Jackpot

How the Super-Rich Really Live—and How Their Wealth Harms Us All

Michael Mechanic

• Publisher: Simon & Schuster
• Year: 2021
• ISBN:
  9781982127237
• Topic: Social Sciences
• Subtopic: Cultural & Social Anthropology
• Index: Social Sciences

A senior editor at Mother Jones dives into the lives of the extremely rich, showing the fascinating, otherworldly realm they inhabit—and the insidious ways this realm harms us all. Have you ever fantasized about being ridiculously wealthy? Probably. Striking it rich is among the most resilient of American fantasies, surviving war and peace, expansions and recessions, economic meltdowns and global pandemics. We dream of the jackpot, the big exit, the life-altering payday, in whatever form that takes. (Americans spent $81 billion on lottery tickets in 2019, more than the GDPs of most nations.) We would escape "essential" day jobs and cramped living spaces, bury our debts, buy that sweet spread, and bail out struggling friends and relations. But rarely do we follow the fantasy to its conclusion—to ponder the social, psychological, and societal downsides of great affluence and the fact that so few possess it.What is it actually like to be blessed with riches in an era of plagues, political rancor, and near-Dickensian economic differences? How mind-boggling are the opportunities and access, how problematic the downsides? Does the experience differ depending on whether the money is earned or unearned, where it comes from, and whether you are male or female, white or black? Finally, how does our collective lust for affluence, and our stubborn belief in social mobility, explain how we got to the point where forty percent of Americans have literally no wealth at all?These are all questions that Jackpot sets out to explore. The result of deep reporting and dozens of interviews with fortunate citizens—company founders and executives, superstar coders, investors, inheritors, lottery winners, lobbyists, lawmakers, academics, sports agents, wealth and philanthropy professionals, concierges, luxury realtors, Bentley dealers, and even a woman who trains billionaires' nannies in physical combat, Jackpot is a compassionate, character-rich, perversely humorous, and ultimately troubling journey into the American wealth fantasy and where it has taken us.

PART I

CHAPTER 1 JACKPOT

Suddenly you’re not ugly. You’re unique.

—CALIFORNIA LOTTO BILLBOARD

James Everingham has never been in his swimming pool.

He has lived in this $10 million house in America’s fourth-priciest zip code—Ross, Marin County, California—for almost two years and never even a dip! To be fair, he grew up in a landlocked Pennsylvania town not known for water sports.

Everingham is among the most highly compensated coders in Silicon Valley. On a pleasant, pre-pandemic January afternoon, we settle into his den to get to know one another. His partner, Karina, is off somewhere, but we are joined by Banana, the couple’s friendly black Lab. It’s a long way from here to Menlo Park, where Everingham serves as VP of engineering for Novi, Facebook’s cryptocurrency division. But he’s got some fine vehicles in the driveway to choose from: a Porsche 911, a Tesla Model S, and a BMW touring bike. An avid cyclist and mountain biker, he also keeps a second, smaller house in the Santa Cruz Mountains.

Very few of us will ever see our fantasies of sudden wealth fulfilled, but we can ask those who have what it’s like. And whom better to ask than the Mozillionaires. That’s the nickname people gave Everingham and his former Netscape colleagues, because Netscape Navigator, the first commercial web browser, was the culmination of a top-secret effort known as the Mozilla project.

Everingham is a good guy to start out with because he experienced his jackpot as any of us might. He had no real wealth to speak of—then suddenly he did. He was one of three siblings raised in a middle-class family in rural DuBois, Pennsylvania, a town that voted overwhelmingly for Donald Trump in 2016 and again in 2020. (He’s the only liberal in the family.) As a teen hacker in the late 1970s, Everingham wasn’t out for money, but a community, free games and software, and the thrill of doing something quasi-illegal—like Matthew Broderick in WarGames. His mom thought he was headed for failure, and so did he, more or less. He never dreamed he would one day get paid to program computers, let alone strike it rich. But that’s exactly what happened to him and several hundred coworkers on August 9, 1995, the day Netscape went public. Even the receptionist became an overnight millionaire.

We’ve grown accustomed to nerds striking it rich, but Silicon Valley wasn’t awash in superwealth then. Netscape was, in fact, the IPO that launched the dot-com boom, the first start-up to have its stock hit the NASDAQ and go haywire, closing at more than double the $28 asking price on the first day of trading. Everingham had been recruited only three months earlier by a friend and fellow coder named Lloyd Tabb. His starting salary was in the high seventies, low eighties. He took whatever stock options the company offered—didn’t bother to negotiate. That was a mistake, but nobody knew! He and his coworkers figured these options, at best, might buy them a car. And then, all of a sudden, their sixteen-month-old company, yet to earn a dime, was worth almost $3 billion on paper. Everingham’s share, in today’s currency, was about $8.5 million—at the stock’s peak, it would have been well over $20 million. He was twenty-nine years old.

Everingham is fifty-five now, and still dresses like the hacker-skater kid he used to be, in blue jeans, plain black T-shirt, and black Chuck Taylors. He has receding strawberry blond hair and hip Buddy Holly glasses. He is six feet tall, but his skinny build, geek vibe, and “city kid” status made him a target for grade school bullies after his family moved from Pittsburgh to DuBois. His dad worked in advertising, making $36,000 or $37,000 tops, Everingham estimates. His mom was a homemaker, raising James and his brother and sister. The family didn’t have much discretionary cash, but his parents were adamant the kids should work hard and go to college.

James was a rebel, though. At thirteen, he wanted HBO and his parents wouldn’t get it for him, so he figured out how to steal it by climbing a telephone pole and removing a blocking filter on the line. To discourage the neighbors from snitching, he pilfered HBO for them, too. His mom ratted him out to the company, which promised not to press charges if the family subscribed. “So I got HBO—and I got yelled at!”

He discovered computers his junior year in high school when, one day at the mall, a friend showed him how to write a simple BASIC program on a Commodore VIC-20:

10 PRINT “Jim”

20 GOTO 10

When he hit Return, the screen filled up with his name, and James was smitten. He was soon so obsessed with writing code that he stopped going to class. He downloaded games and software from electronic bulletin boards over an ancient dial-up modem, racking up a huge telephone bill—“more than my mother’s mortgage.” She was distraught. So he researched how phone systems worked and wrote a program that generated access codes one could use to make free long-distance calls. He would trade these codes for software. Later, after obtaining a list of the tonal frequencies the long-distance operators used to control phone company networks, he created Wardial, a mischievous program that gave its users the awesome powers of a telephone operator.

Everingham sometimes fantasized about wealth when he was a kid. The irony, he says, is that it wasn’t until he stopped trying to get rich that he actually did. After flunking out of high school, and later Penn State, he began building a library of open-source tools for software developers. Hoping to cash in on his creation, he started a company called Logical Alternatives, approaching a dozen banks before finding one that would loan him money without collateral. He flailed as a first-time businessman, but was able to sell his company at a small profit to a Georgia software firm that paid him $45,000 a year to stay on and help rewrite their products. He was recruited two years later by Borland, a software company near Santa Cruz, which offered him $72,000 a year. He bought himself a Porsche, and was always getting pulled over. “I had long hair, goatee. I wore skater shorts, wallet with a chain, combat boots,” he recalls. “I looked like trouble.”

One day, a Borland pal said something that Everingham couldn’t stop thinking about: “He’s like, ‘You’ll find out that your ideal income is always going to be double what you make.’ That seems to be true, and that actually gave me a lot of anxiety.”

The Netscape jackpot only added to the anxiety. His stock options vested over four years, so the money didn’t come all at once. Morgan Stanley, the IPO manager, called him one day. “Hey, your cliff is up. What do you want us to do?” Everingham told the banker to go ahead and sell the first chunk of stock, and then promptly forgot all about the conversation. A week later, he went to an ATM to get some money out. His balance, in today’s dollars, was more than $2 million. “The highest balance I’d ever seen in there was probably $4,000, and this incredible stress hit me,” he recalls. “I almost passed out. Like, ‘I don’t know what to do with that.’ ”

People at work started going a little nuts. One colleague ordered enough Silly Putty to fill up his bathtub—literally. “Because he could,” Everingham says. “He still rented a garage in Palo Alto. This is the only thing that he had bought. He was worth probably $30 million right out of college.” Colleague Lou Montulli, whose office aquarium featured one of the web’s first live cams, bought a massive new 350-gallon tank and went snorkeling in it. Some Mozillionaires bought “decked-out campers” and began living in the parking lot.

Nobody knew what to do with their windfalls, and the company wasn’t helping, so they turned to one another: How are you managing it? How are you dealing with people? Because the people thing… well, the whole tech world was watching Netscape’s stock price, and some of Everingham’s old Borland buddies felt put out. “A couple of my closest friends completely stopped talking to me,” he says. New acquaintances came around, and pretty women—they’d never noticed him before that. It was just like in the old blues songs; suddenly everybody was his friend, which was kind of fun but also super disconcerting. Even things that seemed simple turned out not to be. For instance, Everingham got excited after the IPO, so he went out and bought a Nissan Maxima for his mother, who had never owned a new car. He later learned that his brother had gotten depressed about this and had gone to their mom and apologized because he hadn’t ever been able to do something so nice for her. “I’m like, ‘Oh, shit! I didn’t think about how that’s going to make him feel,’ ” Everingham says.

The NASDAQ roller coaster made matters worse. The stock would shoot up suddenly. “You’re doing the math, and you’re like, ‘That can’t be. That’s millions of dollars!’ ” He would get a number in his head—the number at which he would no longer need to work. “And then it goes right below that: ‘Damn. I have to work.’ And then it shoots back up, and I’m like, ‘Oh! Now I don’t have to work.’ Then, a week later, ‘Damn.’ ” But not needing to work begets a sort of existential crisis. The Mozillionaires—some of whom would never have been friends had they not bonded over their “shared trauma”—talked about this a lot.

One Mozillionaire decided he would go become a photographer. “He came to me after three or four years of being lost,” Everingham says, “and he’s like, ‘I figured out what I want to be when I grow up.’ And I’m like, ‘What?’ He goes, ‘That I don’t have to figure out what I want to be when I grow up.’ ”

That’s even truer now. Everingham and his colleague wound up cofounding another company, LiveOps, that made call-center software. Had Everingham sold his stake at the firm’s peak valuation, he’d be $80 million to $100 million richer. (It’s only worth about half a million now—so it goes.) But his pal took a software utility he’d developed and spun it off into another company, which Google snapped up not long ago for $2.6 billion.

Everingham’s first recruit at Netscape was a coder I’ll call Jake, fresh out of college. Jake was dead set on one day starting his own company, and eventually he did—a social media aggregator that Twitter eventually took off his hands for $134 million. Jake flailed around for a couple of years, trying to figure out what to do with himself. He invested in an online shopping platform, and then, when that company started struggling, came on as general manager. Here Everingham pulls out his phone and shows me a text exchange from one week earlier.…

Jake: hey man… we sold the company for $4B.

Everingham: Wow nice!… Hope you made out well!

Jake: yea… fuck ton of money… I was an early investor to boot. good times! pile on the continued existential crisis!

All of this reminded me of something Nick Hanauer had told me: Anyone who hits the jackpot will quickly discover that necessity is straightforward, but choices are complicated. “When all of a sudden the world is your oyster, what are you going to do?” he said. “For a lot of people that choice—well, you see what happens when people win the lottery.”

---

We should talk about the lottery, actually, if only because a lottery jackpot is so raw, so disconnected from anything real. Winning requires no smarts, education, social connections, or drive, other than a drive to the convenience store. Just dumb luck. With Powerball, you have to match five numbers from 1 to 69 and a bonus number from 1 to 26. The probability of hitting them all is 1 in 292 million. Winning Mega Millions is even less likely. These are incomprehensible odds—we’ll never win, and we know it. We’ve heard the horror stories, too. Attorney Richard Watts, whom we met in the introduction, tells me another: One early client, three decades ago, was a working-class guy with a lottery win of about $60 million after taxes. He came to Watts in deep trouble, but he came too late: “It was all gone in five years: bankrupt, wife gone, kids gone, kids on drugs, kids in jail—really, truly a life he could not recover from.”

The conventional wisdom is that winning the lottery will ruin your life, and yet we keep buying those tickets. The last time Gallup inquired, in 2016, 49 percent of American adult survey respondents said they’d purchased at least one lottery ticket in the previous twelve months. Contrary to the lottery’s reputation as a poor person’s vice, those with household incomes of less than $36,000 a year were less likely to have bought a ticket (40 percent) than “middle-income” folks (56 percent) or people whose families earned $90,000 or more (53 percent). People with college degrees were more likely to play than people with high school diplomas were—and even 45 percent of respondents with postgraduate degrees had participated.

Jason Kurland, forty-seven, represented them all. In fall 2011, Kurland, then an attorney at the Long Island branch of the firm Rivkin Radler specializing in commercial real estate law, received a phone call that would determine his future. The caller, seeking legal advice, had gotten Kurland’s name from another client. Payment would not be an issue because he and two coworkers had just won a $254 million Powerball jackpot. After taxes on their lump-sum payout, they would have $104 million to share. We stereotype lottery winners as financially unsophisticated. Not these guys. They were a founding partner, senior portfolio manager, and chief investment officer for Belpointe Asset Management, a financial firm in Greenwich, Connecticut, where mansions sprout from spacious lots and single-family homes list for quintuple the national median price.

Kurland was no lottery expert, but he quickly made it his business to become one. He researched how different states tax lottery winnings, whether and how big jackpot winners need to be identified (at least eight states let them remain anonymous), and the legal tricks one might use, depending on location, to claim a monster windfall. Claiming in the name of a trust or a limited liability corporation, for instance, won’t reduce the initial tax hit, but it may limit a winner’s public exposure. Some states let you claim using a legal entity and others don’t. Some require press conferences. Some allow an attorney to claim the prize as a trustee. “In that case, the attorney signs the back of the ticket—and you have to make sure you trust that attorney,” Kurland said. (We will come to see the irony in that advice.)

Four days after Thanksgiving, Kurland accompanied the Greenwich trio to their mandatory press conference at Connecticut lottery headquarters, where they were presented with a giant, ceremonial check for $254.2 million, payable to the Putnam Avenue Family Trust. The counterintuitive spectacle of a clutch of 1 percenters hitting the numbers attracted a lot of media coverage, including a piece by New York Times finance reporter Kevin Roose. There were even rumors the trio was a front for the actual winner, but Kurland denied it.

The second call, a few months later, was from a lawyer for Louise White, an eighty-one-year-old Rhode Islander who’d hit a $336 million Powerball jackpot, then the third-largest ever. White had sequestered her winning ticket within the pages of her Bible and slept with it until she could get to the bank and stash it in a safe-deposit box. She hired Kurland to set up “the Rainbow Sherbert Trust,” so named because it was a relative’s craving for sherbet that had brought White to the Newport Stop & Shop, where she’d bought her winning ticket. After paying roughly $52 million to Uncle Sam and $15 million to the state of Rhode Island, White took home about $143 million. At this point, Kurland realized he could make the lottery his niche. He built a website and began promoting himself to media outlets. Soon reporters were calling “the Lottery Lawyer” for quotes, and TV news producers were booking him whenever a huge jackpot had everybody abuzz. “Long story short,” he told me, “now I get calls on almost a daily basis.”

When we first spoke, in early 2019, Kurland said he’d represented about three dozen winners with $2 billion in total payouts, and individual jackpots ranging from $5 million to $330 million. He was being coy, because the winner of a $1.5 billion Mega Millions jackpot, the biggest individual prize in lottery history, stepped forward a few weeks later—or rather, Kurland did. The woman had purchased her golden ticket at a gas station in rural South Carolina, one of the states that allow winners to conceal their identity.

Kurland’s clients have run the gamut. “The reality is that it’s everybody. When the prize was over $1 billion, the whole country was buying tickets. Rich, poor, single, married, young, old. Every ethnicity,” he said. His winners broke down about evenly into two categories. One consisted of the cautionary tales, those who succumb to temptation and go on reckless spending binges, putting themselves on a road to ruin. The second group was the kind of winners we rarely hear about, the ones who live so boringly within their means that Kurland felt compelled to remind them they could afford to cut loose. (If he were to hit the jackpot, “I’d probably live large,” he admitted.) But eve...

Table of contents

• Cover
• Title Page
• Dedication
• Introduction
• Part I
• Part II
• Part III
• Acknowledgments
• About the Author
• Resources
• Notes
• Index
• Copyright