American History 1988
Chapter 138 - 132 Fish Have Arrived

Chapter 138: Chapter 132 Fish Have Arrived

Time entered March, and it had been two weeks since Byte Software completed its first round of funding.

In these two weeks, Byte Software signed an agreement with WSGR to become strategic partnership partners.

At the same time, it also welcomed the likes of Joe Scalcini as the Chief Executive Officer and Jimmy Trebik as the Chief Operating Officer.

Previously the Marketing Director at Hewlett-Packard, Jimmy Trebik had a broad network of connections in the computer field.

The reason Byte Software was able to recruit him was through the introduction by the independent director William Miller.

Speaking of independent director William Miller, he was also a board member mutually recognized by Dean, Morgan Tailer, and Mayfield.

Now 65 years old, William Miller was still serving as the president and CEO of SRI International.

SRI International is a non-profit scientific research organization focused on artificial intelligence, vision, video, and semiconductors, and its predecessor was Stanford Research Institute.

That is why William Miller received approval from all parties; not only was he academically accomplished, but he also previously served as Stanford’s vice-provost and dean of academic affairs.

Beyond that, William Miller was even one of the investors in Mayfield during the 70s. His illustrious career indeed qualified him for the position of independent director at Byte Software.

Upon hearing that Byte Software was founded by Stanford students, William Miller arranged a meeting with Dean, with Professor Donald Knuth also in attendance.

That’s right, they were old acquaintances. Due to these intertwined relationships, it was only natural for William Miller to take up the position of independent director.

Although an independent director usually does not participate in the daily operations of the company, Dean and his colleagues still granted him 1% in stock options.

Not for anything in particular, but for his reputation and the powerful connections behind him.

Granting a certain amount of stock options to an independent director is a common practice in Silicon Valley companies, and he is the only director among the five who receives a salary.

The other four directors—Dean, Marcus, David Morgentaler, and Glenn Miller—do not take any cash compensation or bonuses.

With the addition of these three executives to its senior management, Byte Software grew at a visibly rapid pace.

The most obvious change was that, with Joe Scalcini’s assistance, all those tedious trifles no longer reached Dean.

Now he could concentrate on perfecting Teams’ features and controlling the broader market direction.

Jimmy Trebik, the Chief Operating Officer, helped Byte Software secure partnerships with seven software distributors in California within just a week.

In the 90s, there was no online sales model due to immature conditions. At that time, all software companies relied on offline channels—physical distributors.

Byte Software was following this model, with distributors typically taking a commission of 20% to 40%, the specific ratio dependent on their size.

National chain distributors could earn up to 40% commission. The reason for such high commission rates was to make it profitable for them and thus maintain good customer relationships.

Additionally, these distributors had numerous channel resources. When distributing further to retailers, they would need to give about 10% in sales commission.

Decreasing step by step, this whole sales network was built in such a manner. This was different from Dean’s initial approach with Kevin’s small computer shop—this was the way of a regular army.

Of course, all these moves required a lot of manpower. Within just half a month after completing funding, Byte Software’s staff had already surpassed 140 employees.

Forty percent of them were concentrated at the headquarters in Menlo Park, another thirty percent were spread out in other cities of California like San Francisco and San Jose.

The remaining thirty percent were venturing into other states; Byte Software was expanding rapidly, and it was foreseeable that the number of recruits would surge further.

Senior management, expansion, recruitment—all these cannot do without financial support, which is precisely the purpose of fundraising.

With the 3 million dollars from the first round of funding added to Byte Software’s original 400 thousand dollars in working capital, making a total of 3.4 million dollars, 800 thousand dollars had already been burned through.

In just two weeks, this rate of spending was frightful. Yet the truly frightening part was that this was merely the start; as the business grew, the rate of spending would only increase.

"Boss, here are the travel expense reimbursements for our personnel from last week." Just as Dean was looking over Teams’ sales for the week, Anna approached with a document in hand.

thousand dollars—seeing this figure made Dean wince. Teams’ sales were rising, but this also meant continuously sending staff to provide on-site services.

Some companies were not near Silicon Valley, necessitating Byte Software’s employees to travel, and all this required money.

"When is our Chief Financial Officer arriving?" Since a CFO had not yet been found temporarily, Dean, the CEO, had to approve these substantial expenses.

"There’s an interview this afternoon; do you need to participate, Boss?" Anna flipped through her notepad, providing the latest on recruitment progress.

"Do we have the candidate’s information?" Dean needed to check the candidate’s background.

Anna handed him the already-prepared dossier; as Dean’s assistant, Anna had gradually become accustomed to his work habits.

Ross Tano, the former CFO of Sky Computers—well, another neighbor in Silicon Valley.

Dean had long been accustomed to such scenes, as the executives recruited by Byte Software were mostly from other companies in Silicon Valley.

Typically, senior managers at such companies are bound by non-compete agreements, and they often can’t easily switch jobs within similar industries.

However, California is an exception, as California law does not allow non-compete clauses in employment contracts. This enables talent to freely move to their preferred venues, a practice unlike most other states in America.

Furthermore, California’s courts, local judges, and juries do not favor litigation involving trade secrets and proprietary information, and compensatory damages are seldom awarded.

This added a new vitality to the already vibrant business atmosphere of Silicon Valley, allowing many company employees to frequently switch jobs without fear of being sued.

This was also why Byte Software could easily recruit executives from well-known companies like General Electric, Hewlett-Packard, and Tianteng Computers.

Stock incentives were one aspect, but deliberate government encouragement played a role as well.

"I will make time to meet in the afternoon" being the Chief Financial Officer, Dean naturally had the responsibility to conduct the interview.

After instructing Anna, Dean put down his work and prepared to take a brief rest.

He reached for the newspaper on his desk and saw an unexpected report.

The National Science Foundation had officially started soliciting public opinions on the privatization of the NSFnet, and once this news was released, it sparked intense discussions across society.

Although many insiders had begun quietly discussing the privatization of the NSFnet last year, it was not until today that it entered the public eye.

Many people had mixed feelings about this; some conservatives believed that privatization went against the original intentions of the NSFnet, while more organizations outside of government agencies were eager to access the internet.

However, regardless of the public quarrel, some had already taken action. For instance, IBM had established its Advanced Network Services division (ANS), which was responsible for commercial services during the network privatization period.

IBM’s management noticed some movements from private network operators and thus preemptively set up ANS.

As a contractor for the National Science Foundation, IBM’s ANS division controlled a network that covered all of North America, giving it a natural advantage in the privatization business.

IBM’s lawyers even ingeniously reinterpreted the NSFnet’s AUP policy and drafted a legal opinion statement.

The statement declared that IBM and its newly established ANS division would not interconnect with other companies’ networks.

This was due to the potential mixing of network transmission data from research institutions with data from non-research institutions.

IBM’s lawyers believed this was against the NSF’s "Charter" and AUP policy; therefore, IBM was forced to reject the transmission of data from non-research institutions.

Ironically, while IBM did not allow other companies to access the NSFnet, they could use their dual identity to enable their own commercial services to access the NSFnet.

After the fresh interpretation by IBM’s lawyers, their newly established ANS division became a dual-faced organization. It was both a for-profit company and a non-profit organization.

When ANS carried commercial information, it was a for-profit company. When ANS carried NSF information, it became a non-profit organization.

In plain words, they were using double standards, with the interpretation entirely up to IBM.

Could people tolerate such blatant actions?

Not only internet observers criticized harshly, but general users and other small operators also expressed strong dissatisfaction.

You, IBM, enjoy the benefits of the contract and eat the biggest share of the meat, which is just fine. But you don’t leave soup for others, prohibiting other network operators from accessing the NSFnet—isn’t this a blatant monopoly?

The newspaper in Dean’s hand was ablaze with discussions about this topic. The Senator from Tennessee, Al Gore, even publicly stated that IBM’s actions were impeding the development of the internet.

The young Senator had been very active recently. Since running for President in ’88, he often appeared in the media. However, eerily, the National Science Foundation office remained silent.

Something was not right, and Dean, who knew more inside information, keenly sensed a problem.

Ring, ring... The phone on the desk interrupted his thoughts.

"Hello~ Byte Software, Dean Price."

"Dean, it’s me, Robert Macy."

"Macy?" Dean was too busy lately and had a vague memory of this somewhat familiar name.

"Yeah~ Compuserve’s Robert, we met at the beginning of the year."

"That’s right, we had a good consensus on the cooperation with Price’s List." Dean finally remembered who it was, the person he was waiting for had come.

"Yes, Price’s List is one of our most important clients."

"So? Mr. Macy, is it about Price’s List?" Dean started to make small talk leisurely.

"No, Price’s List is fine," Robert Macy paused, "Dean, have you heard about the NSFnet privatization?"

"Of course," Dean glanced at the newspaper in his hand and smiled, "There is a lively discussion going on about that topic."

"Dean, if I’m not wrong, you must have gotten the news several months in advance."

Dean chuckled softly without denial, "There are some things I can’t talk about too soon, as it involves confidentiality orders."

Hearing about confidentiality orders, Macy became even more certain of his guess.

"So Dean, do you have some internal connections? You know, Compuserve is incredibly eager to merge into NSFnet, but we’ve encountered some issues..."

"I understand," Dean leaned back in his chair tactically, "because I am one of the insiders involved in the NSFnet privatization."

"What?!" Robert Macy was stunned; April Fool’s seemed to be two weeks away.

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