American History 1988
Chapter 111 - 105: The Foundation of Social Hierarchy

Chapter 111: Chapter 105: The Foundation of Social Hierarchy

"Dean, back to business, Morgan Tailer can’t do much with CompuServe. They’re determined to enter the international market, so they’ve made a whole new adjustment to their payment model."

Gary pulled out a document from his desk and handed it over to Dean, "Look, individual users are still charged by the hour.

But for BBS and other commercial websites, CompuServe has adopted a volume-based charging model. The greater the traffic, the higher the charge.

Clearly, Price’s List is the one with the highest traffic among commercial websites. Add in the server costs, and that’s how you get an exorbitant expenditure of 20,000 US Dollars."

"So we have no other choice?" Dean was already prepared for this; until the networks were interconnected, Price’s List was in a passive position.

Facing his probing gaze, Gary shrugged, "Luckily, we do have a bit of room to negotiate, don’t forget that Morgan Tailer is a venture capital firm."

Venture capital firms deal with a variety of clients, although there is no direct business relationship with Ohio’s CompuServe. But CompuServe’s parent company, H&R Block, does have some business interactions with Morgan Tailer.

H&R Block is a tax preparation company, and Morgan Tailer has a large amount of tax work to handle each year because of investment income.

And all this business is entrusted to the former, so strictly speaking, Morgan Tailer is a client of H&R Block.

As a client, bypassing CompuServe and going directly to its parent company is the roundabout method Gary used.

Because of this relationship, CompuServe’s second quote for Price’s List had already been reduced to 15,000 US Dollars.

"15,000 US Dollars, that’s the best Morgan Tailer can do," Gary said, lifting his coffee to gesture slightly to Dean.

"OK, I accept," Dean didn’t haggle. At least this already saved Price’s List an annual expense of 60,000 US Dollars.

"Good~" Gary was satisfied with Dean’s sense of when to advance and when to retreat.

As a client of H&R Block, Morgan Tailer could actually ask for more, such as returning to the previous charging model.

But Price’s List was just one of the many companies Morgan Tailer invested in, and before proving its greater potential, the input of relational resources naturally had to be carefully planned.

"By the way, Dean. You didn’t ask to meet me today just for this, did you?" Although Gary hadn’t known Dean for very long, he knew that the latter wouldn’t call him back from San Francisco just for this matter.

Faced with his question, Dean directly took a file bag out of his bag. "I want to apply for a patent for some software, can Morgan Tailer give me any advice?"

"Patent application?" Gary’s interest was piqued by the keyword, and he eagerly took the documents, "So, Dean, you’ve got a new idea?"

"Office software, I want to give it a try." Dean didn’t sing high praises for Teams because he knew that seed-round investments are generally not large.

500,000 to 50,000 US Dollars is usually the range that most venture capital firms would offer, and this typically requires founders to exchange 20% to 30% of the original shares.

Dean felt that his Teams was already quite well-developed, and a financial support of around 100,000 US Dollars wouldn’t be of much help to its current progress.

As for software sales, considering the software retail market of ’89, that amount of money wouldn’t even be enough to expand the channels.

So after much thought, Dean decided to skip the seed round. He wanted to first try Teams’ market in Silicon Valley, and if it started off well, that would be ideal.

Because this would mean that Teams’ reputation would gradually spread, and if venture capital firms got involved later on, getting a third of the shares wouldn’t be a matter of just a few hundred thousand US Dollars.

Of course, if it didn’t start well, Dean would also actively seek help from venture capitalists. After all, there were no similar products on the market; he could afford to experiment slowly.

Simply put, Dean wanted to maximize the benefits. He hoped that when Teams faced venture capitalists, its valuation would be higher.

When Gary heard that Dean’s idea was software, his interest grew even stronger. Compared to Price’s List, the software market is undoubtedly a little more mature.

Of course, a mature market means fiercer competition. After briefly reviewing the introduction of Teams, Gary frowned slightly.

"Office software with instant messaging? In addition to text, it also has voice functions?"

"Yes, I did some research before developing Teams, and currently there’s no similar office software on the market," Dean needed to reveal some of Teams’ value to Gary, otherwise how could he convince Morgan Tailer to help with the patent application?

"Dean, I’m not sure if there’s a market for voice communication. But if I need to contact other departments in the company, why not do this?" Gary picked up the phone on his desk and casually dialed a few short numbers.

A minute later, Nia knocked and entered, "BOSS?"

"Please get us a fresh cup of coffee, thank you~" Gary ordered effortlessly while looking at Dean.

"Just a moment," Nia left quickly holding the barely sipped coffee.

"Look, Dean," Gary spread his hands, "The internal line phone can do the same thing, and it’s so cheap it’s negligible."

"Gary, I understand what you’re saying. But Teams combines text messages, phone calls, and file sharing, all into one interface.

Think about it, when you need a spreadsheet. You don’t have to pick up the phone and tell your subordinate to email it to you.

Teams can directly skip all these steps, select a file, send, OK, my job is done.

Meanwhile, you can even give other instructions through text messages or voice calls without any conflict! That’s the beauty of Teams!"

In fact, the convenience of Teams goes far beyond this, but without personal experience, it’s hard for ordinary people to understand the changes it can bring to work.

Price, arms crossed, paced back and forth in the office, "So besides voice calls, its other functions are also useful, right?"

"Of course," Dean pointed to the phone on the desk, "If it was just to replace that, I would never introduce Teams now.

Price, Teams won’t dominate like Louts1-2-3 or WordStar, but it will still hold its own in the office space."

"Alright, Dean, you’ve convinced me." Price picked up the phone on the desk and started dialing, "Morgan Tailer will handle the patent application issues for Teams, but I’m not going to invest in it for the time being. Help me set up a meeting with Mr. Koste’s attorney, thanks."

The last sentence was addressed to the person on the other end of the phone.

After he hung up the phone, Dean shrugged, "I understand, Price, and I appreciate your help with this."

"Of course, there are conditions," Price, as a venture capitalist, was well-versed in the ways of business, "When applying for software patents, Dean, you understand that this requires leveraging Morgan Tailer’s connections, right?"

"Yes," he had already learned some about this from Mark at PBK.

"Good, that will make our communication easier moving forward." Price stood up and took out a bottle of red wine from the cabinet behind his desk, "I need you to promise me that when Teams needs funding or Morgan Tailer wants in, we can at least get 10% of the equity."

When would Teams need funding, or when would Morgan Tailer want to join in?

Of course, when Teams has secured its footing and the market demand is growing rapidly. In other words, when the Teams project has achieved initial success and there’s basically no more risk.

Price was asking Dean for a guarantee that Morgan Tailer could secure a ticket to enter at any time. This ticket would ensure a no-loss deal for him.

"If Morgan Tailer invests at a matching valuation, Teams welcomes their investment," Dean agreed to the condition in exchange for patent protection for a 10% stake.

"Good~" Price handed over a glass of red wine to Dean, "I think we should celebrate this collaboration."

"Certainly," Dean took the glass, and they clinked lightly.

Ding~ another deal was struck.

"Mr. Koste’s attorney will contact you later; you’ll need to explain the technical side of things to the Patent and Trademark Office (PTO)."

"No problem."

...

For a 10% stake, in exchange for Morgan Tailer’s legal assistance, Dean felt the deal was acceptable.

After all, if he were to hire those large law firms himself, it could cost him upwards of a hundred thousand US dollars.

And for Morgan Tailer, resolving such a patent application would just require a favor.

Exchanging a favor for a stake in a promising project, and getting in without any risk, was just as good a deal for Morgan Tailer.

This is the reality of class in America; the same task carried out by people from different classes could require vastly different costs.

After a personal trip down Dune Road, Dean finally got all the groundwork for Teams’s launch to market done.

As it turns out, starting up in Silicon Valley is much harder than one might imagine. Having a good idea does not guarantee success.

It doesn’t even count as a start. Just look at Teams—Dean had already gone beyond the idea and finished it.

But to actually push Teams to go public, the early prep work required all his wit.

Dammit, without Price’s help, he couldn’t even sort out a patent application.

Who knew that America’s off-market trading could be so complex? The naive him had thought it was just a matter of filling out a few forms.

Now Dean finally understood why legal fees in America are so expensive. Rather than just being legal fees, they include service fees for public relations.

Glancing back at the unremarkable mound of dirt, Dean pulled his sunglasses down from his forehead, kicked off, and pedaled his bicycle towards Stanford.

The scale of Dune Road might not live up to its name, but the security here was still decent.

At least Dean’s bicycle had been safe and sound for an entire afternoon here. Sheesh, only wondering when he could swap his ride for a flashy car.

Soon enough, Dean, speeding down the hill, saw the glistening Silicon Valley in the distance under the sunlight.