The Term Sheet: A Startup Thriller Novel

by Lucas Carlson

  Andrew waved his finger in the air. “Oh no, buddy. Sorry. First come, first served. I’m CEO. You’re CTO. I’m going to be setting up the bank accounts and dealing with accountants and lawyers and shit.”

  “No, I’m CEO. You can be COO. The COO can still set up bank accounts.”

  Megan walked in the back door. Her hair was windswept and she was carrying two bags of groceries, one in each arm. She started unpacking groceries.

  David came over and gave Megan a kiss on the forehead. “Hey honey, did you have lunch yet or can I make you something?”

  “I just had lunch with Heather.” Megan put a gallon of milk in the fridge. “Have you seen her lately? I’m worried about her. She seems more fragile.”

  “I just had breakfast with her the other day. She didn’t mention that? She’s a strong girl. She’ll be fine. Anyhow, I decided to finally listen to you and Andrew and Heather and to give up the jellyfish stuff and start a new company.”

  Megan dropped a handful of Greek yogurts on the floor. She looked over at David coldly. “Don’t you think you’re being a little rash? What exactly are we supposed to do with the credit card debt? How are you going to fund this new idea? Loan sharks?”

  “I thought you wanted me to dump the jellyfish and go for the encryption idea.”

  Andrew walked to the front door. “Hey Meg, good to see you, but I’ve got to get going. I’ve got some…errands.” He looked over to David with sad puppy eyes. “See ya, buddy.”

  David began to yell: “Why can’t you support me? You didn’t like my first idea, and now you don’t like this one.”

  “I didn’t say anything about the idea. Hell, for all I know you’re selling whales now. All I asked about was how you planned to keep us from going bankrupt. We have bills, you know.” Megan picked up a tomato and shook it in David’s face. “These groceries cost something. Wasn’t your first idea supposed to pay itself off by now? How many sales have you had in the last six months?”

  “That’s not fair, I told you up front that it would take time. I thought this was what you wanted me to do.”

  “Up front? You fucking bought the website weeks before you grew the balls to tell me about it. You weren’t up front about your last harebrained idea, and you barely finish squandering money before now giving up and trying something new on a whim.” Megan turned around and picked up the yogurt from the floor. She continued, “Let me guess, now you’re selling flea circuses online and you and Andrew spent a hundred thousand dollars on a flea circus website that won’t make money for another year. But it’ll do great with just a little tender loving care, right? Am I warm?”

  David’s voice was frantic and high pitched. “It was wrong of me to buy the business without having asked you first, okay? But I was scared. I was terrified that you would react just like you’re reacting right now. I know it’s not a good excuse, but it’s the truth. You mean the world to me, but I just can’t stand living in the world others live in.”

  Under her breath, Megan whispered, “You got that right.”

  “I want to do something important with my life. I don’t want to just work at a coffee shop or wait tables. I want to be someone. I want to give us a life worth living. I want more out of life. And no, I am not quite sure how to get it yet. And yes, I am fucking it all up. And also, yes, I said this very thing about the jellyfish website. So yeah. You can rub it in my face, I probably deserve that. But I am trying. Can’t you see I’m trying to do this for us?”

  Megan turned and looked at David. David’s voice had calmed down and his eyes were glassy. He looked like a little boy whose toy had broken.

  “All I see is that you are doing this for you, David. This clearly has more to do with your ego than it has to do with us. You have not included me in any of your decisions. I am always the last to know when things happen. You say you’re going to help your sister, but in the meantime you barely see her. What kind of brother do you think you are? What kind of man do you think you are?”

  David’s phone rang. He picked it up and ran out of the front door. It was twilight and in the center of Ladd’s Circle, there was a bluegrass band playing music and a few families sitting on blankets and a few kids running around chasing a Saint Bernard puppy.

  David answered his phone: “Hello?”

  “Hi, is this David Alexander?”

  “Yes.” David’s voice cracked. He coughed and tried to regain his composure. “Who is this?”

  “David, this is Mark Baxter, a producer with Pitch Deck. I’ve been looking over your startup pitch, and I have to tell you, I think it’s pretty unique. It’s certainly timely.”

  “How’d you get my phone number?”

  “I’m sorry, you’re Cryptobit’s CTO, right?”

  David instinctively headed away from the music, but without any purpose or direction. As he walked away from Ladd’s Circle, the night breeze settled in and he cupped the phone with his hand to minimize the effect of the wind on the phone.

  “Um, yes, I mean no. CEO.”

  “Oh sure, okay. Well, the company name is a concern, but we can talk about that later. I was just impressed with how much traction you’ve gotten in just the last few days. Those numbers are impressive and I like impressive numbers. I’d like my colleagues to see it. Can you make a short video pitch, outlining the big idea? We’ll need it by this Friday to have a chance at the next round of applications.”

  “Um, sure.”

  “Great, I’ll send you an email with more details and a contract. Just to be explicit here, the video is merely an audition. There are no guarantees you’ll get on the show. This is a long process, and if my colleagues don’t like the pitch, that’s the end of the line. Do you understand?”

  “Yes, no guarantees, got it.”

  “Right, good. But I like you, David, just from our brief conversation. And I like the concept of Cryptobit a lot. Hate the name, but this is something people need to see. People are skittish about the NSA. Your little program could be just what they didn’t know they needed. Okay, well, I’m sure you’re busy, so I will let you get back at it. Check your email for instructions. If you can find a professional videographer to help make your video, it wouldn’t hurt.”

  “Okay.”

  “Good luck, talk to you later.”

  “Bye.”

  David stopped walking. Twilight had turned to darkness in what felt like a few fleeting moments. David was emotionally and physically exhausted. The day felt heavy, but full of promise. He wanted to tell someone. He wanted to run back and tell Megan, but didn’t think she would understand. He wanted to call Andrew, but didn’t want to have to explain what had just happened with Megan. He wanted to call Heather, but she was probably already asleep. He lingered on the thought of his sister. He wondered how she was really doing. Yes, she was strong, always had been. But something did seem off when he saw her last.

  David walked back toward the music. A night breeze began to blow, but David didn’t notice. A world of possibilities flooded his head. He wondered what Tom Lewis was really like. Would he be able to hang out with him afterwards? What was he going to do with the money from Pitch Deck? Or would someone see him on TV and buy his company instead?

  Maybe it would all just fall apart. What if people just laughed at him? What if Megan broke up with him? What if this ruined his friendship with Andrew?

  David was lost, not only in his thoughts, but on the street. The music had long since faded away. He looked around at the quiet street, trying to get his bearings. An owl hooted, but he could swear it was asking “now what?” instead of “who?”

  Chapter 15

  Although his leg was still giving him trouble, the wound was scabbing up rather nicely. Ever since he was a kid, he’d hated pills. Gabriel had offered to get him opium to smooth out the ride, as he’d said. But he hated even taking Tylenol. He couldn’t stand having a foggy mind. He despised being out of control. He wanted to be present and aware, even if that meant temporary discomfor
t. This too shall pass, he would repeat to himself. It always did. Sometimes he made a game out of sitting back and watching it pass. Like one day when he was twelve years old playing hide-and-seek. He loved playing hide-and-seek so much that he would hide around the house waiting for his father to get back from work. His mind fondly drifted back to those days.

  “Buddy! I’m home. Where are you?” his father would say. His father, Frank Thompson, had started out as an errand boy for a construction company and worked his way up the ranks to eventually create one of the larger construction companies on the East Coast. His company built office buildings and more than a few strip malls. Things had been going great for his dad. His mom had passed away when giving birth to him, and his dad never remarried, but they were well off and relatively happy, even though they never lived a luxurious lifestyle.

  But the government shutdown in 1995, after an extended fight between President Clinton and the Republican Congress over funding Medicare, created a downward spiral that hit Frank’s business hard. During the twenty-seven days that the government was shut down, almost all government services stopped. Everything from the Department of Education, Federal Parks, the Department of Energy, the Department of Transportation, to smaller departments like the National Archives and Records Administration and the Advisory Council on Historic Preservation.

  In the first week, the shutdown had little effect. Like a random snow day in Portland. The snow is always gone the next day and it’s back to business as usual. But when the shutdown entered the third week, the consequences started to become more grievous.

  Frank had been negotiating one of his largest deals ever. He was trying to build his first skyscraper and had invested everything into it. It was going to launch him into the big leagues. and set him up to be the next Donald Trump. Though Frank had done well for himself, the skyscraper was going to cost a hundred times more money than Frank had been able to save up. So in addition to risking his entire life savings, he had turned to banks and outside investors to put up the rest. But the location chosen for the skyscraper was a historic site, and when the Advisory Council on Historic Preservation shut down and wouldn’t return phone calls, Frank began to panic.

  On the twenty-sixth day of the government shutdown, Frank’s little boy was waiting for his dad to come home, eager to surprise him again with another game of hide-and-seek. His dad had been coming home later and later recently, and seemed off balance when he did get home, but he wanted to make his father happy. He picked one of his favorite hiding spots: his dad’s closet. The slits in the closet let in enough light from the room that he wasn’t scared. He sat quietly and patiently playing his Game Boy, but his dad didn’t come home. When nighttime arrived and darkness came over the closet, the boy became drowsy and fell asleep.

  He was awakened when he heard a chair scrape across the floor of his dad’s room. The lights were on in the room, so he peeked out through the slits in the door. As his eyes adjusted to the light, he saw his dad standing on a chair in the center of the room. His bladder full and eyes full of excitement, it took all his will to keep quiet. As his dad threw a rope over the ceiling fan and began tying a knot, the boy realized something wasn’t right. He wanted to call out, but his excitement had turned into terror and he couldn’t move. The boy’s legs felt warm and wet. Within a minute, his dad’s legs stopped jerking. The boy sat staring at the ground as warmth turned to coldness.

  “This too shall pass,” the boy’s grandma said to him at the funeral. A few weeks later the feeling hadn’t passed, but his chronically ill, yet disproportionately generous grandma had. The boy then entered foster care and wondered if all that now had “to pass” could ever really come to an end.

  Four months later, while waiting for his foster dad to pick him up after school, the boy heard a couple of girls talking as they played.

  “My turn to hide,” one girl yelled. “You count to thirty.” The boy looked at them and caught himself wanting to play. He felt a sudden urge to run and hide and realized that the hurt inside him had indeed passed. He chuckled. Not at the girls or the game, but at himself. He laughed at how quickly he could adapt to the terrors of the world. He wondered what other horrors he could bear.

  As he sat at his computer, he picked at the scab on his leg, curious if it would still hurt or if it would just fall off.

  It still hurt.

  And he liked it that way. He scanned some security newsgroups and mailing lists, checked some stocks, skimmed the New York Times homepage and browsed SC Magazine, a popular security magazine. One post in SC caught his eye in particular. It was a tiny news blip about a startup called Cryptobit that aimed at revolutionizing online email security. After reading about Cryptobit’s approach, he went to the homepage to sign up for the beta. He entered an email address: MeHartChina@gmail.com.

  Chapter 16

  “Do you think we have a chance in hell?” asked Andrew.

  “Winners are the ones left standing,” said Andrea.

  David and Andrew were standing in Andrea’s corner office overlooking the Willamette River explaining their traction and their recent call with the Pitch Deck producers. The producers had talked to David a few more times. Every time they called, they asked David all sorts of questions that seemed strange. Questions about Megan and their relationship. How long had they been dating? Did they fight a lot? What was the hardest thing they had ever overcome? They also wanted to know about David’s sister. When did she learn about the disease? How did their parents take it? The producers seemed much more interested in David’s backstory than the fledgling company.

  David asked: “So how do you come up with a good investor pitch?”

  “You have to remember that fundraising is first and foremost about people, not companies. It’s about people trusting other people. In fact, if you think about it, it’s actually pretty absurd that you could stand in front of these investors for just a few minutes and walk away with a check for hundreds of thousands or even millions of dollars. Out of context, that sounds pretty crazy. Right? You might even think someone who would so readily part with so much money was insane. But they aren’t crazy, they’re just trying to find people they feel they can trust.”

  David started scribbling notes on a yellow legal pad. “And how do you get someone to trust you?”

  “Well, let me tell you a little story, David.” Andrea pulled a chair out and signaled for David to sit down. Andrew pulled a second chair out and sat down without any provoking. “You don’t need notes for this part. The first time I started a company, I was about your age. My hair went down to my hips, and I was as bright-eyed and starry-eyed as you two are today. My idea was ahead of its time, it was the Internet of Everything. It could connect toasters with microwaves and refrigerators over Internet protocols. If I had just picked thermostats instead of toasters, I might have been Nest. But I have always loved cooking and so I focused on the kitchen first.”

  “That’s a great idea, Andrea.” Andrew chuckled. “Hell, you should start that company today. How long ago was this?”

  “The mid-nineties.”

  “Oh. Way ahead of your time.”

  “So I had a geeky friend of mine build me a prototype. It was an old a toaster with a huge 14.4 baud modem stuck on the back. We went to the only venture capitalist I knew: Frank Wilson. I told Frank why he should invest. I explained that the toaster could call the fire station if it caught on fire. I told him that it could detect the done-ness of the toast and turn off automatically. I listed all the reasons I could think of for how this toaster would change the world. Do you know what Frank told me?”

  “Yes?” said Andrew. “But then he offered only half the money you wanted.”

  “No. None of the money I wanted.”

  “Because you didn’t have a big enough team?”

  “No.”

  “Then he must not have understood the technology?”

  “No, Frank was an investor in Geocities and comScore. He understood technology bett
er than most.”

  “Then why?”

  “He said I was too focused on the solution, not on the problem. I was so busy giving him a list of features, like reading a brochure, that I forgot to answer the basics first. Like what was the big problem with toasters today? He said I needed to study the market more. What was so frustrating about toasters that they need internet access? I had also used up forty-five minutes talking just about the toaster’s features, which left me no time to get to know him or let him get to know me. If fundraising is primarily about people trusting people, I had failed at task number one: treating the investor as a person.”

  Andrew started writing that down and Andrea continued.

  “You start by telling a good story. A good story always starts with a problem which then frames the solution. The more drama, the better. Bigger problems make for bigger dramas. Also, when you tell a good story, you are showing, not just telling. You can’t just say: ‘I am trustworthy, I’ll work hard for you, trust me.’ You must show them that you are trustworthy. You must show them you will work hard. This must be part of your story, woven into the tapestry almost invisibly. Investors are pattern matchers, and within those first few minutes you will need to show that you have integrity, passion, experience, knowledge, skill, leadership, and commitment. And you can’t tell them you possess any of these qualities outright.”

  “That sounds impossible,” said Andrew. “Can’t we just get money on the merits of the business idea?”

  “If only it were that easy, Andrew,” said Andrea with a smile. “Did you notice how I convinced you of the value of storytelling by telling you a story? Storytelling is natural. It’s human nature to communicate with stories. Did you know that nobody wrote down Homer’s epic poems, the Odyssey or the Iliad, for four hundred years? For generations the stories were passed down orally. That’s how strong good stories are at surviving and communicating. Those stories are over three thousand years old now.”