American History 1988
Chapter 149 - 143 The Second Quote

Chapter 149: Chapter 143 The Second Quote

"Valentine, your entrances are always so unexpected," Dean said as he picked up his coffee and greeted him, after Anna had left with the tray and quietly closed the office door.

"I’m glad you didn’t throw me out~" Valentine still remembered the surprised looks on everyone’s faces when he pushed open the door, entering as an uninvited guest.

"So, what brings you here today?" With the internal meeting at Byte Software concluded, Dean didn’t mind having a chat with Valentine.

"Has Byte Software run into some trouble?" Valentine didn’t beat around the bush; he went straight to the point. "I heard about it last night."

Silicon Valley is only so big—what happens here spreads quickly through various channels.

Whether it was Byte Software or AT&T, both were located near the Bay Area. Even if Dean’s side maintained strict confidentiality, AT&T certainly wouldn’t cooperate.

Even with an attitude of killing the chicken to scare the monkey, they would deliberately publicize the lawsuit. Therefore, faced with Valentine’s probing, Dean didn’t conceal anything.

"Byte Software is facing a lawsuit, but we’ll get it sorted out; everything we’ve done is legal and compliant," Dean ensured.

"But your opponent is AT&T," Valentine put down his coffee, his expression serious, "Dean, these behemoth companies have many ways to mire Byte Software in a quagmire of litigation.

They don’t even need to win the case; as long as they drag it out long enough, Byte Software will be worn down, and you’ll have to halt your expansion.

Because the lawsuit will also affect Teams’ sales outside, nobody wants to buy a product from a software company that might go under any minute under unclear circumstances.

On top of that, you’ll have to pay astronomical legal fees, and if funds are short, you may not even find anyone to finance you."

"Wow~" Dean shrugged his shoulders in feigned surprise. "It sounds like Byte Software is indeed on the road to ruin."

"If you don’t take action, it will become reality," Valentine advised earnestly.

"I’m happy to see that you, Valentine, consider all the worst-case scenarios for Byte Software," Dean said as he pulled out an itinerary from his desk and handed it to him.

"But the premise of what you’re saying is that public opinion is on AT&T’s side, when in fact, we are the righteous ones.

The charges that AT&T has brought against us are absurd, and this so-called patent dispute is based on an open international standard!"

Valentine’s attention wasn’t on Dean’s technical explanation, but rather on the itinerary in his hands. "This is..."

"This is an interview with the San Francisco Chronicle, scheduled for this afternoon," Dean explained, revealing the content on the paper. "They’re very interested in the lawsuit between Byte Software and AT&T, and I’ve accepted their invitation for an interview."

The San Francisco Chronicle is the largest-circulation newspaper in the Bay Area, once hailed as "the Voice of the Bay."

Their interest in interviewing Dean, besides genuine curiosity, also resulted from the efforts made by Morgan Tailer and Mayfield behind the scenes.

Since Dean planned to use this lawsuit to publicize Byte Software well, investors, of course, had to lend their full support.

Besides the San Francisco Chronicle, Dean would also accept interviews from computer magazines.

Without a doubt, compared to telephone companies like Bell, Byte Software and computer magazines were on the same side.

"All right, Dean, it looks like you’re well-prepared to respond to the lawsuit, aren’t you?" Valentine began to reassess Byte Software’s situation internally.

"Of course, this time we’re going to give Bell’s octopus a good kick in the ass," Dean boasted with unwavering conviction and confidence in front of others.

"But you still need help," Valentine thought it was time for him to enter the scene. "Byte Software is running out of money, isn’t it? These PR interviews and the upcoming lawsuit will cost a fortune."

Although Valentine had missed the first opportunity, he had always been quietly following Byte Software’s development.

Lately, Teams’ ads even appeared at major airports, and Byte Software’s offices started cropping up slowly in coastal states like Oregon, Washington, and New York.

The investments behind these expansionary measures indicated significant expenditures; the fact that the first round of 3 million dollars of financing had lasted this long was already beyond Valentine’s expectations.

But with the lawsuit, Valentine was certain that Byte Software’s funds must be running low.

Faced with the other’s confident demeanor, Dean smiled calmly. "Valentine, I once promised you that if Byte Software started a second round of financing, I would give priority to Sequoia Capital.

Perhaps you can start by naming a price, but first I must clarify that this does not mean we’re immediately kicking off financing."

Thinking Dean’s explanation was superfluous, Valentine smiled knowingly. His guess was right—Byte Software was running out of money.

"Forty million dollars!" Valentine announced the price he had considered in advance.

Just three months after the first round of financing, the valuation had doubled again. Valentine believed it was a very high opening bid.

"Forty million dollars?" Dean raised an eyebrow lightly. "Valentine, it seems you don’t quite understand Byte Software’s situation."

"What?" Valentine frowned at Dean. "Dean, I think this price is reasonable, given that Byte Software has only been established for half a year."

"It has nothing to do with how long it’s been established," Dean said, pulling out the Byte Software sales report from his desk. "Take a look at this, it will give you the answer."

Valentine skeptically took the document, glancing at the header which read ’Teams Software Semi-Annual Sales Report.’

As the president of Cisco, Valentine was familiar with these data formats, allowing him to quickly locate the information he was seeking.

72,000 sets, total sales of 10.46 million dollars!

Valentine licked his dry lips and naturally picked up the coffee beside him, taking a sip.

"Valentine, do you still think a forty million dollar valuation for Byte Software is reasonable?" Dean asked calmly.

"Honestly, it does surprise me," Valentine admitted, shaking the sales report in his hand. Damn it, he still felt his lips were dry.

Under the pretext of drinking coffee, Valentine cursed inwardly like mad.

Shit! Ten million dollars in sales in half a year! That was far beyond his expectations!

Take Cisco, for instance, where he had hands-on experience—the company only made 1.4 million dollars in annual sales before financing.

Afterward, Sequoia Capital invested, and with Valentine’s help, Cisco’s total sales in 1989 amounted to 28 million dollars.

Then, in the period around February and March of 1990, this year, Cisco had successfully gone public with a current market valuation of around 230 million dollars.

Cisco was already competing with 3Com in the router market, but its first funding round’s sales were not even comparable to Byte Software’s present situation.

In other words, Byte Software looked more promising than Cisco, at least in the early stages of going public.

If Dean knew what Valentine was thinking at the moment, he probably would just shrug his shoulders.

A company typically only needs one or two of Cisco’s high-end routers to provide a reliable internal network, but it would require hundreds or thousands of Teams sets to meet everyone’s office needs.

Because they serve different customer bases, there is no comparison between the two.

What’s most important is that the network’s popularity is still far from sufficient. When the internet enters every household, everyone will need a Cisco router.

At that time, its size and market value will astonish everyone. Of course, Dean currently has no interest in discussing Cisco’s prospects with Valentine; Byte Software is the focus at the moment.

"Valentine, you need not rush to revalue Byte Software just yet; perhaps you should first take a look at our competition with AT&T," Dean suggested.

Valentine heard a strong confidence in Dean’s voice. Could it be that the other party wasn’t facing a cash crunch?

"OK, Dean, I indeed need to reconsider the offer. But remember our agreement, Sequoia Capital will not be excluded from the second round of financing, right?"

"Of course, I promise!"

As he watched Valentine leave, Dean put away the sales report and sighed softly.

The ten million dollars in sales over half a year was no fiction. With heavy advertising expenditure, gradually expanding sales channels, and Byte Software’s aggressive hiring.

In the past two months, Teams software sales skyrocketed, just in the past April they sold over 30,000 sets.

However, all this was built on massive investment. Byte Software’s headcount had already exceeded 300 people, most of them in sales and technical positions.

With one role having commissions and the other being a high-paying tech position, Byte Software’s labor costs alone were reaching hundreds of thousands of dollars per month.

Not to mention the advertising costs, operational costs, and distributor shares, after all these deductions, less than 2 million dollars of the 10 million could actually be credited to Byte Software’s account.

Considering the imminent lawsuits and the subsequent public relations expenses, it could only support Byte Software for another month.

So Byte Software wasn’t without a need for money nor were they unwilling to initiate a second round of financing.

But launching a financing round at this critical juncture would surely invite many investment firms to drive down the price, or simply be scared off by the name AT&T and give up on investing.

Either outcome was not what Dean wanted to see. The recent 40 million dollar valuation from Sequoia Capital was proof enough.

Therefore, Dean needed to bolster Byte Software’s momentum first. This was not only necessary for public relations but also to give potential investors greater confidence.

"Boss, the ’San Francisco Chronicle’ called. They will be here in an hour," Anna knocked on the door to remind Dean of his next schedule.

"OK, I’m aware," Dean stood up, he needed to tidy up his appearance in advance.

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