This Little Piggy (2) “John, this better be goddamn good!” started Michael. “I’m in the middle of increasing my fucking Christmas bonus.” “Easy, Michael, easy,” said John Copain, who used to work for Michael at A & J., but couldn’t hack the discipline and corporate norms. “Remember how we always fantasized about being rich beyond our wildest dreams? Bagging the corporate bullshit? Well, the train has just arrived at the station. Bob Goldstrom is back.” “THE Bob Goldstrom?” “The one and only. And I’ve convinced him you’re the one to run his new initial public offering. It’s that one-in-a million opportunity to get in on the ground floor of a big one. He wants to meet you ASAP.” Michael was skeptical. “John, give me a goddamn break. How could you even get Goldstrom’s ear, much less convince him that…” “Long story. I may be off the wall, but I’m not crazy!” “Okay, okay. When? Where?” “The Sutton Place Coffee shop, 52nd and First, tomorrow morning at 8:30. You and the Great Goldstrom alone. He’s coming out of retirement to shake up the business world…again.” “You’ve gotta be kidding. A coffee shop?” “Hey, what can I tell you? He likes the place for meetings.” The rest of the Acme meeting went smashingly. A & J was awarded the additional $20 million dollars. But after the clients left… “Michael,” said Barbara, giving him the well-earned congratulatory hug, “You ever pull a bullshit disappearing act like that again, I’ll can your ass, budget increase or no budget increase! Do we understand each other?” * MICHAEL ENTERED THE SUTTON PLACE Coffee Shop a few minutes after 8:30 a.m. Take-out customers stood impatiently on line grunting orders while a slovenly Latino guy screamed into a steamy kitchen cluttered with waitresses who were jockeying to place orders from the sit-down crowd jammed like sardines at the thirty or so tables. Wearing a pinstriped suit with pointed lapels, Robert Goldstrom was sitting in a corner, a chess piece among checkers. Not a big man and certainly no longer young, his jet-black wavy hair and dark eyes gave him an aristocratic presence, a sort of Lordship of the decadent junk bond 80’s, gone with the windfall. “Good morning, Mister Goldstrom,” said Michael with his best handshake. “Robert, please,” said Goldstrom, rising only slightly. “Mr. Martini, I’ve heard nothing but good things about you.” “Michael, please.” A high protein, high fat breakfast appeared complete with Muenster cheese omelet, a side order of grease-laden sausages, and a buttered onion and garlic bagel. Before Goldstrom took a bite, he whipped out the obligatory power symbol–a twelve-inch Macanudo Cuban cigar. For the next 20 minutes, he smoked, slurped his coffee, wolfed down his omelet, chomped on the sausages, and told his life story. Michael noticed the butter dripped off his bagel onto what appeared to be a very expensive Hermes silk print tie resting on a bold burgundy striped shirt with a heavily starched white collar. Was Goldstrom aware of these fine points? Did he care? “I’m just a kid from a Jewish middle class family on Long Island, Rockville Center, to be precise. Dad was a mid-level accountant in the financial department at Long Island Gas and Electric Company. Guess I inherited his gift of statistical analysis.” Goldstrom stopped to chuckle at his own joke. “Dad, graduated with honors from Melville High School at 16, a little ahead of the curve,” continued Goldstrom, believing everybody craved the minutest details of his life. “He was accepted at the Wharton School at the University of Pennsylvania, but my grandparent’s couldn’t afford the tuition. So he joined the business world, had a family and kids, and lived happily ever after.” (As Michael was to learn, Goldstrom tended to ignore details that did not suit his purposes. Goldstrom’s Dad, Seymour, while working overtime one evening during the busy tax season, accidentally discovered the gross income of the firm’s top executives, including his immediate boss. He was incensed at what he believed to be the lack of equality. Consequently, he altered the company’s payroll systems to grant him a gargantuan ‘silent’ raise. Seymour’s ‘gift for statistics’ allowed him to doctor the accounting system’s books and records to cover his tracks for almost ten years. Some $750,000 later, the scam was uncovered. But the company’s management wanted to avoid public embarrassment and the potential of a crash in the price of the stock, so they discretely settled the matter. Under the terms of Seymour’s early retirement, he agreed to retire early at half his anticipated pension and the loss of all his health insurance benefits. While the out-of-court settlement saved Seymour Goldstrom’s reputation and a certain jail sentence, it caused the family tremendous financial hardship because Goldstrom’s mom, Cecelia, suffered a stroke shortly after Seymour’s forced retirement. Her condition became more complicated with the onset of diabetes. As a result, she required constant medical care and expensive prescription medications. To simply maintain a modest middle class lifestyle, Seymour returned to work full time as a cash register clerk at the local Home Depot store. Seymour’s pent up bitterness eventually created fits of rage, with Cecelia as the victim of frequent bouts of physical abuse. Eventually, the couple separated, and the courts placed a restraining order on Seymour. Initially Goldstrom attempted to disengage himself from the turmoil, and concentrated on school as a release. Eventually, the physical beatings, the constant emotional upheaval and the frequent 911 house visits, caused Goldstrom to testify against his father in court. By the time, Michael met Goldstrom; Goldstrom had severed all relationships with his father. Seymour eventually suffered a massive heart attack while watching television in his small apartment in a downtrodden section of Long Island called Bayshore . Nobody realized he was dead for three days. Neither Goldstrom or his mother Cecelia attended the spartan final services.) “What a coincidence,” responded Michael. “As a kid I used to spend the summers as a vendor on the beaches in Rockville Center. My dad was a butcher who scrapped up a little cash to buy a summer bungalow.” Goldstrom ignored him. It was impress Michael time. “Got a full scholarship to Wharton. Graduated with a degree in finance. My first job was a junior analyst on Wall Street with Smith Barney. As I completed various research reports on the company’s buy list, I began to realize many of the so-called ‘hot model’ companies were built primarily through mergers and acquisitions and the elimination of operating duplication, rather than real internal growth. “On Wall Street it’s all about instant gratification. When it comes to money, everybody’s a fucking pig. Right?” Michael wasn’t sure whether the question was real or rhetorical. Goldstrom gave him no time to answer. “Acquisitions grow revenues and profits instantly and geometrically; stockholders love the action. So in my spare time I began searching for an industry that had not been picked over. The numbers told me to focus on aggregating doctor-owned private hospitals into a single healthcare brand.” “You mean like Kaiser Permanente and Oxford Health?” “You young guys,” laughed Goldstrom between a forkful of egg, a sip of coffee and a cloud of cigar smoke. “They didn’t exist in the Sixties. I fucking invented them. There was no Kaiser, no Oxford. I was the guy who completed the first health management IPO—one hundred and twenty-five million dollars—exclusively to buy private hospitals, integrate them into one system and eliminate costly operational duplication.” Michael was impressed. Healthcare companies were one of The Street’s hottest growth categories. Goldstrom continued: “The deal was sold out before it hit the market. I named the company United Medical Systems.” “I’m not familiar with…” “Of course you’re not. It’s long since been renamed...Yuma Medical.” “Like in Yuma Medical, the fifteen billion dollar hospital management colossus?” “One and the same.” Michael wanted to ask with a coup like that, why go back to work? But Robert wasn’t finished. “The thing was so successful, it wasn’t long before competitive hospital networks sprang up. The Street’s pea-brain analysts thought it would be a problem. You know, cut market share and stuff. But, I saw it as another ten billion dollar opportunity so I created a venture capital fund that lent money to my competitors.” “Why the hell do that?” asked Michael, chewing on a greasy toasted sesame-garlic bagel. “You sound like the dickheads on The Street. The more competitors, the bigger the market. Having twenty-five percent of a fifty billion dollar market is a lot fucking better than sixty percent of a ten billion dollar billion. Within two years, United Medial was listed on the New York Stock Exchange and my capital fund, Seminal Investors, was listed on the American Stock Exchange. I was living the fucking life of Riley. Everything was moving so fast. I wasn’t even thirty and I had more money than I knew what to do with.” Money and more money; Michael was mesmerized. “I got a taste of Europe during my run. I fell in love with London—those demure, sophisticated, tight-ass British ladies just rang my chimes,” boasted Goldstrom. “Somehow I fell in love with the one bitch who wasn’t easy. I chased her all over Europe. Not only wouldn’t she marry me, she unceremoniously dumped me—for a fucking woman no less! There I was, one of the world’s most eligible bachelors, publicly humiliated. I couldn’t handle it. Took some time off the merry-go-round ” Michael took a sip of coffee and a bite of bagel. Robert distributed more cigar ashes. “In the middle of all this, I had another flash of pure genius! Why not execute my private hospital acquisition strategy in Europe? If McCann’s Hamburgers can export fast food to Europe, why can’t I export a successful financial model? So I created Crystal Bond Medical. Turned out I couldn’t execute exactly the same strategy because hospitals were inextricably linked to socialized medicine. So I decided to consolidate the medical instrument industry. It was like taking candy from a baby! We got listed on the London Exchange in less than fourteen months. The fucking money just kept pouring in. “Had two fucking 737s, one for me, one for my best friends, my furry Newfoundlands, Buzz and Wilfred,” said Goldstrom, raising his voice, oblivious that anybody else was in the restaurant or even at his table. “The three of us just went back and forth between the parties and the drug binges. Had more women than I could accommodate. They were all so easy. Brits, Scandinavians, whatever. “Then one night at a party in my Malibu house, I just walked away.” Goldstrom paused as if peering into a deep, narrow abyss. “I just fell off the edge of the earth for what seemed like an eternity. Nobody knew where the hell I was, including me. My financial empire crumbled. The rest was stolen by my ‘associates’ or foreclosed by the banks. When I returned, everything and everybody was gone.” “After all that, you were broke?” said Michael. “Well, in a manner of speaking. I certainly couldn’t support my previous lifestyle, not that I really wanted to.” Michael thought the whole story was unbelievable, and totally bizarre. And yet… “I’ve spent the last twelve months sobering up, getting physically fit, and regaining my mental edge. No alcohol, no drugs.” “No sex?” smiled Michael. “Now let’s not get crazy,” Goldstrom chuckled. Michael saw opportunity in lighthearted banter. While Robert’s past was engaging, he was here to discuss a path to get rich and richer. “John said you had some new business idea.” “Yeah, that’s what I want to focus on. I guess all your questions just got me a bit off track.” Michael knew better than to correct him. “I’ve invested a half million to research and develop my new business plan,” declared Goldstrom, flicking the cigar. “I’ve also spent serious time with a number of advisors. The unanimous consensus? This scheme can make me wealthy again—dramatically wealthy. John helped me with the research, that’s how we met. He’s told me a lot about you. Let me be perfectly blunt. I need someone with the right corporate pedigree and the right age to help me promote the project, raise the capital, make the acquisitions, then run the companies. You interested?” Michael leaned back and thought: I’ve known this guy for one half-hour. I haven’t a clue what the hell the business is about and he’s asking me to abandon twelve years of scratching and clawing up the ladder at A&J. It had been a climb that began when Michael had begged for a job at A&J for six months before they graciously agreed to start him at the absolute bottom in the mailroom. He’d worked his way up, way up against all odds. “ Robert, it’s hard to answer that question,” replied Michael. “I don’t understand,’ said Robert. “You haven’t told me squat about the business.” “Jesus, I’m sorry, I just assumed John filled you in.” “You know what they say about assuming….” “I know. I know. My new business invention is simplicity itself. We’re going to legitimize the barter trading industry.” Michael didn’t have a clue. “Is there much of a market for barter?” “Are you kidding?” said Bob enthusiastically. “ People have been bartering goods for centuries but it’s never evolved into an organized corporate enterprise. My research tells me re-marketing excess consumer goods is a highly fragmented ten billion dollar business in the U.S. comprised of hundreds of private companies that specialize in one type of inventory, or one channel of distribution. Some are stronger at buying at a good price. Some stronger at selling. Some buy for cash. Some buy under a barter arrangement. Some buy for a little of both. ITI will be the first company to combine all the functions and product categories under one roof, thereby becoming the market leader literally overnight. The key will be acquisitions and financing thereof.” Michael didn’t get it. The concept sounded surreal. “By acquiring fifteen or twenty of these niche companies, we’ll start with a business that capitalizes in the hundreds of millions. Then we eliminate duplication and add value. Everybody wins. The stock will skyrocket, investors will realize a significant return and we’ll both be wealthy beyond our wildest dreams. Me for the second time, you for the first. What do you think?” Michael wasn’t sold that fast. “Who were these ‘successful’ barter companies? What was their primary source of business? How would they fit together strategically?” “Please, let’s not get bogged down in details. Business is not about business, but about money. If you can’t get filthy rich, why bother?” “What do you mean by filthy rich?” “Fifty, maybe a hundred million dollars in three years. Depends.” That caught Michael’s attention. The numbers blew him away. But it still sounded fishy. “ Robert, I’ve got to be blunt. The numbers are tantalizing but the business sounds like bullshit!” Goldstrom was infuriated. “Bullshit!… This is a brilliant fucking idea. You sound like the United Medial nay sayers.” Robert’s performance was convincing. “I need some time to think about it, talk to my wife,” he said, sipping his now cold coffee. “I’ve got a great career with a first-class organization. Been there twelve years. I just can’t...” “Oh I get it. You want to check me out. Go ahead. You’ll find everything I told you is absolutely true.” “By the way Robert, has your new creation got a name?” “Yeah. International Trade Incorporated. Plus the stock symbol, ITI, is easy to remember and sounds important, like a knockoff of AT&T.” Breakfast was finished. As they shook hands promising to meet again, Goldstrom saw an embarrassing butter stain dead center on Michael’s tie. “Don’t know if you noticed, but I have a bad habit of talking and eating at the same time. Wind up with more stained hundred and twenty-five dollar ties.” Goldstrom smiled and pointed to Michael’s tie. “Looks like we’re going to be business and etiquette partners,” he said. “Is that your butter or mine?” * MICHAEL SPENT THE BETTER PART of the next morning at the main branch of the New York Public Library locating United Medical files, reading newspaper articles and scanning magazines. To his utter amazement, everything Goldstrom said was true, right down to the torrid romance with Brit, Samatha Eggers, a distant cousin of Prince Andrew. Although Goldstrom ignored a few tasty morsels. Samantha had indeed jilted Goldstrom for a well-known Swedish jet-setter, Ingrid Bourne. The British and Scandinavian tabloids had a field day with the story because Ingrid, some eight years prior, had a sex change operation. Goldstrom ultimately became the laughing stock of corporate Europe. The widely read daily tabloid, the Daily Mirror, derided Goldstrom in its headlines as ‘The man who loved a woman who loved a woman who was a man.’ The sordid experience forever changed Goldstrom’s point of view with respect to women. Never again would he allow himself to become victimized by something as silly as ‘true love.’ To restore his persona, he publicity dated only voluptuous, high profile women. He would wine and dine them beyond their wildest imagination, so that they would fulfill all his sexual desires and fantasies. A typical night out in Manhattan would routinely lead to dinner in Paris followed by dancing the night away at Harry’s Bar in London, all compliments of his private jet. If his female companion resisted his advances, wanted a meaningful relationship or just stuck around too long, they were shown the door. On the business end, Michael learned Goldstrom operated on the ethical edge. His friends said ‘Robert’ had a knack for identifying unique niches, raising capital, and making associates wealthy. His foes implied ‘Bob’ had absolutely no conscience and did whatever was necessary to achieve his corporate, financial and personal objectives. Who was Goldstrom, Robert or Bob? Michael wondered. In article after article, Robert pontificated about the importance of personal integrity, “In business, there can be only black and white,” while he lived in his own world of murky gray. As one of his former business associates succinctly pointed out, “Goldstrom passionately believes his own bullshit!” To Michael, Goldstrom would forever be Bob. * JOHN CALLED that Friday morning. “What the hell did you do? Bob says you blew him off.” “I did not,” insisted Michael. “I said I needed a little time to think about it.” “Let’s get fucking real!” John exploded. “You can work your ass off for another ten years in your prestigious A&J, revel in your big fancy office and walk away with peanuts. Then what? You’re forty-seven, out on your ass and still saddled with humongous mortgage and college tuition bills. My advice, as a friend, is simple. Don’t blow it, asshole.” Michael took that to heart. “Assuming I want to go forward, what’s the next step?” “Bob said you agreed to meet his attorney Allan Krotsky and his financial advisor Martin Diamond.” Michael was just beginning to understand: what Bob assumed would happen invariably did. * FRIDAY IN THE SUMMER AT A&J MEANT SUMMER HOURS. The doors closed at 1PM. The singles crowd, with their soft carry-on bags, boarded the emerald green Hampton Jitney buses stacked up at 42nd Street across from Grand Central Station, and headed for the pristine wide sandy beaches of South Hampton, Amagansett, Water Mill and Quogue to sunbathe during the day and score during the night at one of the seemingly endless play and party options. Married folk, like Michael, saw it as an option to get away from the steamy, humidity laden air of Manhattan, while the sun was still out. As he bounced home on the commuter train that day, Michael worked on convincing himself about THE Goldstrom opportunity. While he was a superb advertising executive, he had already showed signs of being a greedy pig. He led A&J executives in client expense account spending for the past three years. His philosophy was that a professionally satisfied and heavily wined and dined client was better than a plain satisfied client. He spent the firm’s money liberally, and included Sandra in everything, so she became quite accustomed to the good life. Sitting in the smelly, crowded, bumpy commuter train, he saw visions of big bucks dancing in his head and being picked up and dropped off each day in a long white limo. By the time Michael reached the Stamford station, he was completely convinced this was the big Kahuna surfers dreamed about! The trick was to get Sandra equally stoked. The last thing he needed was to a familial albatross. Michael set the stage. “Honey,” said Michael on his cell phone as he drove out of the parking lot at the train station “Do we have any health care crises on this beautiful sunny afternoon?” “No all’s quiet on the western front.” “Well how about I make a early dinner reservation at the Paradise Grill on the waterfront. I’ll go home, round up the kids and meet you there. We can have sip a few bloody Mary’s, have a piece of fresh fish and watch the sunset.” “Sounds wonderful. I’m on the way.” * “Man, what a surprise,” said the precocious 13-year-old Mark making dinner conversation and sporting a $40 Afro. “Will miracles never cease. Dad home early enough to have dinner with his kids. What happened pops? Get fired?” (Mark’s comment made Michael feel guilty about the time spent on building his career, on trying to provide the good life for his moderately spoiled, but loving children.) “My goodness, Mark, that a dreadful things to say,” said Sandra, defending her knight in shining armor. Mark’s older and more sensitive brother, Matt, sat quietly since he agreed with mom. “No, Mark, but I did get offered another job.” Sandra telegraphed concern. Like her father and mother she wasn’t fond of sudden change. “Will you get more money?” “Considerably more,” said Michael. “Is that considerably more as in a new dirt bike?” asked Mark. Matt smiled and just shook his head. “Boys, why don’t we let mom and dad talk about this after dinner? I’m sure, if everything turns out as dad says, you clever young men will be able to extract plenty from Mr. Soft Touch.” The sunset was spectacular, but Sandra hardly noticed. All she could think about was the potential disruption to her nice neat world. Finally they were home. Now she would get the news. Michael and Sandra headed to the study as the kids made their customary mad dash to the family room to get a face full of video games. Sandra was the penultimate ‘contemporary traditionalist,’ but looked straight out of Vogue—dark hair and mysterious eyes, olive Mediterranean complexion, perfectly proportioned size eight, ever the lady in dress and demeanor and unequivocally supportive of her husband’s decisions. At the same time, she was a determined, high-energy hospital management executive managing a staff of 200. In full Madison Avenue flower, Michael told the whole story to his best friend for the last seventeen years. However, he left out the part about Bob’s approach to business ethics and he modified Bob’s bout with drugs to “What really impressed me was that Bob is a standup guy, honest enough to admit he was once a casual marijuana smoker. Not unlike us before the kids came along, and changed our world.” “Honey, what do you want me to say?” said Sandra sweetly but firmly. “You walk in here and tell me you want to disrupt a lifestyle that has taken us seventeen years to build. And for what? To take a chance on the possibility of more with somebody you hardly know. I don’t want to sound like a doomsayer, but if the guy was willing to admit he was a casual marijuana smoker during a first meeting, God only knows what may be in his closet!” “Look honey, you’re coming at it from the wrong perspective!” “What is that supposed to mean?” glared Sandra. “Well, it means look where you came from. Your dad was a serviceman for General Pacific. How much did he ever make? How many years did he work for that measly pension? I mean your parents still plan vacations to a precise budget. Is that anyway to live?” “It was a great way to live,” responded a hurt Sandra. “We had love, we had fun. We never wanted for anything. My Mom and Dad don’t owe anyone a penny. Plus they’ve got great friends and good health. What more can you want out of life?” Michael knew he had reached a dead end, so he switched gears. His tone went from confrontational to conversational. “You may be right Sandra but meeting Bob has given me cause to rethink who I really am. I’m not an organization man. Down deep I’m an entrepreneur, just like my Dad. In fact, I think I’ve actually been suppressing that urge for years.” “Honey, are we sure we’re not post-rationalizing?” said Sandra warmly but skeptically. “Wasn’t your Dad a butcher?” “Yes and No.” “Tell me, after all this time, are we about to reveal some deep, dark family secret?” teased Sandra. “Baby, when I was a kid, my dad had built quite a wholesale meat business. He and his partners expanded into retail, opening gourmet butcher shops in major cities around America.” “I don’t want to seem mean or disrespectful, but what happened to the money? As I recall my Dad---that humble GP Serviceman---helped us pay for most of the wedding.” Michael knew the real answer wouldn’t help his cause. Michael’s Dad, Matty, had indeed gone into partnership with two childhood buddies, Herschel Bonngarden and Hymie Plakowitz, who had made big money on the black market during America’s World War II meat rationing campaign. They supplied the well-to-do with the finest cuts of meat every day of the week at premium prices, while the unwashed masses were limited to hamburger and cheap cuts of meat a few times a week. Eventually, the FBI caught up with their illegal activities. But Herschel and Hymie served only minor prison terms because they were clever enough to hide the vast majority of their profits in a labyrinth of financial institutions. Matty knew his partners’ expansion capital was tainted. But he saw the partnership as THE chance to leverage his expertise and industry reputation to make a small fortune quickly, and then get out. Unfortunately, his partners had other plans. Thanks to Matty’s hard work, by the end of year two, the operation turned cash flow positive. Three years later, the venture owned 16 stores, and was generating significant profits. While Matty worked the stores, the H&H boys worked the books! Matty never knew what hit him. The boys professionally and efficiently embezzled millions, bankrupted the business, and left Matty with virtually all the tax liabilities. By the time Michael met Sandra, the proud Matty was penniless, and working as a retail butcher in the A&P supermarket chain. Mercifully for the Martini family, when Matty died of a sudden heart attack just 12 months after Michael and Sandra married, the government’s claim for $149,547 in back taxes, plus twice that in penalties, also died with Matty. Michael’s recall of his dad’s situation was slightly revisionist. “Sandra, my Dad and his partners were hard working, but a little naive. Between the three of them, they knew how to build a business, but were light on financial management. This one’s different. Bob’s been around the block. He’s going to teach me what he knows. That would never happen at A&J. Honey, that’s just not the way things are done in corporate America. In less than five years, I predict we’ll be really, really wealthy. We’ll never again have to be concerned about having enough” Sandra, still unconvinced, paused and stared.
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