In the U.S., the most significant event recently for Simon was the financial report for Daenerys Entertainment Group's just-concluded fiscal year. As a leader in the surging U.S. stock market, the global capital market closely monitored this release.
After returning from New York to Los Angeles, Simon personally oversaw the process. On October 17, Daenerys Entertainment Group finally released its financial report for the fiscal year 1996.
From October 1995 to September 1996, Daenerys Entertainment Group's revenue reached a record $36.1 billion. Compared to $27.6 billion in the 1995 fiscal year, the annual revenue growth rate remained at an impressive 31%, significantly exceeding Wall Street analysts' and financial media's predictions of 25% to 30%.
While it's not uncommon for startups to achieve even double-digit growth rates, it's widely known that maintaining high growth becomes exponentially more challenging once a company reaches a revenue scale of $10 billion or more.
For Daenerys Entertainment to maintain over 30% growth after surpassing the $30 billion revenue mark was almost miraculous.
Unsurprisingly, the initial reaction to the financial report from many was skepticism.
"How is this even possible?"
To put it into perspective, with a revenue of $36.1 billion, Daenerys Entertainment would rank among the top 15 companies in the U.S. Fortune 500 by revenue, alongside century-old giants like DuPont, Citigroup, and Texaco.
Yet, upon detailed review of the report, critics were left with no room for refutation.
Take, for example, the company's core film business.
In the recently concluded summer movie season, nearly every blockbuster that grossed over $100 million was tied to Daenerys Entertainment in some way. This reflected the company's growing dominance in the U.S. film industry.
To the public, these successes were simply impressive statistics. But for industry insiders, they translated into tangible profits.
What's more, many observers began to realize that while Daenerys Entertainment had been relatively restrained in previous years, the company had begun to reveal its ambitions and sharpen its competitive edge following the successful acquisition of the Metropolis-ABC Group last year.
For instance, compared to the 1995 fiscal year, Daenerys Entertainment's film and television entertainment division saw a revenue increase of 34% in 1996, surpassing the group's overall growth rate of 31%.
Overall, this financial report—leaving all other Hollywood studios in the dust—was not the result of any single breakout success. Instead, it reflected the collective growth of Daenerys Entertainment's sprawling empire, which spans film, television, music, gaming, comics, theme parks, and more.
And this was what made it so formidable.
Most companies hit a growth ceiling and must explore new ventures to sustain expansion. But Daenerys Entertainment, already a leader in Hollywood, continued to grow robustly across its existing divisions, defying expectations that it had reached its peak.
Beyond revenue, the company's profitability also hit a new high.
Thanks to its disciplined approach and minimal investments in untested ventures, Daenerys Entertainment's annual profit soared to $5.27 billion, up 42% from last year's $3.71 billion. Its net profit margin increased from 13.4% to 14.7%.
With a profit exceeding $5 billion, Daenerys Entertainment ranked as the fifth most profitable U.S. company, trailing only General Motors, ExxonMobil, General Electric, and Philip Morris. These were the only five companies to surpass the $5 billion profit mark for the fiscal year.
By August, during the release of the Forbes list of the 400 richest Americans, Daenerys Entertainment's market capitalization had already reached a staggering $450 billion.
With the October 17 announcement of the annual financial report, the company's stock price surged 3.7% that Thursday, climbing from the previous day's valuation of $495.1 billion to over $500 billion, closing at $513.4 billion. The single-day market value increase of $18.3 billion made Daenerys Entertainment the second company in history, after Egret, to surpass a $500 billion market capitalization.
That day, a CNN financial journalist summarized Daenerys Entertainment's stock price with just two words: "utterly irrational."
In the midst of the new tech wave, a media and entertainment company achieving such a valuation seemed to suggest that the market had entirely lost its mind.
Yet, upon closer examination of Daenerys Entertainment's financials, the industry had to concede that among the core companies of the Westeros system—such as Cisco, AOL, and Egret—Daenerys Entertainment was the most fundamentally sound. While maintaining high growth rates, its revenues and profits were solid and tangible.
For instance, based on the day's closing market value of $503.4 billion, Daenerys Entertainment's price-to-earnings (P/E) ratio stood at 96 times.
A P/E ratio of 96 might seem exorbitant, but compared to many tech companies with ratios in the hundreds, Daenerys Entertainment's valuation bubble was relatively modest.
Even on the New York Stock Exchange (NYSE), where companies tend to have more conservative valuations, the average P/E ratio had climbed to 51 in the ongoing bull market, and many companies had ratios exceeding 100.
What truly justified Daenerys Entertainment's valuation was its growth rate.
Despite already being an industry leader, Daenerys Entertainment's divisions—whether film, television, music, or gaming—had not slowed down. The company's 30%+ annual revenue growth rate was the clearest evidence of this momentum.
This growth was the key driver behind the company's $500 billion valuation.
After all, stock market investments are about betting on the future. The greater the perceived potential, the higher the valuation.
On another note, the combined market value of the Westeros system's two giants, Daenerys Entertainment and Egret, had surpassed $1 trillion. Moreover, these two companies respectively led the NYSE and Nasdaq, inevitably sparking controversy.
The loudest criticism focused on the market bubble.
Even as the U.S. stock market soared, numerous hedge funds had bet against it, hoping for a correction. Many of these funds suffered massive losses, and while these weren't directly related to the Westeros system, the system's prominence made it an easy scapegoat.
Another recurring concern was Simon Westeros's overwhelming personal wealth.
His fortune had grown to such an extent that it was causing unease.
Calls to curb the growth of Simon's wealth were becoming more frequent.
For Simon, the prevailing sentiment these days could be summed up simply: too much money.
This wasn't a superficial complaint from a billionaire but a genuine issue.
It was reminiscent of Warren Buffett in the original timeline.
At one point, Berkshire Hathaway held over $100 billion in cash. Due to the company's sheer size and Buffett's refusal to pay dividends, finding suitable opportunities to deploy that capital became a major headache for the famously frugal investor.
Simon was now facing a similar dilemma.
He simply couldn't spend it all.
Take Daenerys Entertainment as an example. Simon still owned a staggering 78.3% of the company. Based on the company's 1996 profit, Simon stood to receive $4.1 billion in dividends. That's just one company. Excluding the value of Daenerys Entertainment's stock or the profits from the rest of the Westeros system, Simon would need to spend $11 million daily just to exhaust his annual dividend.
To put it into perspective, $11 million a day could buy approximately one ton of gold at current market prices. Spending that much every day would be an exhausting challenge.
Thus, no matter how lavish Simon's lifestyle was, personal expenses remained only a tiny fraction of his wealth.
Investment seemed like the logical way to spend the money.
However, unless he abandoned rationality and started throwing money around indiscriminately—a habit Simon did not have—his $4 billion in annual dividends alone would require a massive team to strategically deploy the funds.
And that's just one year, from one company.
If the full earning power of the Westeros system were unleashed without considering tax optimization or reinvestment, Simon's annual dividends could reach $10-20 billion. In the future, this figure could rise to hundreds of billions annually.
At that scale, the funds would be almost impossible to manage effectively.
The issue was that the Westeros system had reached the economic scale of a strong nation, yet lacked the fiscal demands of supporting millions or even billions of citizens. This led to a situation where wealth flowed in endlessly without equivalent outflows.
For nations, persistent deficits without the ability to export debt like the U.S. dollar system would lead to collapse. Similarly, perpetual surpluses could also spell trouble for nations that became "too rich."
A pig that grows too fat inevitably attracts the butcher's knife.
The Westeros system's biggest long-term challenge might be its tendency to accumulate massive surpluses. Simon needed to find a way to address this problem.
Malibu, Daenerys Studios
The day after the financial report was released, Simon wrapped up a meeting with senior executives. As the others left, Nancy Brill, the petite CEO he had asked to stay behind, couldn't resist teasing him. "Feeling troubled about having too much money to spend?"
Seated at the center of a wide conference table, Simon was reviewing a sales report for Diablo's first month of release. He looked up, amused. "Got any good ideas?"
Nancy moved to the seat directly across from him, shaking her head. "Nope. But from where I stand, the bigger the Westeros system's Matthew Effect grows, the worse this problem will get. I think it's a dangerous trend."
"Oh?" Simon raised an eyebrow.
"It
's obvious," Nancy said. "You have too much. Even if everything is legitimate, the sheer scale of your wealth frightens people. It fuels resentment among the masses and amplifies social inequality."
Simon paused and smiled. "So what do you think will happen?"
Nancy leaned forward slightly and shrugged. "I don't know. There's no precedent for this in human history. And while this might be the most civilized era in thousands of years, the danger still feels very real. I can't figure it out."
Simon smiled faintly. "You've already figured it out."
Nancy blinked in confusion. "Figured out what?"
"Violence," Simon said. "There's nothing new under the sun. Throughout thousands of years of history, every kind of regime change ultimately boils down to violence. In my view, the more civilized a society becomes, the more fragile it is—easier to destroy through barbarism."
Nancy tilted her head thoughtfully. "It seems like you've considered this a lot."
"Of course. And I've taken many concrete actions."
Nancy mulled this over for a moment before asking, "If you believe civilization is destined to be destroyed by barbarism, do you think you can escape that fate?"
"Why not?" Simon asked, his smile fading as his demeanor turned sharp. "I've never claimed I intend to stand on the side of civilization."
Nancy flinched slightly at his sudden intensity. Gathering herself, she countered, "But if you embrace barbarism and resort to violence, wouldn't you just be handing your enemies the justification they need to attack you?"
Simon's tone relaxed as he replied, "I can embrace barbarism without resorting to violence. Nancy, in my view, barbarism and violence are separate concepts. Sometimes, the most destructive forms of barbarism are entirely nonviolent."
Nancy, annoyed by his cryptic response, pushed further. "I don't believe you. Give me an example."
"An example?" Simon dragged out the word, thinking briefly about certain projects he had underway in France. Deciding it was better not to share them with this Frenchwoman, he leaned back with a teasing smile. "…Not telling you."
Nancy pouted but couldn't hide her curiosity. "Fine, keep your secrets. For now."
______
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