

How I Screwed Yasser Arafat out of $2mm (and lost $100mm in the process) - cturner
http://www.jamesaltucher.com/2011/01/how-i-screwed-yasser-arafat-out-of-2mm-and-lost-100mm-in-the-process/

======
cperciva
Moral 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
Or insist on an all-cash deal.

~~~
cperciva
Insisting 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
First off, nobody swindled anyone of anything. Ahh, I shouldn't even be
responding to you.

~~~
cperciva
You 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
> 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
_Not 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.

~~~
gilgad13
> 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"?

Oh, come on. Do you think its reasonable to try to buy a car at 20 different
dealers, even if you only want one of them?

~~~
cperciva
If I wanted to buy a car, I might go to 20 different dealers and say "I want
to buy a car and I'm _considering_ car X", but I wouldn't phone up 20 dealers
and say "I _want to buy_ car X" for 20 different values of X.

~~~
neworbit
...but the point of a rollup is that you do want to buy five or seven cars out
of those twenty.

------
asmithmd1
Interesting 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/a...](http://findarticles.com/p/articles/mi_m0EIN/is_2004_June_8/ai_n6060195/)

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_...](http://articles.baltimoresun.com/2004-07-22/news/0407220158_1_platinum-
existing-businesses-wireless)

------
ajju
> 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.

------
corin_
Sentences 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
Yes 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>

If anybody knows something useful apart from what he wrote about himself:

<http://www.jamesaltucher.com/about/>

please add here.

~~~
jaltucher
I 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
I fucking want to write like this guy.

James, do please tell how you got your writing to be as it is. (no cynicism)

~~~
wildwood
You can probably start here: [http://www.jamesaltucher.com/2011/01/how-to-
steal-and-get-ri...](http://www.jamesaltucher.com/2011/01/how-to-steal-and-
get-rich/)

------
jwh
"...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
Articles 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
Thats 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.

------
seanalltogether
As 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.

------
pmorici
Is 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
I 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.

------
InfinityX0
Holy 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
I took it straight from a financial times site I follow.
<http://ftalphaville.ft.com/>

But thanks all the same :)

------
patrickk
" _...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>

------
zaidf
And they say what is going on _right now_ is a bubble?

~~~
nir
It 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
I 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
Yeah, 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.

------
tstyle
This 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-
fr...](http://www.jamesaltucher.com/2011/01/how-to-lose-all-your-friends/)

------
flog
2 dollar millimeters? Is this "mm" some odd Americanism?

~~~
ars
No. It's a financial thing. It looks odd to Americans too.

And BTW, you could have googled that yourself in two seconds.

~~~
jaltucher
I 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
In 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&...](http://news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=%22%242m%22)
vs.
[http://news.google.com/news/search?aq=f&pz=1&cf=all&...](http://news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=%22%242mm%22)

~~~
eli
Well, you would never say "$2M" to mean $2,000, so either one works and it's
really just a matter of house style.

~~~
samatman
If 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
The simplest bio of the author:

[http://apps.thestreet.com/cms/rmy/biography.jsp?authorId=100...](http://apps.thestreet.com/cms/rmy/biography.jsp?authorId=1005630)

------
arvinjoar
American 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
I don't think you will be disappointed by my other experiences I write about
in my blog at jamesaltucher.com

------
jayliew
I'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.

------
aubergene
He mentions the Shakespeare & Company on Broadway, but the photo is of
Shakespeare & Company in Paris.

~~~
luckymurari
P4Wn3d!

But does that make the story worthless?? I think, No!!

------
jonah
_D) Hiring smart people doesn’t work if you aren’t smart. Everything
ultimately comes form the top down._

------
EGreg
What are you doing now?

