Kim Dotcom, the cyber fugitive who faces possible extradition to the United States over online piracy charges, has the perfect recipe for other internet-wanted moguls: “If the government destroys your billion dollar company, stay calm and build a new billion dollar company,” he wrote on his Twitter account on Tuesday. The declaration sums up a move announced earlier on March 25: a plan to list Mega — his latest online venture, set up in January of 2013 and valued by Dotcom at US$180 million — on the New Zealand stock exchange (NZX).
If the government destroys your billion dollar company, stay calm and build a new billion dollar company.
— Kim Dotcom (@KimDotcom) marzo 25, 2014
That the internet mogul was planning this move was no secret. When Mega hit the scene last year, Dotcom tweeted about a job opening for a CFO who would help Mega “prepare for [its] IPO”. And Mega is performing not badly for a company run by a figure of Dotcom’s notoriety. The company currently claims around 7 million registered users, with new user registrations exceeding 20,000 per day. Users have stored over 860 million encrypted files in the Mega cloud and are currently uploading up to 11 million files per day. It’s coming to market via a slightly unorthodox maneuver, the reverse takeover — a type of merger used by private companies to enter the market without resorting to an initial public offering. NZX-listed shell company TRS Investments (an inactive local investment firm) said it entered into a conditional agreement to buy 100% of Mega, which offers encrypted, cloud-based data storage and file-sharing. TRS will then offer a massive stock issue to existing Mega shareholders and change its name to Mega. This practice is common in world markets, not least because it allows companies to avoid paying the fees of IPO-underwriting banks.
Indicted. Raided. On Bail. All assets frozen without trial. But we don’t cry ourselves to sleep. We built #Mega from 0 into a $210m company.
— Kim Dotcom (@KimDotcom) marzo 24, 2014
By floating his company on the stock exchange, Kim Dotcom may be looking to score a PR coup ahead of his extradition hearing, scheduled for July, over charges of copyright infringement stemming from his now-defunct file-sharing website Megaupload. The move complicates life for his prosecutors, as well: they will now have to take into account the consequences of seeing a listed company go bankrupt (assuming they succeed in July) rather than a privately held one.
Dotcom is trying to establish himself as an advocate of internet privacy and freedom and has stated that Mega was created as a reaction to Edward Snowden’s revelations of NSA overreach. So the big question here — apart from the eventual, actual value of Mega — is which, if any, investors will want to get in bed with a figure like Dotcom. Whatever the response may be, Kim Dotcom is celebrating already: “All assets frozen without trial. But we don’t cry ourselves to sleep. We built Mega from 0 into a NZ$210m company,” he crowed on Twitter on Monday. Which suggests that this is as much about Dotcom’s crusade against “mass surveillance” by governments and corporations (and his own public image) as it is about money.