The time I said `no' to a fortune on the internet

Two and a half years ago I found myself at a conference table with a few other people who wanted to create a financial magazine on the internet. We decided to start by choosing a name. Someone suggested Up The Street, and everyone liked the edgy, aggressive, vaguely political ring of the name. Up The Street was paraded before potential advertisers, who disliked the edgy, aggressive, vaguely political ring of the name. And so Up The Street became

As ours was to be an internet magazine, we had another critical task to perform before deciding what exactly was going to be in it. We had to divvy up the equity. For this purpose the two founders, Jim Cramer and Marty Peretz, called a meeting at Cramer's home in Pennsylvania. After a long day of discussions, the two founders took me for a walk around the grounds.

When I close my eyes before I fall asleep each night, I replay in my head every step of that walk, and try to recall how I lost my way. As I recall, the soundtrack from The Godfather played in the distance, and the two men told me that in exchange for my blood oath, or at least for the weekly column that they wanted me to write, they would give me an equity stake of 2.5 per cent, with an option to acquire another 2.5 per cent.

I said I'd think about it, and when I got home I did - for about two minutes. I think very highly of Marty Peretz, which was why I had turned up to talk about his magazine in the first place. But the decision not to accept a 5 per cent stake in his newest venture lost me no sleep - not then, anyway. was expected to lose a great deal of money from the start and, as far as I could see, would continue to lose money right up until Marty went bust. Five per cent of nothing was still nothing, even if it was 5 per cent of nothing owned by Marty Peretz. Plus, there was the opportunity cost: any work I did for would be work I didn't do for The New York Times, which paid cash up front.

Two and a half years later, in advance of Inc's initial public offering, the New York Times Co has just purchased a minority stake in the magazine for $15m. I open newspapers and find myself ridiculed.

The other day, The Wall Street Journal said that I left at least $5m on the table. Of course, the real number is probably bigger - more like $12m. But whether it is $5m or $12m, it raises a question: how do I feel? Like a fool, of course. But a fool who would now like to raise another question: what the hell is going on? Truly, I do not understand this new economy of ours. If I write for The New York Times, which has about 4 million readers, a great deal of advertising, and huge profits, it pays me some few tens of thousands of dollars a year.

If I had agreed to write for, which now has 37,000 subscribers, annual losses of $16m and very little advertising, The New York Times would now think me worth paying millions for. Why would my services be so much more valuable to The New York Times if they are practised in an obscure publication with few readers rather than in the world's most powerful newspaper. If I can solve that mystery, I am probably qualified to own my own internet magazine. Sadly, I can't. I do have a few theories about it, however, none of them very persuasive.

1) The New York Times has gone mad. It is panicked that it is missing out on The Next Big Thing. Fifteen million dollars means nothing to The New York Times. Its corporate officers view their investment as disaster insurance - a hedge against radical change, from a world where people read the Times, to one in which they have no interest in anything but internet tip sheets.

2) My financial advice, and the financial advice of other would-be scribes for, is precious. When I write for The New York Times I do not offer financial advice, as I would if I wrote for Moreover, I am not allowed to give financial advice - The New York Times does not sully its hands in this way. In mining the financial acumen in the journalistic mind, has hit gold. The New York Times wants a piece of the new action: journalists picking stocks.

3) The internet is a game of self-fulfilling prophecies, and The New York Times has suddenly figured that out. By tapping a group of people who are no less plausible than any other group of people hovering around the internet and saying, very publicly: "Here, take these $15m belonging to the great New York Times and do something with it,'' The New York Times creates its own success. The golden rule of internet business is: if people believe it is a success, it is by definition a success. might not be worth anything, but the people who started it are not embarrassingly stupid. They have gumption and ambition. If The New York Times pretends they are worth a lot, and throws capital at them, other people are sure to follow. Pile enough capital in a heap, and something good is bound to happen. At the very least, the stock price will go up. After all, The New York Times is an investor.

n Michael Lewis is the author of `Liar's Poker', `The Money Culture' and `Trail Fever' and a columnist for Bloomberg News.