From legendary short seller to god of American capital

Chapter 332 The Next Era: Camel vs. Bull!

Chapter 332 The Next Era: Camel vs. Bull!

Larry frowned slightly, still pondering what kind of scheme the other party was employing. Having dealt with many intelligent people, Larry was somewhat skeptical that this man would expose all his weaknesses at once.

"What are your plans?" Larry asked, adopting the safest approach.

Reynolds replied without hesitation, "I'm not reconciled! The newspapers say all the mistakes are due to the monopoly of capital—I can't judge whether that's true or false, but personally, I'm not reconciled!"

As he spoke, Reynolds' expression hardened, and he quickened his pace, continuing, "I'm not reconciled! The industry we've upheld for generations has been so easily taken away by people like Duke—this is what we've dedicated our lives to. I accept cigarettes replacing chewing tobacco! But the invasion of Winston by capital pierces my heart!"

Larry nodded solemnly, signaling the other person to continue.

"I can now resell gleaming tobacco in our town, even in our county, but I still have a lot of unsold chewing tobacco stock—I want to switch to full-scale cigarette production. But the machines are expensive, and I have to experiment with formulas one by one—but none of that is enough to stop me. But do you know what the most dangerous thing is?"

Reynolds' face contorted with pain as he continued, "Duke! That guy's using the money he raised from his IPO to build a factory in New York. His automatic cigarette rolling machines will produce 40 cigarettes a day, and the price of cigarettes will drop even further. He has a lot of capital backing him up, but all I have is the red soil of North Carolina and a bunch of workers who only know how to rub tobacco leaves—and my debts."

Larry nodded slightly and quickly summarized the other party's predicament: outdated technology, insufficient capital, and encirclement by giants.

"So you came to New York to raise funds?" Larry asked.

"Yes and no!" Reynolds smiled wryly. "They only ask about collateral. My factory land, even my wife's dowry, have been appraised, but it's still not enough to meet their safety standards—they told me, Mr. Reynolds, you can earn money by smoking for another ten years, why take the risk?"

He paused, his gaze sharp, "But I know that ten years from now, no one will remember the taste of chewing tobacco, only the aroma of their first cigarette."

Larry paused for a moment, then suddenly asked, "Have you ever tried Bull Durham cigarettes?"

"It doesn't taste good! I think," Reynolds said frankly.

"I think so too," Larry said with a smile. "So why do you think his cigarettes aren't good enough?"

Reynolds thought for a moment and said, "I think it's because the tobacco is too pure, it's all brightleaf tobacco. Although it's very good, it only uses one type of tobacco, so the taste isn't very good."

Larry nodded in agreement. No wonder he'd inherited a family history in tobacco; he'd hit the nail on the head. Larry decided to give him some pointers, but before that, he needed to confirm his current predicament again—because Larry judged that the man was genuinely honest and straightforward.

"Sit down, Mr. Reynolds." Larry gestured to the sofa, and after the three of them sat down again, Larry asked, "How much money do you need to realize your dream?"

Reynolds was silent for a moment before finally speaking, his voice low, "I need—$15."

His gaze was fixed on the table, as if uttering this number had exhausted all his courage. "I need to buy two more automatic cigarette rolling machines from the UK, build a new workshop, hire a perfumer, and support marketing for a year."

"What if it fails?" Larry asked.

"If I fail—I'll just have to leave this money buried in the red soil and sell the factory to Duke. I'll use the money from the factory sale to pay off my creditors first."

As he spoke, Reynolds raised his head, his eyes filled with the pride and desperation typical of Southerners. "If you're willing to invest, I can give up 15% of the shares!"

As soon as he finished speaking, the reception room fell silent. Suddenly, the chirping of cicadas outside the window became clear.

Larry laughed and said softly, "Richard, just as you said, times are changing. If you want to keep your factory, you don't need $15—"

Reynolds frowned. "Is that 10 or 12? The bank told me that if I applied for a loan of more than 10, I'd be crazy—"

"50!" Larry interrupted him loudly.

Reynolds sat bolt upright, thinking he had misheard. "Excuse me, what you just said was—"

"$50!" Larry repeated, his tone as calm as if describing the weather. "Cash, in three installments. $20 upon signing the contract, $15 when your first batch of trial cigarettes rolls off the production line, and another $15 if sales exceed one million packs within six months!"

Larry had already planned it out: these three rounds of equity investment correspond to initialization, scaling up, and commercialization, respectively.

Reynolds' breath caught in his throat for a moment.

That's $50! Enough to buy the entire factory in Winston and build a new one.

"How many shares do you want?" he asked in a dry voice.

"49%!" Larry replied.

Reynolds' expression changed drastically. Although he had a vague idea of ​​what was going on, the other party wanted 49% of the shares, which meant they were on equal footing with him.

He had thought the other party would only ask for 20%, but now it has more than doubled.

After a moment's thought, Reynolds said coldly, "You're acquiring my company—if I wanted to, why wouldn't I go to Duke?"

"No!" Larry shook his head and said, "I am redeeming your future."

As he spoke, Larry leaned forward, staring intently at the other man. "You just said that Duke crushes small cigarette factories with machines and capital. But do you know what his real weapon is? It's not the cigarette machine, but patience."

He could lose money for five years straight, waiting for his competitors to starve, but you can't; you only have one chance. If your first cigarette product fails, no one will give Reynolds a second bet!

Reynolds was speechless, for this was the very source of his sleepless nights and fears.

Larry continued, "So, the 49% isn't about control, it's about ensuring you don't back down halfway. When someone on the board says, 'Let's go back to chewing tobacco,' when workers complain about how difficult the new machines are to operate, when the first month's sales are dismal, you need someone who, like you, believes in the future, to stand beside you and say, 'Try again!'"

Larry's words seemed to possess a magical quality; his tone wasn't loud, but it had a captivating power.

Not to mention Reynolds, even Lehman stared at Larry in shock, shaking off half the ash from his cigar in excitement.

Larry deliberately gave the other party some time to fully understand his meaning and be deeply shocked before continuing, "And 49% means you are still the controlling shareholder, and the brand will always belong to Reynolds."

Reynolds stared at Larry for a long time. He had always thought that people on Wall Street only knew how to exploit. But he never expected that this blond, blue-eyed young man would be willing to use a huge sum of money to suppress the obsession of a southerner.

What was even more unexpected was that the other party did not want short-term returns, but rather to jointly build a powerful tobacco brand.

Larry, however, envisioned a real equity investment where he only needed to invest $20 to lock in a 49% stake.

The shares are subject to a stop-loss of $20 if the other party mismanages the business.

But if it succeeds! The return on $20 will definitely be much more than that amount —

Of course, if the other party listens to him—Larry believes Reynolds has no chance of losing, even against James Duke!

Yes! That's how confident we men are! I have money now, and I also have knowledge about the future! So I can say whatever I want, even if it means a dragon is flying right in my face!

Reynolds thought for a moment and slowly said, "If it really can—well, really can be done well, then of course it can! But to be honest, I don't have that much confidence to make a cigarette that surpasses the Bulls Durham."

"Just tell me if you can agree to my conditions? If you can, I can show you a way out—" Larry said crisply.

Reynolds looked up blankly. "You know about tobacco too?"

Lehman, somewhat flustered, said, "Sir, should I excuse myself?"

"No need!" Larry said firmly.

Reynolds closed his eyes. He saw his father's figure bent over in the tobacco field, his wife's worried eyes, and the first wisp of blue smoke from the newsboy's cigarette just now on the street corner—

When he opened his eyes again, he raised his right hand. "49%! It's a deal. I swear to God."

(Richard Reynolds)

Larry nodded. He wasn't afraid the other party would back out, because what the tobacco industry needed now was marketing—not ideas—rather than the secrets he was about to reveal.

Marketing or branding is their biggest trump card! And they won't reveal this trump card.

"Have you ever tried mixing Turkish tobacco with Virginia tobacco?" Larry said casually.

Reynolds paused, then said, "Tried it! It's too aggressive! More aggressive than a bull."

"How about adding a little burley tobacco? South American tobacco is very mild, and with some Egyptian or Javanese spices—we can make the smoke even milder and give it a slightly sweet taste." Larry smiled and coaxed him gently.

Reynolds' pupils contracted slightly; he had never even considered this direction before—so he asked the question again, "You know about tobacco, Mr. Livingston?"

“I don’t understand! But I do understand the aesthetics of addiction,” Larry said with a laugh. “You may not realize it yet, but chewing tobacco is a function, while smoking is a ritual. People aren’t buying nicotine, or the purest flavor, or the stronger the better—they’re buying three minutes of elegance and rebellion.”

Upon hearing this, both Reynolds and Lehman were stunned into silence.

Their eyes were fixed on Larry, their minds still replaying each other's words—

Reynolds gradually realized that the person in front of him was not a Wall Street gambler, but someone who could see the essence of things across different fields.

"—You may continue, Mr. Second Shareholder!" Reynolds said solemnly.

Larry nodded slightly. "This is a different cigarette brand from Duke's before or after; it focuses on a lifestyle. While introducing Turkish tobacco, we want to incorporate the mystery of the East into the brand."

"The East—mysterious—what do you mean?" Lehman couldn't help but ask.

"Camel! A creature from the East, so different from a bull!" Larry replied.

"Camel! Well—the name sounds like it's going against James Duke's Bulls, but I like the name!" Reynolds replied frankly.

Larry nodded and continued, "From this moment forward, you cease all chewing tobacco production. Go all in on cigarettes. I will design the brand's packaging and everything else—camels represent exoticism, mystery, and endurance!"

Reynolds nodded. "Then I'll add one condition!"

"Speaking."

"You have to be personally involved in the brand's design, from phonetic alphabet to GG slang, to the taste balance of the first sample—"

"I need your eyes, to look to the future!" Reynolds said earnestly, his right hand already outstretched.

"Deal!" Larry smiled and shook the other person's hand.

This was the second time the two shook hands today, but the second handshake has already determined their future.

There's no time to lose; good things shouldn't be delayed.

Over the next three days, Larry's hired firm's professional lawyers assessed the other party's assets and drafted a cooperation agreement.

On Thursday morning, June 16, Larry and Reynolds returned to the Lehman Brothers meeting room and solemnly signed the contract for Larry to acquire a stake in Reynolds Tobacco Company.

The contract clearly states that Larry owns 49% of Reynolds, but the shares are frozen until the $50 investment is fully completed.

Larry immediately paid the initial investment of $20—which brought the remaining amount at the New York bank to $64.7.

In the formal contract, Reynolds Tobacco Company was upgraded from "&Co." to "Inc.", transforming from a partnership into a corporation.

This is a small change, but it represents a modernization transformation led by strategic investors.

After the contract was signed, the lawyer immediately notarized it. Once everything was finished, Larry, Reynolds, and Lehman walked out of Lehman Brothers and stood on the street.

Lehman said regretfully to Reynolds, "Richard, oh, what a pity—I don't think you can supply us with Brilliant Tobacco anymore—"

Reynolds smiled but did not answer. Instead, he turned to look at his new partner.

Larry smiled and beckoned the newsboy on the corner, handing him two ten-cent coins. "A pack of Bull Durham cigarettes, please."

.

The newsboy, all smiles, handed over a pack of cigarettes. "Sir, it's 12 cents a pack. I don't know how to give you change, so how about you give me another five cents and I'll give you a newspaper too—"

Larry smiled and pulled out another five cents, handing it to the newsboy. The newsboy then gave Larry a newspaper that smelled strongly of ink.

Larry looked down and was a little surprised, but also a little pleased, because it was a copy of The Wall Street Journal.

At this time, *The Wall Street Journal* was still a tabloid. Despite its considerable professionalism—

"Oh, this is new packaging!" Reynolds stared at the cigarettes.

"Yes, we've adopted a new method of two rows of six cigarettes each," Larry said, unpacking the cigarettes and handing one to Reynolds and Lehman, one for each of them.

"Try something new—" Larry struck another match and lit the three of them one by one.

As the smoke rose, smiles appeared on the faces of all three.

The taste is still the same, only the appearance of the cigarettes has changed.

very good!

Reynolds took a couple of puffs, looked at Larry, and suddenly asked out of the blue, "Why a camel?"

Larry laughed. "Because it doesn't belong here. It comes from a foreign land, thirsty, burdened, and silently moving forward—just like me, or you. This new cigarette will cross prejudice and reach the hands of those who yearn for new things."

Reynolds nodded, tossed his half-smoked Bull cigarette to the ground, and ground it down hard with his shoe. "From today onward, the Reynolds Tobacco Company will no longer produce any chewing tobacco." His voice wasn't loud, but it rang out like a hammer striking an anvil. "From now on, we will only do one thing: make all of America fall in love with a cigarette called Camel!"

Larry smiled and turned to Lehman, "Remember to keep this a secret, Mr. Lehman! Also, I'm entrusting the matter of importing tobacco from overseas to you!"

"No, no problem!" Lehman assured loudly.

Larry laughed, flicked away the half-smoked cigarette in his hand, waved to the two men, and said with a smile, "Goodbye, Mr. Reynolds, Mr. Lehman! I'm going to Chicago. We'll talk when I get back!"