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That Other Planet Earth

Oct
11
2003

The first page of this week’s New York Mag’s Intelligencer column carries this quote from Tom Wolfe, who used to be a smart guy.
“It’s fascinating to see that not a single scandal has erupted in Silicon Valley. It was all right to have a corporate plane there, but you had to fly it yourself. Greed was not in style — but it sure was here.”
Huh?
If having a pilot’s license was a requirement for plane ownership, the San Jose Jet Center — once so crowded they were talking about housing the millionaires’ birds in Stockton — would be empty. The plane is the ultimate status symbol. How else can you commute between your homes in Sun Valley, Kauai and Atherton?
Silicon Valley was and is about money, getting it and hiding the fact that you’re richer than God behind a bland suburban exterior. New York is about getting money and spending it to prove you’re God and are therefore qualified to run the universe. Greed is in style in Silicon Valley. Consumption — New York style consumption — is not.
There haven’t been any scandals because, well, because no one wants or wanted to look for them. Until Friday. What’s been described in U.S. District Courtroom 1106 this week is pretty scandalous. There’s a whole country between New York and California and sometimes, well, sometimes it takes more than 5 hours to cross it.
New Yorkers think Quattrone is a Wall Street guy because he worked for a Wall Street firm. They think he showed Silicon Valley how to be greedy because, well New Yorkers think they invented everything.
But that’s not true. As I and many others have reported, again and again since 2001, Quattrone almost single-handedly built a money-making machine that enriched a small group of people using money generated by the public’s insatiable thrist for tech issues.
Quattrone encouraged that thirst by keeping stock offerings small so their prices would double or triple. Shareholders — the executives of the companies — would become millionaires (so they could go buy planes). He also used — as U.S. Attorney Steve Peikin demonstrated with a ruthless effeciency Friday — his ability to make IPO stock offerings as a way to build his business — not his bank’s, his — in Silicon Valley.
There is something very strange about sitting and listening to someone tell you that everything you’ve ever suspected is in fact true. Because your suspicion grows: is it even worse?
The Wall Street Journal will spend a lot of time on Monday on the email messages that Quattrone exchanged with Michael Dell. Quattrone wasn’t subtle. He roped Dell into appearing at CSFB’s tech conference by offering him shares of Corvis, an optics company (remember that bubble within a bubble?) on the day it went public. And he solicited Dell’s thought on a personal computer industry analyst.
“NFW” Dell wrote bank. No fucking way.
That’s not all. There’s another email in which Foundation Capital was asking for Corvis allocations, too. The shares, the message says, will go into the partners’ individual accounts, not to the venture firm’s general fund. Spinning. And I’m not talking public relations.
Oh yeah, and most of these messages were written by Andy Fisher, the guy who CSFB used to swear had nothing to do with investment banking but just happened to have an office in Palo Alto. The rest of the messages come from Mike Grunwald — the young banker who lived with Bill Brady and Ted Smith in Brady’s huge Telegraph Hill house — and Grunwald’s boss, John Schmidt. Sound familiar? Those are the two guys, the brokers of record on the friends of Frank” accounts who were fired from CSFB for supposedly rigging the bank’s commission scheme.
Yeah. Greed. It’s good. But until you spend all your cash on a Park Avenue apartment, an idiot trophy wife and her couture wardrobe, it’s not a scandal.

Share  Posted by Chris Nolan at 12:02 PM | Permalink

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