me a Brooks Bros franchise”. As the twins try to make
their case, Summers asks his assistant, Anne, to “punch
me in the face”, before showing them the door. Tyler is
so angry he closes the door hard as they are bundled
back out into the quad and the doorknob comes off in
his hand.
That moment, half-way through Aaron Sorkin’s
Oscar-winning film, The Social Network, seemed to sum
up the brothers: arrogant, entitled East Coast preppies
whom wily West Coast geeks, such as Zuckerberg,
could easily outsmart. Move fast and break people, even
two-metre, 100-kilogram clones. Especially two-metre,
100-kilogram clones.
The now 37-year-olds might have remained
punchlines of Silicon Valley but their next big idea –
if you believe Facebook was their first – has turned out
to be their redemption and their fortune. The US$65
million they agreed to accept to settle their dispute
with Zuckerberg in 2008 eventually came to be worth
US$500 million – two-thirds of the settlement was in
Facebook stock and it has skyrocketed over the past
decade. They used their pot of gold to invest heavily in
bitcoin. It was risky. It almost bankrupted them multiple
times. But in the end, it came spectacularly good. They
are now billionaires, not as many times over as ‘Zuck’
but rich enough to earn the new economy bragging
rights they have long craved.
TELLING STORIES
The story of their unlikely comeback is told in a new
book Bitcoin Billionaires by Ben Mezrich. If you think
Mezrich sounds like an unlikely chronicler of ‘the
Winklevii’, you’d be right. He also wrote The Accidental
Billionaires, the book on which the film The Social
Network was based. In other words, he’s the person
most responsible for the Winklevii’s reputation as
arrogant losers. Part of the reason he has written the
new book, he says, is to correct the record. “I misjudged
them. I would have loved to have been able to tell their
story more fully,” he says.
Mezrich describes how the Winklevii first heard
of Bitcoin at a club in Ibiza in 2012 when they were
enjoying their Facebook payout. They returned to New
York and struck a deal to buy a start-up called BitInstant
that enables speculators to buy the cryptocurrency
easily and safely. After that, they snapped up an
estimated one per cent of all bitcoin in circulation for
a total of US$11 million.
That initial investment reads like the first scene of
the movie Bitcoin Billionaires will – like its predecessor- become; Sony has already bought distribution rights.
The Winklevii use ‘hot’ (internet-connected) and ‘cold’
(never-connected) laptops to buy their stash of the
digital currency securely. They then destroy the laptops
with sledgehammers and erase all digital copies of the
long alphanumeric code that is the digital key to their
holdings in favour of printing it out on pieces of paper.
They cut up the printouts into several parts and fly
all over the US, stashing the parts in separate safe
deposit boxes around the country. To steal the code,
a thief would have to break into the correct safe deposit
box, in the right branch of different banks. Paranoid?
The Winklevii?
After they amass their stash, the pair become
evangelists for the new money. They spend untold hours
trying to convince bankers and financiers that bitcoin is
a serious investment opportunity, not some libertarian-
cum-anarchist fantasy. But it looks like they will be
humiliated again. Wall Street rejects bitcoin. Warren
Buffett calls it “rat poison squared”. BitInstant’s founder,
Charlie Shrem, goes off the rails, becoming rather too
fond of nightclubs and models. Later he is sentenced
to two years in prison for aiding an unlicensed money-
transmitting business. The bitcoin price yo-yoes
frantically, spiking during the Eurozone crisis then falling
back. The main bitcoin exchange, Mt Gox, collapses
after hackers steal US$450 million. US prosecutors shut
down Silk Road, an online black market best known as
22 | theceomagazine.com