock if they’ve never heard of the company? Is there a law against doing it? Did we sign some fucking agreement that says I need permission from Barcourt lawyers before I shit?”
“There’s a regulation against hyping the stock, especially in the quiet period,” says Aaron, still calm. “They get to see press releases during the quiet period but they don’t have a veto and this isn’t a press release. You can do it if you want. But it’s a risk…”
“Life’s a risk. I could get killed crossing the street on the way to the interview. I’m gonna do it. Let them know.”
“Do you want to discuss it with Donna?”
“No. I don’t. She’s the CFO. She does the numbers. When I want advice about numbers, I’ll ask her. When I want advice about the law I ask you. You told me that there’s no law against it, but there’s a risk. I decided to take the risk. Just tell them I’m doing it… Stock’s back at nineteen now; that’s a little better. Wonder what the fuck is going on with it?” Larry is now talking to himself.
“Okay, Larry, be careful. DON’T TRUST THE PRESS.”
“Right. Thanks.”
#
When Larry gets to the television studio at 500 8th Avenue he finds that the marketing lady, Eve Gross, has been a little optimistic. It is not CNN itself but its little sister CNNfn that wants to interview him. A twenty-something producer with a pierced nostril leads him to the green room which is actually just an alcove off the makeup room with a dilapidated water cooler and a monitor showing the broadcast.
Waiting to go on before Larry are an analyst from a brokerage firm with her PR lady and the current girlfriend of the publisher of a prominent men’s magazine with an entourage of two other women whose duties are not apparent.
Larry watches the host, Robert Sanford, read the financial news off his TelePrompTer until he is called in for makeup.
“We’re just going to powder your nose a little to take off the shine and then spray your hair to keep it in place,” says the makeup lady, shifting her gum to the other side of her mouth. But she is interrupted by a call on her cell phone and issues a substantial stream of “he goes...” and “she goes...” and “then I go…” before getting back to Larry.
“I’d much rather do men,” she says to Larry. “Their makeup, I mean. They’re not so particular. Some women…” She gestures with her head to the girlfriend of the publisher. “Some women just make it impossible to get your job done, ya know?”
“Yeah,” says Larry.
“Okay, now don’t touch your hair. When you’re done, come on back here and I’ll give you some cold cream to get the powder off.” She’s back on the phone with more “he goes/she goes…”
Larry turns up the monitor so he can hear the interview with the analyst.
Sanford: What did you think of today’s IPOs?
Analyst: Well, Bob, it’s a pretty typical day. Three new companies out of the gate. One of them, haircolor.com, tripled before the close. Actually it was up four times in the afternoon but there was a little profit-taking at the end. There was the adult site which doubled to thirty dollars, and freesoftware.com had a little less interest than expected and is up a disappointing fifty percent.
Larry looks around desperately for the producer. Finally, he spots her. “They’ve got it wrong,” he says. "Hackoff.com’s not a porno site; it’s an e-commerce site.”
“I know,” the producer says. “I do my homework.”
“But the analyst Sanford is interviewing just said it’s a porno site. That’s go to be corrected; that’s wrong.”
The producer is amused: “You can’t change what the analyst says,” she says. “Besides, her four minutes are up. She’s coming off the air. You’re up after the girlfriend.”
“But does Sanford know? Is he going to introduce me as the CEO of a porno site?”
“Sanford doesn’t know anything yet. During the next commercial, before you go on, he may read the briefing I gave him. Or he may not. You may get a second to talk to him before you go on the air. Or you may not. It all depends. No problem; it’ll be fine. I’ll be back to get you in a couple of minutes and lead you to your place.”
Sanford: You and the publisher have both a business and a personal relationship, as I understand it.
Girlfriend: Yes. Yes we do. We also have a spiritual relationship.
Sanford: I don’t want to pry, but it seems to me a legitimate business question is: Do you think your relationship will last? The publisher has had lots of relationships...
Girlfriend: Bob, as I just explained, our relationship is special. It’s business; it’s personal; it’s spiritual. It will last.
Sanford: Well, because of the business dimension, it is important to our viewers. I mean otherwise it would be private. I mean isn’t fifty years a rather large age difference?
Girlfriend: Bob, I don’t think you get the spiritual dimension here. Age is just not important in the spiritual place that the publisher and I are at. It’s just so irrelevant.
Sanford: Thank you for being my guest on “Meet the Money”.
Girlfriend: Thank you, Bob. It’s been great to be here.
“Okay, you’re up next,” the producer says to Larry.
She leads him through a murky area, cautioning him to step over the cables. They pass the girlfriend who is swearing spiritually under her breath.
Larry goes up on a dais in a chair next to Bob Sanford, who is fixing his hair and talking through his mike to someone who is talking back through the earphone in his ear. A guy in a Grateful Dead tshirt clips a mike to Larry’s tie, pushes the wire under his jacket, and gives Larry the box at the end of the wire to put in his jacket pocket.
“Sixty seconds,” the producer says.
“So,” says Sanford, still off the air, “you’re one of those dot.com billionaires. I hate you guys.” He doesn’t sound like he’s kidding.
“Just a millionaire,” says Larry. “And that’s all on paper. It’s not real. I can’t sell my stock for at least six months. I…”
“Yeah, you guys are always whining … all the way to the bank. I didn’t think porno sites went public.”
“We’re not a porno site,” says Larry. “We’re an e-commerce site. The producer said you were briefed on all this…”
“Five seconds,” the producer says.
The red light illuminates on top of the camera facing Sanford which dollies in. He looks into the TelePrompTer to read the introduction. To viewers, it looks as if he has leaned towards them.
Sanford: Our next guest on “Meet the Money” is Larry Lazard, Chairman and CEO of hackoff.com, stock symbol HOFC. Although hackoff was not the most successful IPO of the day, it did double and leave Larry with plenty of money. Larry, welcome to “Meet the Money”.
Larry: Thank you, uh ... Bob. It’s a pleasure to be here.
Sanford: Many people believe that hackoff.com is an “adult” site. You say it’s e-commerce. Is it both?
Larry: No. hackoff.com has nothing to do with pornography. We’re an e-commerce business. We supply the software that keeps e-commerce sites safe from hackers who want to steal credit card information and do other bad things. We are making e-commerce secure.
Sanford: Do you think the people who bought your stock and made it double today did that thinking that hackoff is an adult site? Maybe they think that IS a good business.
Larry: No. No; I don’t think that. I think people bought our stock because they think we have a good business and they want to share in that success.
Sanford: Do you think that people didn’t buy your stock because they don’t like your business plan? Actually, the haircolor.com IPO did much better than your company today. They have a business model that people can understand.
Larry: I don’t know. I can’t really talk about our business plan other than what is in the prospectus because we’re still in the quiet period. But were pleased with the IPO.
Sanford: Rumor on the street is that hackoff was priced below expectations at the midpoint of it’s range. Do you think that’s because you spent some time in prison prior to being CEO of hackoff?
Larry: No. I don’t. I think people recognize that I have a unique understanding of the market for online security and that hackoff—
Sanford: Do you think hackoff will go down when investors find out that it’s not an adult site? I’m sure a lot of them thought it was. There are lots of investors listening to us now.
Larry: I...
Sanford: Larry, our time is up. Thank you very much for being my guest on “Meet the Money”.
Larry: Thank you for having me.
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