The First Billion (3 page)

“Sir? Our records indicate that Mr. Byrnes checked out of the hotel yesterday evening at eleven-thirty.”

“Eleven-thirty? You’re sure?”

Moscow was eleven hours ahead of San Francisco; 11:30 P.M. in the Russian capital meant lunchtime in the office. Byrnes had called in four hours before that, at around eight yesterday morning, to report that he’d arrived safely and would start his investigations the next day. The notion that he’d checked out without spending the night was as unsettling as it was absurd.

“Mr. Byrnes is no longer a guest with us,” replied the operator. “If you’d like to speak with our general manager, I’d be happy to connect you.”

“No. That won’t be necessary.”

“Po Zhausta. Da Svidaniya.”

Gavallan put down the phone and strode to the window. For a long time, he remained still, looking out over the city. Through the rain, he could make out Telegraph Hill, and beyond it the bow lights of a supertanker advancing slowly out to sea. Farther to his left, pale red beacons glimmered atop the cable towers of the Golden Gate Bridge. Staring at the melancholy panorama, he experienced a sudden tremor, a shiver that rustled his spine and caused him to cross his arms and hug himself as if fending off a stern winter’s breeze. It was the same yawn of anxiety that had passed over him two days earlier, when on a foggy Monday morning he’d first broached the idea of a trip to Moscow to Grafton Byrnes.

3

So you’ve seen it?” Gavallan had demanded as Grafton Byrnes entered his office.

“Yeah, I’ve seen it,” answered Byrnes with a calm Gavallan did not share. “Not the best PR one of our deals has ever gotten, but not the worst, either.”

“I’m not so sure. Timing couldn’t be worse, that’s for certain.”

Byrnes strolled across the room with the easy authority that was his trademark. He was taller by an inch, dressed in a navy crew neck sweater over a white oxford button-down, brown corduroy slacks, and Belgian loafers polished to a spit shine. His face was craggy and lean, with eyes that appraised but never accused, and a smile that forgave all sins.

“Want something to drink? Pellegrino?” Gavallan spun in his chair and opened the compact refrigerator hidden in his credenza. “I’ve got one those new lattes in a bottle. How ’bout that?”

Byrnes took up position behind him, peering over his shoulder. “Nothing with caffeine, thanks. I’ll take a mineral water. No, no . . . one without any bubbles.”

Gavallan handed him a bottle of Ozarka and selected an ice-cold can of Orange Crush for himself. He considered his teenager’s sweet tooth his only vice. Vintage European automobiles, chilled Russian vodka, and Stevie Ray Vaughan playing the blues at excruciating volumes counted as passions, and were thus exempt.

“Skoal, brother,” he said, lifting the can of soda pop.

“Skoal, my man.”

It was a joke between Texans, “Skoal” being both an informal “Cheers” and the tried-and-true chewing tobacco of their youths.

Gavallan had known Grafton Byrnes his entire adult life. They had met at the Air Force Academy in Colorado Springs, where Byrnes had played regimental commanding officer to Gavallan’s plebe. Every time Gavallan mouthed off, it was Byrnes who administered the punishment. A hundred push-ups on the deck. A thousand-yard sprint in shorts and tennis shoes through waist-high drifts of midwinter snow. Two hours of reciting the Uniform Code of Military Justice while doing Roman chairs against the commons room wall. If harsh, the abuse was well-intentioned. It was Byrnes’s job to make sure Cadet John J. Gavallan made it through the Zoo, and to that end he tutored him in calculus, instructed him on how to properly hold his knife and fork, and taught him to iron a razor-sharp crease into his trousers.

Retiring from the Air Force a major, Byrnes had followed him to Stanford Business School, then to Black Jet Securities two years after its founding. He was pretty much Gavallan’s older brother, and as close a friend as he could ever hope for.

“You know this guy, the Private Eye-PO?” Gavallan asked.

Byrnes shrugged, offering a wry smile. “I do now. Who is he exactly? Or should I say ‘what’? Some sort of Internet gadfly?”

“You could say that. Calls himself the Robin Hood of the Valley’s pink slip brigade. He spies on the rich to protect the poor.”

“The poor being who?” smirked Byrnes. “The laid-off techies who can’t afford their Beamer payments?”

“More like the average investor who lost his shirt when tech stocks took a beating.”

“Oh, you mean our retail clientele. So he’s the bastard responsible for the plunge in our commission revenues. Got it.”

Outside, a blanket of fog sprawled across the Bay Area, a pea soup so thick Gavallan had trouble making out the gargoyles on the roof of the Peabody Building a hundred feet away. Rising from his chair, he circled the desk, swiveling the computer monitor 180 degrees so they could both read from the screen. As usual the Private Eye-PO’s posting was written in a style somewhere between the Motley Fool and a fifties Hollywood tabloid.

For weeks now, Wall Street has been in a lather for the $2 billion Mercury Broadband deal being brought to market by Black Jet Securities. Well, kids, your own Private Eye-PO has learned that the offering is fully subscribed, with plenty of savvy investors looking to get in on the action. Caveat emptor. Mercury is not what it appears. My own no less savvy gumshoes swear to me that Mercury is only a shadow of its trumped-up self, and Red Star, a sheep in AOL’s clothing. What do you expect from Black Jet Securities, itself a pretender to the throne? When will Mr. Gavallan learn? Black Jet can never be white-shoe. But, hey, friends, why listen when you can look? After all, isn’t seeing believing?

“You sure you don’t know this guy?” asked Byrnes. “This stuff sounds almost personal. He had as much fun knocking you as he did Mercury.”

“No one knows him,” Gavallan replied testily. “That’s his gig. He keeps a bag on his head while he goes around savaging companies. Mercury’s not the first company he’s skewered.”

“I suggest we find him on the double and shut him up.”

“I know a guy we can call. Does some work for the government. I’ll get on it right away.” Sighing, Gavallan turned away from the monitor, massaging the bridge of his nose with his thumb and forefinger. “Every time I read it I feel like I’ve been socked in the gut. This is not what we need right now.”

“No, it’s not,” Byrnes agreed, “but it’s what we got, so we deal with it and move on.” His eyes narrowed with concern over a different matter. “You okay, kid? You look a little tired.”

“Yeah, yeah, I’m fine. It’s just this on top of all the other crap lately . . .” The words trailed off.

“If it’s Manzini who’s bothering you, forget it. You had to let his team go. They knew the rules. Around here you eat what you kill. We’re not a bulge bracket firm that can rely on our granddaddy’s clients to throw us some scraps. GM’s not knocking down our door wondering if we might underwrite some debt for them. IBM isn’t about to ask us to do a secondary offering. We have to go out and get it.”

“Yeah,” said Gavallan. “We make money the old-fashioned way—
we earn it
.”

“Damn right,” said Byrnes emphatically. “Don’t beat yourself up over it. They were lucky you kept them on as long as you did. Half those guys were earning a base of three hundred. Look, the Internet vertical was dying. They didn’t produce, they got canned. End of story. We’re not running a charity here.”

A “vertical” was banking jargon for a particular industry segment. The tech sector was divided into E-commerce, web infrastructure, optical equipment, software, and so on. Each vertical was assigned a team of bankers to service businesses operating in that sector. The team consisted of an equity analyst, a few capital markets specialists, the investment bankers who actually drummed up the business, and two or three associates to do the grunt work.

“I’m well aware of that,” said Gavallan. “Next time it can be your turn to fire the guy you’ve been going to Warrior games with for five years. Carroll Manzini’s a friend.”

But he could see from Byrnes’s skeptical expression that he wasn’t buying. Byrnes had a more unyielding attitude toward business. You performed or you got cut. That simple. He’d governed by the same draconian principles when Gavallan had served under him at Stealth training in Tonopah, Nevada, the two-thousand-square-mile cut of yucca and scrub known to conspiracy buffs as Area 51. The funny thing was that back then Gavallan had been happy to live by those rules. He was as confident of his own skills as he was disdainful of the saps who didn’t make the grade.

Strangely, as chief executive of Black Jet Securities, he was unable to demand of his employees the uncompromising standards he asked of himself. He regretted the most recent firing of twenty-six of his executives and couldn’t help but feel in some way responsible for their inability to generate income for the firm. So what if financing activity in the Internet sector had dried up as quickly as a summer squall? That not a single IPO had been done for an Internet play in months? Or that every other bank on the street had slashed their staffs long before?

Frustrated, Gavallan looked around his office. It was large but modest, with tan carpeting, textured ecru wallpaper, and comfortable furniture arranged to promote informal discussions with clients. A floor-to-ceiling window ran the length of the room and gave the office a stagelike feel. The plummeting vista was nothing short of spectacular, and nearing the window more than one client had professed an incipient acrophobia. A second glass wall ran along the interior corridor. When Gavallan was alone at his desk, he made every effort to keep the blinds open, as well as the door. He detested the trappings of authority and wanted everyone at Black Jet to know he was available at all times.

“Maybe you’re right,” he conceded. “I’m just lousy at that kind of thing. It’s easier to hire a man than to kick him out on his tail.”

“Oh, but if the world were a fair place,” said Byrnes, bowing an imaginary violin.

“Get out of here,” said Gavallan. “Come on, cut it out. You look really stupid doing that.”

He knew his ideas about an employer’s duty were old-fashioned, but he stuck with them nonetheless. His father had worked on the cutting line at Martinez Meats in Harlingen, Texas, for forty years. Forty years hacking the hindquarter off a flayed steer’s carcass, eight hours a day, five days a week, in a fluorescent-lit factory that breathed blood and sweated ambition, where temperatures routinely soared to a hundred degrees during the six-month summer. The Martinez family might not splurge on luxuries like air-conditioning and they certainly didn’t pay much. (Gus Gavallan’s weekly salary of $338 came tucked in a wax-paper envelope delivered Monday mornings at nine o’clock sharp, so that the younger men wouldn’t drink their paycheck over the weekend.) But neither did they fire their staff. In those forty years, Martinez Meats never let go a single man or woman except for absence, tardiness, or public inebriation, and his father’s devotion to the Martinez family was nearly religious.

Black Jet had barely been in business nine years and Gavallan had already fired, let go, laid off, made redundant—however you wanted to put it—over a hundred men and women, including the latest casualties, Carroll Manzini’s tech-team of banking superstars, twenty-six strong. The thought pained him. He wanted to believe that the bond between a man and his employer went beyond business to family. It was a social contract that exchanged loyalty and service for welfare and security. Maybe he was foolish. Maybe at seventeen thousand dollars a year you had a right to that kind of paternalistic relationship. At half a million bucks plus bonus you were on your own.

Byrnes laid a hand on his shoulder and gave it a squeeze. “Toughen up, kid,” he said. “Look at you. Your chin’s falling into your neck, your ass is dragging, and God knows you need a haircut. And that whining . . . Christ, you sound like a dooly crying during Hell Week. The Gavallan I knew was a rock. You didn’t say a goddamn word that day up at Alamogordo. Not before, during, or after. A fuckin’ rock, man.”

“Easy to be a rock when you’re border trash that doesn’t know any better,” retorted Gavallan, but already he was smiling, feeling a little better. He was remembering the day in Alamogordo. August 2, 1986. Lead-in-Fighter Training.

The weather had been perfect, hot and mostly clear, with only a few thunderheads to keep away from. The two of them were up in a T-38 jet trainer, Byrnes already a combat-tested pilot, the instructor, and Gavallan his student. After an hour of practicing basic fighter maneuvers, the two were heading in for landing, making plans to rendezvous at the O-club for a few beers and a steak after debrief. Then—
Bam!
—without warning, the jet’s turbine engine had exploded, severing the hydraulic main, ripping off a chunk of the tail, and sending the plane into wild, uncontrollable gyrations at four hundred knots. One second they were flying level, the next they were pitching wildly, rolling and yawing, the burnt scrub of New Mexico changing places with the powder blue sky with sickening frequency.

Standing in his office, Gavallan jolted. Sixteen years after the fact, he could hear the whine of the disintegrating engine, the whoosh of the violated air as it battered the jet. Mostly, he recalled the adrenaline rush, the iron fingers grasping his heart and crushing it mercilessly.

“Everything’s copacetic,” had come Byrnes’s voice, calm as a Sunday morning. “Just let me take care of this fire and we’ll be jim-dandy to land.” And in the same unbothered delivery, he’d begun ticking off the measures to regain control of the plane—depress rudder, bring up left aileron, release the stick to let the nose find its way down.

But strapped into the front seat, Gavallan knew damn well everything was not copacetic. His eyes were glued to the altimeter, watching it tick down from four thousand feet at a hundred feet a second. He could feel the G forces increasing, driving him deeper into his seat, nailing his arms to his side. As he counted the seconds until they augered in, his hands automatically reached for the side of his seat, searching for the ejection handles. But when he found them, he immediately let them go. It was an act of betrayal. Of disbelief. No, it was worse. It was a pilot’s cardinal sin: the acknowledgment of his own fallibility.

The altimeter spun merrily counterclockwise, passing eight hundred feet, seven hundred, six. . . . The plane came out of its death spiral, the nose pointed straight down toward the arid landscape. Gripped with a quiet terror, he waited for the nose to rise. A series of prayers stumbled from his lips. When that failed him, he swore silently.
Come on, you son of a bitch. Come up. Just a little, you mutha, just a little!

Slowly, the plane righted itself. The nose inched up, the wings leveled to the horizon. And as the ground zipped beneath their wings close enough to slap a longhorn’s rump, Byrnes chuckled, as if the whole escapade had been engineered for Gavallan’s amusement.

“What’d I tell you, rookie?” he asked.

After landing, the two accomplished their postflight inspection of the debilitated aircraft. A four-by-four-foot section of crumpled metal dangled from the tail, secured by an aluminum thread no wider around than a pencil. Viewing the damage, neither Byrnes nor Gavallan commented. They simply exchanged glances and shrugged their shoulders. That night, “everything’s copacetic” entered lore, meaning, of course, just the opposite—that nothing could be more screwed up.

“Okay, okay. I get the message,” said Gavallan, walking to his chair and sitting down. “Slap me around a little if I start feeling sorry for myself again.”