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The Bluff

“Is John in?,” I asked.

I looked around for John, hoping he would walk out of his office, but there were only busybodies in sight. I stood there nervously at the front desk like it was a hold-up. I was the largest shareholder of John’s company, and although I never played the card before, I would say it without saying it: “IS—JOHN—IN?” I needed to raise my voice and broadcast a powerful tone if I were to get past the gatekeeper.

The gatekeeper, Jackie, was like the Greek God Charon, who requires a toll to cross over to the other side.

I wondered what Jackie knew about John, was she in on John’s scheme?

“Is he expecting you?” she asked, “today is the annual shareholder meeting and he’s prepping with the Board now. I don’t see you scheduled. Let me check!” I stood there silently while she made a call. She slowly lowered the phone, looked up and with a forced smile, “he’s expecting you, go on back.”

At the age of 26, I already had five solid years into a career I had no business being in—underwriting. I was an old man in that world and felt like a pro athlete getting ready for retirement due to the pounding. This moment, this meeting with John, it was going to be the fiercest encounter I have ever been a part of. This moment was the culmination of two years of discovery, heartbreak, and deceit.

Responsive Versus Reactive

The days leading up to the board meeting taught me the difference between being responsive and being reactionary. One is a calculated choice, and the other is a forced impulse. Most of my life (from 5 to 15 years of age) was a series of reactions. After 15, I could read people and slow the reactions down to plan a response, and this is what I later learned people meant by survival. If your life is presented with too many surprises, you go into a spiral. And may never recover.

But here I was, a thriving Wall Street player. I had dreamed of the money but had no idea the road would be filled with so many greedy players. The higher I rose in the company, the greedier people were.

Beans and Tortillas

Thinking back to how I got to John’s office… it was a long road.

It began with my 12th birthday. I asked my mother for a subscription to the Wall Street Journal (WSJ). She went along with my wild dreams, probably as a form of insurance to hedge against a future spiral. But my aspirations were larger than mere survival. I wasn’t just going to survive, I was going to make millions in the stock market! The rewards would be huge! Alas, I could forget about eating beans and tortillas forever.

Soon thereafter, my Mother and I met with a stockbroker. I bought $200 of call option premiums on Foster’s Beer.

I promptly lost $200 on Foster’s beer.

More beans and tortillas were in my near future, but I wasn’t going to let this failed play perturb me from my wall street pursuits.  The loss made me want to break into the stock market more than ever.

“The heart has its reasons, whereof reason knows nothing.”

–Pascal

I loved entrepreneurship—I had a series of ventures in high school—ranging from having my own car detailing business to independent work doing various odd jobs. I could’ve had better and more consistent pay working at McDonald’s, but that wasn’t the point. I wanted to swing on my own, and strike out on my own. And I did.

Right Place at the Right Time

To further my financial education, I joined an investment club while at the University of Arizona. I already had a WSJ education in finance; I read it daily from the age of 12, cover-to-cover. I wanted to talk about PE ratios (the first thing you learned about after seeing the movie Wall Street), mergers, acquisitions, etc. All the club members wore navy jackets with a crested gold patch on the pocket and they were talking about seemingly everything but finance.

After university, now 21 years old, I was sponsored by an investment banking house specializing in “underwriting.” I’ll call my firm, the “Edge.”

They taught me structure; I learned how underwriting is structure and a process, not an event. It’s a process of stacking a team for the company you’re investing in, raising capital, doing bridge-loans and eventually taking the company public through an Initial Public Offering (IPO). The structure is everything in finance. The best deal can and will blow up without structure. Unfortunately, there’s too much greed in the world and someone will find the weak link.

My firm promised to teach me finance, structure, and funding for small businesses. It was the other side of entrepreneurship. I studied prospectus after prospectus, I learned valuation techniques and funding rounds with real companies — this was my first MBA.

It’s circa 1993 and the economy began heating back up. Although I had no business in the investment banking world, my firm, like all firms in 1993, needed pedigree (MBAs, lawyers, financiers, etc.). They got me instead; but what I lacked in a pedigree, I made up for with a tenacious work ethic. While I enjoyed this side of entrepreneurship, my compliance officer had his eye on kicking me out of the firm. As far as he was concerned, I was young and naïve. Too raw to invest in.

I recall one particular day when we IPO’d a company and were toasting with bottles of Dom Perignon to celebrate. I never had Champagne, and reacted a bit hastily by yelling out, “This tastes like shit.” Our clients and everyone stood there dumbfounded, especially my compliance officer. Luckily, my boss saved me: “let’s drink this cheap wine anyway!” he yelled out. Everyone laughed, and later I was told the price per bottle. Whoops. It was another moment which illustrated my inexperience into this world. My compliance officer never let his foot off the gas when it came to pushing me out.

But I worked harder, longer and my firm rewarded me with large shares of offerings.

Similar to the Initial Coin Offering (ICO) wave in 2017, I was part of the IPO wave. My IPO wave lasted eight years. My firm taught me the art of structure, and I had the art down. But, I had nightmares too.  What would happen if the bubble burst? In the 90s, it wasn’t uncommon for IPOs to open with at least a 50% premium.

By the time I was 26, I had the lion by the tail—that tail happened to be John’s.

Ceiling of Competency

Getting into the investment world without a pedigree was a bit of luck and determination. I wanted to become a money manager, an investor. I was fully consumed with investing since I was 12 and I absorbed financial statements faster than water seeps into an Arizonan desert. I had accumulated about 20% of John’s company on the open market over a period of almost two years (from early 1996 to the end of 1997).

I had done most of the structuring for John’s company. I completed the private placements, bridge loans, the IPO, and helped syndicate it out. I supported it in the aftermarket (post-IPO) and I accumulated a huge position. This was my era, the era of eras.

One thing to know is that the original CEO of John’s company, we’ll call him Fred, was why I invested so heavily in the first place. The company, which we’ll call XO, was a low tech manufacturing firm with a great team.

I learned the hard way that investing in products is incredibly risky. I lost money investing in products, but I’ve never lost money when investing in people.

During the process of growing XO, there were a lot of investors calling on Fred to resign from his role and appoint someone bigger with more experience; someone who could take the company to $100m in sales. Everyone loved and respected Fred, but wiser minds than mine declared that Fred (inventor and CEO) of XO had reached his ceiling of competency. As a shareholder and fund manager, I tacitly agreed. The pitch made sense to me, but only because this was one area I had no experience in.

The John Scully Syndrome

“Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?”

These are the words Steve Jobs told John Scully to convince him to leave Pepsi and become the CEO of Apple. It was one of the biggest mistakes in Apple’s history and it happened in 1983.

Scully was a corporate shark and having Steve around wasn’t going to work. Imagine: you’re 29 years old and crowned, “The King of Computers,” that was Jobs. The prevailing wisdom was that Jobs had reached his ceiling of competencies, so he head hunted Scully. At the age of 30, Jobs was fired from Apple. The king of computers was dethroned from even being the king of his own computer company.

Large investors were telling me the same thing about Fred; I went along with it and Fred did too. One of the investors discovered another Scully, not John Scully, but another John. John was hired in 1997 to lead XO and everyone was happy, except me. Something was wrong.

Learning The Bluff

In 1997, John and I met in Vegas to attend an Oscar de la Hoya boxing match. I must’ve already been to five or six of Oscar’s matches and always sat ringside. He reminded me of myself: shy, determined and just trying to keep off the ropes.

I was hesitant to meet John outside of business: XO was a publicly traded company and fraternizing could be looked at as insider trading. It’s serious, you don’t play with the SEC. But the warlord knew that I was going to the Oscar match and he invited himself and his kids. His kids were older than I was, by about 15+ years, and all were successful partners at prestigious marketing, legal and investment firms.

After the fight, John waved his kids goodbye and started parading me around from the craps tables to the poker tables. “Listen,” he said. This deep, almost angry voice was one I never heard from John before, and it caught my attention: “Gambling is all a bluff, you know how to bluff? Do you know how to bluff?” He rolled his eyes at me, “Of course you don’t.”

I never forgot that night, because he was right, I didn’t know what bluffing was and I certainly wasn’t good at it. What I realize now is that in business, if people use the bluff as a tactic, they’re probably dishonest and should be treated as such.

I pondered how often John bluffed and recalled all the earnings calls he had been on where he challenged analysts. Was it all a bluff?

Tic Toc, Tic Toc

John let his hand show trying to teach me poker, and although I didn’t know what game we were playing, I gleaned insight into this calculating and dangerous mind. He was beyond dangerous, he was pernicious.

John was a ruthless, warmongering warlord, and we were not going to be on the same team for long. I didn’t know what he was up to but I suspected time was against me. I surmised he came to Vegas to placate me; he was buying time, but for what?

Towards the end of the night, he told me there was going to be some big news next week, and he exhaled with a smile.

Uh oh, that was inside information.

He was giving me notice — the clock to execute his plan had begun.  

The Compensation Package

There were two issues the warlord had with me, I was not swayed and I was not playing along. The big problem in business is, it’s hard to compete and beat somebody if they’re not emotionally vested in the game. I didn’t even know I was competing, as I said, I assumed we were on the same team and striving for the same goals.

On numerous conference calls, he would convince everyone how he was the savior and hero of XO. He had everyone eating out of his hand, and all of the big firms were in love with him. Large funds began investing in XO. He had a silver tongue and his background of being the CEO of large companies made him a darling on Wall Street. They often stated how lucky XO was to have a titan of industry running such a small company. Thus, the stock went up.

When John was hired as CEO of XO, the compensation package consisted of a $200,000 annual salary and 2,000,000 stock options exercisable at a strike price of $12 per share—he had restricted stock—he wouldn’t be able to liquidate his stock options for two (2) years. The stock was at $8 when he took over as CEO.

From the moment he was hired, he became a PR machine. He was a self-promoting marketing genius, and the market loved it.

Control

What I noticed immediately was that the warlord began replacing members of the Board of Directors. John replaced five (5) of the seven (7) BODs within a couple of months. He had control. Full control. And my equity interest, as large as it was, was irrelevant. The lesson about control: you can have a small minority position and control the whole enchilada.

What John Scully and John had in common was they understood control and how to get it. In Scully’s case, he didn’t understand how far ahead of the innovative curve he needed to be to keep Apple relevant. Scully focused on profits, cutting innovation. John from XO had a different plan and it didn’t include profits or innovation. He was going to make tens of millions of dollars destroying XO. I didn’t know it then, but it was me who was going to try and stop him.  I was probably the least likely of people he expected; he had accounted for everyone, including me, but I was very low on the danger list.

All Business Models Work

I spent a lot of time with Fred during the CEO transition to John in late 1996. Fred was maybe the first person to show me how to really make money. He took everything personally and in the beginning, he was happy about John. Fred was a real-life business hero who could handle everything and anything: lawsuits, competitors, sabotage, regulations, etc. He took it personally when larger companies were competing against his, even if they were there first. Fred wanted to focus on product development and marketing. Unlike John, he’s not ruthless, he’s just plain smart and has beaten the snot out of big pharma, marketing firms and the biggest consumer firms in the world.  

I realized early in my career that all business models work — all of them. No one has ever approached me seeking capital whose business model didn’t work. Amazing, right? No one will tell you they need capital but their business model doesn’t work. People want you to fall in love with their product without thinking about the execution aspect.

Profit is a Bad Word

What was worse than losing all my lawnmower money on Foster’s was I was slowly indoctrinated into worshiping the term, “profit.” We use the term profit every day, it’s the holy grail of business school vocabulary. The term bottom line is meant to describe profit, the number that matters the most. Bullshit.

Analysts, stock market pundits, undergrads, are captive to the word—profit—success is synonymous with the word—newly minted MBAs and CEOs are bonus beneficiaries of it. The warlord was able to engineer profits every quarter, despite sales being flat. The XO stock price was rising and analysts loved it. Wrap a strategic plan around profits, get on an analyst call knowing none of them have ever scratched the surface of actually operating a business and voila, you’ve struck gold.

No, I’m not a Communist. Yes, profit is a bad word. Yes, it’s an engineered number. For example, say you own a privately held business: do you want to pay more or less in taxes? Less, of course. I often see business owners hire family members, purchase murdered out Escalades or take “marketing” trips to Telluride as a way to increase expenses or expenditures because it will lower their taxable liability. We call that Cost Accounting. But what about firms that want to improve profits, can that be manipulated as well? Of course, we often see firms announce “restructuring” as a way to boost profits.

Profits are a powerful force and it’s all a farce. Take the Black Swan of 2008 for example. Banks were making what we call NINJA (No Income No Job Applicant) loans. They were garnering billions in upfront closing costs, origination fees, etc. They had FOMO (Fear of Missing Out) and worried their competitors were going to take all the profits. Well, those NINJAs stopped paying on their mortgages. While the banks were showing profits, their loans were defaulting at record paces. So bad the Fed’s had to put into receivership over 100 banks! Do you recall firms like Washington Mutual or Wachovia? They’re gone. Why? They focused on profit.

The Set Up

John’s special announcement about XO happened one week after Vegas. He had given me inside information while in Vegas and it was all very neatly planned. If I bought or sold one share it could be looked at as insider trading. He knew it, I knew it. He had me in check. It was a perfect set up; if I reported it I would attract the SEC into my world and most likely lose my license, get fined, and even lose my career. They would want to know what I was doing in Vegas with the CEO of a publicly traded company, and why I had so much equity. He knew I wouldn’t touch my stock or go to the SEC. Check, but not check-mate.

The XO announcement was about a large retailer that agreed to sell its products. It was a big one. I got on the conference call knowing it was only partially true. How did I know? I had taken the time to befriend all of the workers at the XO factory for the past two years. They were mostly Hispanic and African-American, and I would make it a point to show them I had respect. I asked about any new orders or work. They did confirm they had an order for a large retailer, but the order itself was small, very small.

I never forgot where I came from. As a kid, we ate beans and tortillas on Monday, and tortillas and beans on Tuesday. My mother was a teacher and we were living off a teacher’s salary. The ol’ man’s child support came in late, incomplete, or not at all. But she made it work, and she sacrificed in order to be able to provide for us. Because of my upbringing and the respect I have for everyone who’s struggling to make ends meet, I made it a point to have a rapport with the men and women at the factory — I always do.

The stock price was now at $25 per share. What was going on? I looked into divesting some of the equity, but I realized because I controlled so much stock, I would single-handedly bring it down if I liquidated anything of significance. John knew this, and I knew that I was behind the eight-ball. What was he up to?

After Vegas, I was in deep. John tied up his only loose end with me by giving me non-publicly information prior to the release. I was stuck; I had no alternative but to find out what he was up to.

Disequilibrium over Equilibrium

Fred and I talked a lot about marketing. What we didn’t talk a lot about was economics. Why? Economists don’t really know how to make money, they know how to proselytize and talk about Adam Smith’s invisible hand but they don’t understand entrepreneurship. There are really only a few economists that ever really understood entrepreneurs (e.g. Kirzner, Popper, Schumpeter, and Harper).

The key to business is to find a gap or pain where you can create economic rents to justify your time! When people think of economics, they think of Supply & Demand, and equilibrium. Equilibrium is the intersection of supply and demand whereby you’re supplying the exact amount of widgets demanded in the marketplace. You’re efficient. Barf. Equilibrium is easy, disequilibrium is hard.

The best economists in the world are experts at matching supply with demand, equilibrium. The best entrepreneurs in the world are experts at creating disequilibrium. Which do you want to be?

Yes, disequilibrium is having more demand than supply and it’s a good problem to carry. Creating demand is the hardest part of a business and the best problem you can have is too many sales orders. Demand should outstrip supply any day of the week. Fred was an innovator and guerrilla marketer. He taught me guerrilla marketing while most of my peers were still memorizing the 5 Ps of the Marketing Mix.

Economics has a definition that looks something like this: Economics is the study of the allocation of scarce resources. That’s pretty much it; but, that begs the question, what does scarce mean? Scarce means rare. How do I get my hands on rare resources? Clearly, the economists who subscribe to this have never owned a company.

I’m going to give you my new and improved definition of what economics is: Economics is the study of the allocation of scarce resources; but, by scarce I do not mean rare, I mean valuable. That’s what I want you to memorize.

It’s only when we are able to endow value to something that people pay for it. There was never any value to oil before the automobile. Endowing value means you’re going to have to create demand.

The Mother of all Tactics

The journey of my investment life, since I was 12, was coming to an end. I could feel it. It was the winter of 1997 now. The market was peaking, and the warlord was winning. I was losing. I was in over my head. I was in check.

Each month, I ritualistically reviewed all the short positions on every equity I owned. Working at an investment firm allowed me to see what firms were long and short. But it was only once a month.

December 1st, 1997. It was a Monday. I came into work early to check the short position on XO. I was not prepared for what I saw. There were seven (7) firms that I had never seen have a long or short position on XO stock.

The percussion of the wreck I was piecing together left me in a state of paralysis. 2,000,000 shares short. Coincidence? A Rabbi investor of mine once told me, “there’s no such thing as coincidence.” This was no coincidence.

I checked the price of XO, and the last trade was at $34.25 p/share. Volume was high.

John was shorting his restricted stock options. Could he do that? Didn’t matter if he could, because he was. Why?

I calculated that he began shorting XO when it was at $32 p/share, and it was as high as $36. By my math, he had shorted roughly $68,000,000—give or take a few million.

Fred wasn’t going to stop innovating at XO, but he was getting nervous because the company was burning through the cash, quickly. I was sweating.

The way shorting stock works is pretty simple. You expect the stock to go down, open a margin account, tell your firm you want to short 2,000,000 shares, the firm will require at least 60% of the collateral in the form of cash or equity. He put up his restricted stock in XO and they loaned him 2,000,000 shares to short. This means he gets to sell 2,000,000 shares on the open market without ever buying it. Let’s say he shorted it all at $34 p/share, that’s $68mm. If the stock falls to say $30 p/share he makes the difference between $34 and $30. That’s a profit of $8mm. The firm only requires you to pay back the number of shares, not the dollar amount. If the stock goes to $40 you lose $6 p/share x 2,000,000 shares. That’s a $12,000,000 loss. It’s a big risk to short stocks, I highly discourage it; but, if you’re like John, you have the stock to cover your position if it goes up on you. Aarghh! This was perfectly executed.

In short: the warlord was pumping the stock up and at the same time trying to put the company out of business so he could walk away with $68,000,000.

John was a warlord, he wreaked havoc, he was a menace and no one knew what he was up to. Except me. He wasn’t bluffing.

I ran out of the office and drove to California to think it through, and what my next steps would be.

While the warlord was wowing analysts, Fred was innovating. I made inquiries to Fred and around the factory and his innovations were beyond my expectations. I expected him to be neutered like John had neutered everyone.

John was burning cash on new hires that didn’t really do much. He was taking lavish trips, he spent $150,000 on a trip to Europe and Asia for two weeks.

The warlord was a tactician, a tactician knows how to execute, a strategist only knows the desired end game. He mapped out his play and timed it to perfection, he had all the bases covered, and the stock was doing exactly what he wanted, going up. Employees, retirees, and Investors would be set to lose hundreds of millions: game, set and match.

The End of the Beginning

My first thoughts were how to insulate my investors, I was past the code red. The warlord knew that even by the slimmest of margins that I figured out he shorted the stock I had no chance of winning. It was too late.

I received a phone call at 10 am from my two largest investors, they knew something was amiss, I was on three-way. “Aram, what is hell is going on with you? Where are you?” I was hesitant to answer the phone in the first place but were my big guys. They mentored me through multiple issues. “I’m driving, I pieced it together, it’s bad.  What John has set in motion is not like anything I’ve ever seen.” Long pause, Thompson and David connected the dots quickly. “What are you going to do Aram, tell me your plan, I’ve got about $20mm into it, Thompson has about $40mm, you control over $120mm.” I took a deep breath. “I need two weeks. I can’t tell you what it is but by my best guess the shit won’t hit the fan for three, I need two. I don’t want to implicate anyone so it’s best not to discuss my plan.” Long pause. “Aram, this is Thompson, everyone is telling me the opposite you are. Are you 100% sure you’re right?” “Aram, this is David, do what you need to do, GET-HIM-OUT, do you understand? I’ll call you tonight.”

The Beginning of the End

The next two weeks were spent trying to find a smoking gun on John. I met with former employees, hired two Private Investigators and two lawyers. This part of investing is what happens when ego and greed come together. But John wasn’t just greedy, he was malicious, I had never met anyone like him. In a way he was flexing, he was daring someone to take him down. He was calling for someone to battle him.

One of the Private Investigators informed me that he suspected I was being watched and my movements were tracked. “What? By whom?” He suspected John. He had me again, at every turn. I was starting to get angry, I needed to keep my emotions to a minimum and getting angry only played into his game.

This would be the beginning of the end for me. The only question was at what cost? What was the price? The sacrifice?

I was married at the time. My then wife told me to sell it all and quit, run, resign. We would still have plenty of money and I could start over. She was asking me to look the other way. I wouldn’t succumb to the same greed that captured John. That was cowardice. He was a coward. I wouldn’t leave my investors to catch a falling knife either.

Sometime in January 1998, I woke up at 3 am, she was already awake. I sat up and told her I felt it was best she pack up and go to her mother’s in the morning, and I’d write her a check for her half of everything. She said okay, rolled over and went to sleep. I saw her two times after that, to pick up clothes and furniture.

I spent a lot of money looking for that smoking gun on John, and it never appeared.

The Call

There’s always a price to being naïve, I just never believed it could this steep. But, I was learning more about John every day. One afternoon I received a call while driving. It was a blocked number.

“Hello, this is Aram,” I answered.

“Aram, John here. I haven’t heard from you in a while—just checking in to see if you’re okay? I know you’ve been busy, but let me know if there’s anything I can do?”

That call shook me to the core. I responded, “John…I have been busy, very busy. I’m busy now but I’m going to be alright.”

He gave me a condescending chuckle and hung up. He knew I was snooping around. The call was a wake-up call, and it worked. I was afraid for my life.

I was having terribly bad sleepless nights, nightmares and a little paranoia. I decided I would think solely about John. The only way for this Shakespearean tragedy to end would be to confront John, mano y mano.

Charge

Two weeks had passed since I spoke to Thompson and David, and it was time for the XO Annual Shareholders meeting. All board members would be there, the press, analysts from all over, shareholders like Thompson and David, employees of XO, etc.

This was going to be epic. He would not expect me on this day, so I thought.

I wondered what Jackie knew about John, was she in on John’s scheme? I was not supposed to be there, but yet, she hung up the phone and told me John was expecting me.

So much for my element of surprise. John was waiting in front of the door of his corner office.  He looked impatient, not happy. I carried my large manila folder in my right hand so I didn’t have to shake his, he noticed. He towered over me by what seemed like three feet and outweighed me by 50 pounds. He smiled and greeted me, “Come on in.” I stepped into the office and there was the den of thieves, all the board members smiling at me.

“We’re busy today, as you know the annual shareholder meeting is at 4, what can we do for you?” John asked.

I stood there in silence for a few seconds, lifted my head and stared straight into his eyes, one foot away from my nose. “We need to talk.”

He paused. He stared back at the board and ushered them to leave with a wave of his hand. The board didn’t hesitate, they jumped out of their seats and raced past me. A bunch of trained poodles I thought.

John came closer to me, I raised the manila folder to keep the distance between us. I handed it to him, he walked around his desk and sat in his high back leather chair. “What do you have in here, what am I looking at?” I took a step closer to the desk. “John, You’re going to leave XO.”

I took another step to the desk, he stood up, looked down and before he could say anything I lost my voice, he looked at me puzzled, I gulped, stuttered, I felt like I had a heart attack, “You are going to leave XO, you are going to leave, today!”

John picked up my folder again and began to pull the documents out. I was feeling a bit more emboldened. “Don’t take my word for it, read it, you’ve even implicated your kids.” John looked me up and down, put the manila folder down, and slowly opened his top drawer, he put something on the table, it looked like a revolver, it was a revolver. In a split second, I wondered ‘who keeps a revolver in their drawer?’ I never felt angry during the entire process, not until that moment. I looked up into a visibly angry face, his eyes had a fire in them. I clenched my teeth, pointed at him and raised my voice, again I stuttered, this time because of the revolver, I wished I could get myself into a rhythm: “You started this John!” I gathered my wits,“ not me, not Fred, you! Remember that, I’m here because of you, this is your doing!” He waited what seemed like forever to say anything, he was calm, “What is it you think is going on?”  I had my head on straight, the initial shock was gone, “Your kids will go will go to jail, you’ll go to jail, and so will I. That’s where we’re at John. The firms where you held your restricted stock, I found them…” I pointed at my head and shook it back and forth, gesturing he didn’t use his head. “…and guess what, there’s a short position of 1,000,000 shares. EXACTLY! JOHN!” He looked up at me, there was fear for a split second. “John, They have accounts too, I found them.” He roared, “Don’t you f—ing come in here and threaten me?” He wasn’t going to lie down, people always forget that even a champion on the way out is dangerous. I stood back, I gave a patronizing laugh, I spoke very softly this time, “John, I’m going to the SEC. You’re going to deal with them, not me, them.” I then yelled and it startled him, “You’re FIRED.” I didn’t know what I was saying; I just wanted to keep talking before he shot me. “You’re FIRED, John!” I was pointing at him and he was yelling at me, I was yelling at him and I pointed at the folder, “Read it!” We were both frothy at the mouth and yelling, I remembered he had a revolver, I quieted down and stood there while he finished his rant about shooting me to protect his family or something. I am, by nature, and by practice, a nonviolent person, but I had wanted to punch him, like in the movies. But then, I bring myself down to his level. I got those thoughts out of my head, it was making me too emotional, if I could keep calm I could win this. I suspected John was no stranger to violence, he was a bully. I thought about finishing this up, whether it would end up with me getting shot or walking out, I was going to finish.

I hadn’t anticipated a gun, I was still in shock over it, every time I looked at it I got emotional, so I stopped looking at it. He put the gun there as a prop, to throw me off, it was working.

He stared at me, his face said a million things, his silence told me I was close to checkmate, I was confident. I didn’t flinch, I stared at him, he stared at me. I was closing in on his desk. I stepped to the desk, he moved his hand closer to the gun, I grabbed the manila folder, “put the papers back in,” I said in my normal calm voice, “It’s best you don’t read it, John, just resign, you have until 4 O’Clock.”

I looked down at the gun, this time with less fear, I was afraid, but I gave him a disgusted shake of the head. It was up at him now. “F__ you!” he said calmly. That was it, check-mate. That’s what I wanted to hear. I walked out, pushing his doors open. I passed 10 or so XO staff that had lined up to hear what was going on.

An hour later, at 4 pm. The Annual Shareholder began. I leaned my shoulder against a pillar in the back, manila folder in hand. Investors came up to me, XO employees were staring at me, I was cordial but had no desire to small talk. The emotional roller coaster would not go away.

There were rumors and whisperings swirling around, people were looking for me and at me, and I saw them looking at John too. My senses were in hyper-mode. You see most everything after a meeting like I had. I felt a new maturity like I had gone from 26 to 45 in the span of an hour.

A Board of Director member started off with the usual greetings. He introduced John, who spoke for what seemed like an hour about XO, then he started in on his career and what he was able to accomplish at XO, how proud he was of his team, a bunch of BS. His kids were in the room. My new heightened sense of awareness allowed me to discern which of his kids knew and didn’t know. His daughter knew but the brothers had no clue. She didn’t stop looking my way until I would acknowledge her stare. She knew I knew she was there. I smiled before I turned to her. She made me more nervous than the warlord, she would slowly turn her head to the front. I caught glances from Thompson and David.

John was thanking everyone for their support and stated it was time to spend more time with his family. He looked directly at me, pointing, “I want to give Aram Chavez special thanks for his support in the aftermarket, he believed in my vision and I’ll miss him.” Everyone applauded. What a farce. I gave his daughter a small grin again, I earned it. His boys were clapping like Odie. He announced his resignation effective immediately.

He stepped down and received hugs and handshakes from everyone in the first couple of rows. Jackie gave him a hug, she looked at me, I suspected she knew his scheme or parts of it. He disappeared into the hall. Thompson and David followed him, they wanted to see it in his eyes that he was finished, insurance.

That was the last time I saw the warlord or heard from him or of him. The board would agree to give him a severance package that ended up being a golden parachute. I learned later his severance package also included a recital that would preclude his children from being prosecuted after his resignation. I would check on the short position the next month, it no longer existed, he covered it, I went home and opened a beer, it was 10 am. I got a call from Thompson and David. I told them I was having a beer and the short position was gone. Thompson was worried, “Only one beer Aram.” It was a command, not a question. I laughed, “This is it, Thompson.” I poured it down the sink because beer at 10 am is a terrible idea.  

There’s no way I would’ve been able to prove anything against John or his family. The manila folder was filled with my notes on finance and a bunch of blank papers.  There was no evidence or proof of any wrongdoing.

I wonder what he would think if he knew that he taught me the bluff in Vegas?