Gil held up his hand to stop Art. 'OK, Art, OK,' he said calmly. He turned to me. 'I appreciate your sense of integrity, and I think there is a place for it in the way we do business at Revere. And I agree we had a moral commitment to invest more money, provided we were happy with the way the business was being run. But we're not.'
Gil looked to me for a response. I didn't give him one.
'Investment decisions must be based on the commercial realities,' he went on. 'And the reality here is that the partnership doesn't want to invest. It's not your decision, it's ours. All we ask is that you carry it out.'
They were all staring at me. 'I can't,' I said, and picked up my pen and pad and left the room.
I sat at my desk in the empty office I shared with the other two associates, my brain tumbling over what had just happened.
I had been at Revere just over two years, joining straight from business school. From the beginning, I had been determined to succeed, to make the serious money that American venture capitalists can earn, to break out of the traditional constraints of my past: my father's title that had now become mine, public school, university, the army. In my middle twenties I had realized that my life of tradition and privilege, which since boyhood I had been told was the pinnacle of human civilization, was for me a cold prison cell.
There was something beguiling about being an officer in the Life Guards: the sense of belonging to an elite, a sense of superiority that had been carefully honed by centuries of regimental pomp, ceremony, myth and esprit de corps. But I didn't want to be beguiled. Soldiers were thankfully becoming increasingly irrelevant in the modern world. I didn't want to be irrelevant. I wanted to be in the middle of things. So I had escaped, leaving the army and winning a scholarship to Harvard Business School. America was a land of opportunity for anyone who believed they had ability and who wanted to make a success of themselves, untrammelled by their past lives in the old country.
I was definitely one of those people.
And I had been doing well. PC Homelease had made eight million dollars for Revere in six months out of a half-million initial investment, and had won me recognition in the firm as someone who was either smart or lucky. Gil thought highly of me, and until today, so had Frank. I badly wanted to make partner; that was where the big money in venture capital was made. At a lunch a few months before, Gil had hinted that this was a definite possibility. Was I now going to throw it all away?
But I had given my word. I couldn't go back on it.
Why couldn't I? Was this just another one of those precepts that had been programmed into me at school and in the army, that a gentleman's word was his bond?
No, that wasn't it. I knew plenty of gentleman liars. It was just that in life there were some people you could trust, and some you couldn't, and I thought it was important to be one of those you could.
The other two associates returned from the meeting.
'Have you got a death wish, or something?' asked Daniel, as he threw his legal pad on to his desk by the window. Short, thin, with dark hair and pale skin, he was the most aggressive, and probably the brightest of us. 'Once they say no, they mean no, you know that.'
I shrugged.
'Man, that was rough,' said John, putting a hand on my shoulder. 'They mauled you in there.'
'It certainly felt like it.'
He powered up his computer. 'I think you were right, though. If you say you're gonna do something, you've gotta do it.' He gave me a friendly smile.
'Bullshit!' Daniel said. 'Art's right. You've always got to do what makes financial sense. That's what the investors in our funds pay us for.'
I ignored him. There was no point in arguing with Daniel on the question of ethics. He was the personification of the concept of 'market forces' as a religious system. If something's price goes up it's good, if the price goes down it's bad. We had both been recruited from Harvard, and despite the compulsory ethics courses we had attended there, we had been given plenty of academic justification for the supremacy of the pricing mechanism as a moral tool. Daniel didn't need any of this, though. He was a natural believer.
John was very different. Tall and athletic, with mousy brown hair and big blue eyes, he looked younger than his thirty years. He had been at Revere the longest of the three of us. His father, John Chalfont Senior, was one of America's richest men. He had built up Chalfont Controls into a multi-billion dollar corporation, and for a couple of decades had made regular appearances in the business magazines, where his views on hard-working Americans, corrupt politicians and unfair foreign competition were stridently broadcast.
But John Junior had little interest in hard work or money, managing to do just enough to scrape into an Ivy League college and business school. His ambition seemed to be to lead an ordinary life, free of hassle, which, given who his father was, was not easy to achieve. Joining Revere had kept his father happy. Daniel said John would never make it at the firm; he didn't have enough interest in money. Daniel was probably right. But John did what he was asked to do competently enough, and it was hard not to like him. He did a lot of work for Frank, who seemed to be happy with him.
'What are you going to do now?' he asked.
I sighed. I had been thinking about that ever since I had walked out of the board room. 'I don't know. I'm thinking of resigning.'
'Don't do it, Simon,' said Daniel. 'Seriously. Shit like this happens. It's going to happen wherever you work. Just because Frank woke up in a pissy mood this morning shouldn't mean you have to give up your career. What's with him anyway? I've never seen him so mean.'
'Neither have I. What do you think, John?'
'I don't know,' he said thoughtfully. 'Something's bugging him.'
Frank would normally have backed me up on something like this. And if he had disagreed with my conclusions, he would have gently guided me to what he believed was the right answer before the meeting, not waited for the moment of maximum humiliation.
It had to be me and Diane. That was the only logical explanation. Frank loved his daughter, and was very protective of her. In this case overprotective.
My phone rang. It was Gil.
'Simon, can I have a word tomorrow morning? Say nine o'clock?' His voice was friendly.
'Gil, I'd like to talk to you now – '
Gil interrupted. 'There's no need for that. Let's talk tomorrow, when you've had time to think about this morning. OK? Nine o'clock tomorrow then.'
His voice brooked no argument, and anyway what he said made sense. 'OK, I'll be there.'
Daniel glanced across the room at me. 'Gil's going to give you a chance to dig yourself out of this hole. Take it.'
'We'll see.' I picked up the Net Cop papers on my desk and tried to focus on them.
'Do anything over the weekend, Daniel?' John asked.
'Yeah,' said Daniel. 'Went to Foxwoods. Played blackjack all Saturday night, and came out with a thousand bucks more than I went in with. What more could you ask? What about you?'
'Nothing so exciting. I caught the Monet exhibition at the MFA. Pretty good. You should go.'
'Sign me up!' said Daniel.
'Daniel, have you ever been to an art gallery?' I asked.
'Sure. My parents took me to some museum in Paris when I was a kid. I threw up over a sculpture of a man and a woman making out. My mother was convinced my innocent sensibilities were upset by such an obscene composition. I suspect it had more to do with the Pernod I sneaked at lunch. Anyway, it was a real mess. Museums don't agree with me.'
John snorted. 'I'm sure they don't.'
My phone rang again. This time it was an external call. 'Can you take that John?'
He punched a button and picked up the phone. He listened, and glanced up at me, mouthing the word 'Craig'. I shook my head.
'I'm sorry Craig, he's in a meeting . . . It may last all day . . . I'm not sure what exactly it's about . . . I'm sure he'll be back to you when he has some news . . . OK, goodbye.'
'Thanks,' I said, as he
put down the receiver. 'Craig's going to be calling all day. Would you two mind picking up my phone today?'
'Us pick up your phone?' said Daniel. 'We can't do that! We need a babe to pick up your phone. I'll call a temp agency and get one for you. Now what do you need? Redhead? Blonde? Let's get a blonde.'
'You'll do fine, Daniel,' I said.
I glanced down at the Net Cop papers in front of me. I had told Gil I couldn't carry out his decision, but that decision had been taken, and I had to face up to the fact. I couldn't leave it to someone else at Revere, or even worse, some hard-nosed lawyers to tell Craig. I had to do it myself, face-to-face; I owed him at least that much.
3
Net Cop was located in a modern industrial park in the romantically named Hemlock Gorge, a small wooded valley just off Route 128 in Wellesley. The whole company was basically a room of engineers in cubicles on the first floor of a low, brown, all-purpose building. I received a wave from Gina, the company's only secretary, and looked for Craig. At this stage of the company's life, all the work was being done on computers. On one side of the room sat the hardware engineers, and the software engineers sat on the other. They were different breeds of people who spoke totally different computer languages: the hardware guys used Verilog, and the software guys C++. Craig needed to get these two groups working together. This was achieved by a small team of bilingual engineers who sat in the middle of the room with a handsome golden retriever called Java.
Many of the staff were surprisingly old, some of them even had grey hair. Craig liked to hire experienced people, the enthusiastic nerds of the eighties who now had wives, children and a little common sense.
It was a good team. A great team, Craig said. And from a standing start they had already achieved more in six months than much bigger firms' R&D departments had achieved in two years.
I spotted the man himself drawing at breakneck speed over a double whiteboard in the corner. Boxes and arrows spread across the large white surface in bewildering confusion, and Craig finished off his point with a resounding question mark, scribbled with such emphasis he almost broke the pen. Two engineers were listening to him: an Indian with a greying beard, and a large man with a bulging yellow T-shirt and hair that was receding at the front, and advancing rapidly down his back.
I crossed the room and coughed gently.
Craig turned round. 'Hey, Simon! Howya doin'?' Despite his MIT education, he sported one of the dozen or so local Boston accents, which he clung on to tenaciously. He was grinning broadly, as though he were genuinely pleased to see me. Perhaps he was.
'I'm fine, Craig. How are you?' I replied, nervously.
'So, when do we get the dough?'
'That's what I wanted to talk to you about. There's a problem.'
'A problem? What kind of problem?'
The two men Craig had been lecturing were watching us with interest. In fact, I could feel eyes from all around the room resting on us.
'Can we talk about it in your office?'
Craig paused, looking around him. 'OK, come on,' he growled, and led me over to his small glass corner office.
He closed the door behind me.
'What's the problem?'
I took a deep breath. 'Revere has decided to make no further investment in Net Cop,' I said. 'Sorry, Craig.'
'What do you mean, you're not going to give us the money?' Craig's face reddened, and his thick neck bulged even further, the veins clearly visible. His muscles tensed large under his T-shirt. He struck the small conference table in his office so forcefully I thought it would break.
'You gotta give us the fuckin' money! You gotta!'
'Craig, I'm sorry, I've discussed it with the partnership. We can't.'
'Why the hell not?'
He took a couple of steps forwards and stared up at me. He was only five feet six inches tall, but he worked out regularly. He looked more like a squaddie than a brilliant coder. He was strong and tough, and very, very angry.
I groped for words. 'We feel that the market has changed. It's become more competitive. Too many companies are out there and it's hard to tell who the winner will be.'
'Jesus, we've been through this a million times. You wanna know who's gonna be the winner? We are!'
Spittle darted from his lips as he pounded his chest with a meaty thumb. I was aware that outside the glassed-in office all the engineers had stopped their work. Some of them were drifting over to watch.
I wanted to tell him that I thought he was right, that Revere should have given him the money. But that would have been unprofessional and a betrayal of the partnership. Besides, it would have made a messy situation even messier. Gil was right: while I worked for the firm I had a duty to carry out their decisions. Whether I agreed with those decisions or not was between them and me.
'I'm sorry,' I said. 'But there it is.'
'You can't do this, Simon. You're committed in the investment agreement.'
'Not quite.'
'It says if we meet the milestones, Revere will put in another three million bucks. We've met the milestones. Where's the money?'
'We don't feel that the ASIC has been tested sufficiently.'
'That's crap! I'm satisfied, what more do you need?'
'We need it to be tested in real working conditions for a period of three months. To see whether it works in a real system.'
'That's impossible, and you know it! Anyway, I say it works fine, and that should be enough!'
Reluctantly I tossed across a copy of the investment agreement, with the words 'will be determined at the sole discretion of Revere Partners' highlighted in yellow.
Craig glanced at it and then scowled. Suddenly his finger jabbed the page. 'What about this then? "Such approval not to be unreasonably withheld." I'd say you assholes are being unreasonable.'
I sighed. 'Your lawyers can spend money with our lawyers discussing that if you like. It doesn't really matter. We'll win, and even if we don't, there are two more clauses we can use. Face it Craig, if we don't want to put in more money, we don't have to.'
Craig threw the agreement on to the table and moved over to the window overlooking a car park, and behind that the small ravine that was Hemlock Gorge.
'You gave me your word that we would get the money, Simon,' he said quietly, his back towards me.
'I know,' I replied. 'I haven't been able to deliver. I should never have made you a promise it wasn't in my power to keep.'
'I've put everything into this business, Simon,' Craig said. 'And not just all my money. I gave up a good well-paid job with stock options at a successful company. I hardly see Mary and the kids, now. And I'm not the only one. What about those guys out there?' He waved his arm towards the small crowd gawping at us through the windows of the conference room. 'I promised them Net Cop would be a success. That if they worked their asses off for a couple of years, it'd be worth their while. And if I have to let them down, because you've let me down, I'll . . .'
He stopped himself. He stood silently for several moments, rocking on the balls of his feet. He was a tight bundle of muscle in jeans, trainers and a black T-shirt with a white dumbbell across his chest.
'Who was it, Simon?'
'What do you mean?'
'Which one was it? Who turned us down? Gil Appleby? Frank Cook? That woman, whatever her name is? The Indian guy?'
I was impressed with Craig's memory of the people who had heard him present earlier that year.
'It was a partnership decision. A consensus.'
Craig spun round. 'Don't give me that bullshit! You at least owe me the truth on this one. Now, who was it?'
He was right. Loyalty to the firm could only stretch so far. I owed as much, or more, to Craig.
'Frank Cook,' I said.
'The bastard! The fuckin' bastard!' Craig shook his head.
'Craig,' I said.
'Yeah, what?'
'You'll get the money.'
'Oh, please! We're screwed, and you screwed us.'
&
nbsp; 'It's a great opportunity for someone.'
'Oh yeah. Like, some other VC is just gonna leap in with a ton of money once you guys have pulled out. Come on!' Craig's face was filled with contempt.
'You can try. I'll give you the best reference I can.'
'Like they're gonna call you! They're gonna talk to Frank Cook, and you know what that cocksucker's gonna say.'
Craig was right. Frank would make clear his reasons why Revere had pulled out. Craig glared at me, his small blue eyes burning underneath the folds of his brow, his short hair bristling. 'You make me sick, you know that? Just get outta here.'
'Craig, I can help – '
'Just get out!' he screamed.
I nodded slowly and left, passing a series of angry, puzzled faces on my way out. I managed to keep my expression firm until I was safely outside the building. But as the door shut behind me, I slumped back against the wall, cursing Gil and Revere and myself. I vowed never to get myself into that situation again.
When I arrived back at the office, Daniel was scanning a list of stock prices on his computer. He had an ability to recall price histories for certain stocks going back years, just from looking at them every day.
Daniel and I had hardly known each other at business school. He did well in class, and he talked a lot about his investments. For the most part these seemed to be remarkably successful. He had an uncanny knack for spotting take-overs before they would happen, and for anticipating the rapidly changing fads of technology investors. He made no secret that his ambition was to make many millions very quickly, and he saw the stock market as the quickest way to that end. He had supreme confidence in his own investment abilities, but all the risks he took were carefully calculated.
Revere had liked the look of him, and he had liked the look of venture capital, although, as he once told me, this was as much because it would give him better information about the markets as because he thought he would make big money out of it directly.
Final Venture Page 2
