by David Vann
The dot-com did well at first. We received a much larger round of funding, and no one believed that the stock crash that began in April 2000 would continue for very long. Everyone expected recovery within a year or less, including the venture capitalists. In hindsight, this was silly, but it was what people in the dot-com world, including me, believed.
Our dot-com was more traditional than most, since our industry—boating—was conservative. We had older managers and dressed at least business-casual, and we didn’t have a foosball table or any other games or wild parties. We just worked eighty-hour weeks and then hundred-hour weeks for five months straight to launch the site. And I found my way to advance within the company.
Though I was hired in business development, I became the “contract guy,” and everyone had me review legal agreements before negotiation or signing. I was interested in contracts because they revealed that business is based, finally, on nothing more than trust and hope, despite what we otherwise believe. What holds the business world together is a house of cards. We didn’t have an in-house legal department, and I was one of only a few people in the sixty-five-person company who could read carefully. So I began reporting directly to every member of our executive management.
Near the end of the summer, I was promoted to work directly under the CFO. I would be responsible for all legal agreements for the company and its subsidiaries. I would call our several law firms when I had questions, but I would do as much of the work myself as possible, to minimize our legal fees, since by this time the company was trying to reduce expenses in a difficult market. My change in position was announced at a company-wide meeting after my work was praised, and I was happy until I found out they wanted me to take on these greater responsibilities without giving me anything in return. They weren’t promoting me to director level, just changing my title to manager of contracts and business development, and they weren’t offering more pay or more stock options.
The CFO was condescending to me. He was a good boss, generally, but now he told me I needed to walk before I learned to run. I hated the clichés of business. Thinking in business is extremely lazy. If I hadn’t needed the job to repay my mother and Rand and all my other creditors, I would have given him an ultimatum, but instead I settled for additional stock options, which I knew would be worthless, and the promise that I would advance in rank and salary soon, most likely in a couple of months, after my formal review.
So I went to work even more determined to show I deserved to be raised up. I tackled a company we had acquired. Within three weeks, and after one visit up to their offices in Seattle, I showed they had more than five hundred clients not under contract, legal notices on their website that were meaningless since they had never incorporated and weren’t a legal entity, and no protocols for who would review or execute contracts. They were also breaking the law every day by copying material from other websites and encouraging their clients to do the same. It was an intellectual property nightmare, and an extreme example of mismanagement and lack of due diligence. The general manager did not understand even the basics of business law. As I pointed out the problems to him, he had difficulty understanding, and he took no responsibility.
I reported back to the CFO and he said go get ’em. With help from our law firm, I rewrote all of the company’s contracts and legal notices and instituted due diligence. I reviewed the original acquisition of the company and followed up on licensing and stock issues. By the time I was through, I had greatly reduced our liability and put through an enormous volume of legal work while at the same time reducing our monthly legal bills from $45,000 to $8,000. In my final report, though, our president asked that I soften my exposure of the general manager’s culpability. I was basically forced to do this. Instead of telling me by e-mail, which was our usual way of operating in the company, he came down and sat with me personally. He made it clear that if I didn’t soften my exposure of negligence, I might lose my job. I gathered that some of the lack of due diligence in the original acquisition of the company might have been his own fault.
So I had to change my report, and I moved on. In addition to my work with our subsidiary, I wrote every new contract the dot-com needed for various vendors, contractors, and employees. I reviewed, revised, and negotiated contracts that came in from our largest partners, from development contracts to eBay. I substituted for in-house legal, negotiating directly even with the infamous AOL. I also wrote, reviewed, and negotiated European contracts for our new European office.
At my review, I argued again that I should be promoted to the director level and given a raise. But the CFO kept putting me off. He did this by never getting around to finishing my review. These were hard times in the dot-com world, with stock prices falling ever lower, and he needed to bring in another round of funding. He was failing at this, and all of his other duties were being put on the back burner. The truth, though, is that he didn’t stick up for me. I had a lot of inside information in that company, so I knew that a few other people were getting raises because their executives were putting in a pitch for them. At these same meetings, my boss was not putting in a pitch for me. Instead, he was just relying on me to cover more and more of his work as he focused on getting new investment.
In December, we had massive layoffs and I couldn’t help but think that many good people were losing their jobs because of mismanagement by our executives. They had paid a ludicrous amount for our subsidiary, our chief strategy officer was a nincompoop who had spent hundreds of thousands on content we weren’t even using, the general manager who should have been fired was promoted instead, and the company building our website was using kids straight out of college who billed us at more than $200 per hour. These were the excesses that brought dot-coms down. The CEO of Scient, the company building our website, was reportedly making $100 million a year. I hated seeing good people lose their jobs because of these excesses.
I kept my job because I was saving the company almost $40,000 a month in legal fees, plus doing much of the executive management team’s work and running the Product Store, and I was being paid only a little more than $5,000 per month. Our CEO pretended he was in a similar situation, since he wasn’t being paid a salary, but at the same time he was scooping up entire percentage points of stock in the company, two percent here, two percent there, striking deals influenced by his position as chairman of the board and by the fact that his wife was a partner in one of the two large venture capital firms that were funding us.
I grew to truly dislike our CEO. Usually, when things are going wrong for a large group, you can’t point the finger at just a few people, but with our CEO, president, general manager, and chief strategy officer, it was not rocket science to figure out what went wrong.
The bankruptcy court had listed the boat in Spain for seven or eight months now, but it hadn’t sold. This wasn’t a surprise, really. I had told my lenders the boat would sell only if it was fixed up, with a fresh coat of varnish and a thorough cleaning, inside and out. No one buys a boat that hasn’t been maintained. I had offered to do this work for free if they paid for flights and materials, but the lenders didn’t want to spend more money. By now, the varnish would be gone, the wood warping, the galvanized rigging rusted, and there might even be corrosion inside the hull.
In mid-November, the bankruptcy trustee made a final offer to the secured creditors, an offer which was not at all in their best interests, since the role of any bankruptcy trustee is to protect unsecured creditors (those whose loans haven’t been registered as liens against the vessel). The trustee also indicated that if the secured creditors did not agree to this plan, he might just close the case and abandon the asset back to me, the debtor. So my secured creditors asked the trustee to close the case as soon as possible. Once the boat was abandoned back to me, they would still have their liens, and the unsecured creditors would be gone.
I began work right away on a new deal with my secured creditors. In return for a much lower interest rate (the minimum federal ap
plicable rate instead of fifteen percent) and much longer term (six years instead of three, with the first two years deferred), I would repay the full principle plus interest calculated at the new rate, and give charter time, and invest all of the money needed to put the boat back into service.
I tried not to rush into this. I tried to stop and think about what I was doing. I didn’t have to go back into business, after all. I didn’t want to wreck Nancy’s life, either. But even when I would pause and try to think, it seemed that the decision had already been made. My mind would just stop, unable to go any farther. Perhaps this was the unconscious control my father’s death still had over me. Or perhaps I would have been tied to the sea even without his death. But I also couldn’t let my private lenders take a loss. And I wanted the boat and that life back again. That life, unlike this one at the dot-com, had been self-determined. It had meant something.
My plan was to charter in the Virgin Islands and nowhere else. Once I fixed up the boat and sailed across the Atlantic I would simplify and streamline the business. No more complicated licenses and permits in various countries, no office in California, no permanent employees, and no educational charters. I would charter only through brokers, who sell the boat for a week and do all of the sales and follow-up with their clients. For the first two years I would make no payments on the loans, and for the next four years I would be paying on only $185,000 in loans at the lowest legal interest rate, since Rand and Lee had agreed, in their characteristic generosity, to have their $250,000 loan paid after the other loans, beginning in six years and ending at ten years. It was a very attractive plan, a rare second chance.
The difficult part was coming up with $100,000 to put the boat back into service. I owed $20,000 to the marina in Spain and would need to pay for legal fees, a new insurance policy, a new paint job, new standing rigging, new varnish, equipment overhauls, a new dinghy and outboard, etc. It was a solid hull, made of the highest-grade steel and only two years old, but all the cosmetics would have to be redone. The dot-com had promised a bonus, and I needed to make sure I received it. I also needed to sell Grendel. Nancy and I began working on Grendel immediately, at the end of November, to have it ready for sale when the bankruptcy trustee officially closed my case. Nancy would also take out credit cards to help fund the new business.
At the dot-com, I was switching my focus. They were still jerking me around about my bonus and a promotion and raise. They had been promising all three since late July, and now it was December and my boss, the CFO, was fired along with much of the rest of the company. He was going to stay for another month, to finish a few things and because new investment is less likely if the CFO has just left, but then he’d be gone and I’d have even less chance of getting the bonus or anything else.
The entire dot-com era was an anomaly for employees. Because of stock options, employees for one of the few very narrow windows in history were able to get back more than they put in. But that was over now. Stock prices were down, and companies were treating employees with no regard whatsoever.
On the weekends, instead of working for the company, I was fixing up Grendel for sale. When I finally listed it in January 2001, a bad time of year in a worse economy, a flood of buyers came to look at it right away. I was offering a solid boat at a reasonable price. On Saturday of the first weekend, Michael and Eva Pardee came to look at it, and they fell in love. Two days later, they put in an offer for the full asking price. Michael was also interested in what I was doing with the ninety-foot boat. He volunteered to spend a month in Spain helping me get the boat ready, and to crew across the Atlantic.
Everything was going well. In addition to selling Grendel and setting up a new company in Gibraltar (I didn’t want more foreign corporations but actually didn’t have a choice in this case), I had signed on with a clearinghouse that would hold our charter calendar for brokers, and I had found a broker who would sell trips on our boat before seeing it. This was unusual. Most brokers wait until they’ve seen a boat at one of the boat shows before they’ll book it, and we wouldn’t be at the shows until November. This broker sold our two holiday charters—Christmas and New Year’s—right away, at $21,500 for each week. He was an eccentric South African in Florida, with a grand way of speaking, and though our initial negotiations were contentious—he wanted to be our clearinghouse as well as our broker, and he wanted a twenty percent commission on trips instead of the usual fifteen percent—I was firm and he finally relented. On each of these $21,500 weeks, after broker commission and the clearinghouse and operating expenses, we would net more than $15,000.
I had worked hundred-hour weeks for the dot-com to the point of physical illness, but now I used a lot of my time at work to arrange repairs for the boat, which I renamed Bird of Paradise. First I would need to fix the mysterious problems with the port engine and steering. I talked with Nick Bushnell, the surveyor in Gibraltar, fairly often now, trying to get the boat hauled out and repaired before I arrived. But the engine did not get looked at, and when the time finally came for the yard at Sotogrande to haul the boat, after a delay because their travelift needed repair, they tried but gave up. They said my boat was too heavy. Their lift had been de-rated during the repairs and wasn’t strong enough now. They had tried, and they weren’t going to try again.
Even though there were some frustrations, I was generally happy making these arrangements for the boat; I was grateful to have a second chance. It was also a happy time because I was thinking about marriage with Nancy. We were partners moving into a good future together. This was her dream now, too, and she was putting everything on the line for it. Once Grendel sold, I had the money to buy her a ring and invited her for an evening cruise on a small powerboat along the San Francisco waterfront. It was fairly warm for mid-March, and very clear and calm. I pulled up beside a small fisherman’s chapel at Fisherman’s Wharf and asked her to marry me. She said yes, and we celebrated with dinner on the wharf.
We decided to have the wedding soon, on July 21, because there were only a few small windows of time available in the first year of our charter schedule.
The next two weeks were busy with planning the wedding and making last-minute arrangements for crew and repairs and insurance, but it all went smoothly. By April 3, when I boarded the plane with Michael Pardee for Spain, everything except the hauling of the boat had worked out perfectly.
PART THREE
THE BOAT DID not look good. The paint job was even worse than I remembered, and rust stains were everywhere. The stern ladder was not out, so we had to board the stern of the next boat and climb over at midships. Standing on my own deck, I was filled with despair. The deck was stained with rust and all of the wood on the huge pilothouse was gray and warped. The wooden rails were completely dried and cracked.
Michael stood on the deck of the other boat, handing our luggage over, and he shook his head. “I don’t know, David,” he said. “Maybe we should just fly back home.”
The feeling of regret was overwhelming. Everything I had done to go back into business. Four months of arrangements. I had already paid almost $30,000 to the marina and the lawyers, and I had signed the new promissory notes.
But the deal was not quite final. The sale and registration had to go through one last office in Gibraltar, so if I was willing to take the $30,000 loss, I could get out of it. I would need to think about this.
In the pilothouse, the loveliest part of the boat, we could see that some of the varnish had been preserved. But not all of it, even on the inside. For a year and four months, salt spray had blown over the breakwater behind us into the pilothouse and down below into the main salon. The throttles and engine panels were rusted and pitted, and both tables, including the beautiful one for sixteen, were weathered gray. Even up high, on the inside of the ceiling, salt crystals had chewed into the varnish. All of this wood would need to be sanded bare and revarnished. Some of it would need to be screwed down and planed where it was warping.
Down below, in the main sal
on, a damp salt grime coated everything. In every stateroom, too. Lots of mildew. But at least the varnish was okay in the staterooms. And they were beautiful, big staterooms, all solid mahogany.
The engine room was the most depressing. The marina had not kept the water pumped as they had promised, and it was about three feet deep, just reaching the bottoms of the engines. The water had not reached the starters and alternators, luckily, but my two electric discharge pumps—big expensive pumps—were completely submerged, as was the pump for the saltwater toilet system. And it wasn’t just saltwater in here. Somehow oil had spilled, leaving thick black sludge three feet deep throughout the entire engine room, which was twenty feet wide and fifteen feet long, with steel stringers that had many surfaces, every inch of which would need to be cleaned.
Michael and I began a truly awful month, a month in which I hated every minute of every day and we worked without taking any time off. He was doing this without any compensation, just as a favor to me. And he stuck with me through all of it and even remained cheerful.
In his early fifties and well-off after a lifetime of hard work, Michael had to endure what became a series of privations. We couldn’t use the toilets, since the saltwater pump for flushing needed to be replaced. We did have running water, but only a limited supply. We had no heating, and it was cold at night. We had no blankets. We had very little electrical power, since I was still cleaning and drying out the entire system before switching it on.
While we worked, Nick Bushnell was helping set up an appointment at El Rodeo, a marina in Algeciras, across the bay from Gibraltar. The boat needed to be hauled out for rudder modification, bottom cleaning, and new bottom paint. Like Michael, Nick wasn’t charging me for his help. He said he just wanted to see it work out for me this time. True generosity. He also found a guy named Stan who would work on the engine room and bilges, and two women to do laundry and clean the staterooms.
