The First Billion (2 page)

Five seconds later, the Lada was barreling down the center lane of the Novy Arbat. Byrnes looked over his shoulder out the back window. Late-evening traffic had already closed in around the car. For a moment, he was able to glimpse the parking lot in front of Metelitsa. A long line of cars was pulled up to the valet. Men and women ambled toward the entrance. He saw no sign of his newest friend.

“Rudenev. How long?”

The driver held up a finger. “One hour.”

Byrnes sat lower in his seat, catching his breath.

He knew it had been a lousy idea to come to Russia.

2

The early-morning sky was dark, a low cloud cover threatening rain as John Gavallan backed his Mercedes 300 SL “Gullwing” from the garage of his home in Pacific Heights and accelerated down Broadway toward his office in the heart of San Francisco’s Financial District. It was a short trip: eight minutes in good weather or foul. At 4 A.M., the streets were deserted. The night owls had gone to bed; the early birds were only just beginning to rise. A fat drop of rain plopped onto the windshield, and Gavallan shivered. A week into June and he’d barely seen the sun. He recalled Mark Twain’s quote about the coldest winter he’d lived through being the summer he’d spent in San Francisco, and smiled thinly. Normally, the prospect of another dreary day would have soured his mood. Reared in the southernmost nib of the Rio Grande Valley as he was, his blood had been boiled thin by the Texas heat, his soul stone-bleached by the subtropical sun. This morning, though, the stormy skies suited him. What better companion to the acid drizzle corroding the lining of his gut?

Gavallan drove the Mercedes hard, shifting down through the gears, enjoying the engine’s finely tuned growl, loving the communion of man and machine. He cracked the window an inch, and a blast of sea air freshened the car. Directly ahead lay the bay, and for a moment he lost himself in its blind expanse, wondering how much time had passed since so much had ridden on a single day’s outcome. The answer came immediately. Eleven years and five months. It was the calendar against which he measured his life. There was before the Gulf War and after the Gulf War. And sinking deeper into the black bucket seats, he felt himself strapped inside the cockpit of his F-117 Nighthawk, the turbofan engine rumbling to life beneath him, G suit tight across the waist, hugging his legs and his back. He recalled, too, the shortness of breath beneath the confident smile, the tingling that had taken hold of his stomach as he gave the thumbs-up and taxied onto the runway for takeoff that first night.

A tingling not so different from the one he felt this morning.

Shaking off the memory, Gavallan drove his foot against the accelerator, taking the sports car to seventy miles an hour. The rain hardened and a gust sheeted the windshield with water. Blinded, he downshifted expertly, braking as he crested Russian Hill. “Instrument conditions,” he whispered, eyes scanning dials and gauges. A moment later, the wipers cleared the screen. Off to his right loomed the Transamerica Tower, a pale triangular needle framed by a score of steel and concrete skyscrapers. The buildings were dark, except for random bands of light encircling their highest floors. He glanced at the mute forms a moment longer, feeling a kinship with those already at their desks. He’d always thought there was something daredevilish about starting the workday at four in the morning, something not completely sane. It had the whiff of tough duty that had always attracted him, the raised bar of an elite.

At age thirty-eight, John J. Gavallan, or “Jett” as he was known to friends and colleagues, was founder and chief executive of Black Jet Securities, an internationally active investment bank that employed twelve hundred persons in four countries around the globe. Black Jet was a full-service house, offering retail and institutional brokerage, corporate finance advice, and merger and acquisition services. But IPOs had been the ladder it had climbed to prominence. Initial public offerings. The company had made its fortune in the technology boom of the late nineties and, to Gavallan’s dismay, it was still suffering a financial hangover from those halcyon days.

Nine years he’d been at it. Up at three, to work by four, finished twelve hours later, fourteen on a busy day. Once, the days had passed with astonishing rapidity. Success was an opiate and mornings bled into evenings in a hazy, frenetic rush. Lately, the clock had assumed a less benign stance. Time meant money, and every month that passed with revenue goals unmet was another inch cut from Black Jet’s financial tether.

Dropping a hand to the stereo, Gavallan spun the dial to National Public Radio. The 4 A.M. business report was under way, a summary of action on the world’s major markets. God, let it be an up day, he thought. In Asia, the Nikkei and Hang Seng Indexes had closed higher, both with solid gains. In Europe, markets were divided, with the London FTSE, or “footsie,” strongly ahead and the German DAX and French CAC 40
(“cack quarante”)
lagging only slightly below their highs. But what about New York? He’d been in the business long enough to know there was only one market that really counted. A moment later he had his answer. At seven-oh-five Manhattan time, the futures markets were up sharply, presaging a solid opening in just over two hours.

“Nice!” he said aloud, landing his palm against the varnished oak steering wheel for good measure. It didn’t take a genius to know it was best to sell in an up market. But just as quickly his exuberance faded, replaced by a cold apprehension. If all went well, he could celebrate at the end of the day. For now, though, he had to wait. Too many cards remained facedown on the table.

The offices of Black Jet Securities occupied the fortieth and forty-first floors of the Bank of America Tower, a fifty-two-story slab of red carnelian marble not dissimilar to Mies van der Rohe’s Seagram Building in New York. The elevator opened, disgorging Gavallan into a brightly lit reception area. Sofas and chairs upholstered in Corinthian leather offset terra-cotta carpeting. A combed birch counter stood to the left, and behind it a seven-foot wall of polished black granite bearing the firm’s name in silver matte letters.

“Six days!”

Gavallan slowed, turning to meet the source of the words.

“Six days,” Bruce Jay Tustin repeated, cresting the interior staircase that led from the trading room on the floor below. “The countdown for Mercury is on. T minus a hundred twenty-two hours. Fuckin’ A, bubba!” Tustin was the firm’s head of syndicates as well as a member of the executive board. He was forty-five years old, short, and svelte, a bantamweight clad in a Brioni suit. He had a boxer’s mug, too—the broad forehead; the flat, broken nose; the sly, determined cast to the eyes.

“How’s the book?” Gavallan asked. “Holding strong?” The “book” referred to the nimble piece of software that held all orders and indications of interest for the new issue.

“A few cries in the jungle, but we’re working to calm the savages.”

Gavallan sensed there was more to it. “Any of the major players backing out?”

“Just one so far. Mutual Advantage in Cincy canceled their order. Said they wanted to put the money into bonds. Doesn’t look like anyone else is taking the rumors seriously. The market wants this deal to happen.”

“Let’s stop it there, Bruce. I don’t want a snowball effect. We’re standing behind the deal one hundred and ten percent. Keep putting the word out: Mercury is hunky-dory.”

Tustin nodded obediently. “You find out who it is bad-mouthing us? Not one of your girlfriends, is it?”

Gavallan shook his head, thinking that someday Tustin’s mouth was going to kill him. “Not yet. But we’re looking.”

“Ah, that’s right, I forgot.
She left you.
Hang in there, kid. You’re young yet.” Tustin clapped Gavallan on the back. Features brightening, he added, “Opening’s looking strong,
Jefe
. The market’s getting primed for Mercury. Six days. Hoo-yeah!” And pumping his right fist in the air, he spun and bustled down the steps to the trading floor.

“Hoo-yeah,” repeated Gavallan, but his parting smile disguised a pressing urge to get to his office. Walking briskly, he shifted his calfskin satchel to his left hand while withdrawing a set of keys from his pocket.

At first glance, he looked more the affluent bachelor than the driven executive. Tall and fit, he’d dressed for the day in his usual outfit: jeans, moccasins, and a faded chambray shirt, throwing on a navy cashmere blazer for good measure. He was finished with uniforms, be they dress blues or three-button worsteds from Savile Row. In the same disobedient spirit, he kept his sandy hair cut long, sure that it brushed his collar and hid the tops of his ears. His face was strong rather than handsome. Creases dimpled weathered cheeks. Wrinkles bracketed eyes hard and gray as agate. His nose was slim and straight, the boldest testament to his Scottish ancestry. His jaw was steadfast, and as usual raised an extra degree, as if he were trying to peer over the horizon. A pillar of the yacht club, you might guess. A regular at the nineteenth hole.

But a second look would give you pause. His gaze was direct, and when not combative, confrontational. His gait was compelling and hinted at tensions simmering within, some urgent, inner purpose. You would never, for example, stop him on the street to ask for directions. It was his hands, though, that gave him away. They were the hands of a brawler, large and callused, the knuckles swollen from long-ago fights. No Ivy Leaguer he, you might say, and take a step back. This one was hewn from rougher stock. This one had required polishing.

Even at this hour, the hallways were abuzz. The day’s first conference call originated at four-thirty. Everyone present in the office at that hour—usually about sixty traders, analysts, and brokers—gathered in the company conference room to share earnings announcements, analysts’ reports, and street gossip with branches in New York and London. Video cameras, color monitors, and microphones linked the participants, and for thirty minutes they hashed out anything that might boost a particular stock’s price or knock it down. Information was the market’s universal deity—rational, impartial, and above all merciless—and it was worshiped accordingly.

Inside his office, Gavallan turned on the light. A glance at his watch gave him ten minutes until the conference call began. Not bothering to unbutton his jacket, he sat at his desk and checked his E-mail. Seventy-four new messages had come in since yesterday evening. Hurriedly, his eyes scanned the flat panel screen. The usual brokerage recommendations: Buy Sanmina, hold Microsoft; so-and-so initiating coverage on Nortel. Delete. Delete. Delete. Notes from a few venture capitalists in the Valley. An invitation to a golf tournament in Vegas. “Don’t think so,” he muttered, hitting the delete key; he’d take his clubs out of storage when the world righted itself. A smattering of messages from his colleagues in the firm. He’d check these later.

“Byrnes, Byrnes, where are you, buddy?” He looked for Grafton Byrnes’s handle but didn’t see anything. “Damn it,” he muttered, rocking in his chair.

He’d hardly slept, expecting his number two to call with an update on the trip to Moscow. At the least, he’d hoped for an E-mail. Finding nothing, he unlocked the top drawer of his desk and located a square slip of paper bearing the initials G.B. and a ten-digit number. He picked up the phone and dialed.

“Hotel Baltschug Kempinski. Good afternoon.”

Gavallan snapped to attention. “Yes, good afternoon. I’d like to speak with one of your guests. Mr. Grafton Byrnes.”

“One moment.”

Where are you, my boy? he wondered, drumming his fingers impatiently on the desk. You’re my ace in the hole. Pick up the goddamn phone and tell me everything’s all right. Tell me I was a fool to worry and that we can put some champagne and caviar on ice for our European friends.

“Mr. Byrnes is not in the hotel.”

“Very good,” said Gavallan, though in fact he was curious as to why Byrnes hadn’t finished his work yet. Drawing a manila file from his desk, he flipped open the cover. Inside lay the photographs—the reasons for Grafton Byrnes’s last-minute trip.

The first showed the façade of a two-story building that could have been a warehouse or a manufacturing plant. A sign above the entry read “Mercury Broadband.” The photo was captioned “Moscow Network Operations Mainstation.” A second picture purported to show the building’s interior: room after room packed with standard telephone switching equipment, circa 1950, gray rectangular dinosaurs sprouting black connector cables like unruly hair.

Founded in 1997, Mercury Broadband was the leading provider of high-speed Internet service in Russia, the Ukraine, Belarus, and the Czech Republic—an area that Gavallan, with his training as a Cold War jet jock, would forever think of as “the communist bloc.” Through its network of coaxial cable, fixed wireless, and satellite relays, Mercury Broadband serviced over two million businesses and residential customers and had contracted rights to service an additional twenty-seven million. It also packaged and offered multimedia content and E-commerce in the form of Red Star, a multilingual portal similar to America Online that boasted over seven million subscribers.

But here was the good part: Not only had the company doubled its revenues each of the last three years, it had begun turning a profit as of third-quarter fiscal 2000. In six days, Black Jet Securities would take Mercury Broadband public on the New York Stock Exchange in an IPO set to raise two billion dollars. The seventy million in fees the deal generated was crucial to relieving Black Jet’s worsening financial malaise. Every bit as important was the boost to the company’s reputation a successful offering would bring. From regional mighty mite to international presence in one fell swoop.

Which brought Gavallan back to the photographs. He had another picture in his manila file, also purporting to show the interior of the Moscow network operations center. This one positively beamed with the latest in Internet hardware—Sun servers, Cisco routers, Lucent switches—and it was this photo he’d showed to his investors.

“I’d like to leave a message,” he said. “Please tell him Mr. Gavall—”

“Mr. Byrnes is not in the hotel,” the Russian operator interrupted.

“Yes, I heard you. If you don’t mind I’d like to leave a—”

“No sir, you do not understand,” cut in the operator again. “Mr. Byrnes has checked out.”

“That’s not possible. He’s not due to return to the States until tomorrow. Please check again.” And before the operator could protest, he shouted, “Do it!”

“Very well.” The “sir” was distinctly missing.

Confused, Gavallan ran his eyes over the computer screen, reconfirming he hadn’t received any E-mails from Byrnes. His instructions had been clear: Once Graf picked up something about Mercury—
good or bad
—he was to let Gavallan know. Immediately.