MovieChat Forums > August (2009) Discussion > Questions about the plot

Questions about the plot

posted 13 years ago by foursixkid
2 replies | jump to latest

1) How did Tom get investors to give his company money? In the first scene it is made clear that they do not have a business proposal to give to potential investors. Why would an investor blindly give them money? Was he relying soley on the success of other dot.com businesses at the time? I thought publicly traded companies had to give their investors detailed reports every quarter to show them their profits/losses...

2) What was Landshark actually doing with all the money they were receiving from the investors? Were they only spending it on their office space and their employee's salaries?

3) More of a general stock market question. What causes the value of a stock to rise and fall? This also ties into the term "lock-up". Were Tom and his management team the only people who couldn't sell their shares until the six months was over? If no one was allowed to sell their shares then why would the value of the stock fall?

4) What was the best case scenario for the management team at Landshark? Were they just waiting until the lock-up ended so they could sell their own shares and walk away? Did the management team genuinely think that Landshark would be successful or were they trying to cut and run as quickly as possible?

Thanks in advance :)

[–] schumithecat 13 years ago

1. during the dot.com boom, there was a frenzy where some investment decisions were made on hype and supposed potential rather than realistic business models. I believe the lock up was based on an initial public offering, where insiders' shares could not be sold for some period of time. Yes, publicly traded companies must file quarterly and annual reports, which often affect the stock price depending on whether results are better or worse than what investors expected.

2. yes. they had little or no revenue and huge expenses, and burned through their cash as a result.

3. supply and demand. the insiders' shares were locked up, so they couldn't sell while everyone else was dumping their shares due to the dot.com bust (driving down the price, because you had to keep dropping the price to find a buyer).

4. for most of the movie, the CEO hoped to hold onto his huge ownership share until the company turned things aruond became profitable and the stock price recovered (at which point he could sell and make a lot of $). at the end, he realized the company did not have a chance of turning it around for years (and there was no way he could keep the company afloat that long) and had no choice but to sell his shares for peanuts and get some protection for his brother and friends.

[–] Sparrowhawk 8 years ago

1) That was not unusual at all. The reason the whole dot com 1.0 architecture collapsed was because investors were running around throwing mountains of money at ANYBODY who had a cool-sounding idea, regardless of whether they actually had anything to sell or not. Yeah, it's insane and stupid, but so was the whole dot com ecology.

2) They were blowing it not only on paying their developers, but on insane stupid schit designed to make them look confident and cool. Like that plane Tom kept going on about. Act like you own the world, and you'll eventually own the world, was the thinking.

The other two I can't answer since they're more technical, but I do believe the intention was to take investors' money and then develop the product to deliver. They didn't go into this intending to defraud anybody. They just wildly miscalculated the time it would take to have the product to ship.