American History 1988
Chapter 173 - 167: Outsmarting Oneself

Chapter 173: Chapter 167: Outsmarting Oneself

"Mayfield transferred our stocks?!" Dean said, listening to the news on the phone with a look of disbelief.

"Yes, they reached a preliminary agreement on the very first day you went to Los Angeles." David Morgentaler could barely suppress his laughter.

The timing was impeccable; Dean didn’t know whether to laugh or be angry.

"David, while I’m angry that Mayfield privately sold the shares,

I’m also curious, didn’t they watch that talk show, or the Los Angeles Times the next day?"

This wasn’t Dean being narcissistic, but under such a huge reaction, the normal reaction would be to wait a few days first.

"Who knows?" David Morgentaler shrugged on the other end of the phone, "Maybe they heard something? But I bet Glenn is regretting it now, hahaha~"

Every time David Morgentaler thought of Glenn Miller’s smug strategy and then looked at the support Byte Company was receiving from the public and politicians, he couldn’t help but want to burst into laughter.

In the final moments before victory, Mayfield chose to surrender.

Now, all over Sand Hill Road, Glenn Miller’s shrewd maneuvers were spreading, and he was becoming the laughingstock of the venture capital circle.

"OK~" Dean shrugged helplessly, "Mayfield is not our partner anymore."

"Of course," David Morgentaler laughed even more joyously, knowing that Dean’s statement meant that they would no longer accept investments from Mayfield.

As for whether it was Byte Software that would no longer be open to Mayfield, or that any of Dean’s future creative endeavors would no longer consider them, David didn’t care.

He was even looking forward to the latter, having worked with Dean for so long.

David wouldn’t be surprised by any other creative ideas Dean might come up with, considering they already had Price’s List, and Byte Company as prior successes.

"Thanks for the information, David, but I still have to talk to Durell," Dean were preparing for a trip to San Francisco.

"I won’t get involved in your affairs, but this is a critical time for Byte Company. We should be united, Dean," David said, worried that Dean might act impulsively, and at the end, he didn’t forget to offer a word of advice.

"I’ll consider it carefully." Dean hung up the phone, stood up, and left the office, heading for San Francisco.

Honestly, Mayfield’s cunning maneuver was both infuriating and amusing to him.

Were it not for the call from David Morgentaler, he wouldn’t have known these details.

Though it was Mayfield’s freedom to sell the stocks, the bare minimum would have been to inform the board members in advance.

But Dean hadn’t received any such news, and he also couldn’t say that Glenn Miller had violated the contract.

Because Mayfield’s current stake in Byte Company was 4%, which conveniently was just below the threshold for a mandatory disclosure.

Moreover, according to the original financing agreement, if an investor wanted to exit midway, then the shares should be offered first to other internal investors who were interested.

And the person who took over Mayfield’s 4% stake was KeyPoint Ventures, also a board member.

See, Mayfield’s operation was rational and didn’t violate any agreement.

The only thing that was not proper was not holding a board meeting to inquire about the intentions of other investors and to provide an explanation for the exit.

It seems that Byte Company’s financing contract needs to be supplemented further; these loopholes must be closed as soon as they are discovered.

From David’s call, Dean also learned the details of the transaction between Mayfield and KeyPoint Ventures.

Mayfield’s 4% equity in Byte Company translated to about 343,000 shares, priced at roughly 8 US dollars per share.

Taking advantage of Dean’s absence from Silicon Valley, Glenn Miller actively approached Durell. Glenn was very aware that KeyPoint Ventures had always wanted to acquire more shares of Byte Company.

During the second round of financing, KeyPoint Ventures even competed with Sequoia Capital for a share of the funding.

Although later it was not clear what agreement they reached, Sequoia Capital became the lead investor in Byte Company.

But according to Glenn Miller’s estimates, Sequoia Capital was unlikely to pay a premium for his shares, as Valentine was a very cautious investor.

On the other hand, KeyPoint Ventures, which only obtained a 5% investment share, might be possible, because Durell had previously shown a strong interest in it.

And unlike Valentine, Durell was an improvisational investor. So-called improvisation, at times, can also be interpreted as impulsive and emotionally driven.

To sell his shares at a good price, such an investor was the best sales target.

As it turned out, Glenn’s hunch was right, and he almost effortlessly convinced Durell to take over all of Mayfield’s shares at a price of 12 US dollars per share.

On the very day Dean appeared on "The Late Show with David," Mayfield and KeyPoint Ventures completed the signing of the agreement.

The total amount of the transaction was about 4.1 million dollars, and after the completion of the transfer, KeyPoint Ventures’ stake in Byte Company rose to 9%.

They became the venture capital firm with the second-highest stake in Byte Company after Sequoia Capital.

And Mayfield, who jumped ship midway, was also well satisfied with the transaction.

The initial investment of 1 million dollars was now turned around for 4.1 million dollars. In just a few months, he netted a profit of 3.1 million dollars, a return on investment of over 300%.

Glenn Miller, who led this investment at Mayfield, also got his share of the distribution, 600,000 US dollars.

Though it was a bit less than the 800,000 US dollars he had initially hoped for, it was still a lucrative return.

A triumphant Glenn reserved a villa in San Francisco almost immediately upon receiving the money.

He had long been thinking about getting himself a new house, and Durell’s generosity undoubtedly helped him fulfill that wish.

But his good mood didn’t last two days before he was called into the office by Wally Davis, a senior partner at Mayfield.

"Glenn, do you have the habit of watching talk shows?"

"No, those hosts seem too stupid, and the questions they ask are ridiculous."

Unaware of the issue, Glenn viciously mocked talk shows without a second thought.

He had recently made a bit of a name for himself within Mayfield, thanks to the investment return of 3 million dollars.

As a result, not only were the backing partners satisfied with him, but Wally Davis had also promised him greater investment authority.

The dual harvest of career and wealth had Glenn slightly smug, and he even forgot that he was in his Boss’s office.

"What about the newspapers?" Wally Davis, with a calm face, handed him a stack of neatly arranged newspapers from his desk.

Finally sensing something was amiss, Glenn wiped the smile off his face and carefully took the newspapers from Wally Davis’s hands, "Boss, what happened?"

"You better take a look at these reports first. Also, I’m curious what you’ve been up to lately?

"You don’t care at all about such an important paper as the Los Angeles Times? That’s not how a qualified investor should behave.

Remember one of the investment principles I’ve always emphasized? News is always the primary source of information for investments!"

As Wally Davis’s tone became increasingly stern, Glenn’s face grew paler.

Especially with each report he read, Glenn’s lips quivered uncontrollably.

"Boss..." Glenn looked so shaky he might faint at any moment.

"Now! Call Dean!" Wally Davis ordered, tapping his desk with his finger.

"But... we’ve already completed the settlement with KeyPoint Ventures..." Glenn stammered in explanation.

"Idiot! You’re calling now to apologize to Dean!

We’ve already missed out on tens of millions of dollars in returns, but I don’t want to miss out on the third round! Or the IPO behind it!

Now! Make that call right in front of me!"

"OK! OK!" Glenn hastily picked up the phone on the desk and started dialing, but the answer from the other side chilled his heart.

"Boss, he’s not in..."

"Then call back later, but you must make this call today!"

Each time Wally Davis saw the reports about Dean and Byte Company, he felt like every word on those pages was mocking Mayfield.

They thought they were smart to jump ship midway, only to be slapped in the face by all the newspapers thereafter.

Who would have thought Dean’s appearance on a talk show would generate such a huge response? Now even a fool would understand, Byte Company’s software is going to be a big hit.

million dollars, a 300% return rate, ah?

Wally Davis conservatively estimated that the 4% share they had is now worth close to ten million dollars!

A one million dollar investment, a ten million dollar valuation, Mayfield missed out on three rounds of a 300% return rate!

Adjusting his collar, Wally Davis tried to calm his heaving chest.

"Glenn, regarding the rumor about the AT&T case and Judge Swase from the Northern District Court, who tipped you off?"

Glenn was startled, "A friend of mine, he used to work at Sand Hill Road for a while."

It was because of this rumor that Glenn had considered selling Byte Company’s shares.

Come on, this was the presiding judge of the lawsuit. If there was an invisible relationship between him and AT&T, Byte Company’s chances of winning could be speculated.

So, Glenn took advantage of the founder Dean’s absence to quietly find himself a "buyer."

Hearing Glenn’s explanation, Wally Davis’s gaze flickered. "Are you sure your friend disclosed the message unintentionally, not premeditatedly?"

Glenn was dumbfounded, "He works at MCI, there’s no reason for him to be involved in this..."

...

San Francisco, Pacific Heights, a renowned wealthy area on the West Coast.

A silver Cadillac raced from the distant highway, rapidly approaching. While Dean turned his head to look for the destination, he surveyed the villas before him.

Mother F*cker, worthy of a wealthy area, the surroundings are unbelievably clean.

You can’t even see a homeless person or trash, with police patrolling the streets about every 100 meters or so.

Just a short distance to the right side is the Gold Coast, Dean could see the glittering sea and groups of vacationers on the beach without even stepping out of his car.

There’s no denying the scenery here is even better than the Inner Bay, truly a sea-view villa.

As Dean was trying to discern the address, Durell, standing on a balcony of the second floor not far away, had already seen him.