Chapter 63
Translator: Dreamscribe
Netflix is a company that achieved great success in the United States.
Just two years ago, its market capitalization reached a whopping 30 billion dollars.
“But ever since Netflix founder Reed Hastings declared that he would expand Netflix into as many as 200 countries, the stock price started to decline.”
From the investors’ point of view, it seemed like Netflix was overly intoxicated with its success in the U.S. and Canada.
“Even though the stock price fell, Reed Hastings bulldozed forward. The problem was that starting last year, the Chinese stock market bubble burst, and the stock market began to gradually sink.”
The collapse of the Chinese bubble.
The Greek default.
Stummwagen, the Paris terror attack.
Brexit, and so on.
Events that shook the international market occurred one after another.
“As a result, Netflix’s stock price, which had reached 30 billion dollars, fell to 20 billion dollars, and with the recent bankruptcy of Deutsche Bank, all financial institutions started withdrawing their investments, causing the 10 billion-dollar level to collapse for the first time.”
The biggest problem was that loans were also blocked.
Right now, the media is calling the Deutsche Bank incident the second Lehman Brothers.
Other European companies are quickly absorbing Deutsche Bank to prevent it from reaching that level, but human psychology is what it is.
No matter how much the shock is mitigated, to investors, this situation was nothing but fear.
“From a market capitalization of 30 billion, now it’s below 10 billion… down to 9 billion dollars.”
Netflix must be dumbfounded too.
It’s not like they did something terribly wrong, but the collapse of the global financial market ended up affecting their business as well.
“From the investors’ perspective, it probably seems like, in a recession like this, people wouldn’t want to pay monthly to subscribe to Netflix.”
“So they’re in urgent need of a capital injection?”
“Yes. They say the urgently needed amount right now is 1 billion dollars. That’s why they’re apparently looking for investors everywhere. They had made all preparations for global expansion, but the loans and investment funds they were supposed to receive have vanished.”
If Deutsche Bank hadn’t gone bankrupt, Netflix would have smoothly carried out its global expansion by now.
However, due to the financial market ice age triggered by the bankruptcy of Deutsche Bank, Netflix’s global expansion was blocked as well.
As a result of the shock, its market capitalization also dropped to 9 billion dollars.
“What if they don’t receive the capital injection?”
“Then global expansion is out of the question. They might even have to shut down immediately. To be honest, 1 billion dollars is the bare minimum. Netflix originally tried to expand its business too rapidly all at once. Their greed was excessive. That’s why this incident is about to tear them apart.”
I silently looked at Vice President Kang Ji-hwan, the core of our Kwangwoon Securities.
Not only did he speak respectfully to someone much younger like me, but he also coolly gave up the position that he himself should have taken.
You’d think he might follow hyung and move over to Kwangwoon Group’s holding company to play the role of Vice Chairman, but he insisted his place was here and stayed in his position.
And that’s not all.
When I was just a Department Head, he used to speak informally, but as soon as I became CEO, he treated me with such deference that it almost felt burdensome.
He firmly held the stance that companies shouldn’t be judged by age, and thanks to that, other executives didn’t dare speak casually or act overly familiar just because I was young.
To me, he was someone I was truly grateful for.
The reason such a person had come all the way to Kwangwoon Tower today was precisely because of the Netflix investment matter. As soon as he heard that Netflix had caught wind of our interest, the founder himself started flying to Korea.
“How much investment are you considering?”
“How much do you think would be appropriate, Vice President?”
“May I speak frankly?”
“Yes.”
“Honestly, I’m against investing in Netflix.”
“Why do you think so?”
“Not only because of the reckless business plan to go global all at once, but also because this isn’t about simply buying and selling stock, this is a capital injection through a paid-in capital increase. The risk is just too high.”
If Netflix wanted to receive investment funds from us, a paid-in capital increase was one of the options.
There is also the option of lending the money outright, but what our securities firm ultimately wants is not loan interest, but profits through investment, isn’t it?
That’s because the returns are much better on that side.
However, since this is an investment in the truest sense, if the company goes under, our money disappears along with it.
Because of this fear, companies that had invested in Netflix were now pulling out one by one.
“But CEO, you’ve already decided to invest, haven’t you?”
When I looked through the materials about Netflix.
I saw a shining golden light there.
This isn’t an investment for small gains.
From my experience, this will be an investment that yields tremendous returns.
“In that case, I think 1 billion dollars would be appropriate. That’s exactly the amount Netflix is asking for as well.”
I slowly nodded my head.
In fact, I was still unsure about how much to set as the investment amount.
“Let me say it again, but I still believe that investing in Netflix will result in losses.”
And such concerns didn’t just come from the Vice President.
Employees in the Prime Department were also expressing their worries.
That’s because Netflix was in such a state that it wouldn’t be surprising if it shut down tomorrow.
“For now, let’s hear what they have to say and reconsider our decision.”
“Yes. Since they’re coming all the way here, I should at least meet them.”
So we waited for Reed, the founder of Netflix, who was reportedly flying to Korea on the next available flight.
For this serious investment meeting, the Vice President, several executives, and some employees from the Prime Department were already gathered in the conference room.
Not long after, Reed entered Kwangwoon Tower with his executive team.
“I’m Reed Hastings, CEO of Netflix.”
And then I saw it.
“……!”
Reed’s golden face, shining so brightly that the afterimage remained in my eyes for a moment.
***
Reed Hastings, founder of Netflix.
He succeeded by expanding Netflix’s streaming business from the U.S. market into Canada.
That’s where he gained confidence.
And once he realized that the global market meant big money, he began a full-scale business expansion.
However, the timing was unfortunate.
After the Chinese bubble burst, came the Greek default, followed by Brexit.
Investors were already displeased by his declaration to vastly expand into global markets, and then all these events happened at once.
Fine. Up to that point, it was still manageable.
Even if the stock price had dropped, it was merely the calm before the storm.
Once Netflix succeeded in global expansion, it would shut the mouths of all those who had mocked him.
But this time, the situation was different.
Deutsche Bank, one of the top three financial institutions in Europe, had collapsed.
Thanks to that, every investor began to withdraw their funds, and all additional loans and investments were blocked.
Just one step away from global expansion, this was misfortune beyond belief. Then came the news that an unknown company was interested in investing.
“Kwangwoon Securities?”
It was a company he had never heard of before.
“I don’t know the details either, but according to rumors, they have significant financial power. Also, although it’s not confirmed, they supposedly made a huge profit from the collapse of Deutsche Bank.”
And now such a firm suddenly wants to invest in Netflix?
But this wasn’t the time to be picky.
As soon as Reed Hastings heard there was investment interest, he flew straight to Korea.
In truth, anyone willing to provide money right now was worth grabbing by the ankles to secure investment. Otherwise, Netflix would have to shut down.
So he came to visit the company without even properly looking into Kwangwoon Securities.
“Wow… is this really the Kwangwoon Securities building?”
Staring up at the 555-meter-tall skyscraper, Reed swallowed dryly.
To think this was where Kwangwoon Securities operated.
Since people were saying it was a rising company, at first, he was worried it might be a scam, but suddenly he felt a strong sense of trust.
“This way, please.”
With that, Reed followed the guidance of the staff toward the meeting room.
There, he came face to face with what might be the savior that could keep the company alive today.
“I’m Jung Jin-ho, CEO of Kwangwoon Securities.”
At first, he thought the person next to Jung Jin-ho was the CEO.
But for such a young person to be the CEO?
Well, in the U.S. Wall Street, it’s not unusual to have a young CEO.
And the age of the other party didn’t matter.
They had to secure the investment funds no matter what.
The urgently needed amount was 1 billion dollars.
But even if it was only 100 million dollars, he intended to persuade the counterpart as much as possible.
“Then, let me explain the business direction that Netflix is envisioning.”
Reed, along with the executives who accompanied him, passionately presented the reasons behind Netflix’s global expansion and its future prospects.
He also presented very favorable terms.
They would offer shares through a paid-in capital increase and provide special preferred dividends.
In other words, they would grant management participation and special preferred stock, and offer not only dividends but also a certain portion of profits from global revenue.
“…….”
Reed observed CEO Jung Jin-ho, who held full authority over today’s investment decision.
Even after showing several visions and directions, Jung Jin-ho didn’t seem particularly interested.
He occasionally jotted something down in a notebook, but it looked more like he was doodling out of boredom.
And the strange thing was, he kept glancing at Reed and squinting his eyes.
What was this?
Was it because he had flown in directly without cleaning up, and his appearance was bothering him?
No matter how urgent it was, maybe he should’ve taken a moment to wash up first.
‘The investment is as good as gone today.’
Reed half gave up.
The counterpart didn’t seem interested in this investment.
“So, Netflix is seeking 1 billion dollars in investment, right?”
“……Yes.”
Reed answered powerlessly and lowered his head.
But then, an unexpected remark came out of CEO Jung Jin-ho’s mouth.
“I’ll give you 3 billion dollars.”
“……?”
For a moment, he couldn’t believe his ears.
Three billion dollars?
Did he mean to say 300 million and misspoke?
Not just Reed, but the executives who came with him were blinking in disbelief.
“Th-three billion dollars? I didn’t mishear, did I? Maybe there was a mistake in the translation…”
“It’s 3 billion dollars, correct.”
“!?”
He hadn’t misheard.
And CEO Jung Jin-ho’s expression was completely serious.
He didn’t even know how to react.
The size of the investment was so unexpected that his mind went blank.
“As you said, just give us shares through a paid-in capital increase and special preferred stock.”
“O-of course.”
With 3 billion dollars, they would acquire more than 35% of the shares.
That would make them the largest shareholder, granting them enormous influence over management rights.
On top of that, he had already offered the bold condition of special preferred shares.
From now on, every dollar Netflix earned would go straight into Kwangwoon Securities’ pocket.
But was that a problem right now?
They were receiving 3 billion dollars immediately!
“And I have one more condition.”
“Yes. P-please say anything.”
“From your presentation earlier, it seems Netflix is planning to market multiple drama series.”
“Yes, that’s right. Since we can’t predict which work will resonate with the public, we’re spreading our efforts across multiple titles.”
Even if a work is well-received internally, once it’s released to the public, it often receives underwhelming responses.
That’s why they were distributing their marketing funds across various projects.
“I’d like you to go all-in on just this one.”
The project CEO Jung Jin-ho pointed to was ‘Stranger Things’.
Internally, it was considered well-produced, but since it was set in the past, many evaluated that it would be difficult for the younger generation to relate to.
But it seemed Jung Jin-ho liked this particular title.
No, rather than saying he liked it, there’s no way he could’ve actually seen the final product, having only read the synopsis.
And yet, to focus solely on this one project and exclude all others?
The risk was far too high.
“I want all marketing personnel devoted to this project alone.”
But as mentioned earlier.
This was not the time to be picky.
And the other party was the generous benefactor offering a 3 billion dollar investment.
So no matter what he said, they could only follow, as if obeying the heavens!
***
The presentation and vision that the Netflix team showed today didn’t register in my eyes at all.
It was because of Reed Hastings, whose face seemed not only painted in gold but was practically radiating with brilliance from the moment we met.
Not only that, when we shook hands, an instinct so strong shook my entire body.
Because of that, I couldn’t even properly look him in the face or focus on the presentation.
But as I kept looking at him, the instincts rising within me helped me pinpoint the exact investment amount.
Three billion dollars.
To be honest, I wondered if that was too excessive an amount.
But my intuition didn’t just nudge me not to miss this opportunity, it almost beat me all over, screaming at me to act.
“Really… thank you so much. CEO-nim, today you’ve saved our Netflix.”
Reed Hastings grasped my hands tightly with both of his.
“And as you said, we’ll put maximum focus on ‘Stranger Things’.”
Just as Reed’s face was radiating light, ‘Stranger Things’, too, had been shining throughout the presentation, as if asserting its overwhelming presence.
That’s why I had told them to focus on it.
“Yes. I’ll be cheering you on.”
***
Three billion dollars.
Even Vice President Kang Ji-hwan hadn’t anticipated that figure.
Netflix’s vision, its business direction.
From Vice President Kang Ji-hwan’s perspective, it all seemed rather ordinary.
To him, it all sounded like chasing clouds.
Aiming to dominate the global market through streaming?
It wasn’t a business he could fully grasp.
People still watched movies on DVD these days.
Or went to the theater.
If not, they would download and watch.
“And yet… three billion dollars…?”
When he first heard the surprise announcement that CEO Jung Jin-ho would invest three billion dollars, he felt dizzy for a moment. But he didn’t even have time to stop it.
That was because once CEO Jung Jin-ho made up his mind, he never changed it.
Still, three billion dollars!
That was more than three trillion won!
“Whew.”
Vice President Kang Ji-hwan sat in front of his computer.
He had specifically requested Netflix to send him the video of ‘Stranger Things’.
“CEO-nim probably hasn’t even watched this.”
Then why had he insisted they pour everything into it?
He had always made investments that were hard to understand, but in this case, it wasn’t even the full script, just the synopsis. How could he be so sure that the drama would be a hit?
So, simply out of curiosity, and because, if the drama really wasn’t good, they’d have to find a way to revise the investment contract, he asked for the footage.
That was the role of a vice president.
“Ah… what if I fall asleep in the middle of this?”
With that, he started watching from episode 1.
He mumbled, “Not bad”, and clicked the next episode.
Episode 2, 3, 4, 5.
He had only planned to watch a little before bed, but he couldn’t stop clicking for the next one.
“……!?”
And suddenly, the sound of birds chirping brought him back to his senses.
“Wh-what? Is… is it morning already?”
How long had it been since he binged a show all the way through the night?
No, it was the first time for Kang Ji-hwan.
“And they end it there?!”
These cruel, evil producers!
He wanted season 2 right this instant!
Kang Ji-hwan’s hands were trembling from the desperate urge to watch the next episode.