American History 1988
Chapter 200 - 194: Dividends

Chapter 200: Chapter 194: Dividends

Everyone seated in the conference room held stock options in Byte Company.

For instance, executives like Jimmy and Joe held stock options that varied from 1% to 2%.

With a profit of 30 million dollars, they would receive a share ranging from 300,000 to 600,000 dollars if it were distributed according to the shareholding ratio.

Damn it! Factoring in their own salaries and various bonuses, Jimmy’s annual income even reached 1 million dollars!

It was an astounding figure, one that most corporate executives in Silicon Valley couldn’t even dream of earning.

Jimmy had worked an average of 60 to 80 hours per week throughout the year, and now his efforts had paid off; a million dollars was his due.

Of course, if we’re talking about who got the most, it would certainly be the few directors present.

Marcus and David Fero now each held 5.6% of Byte Company’s shares, and this time they could pocket a dividend of 1.68 million dollars each.

Well, up until now, both were still dizzy with their fortune. Byte Company hadn’t even gone public, and they’d already become millionaires.

Morgan Tailer owned 8% of Byte’s shares and they would take back a dividend of 2.4 million dollars.

Remember the amount they invested in the first funding round? 10%, 2 million dollars.

Yes, Morgan Tailer had already retrieved all their initial investment, with even a little left over.

This meant that all future income from Byte would be pure profit!

What mattered most was they hadn’t IPO’d yet, and David Morgentaler was now extremely pleased with himself.

He had an intuition that Byte would be the most brilliant achievement of his investment career.

Unlike David Morgentaler’s satisfaction, Durell felt a tinge of regret in his heart.

If Dean had been bolder and borrowed a large loan from the bank to accumulate 100 million dollars for dividends, that would have been perfect.

But a dividend of 2.7 million dollars wasn’t too shabby either; at least KeyPoint Ventures had already recovered a third of their initial 9.1 million dollar investment.

The aggressive Durell never backed down. He would keep doubling down his chips until he hit the grand slam.

Valentine, who appeared rugged, actually had a cool head on his shoulders.

He would weigh each of his investments carefully and never let impulse cloud his judgment.

Perhaps because of a similar background with Dean, coming from a working-class family, he carried a subtle sense of "loyalty."

He enjoyed taking risks as much as he enjoyed wealth and had actively requested a 100% dividend payout ratio.

But faced with Durell’s sweeping approach to profit-sharing, he didn’t hesitate to stand up for Dean.

Although financial statements could cover everything, this posed some risk to Byte’s IPO and Dean’s personal reputation.

Valentine was content with taking only what he deserved, 4.5 million dollars; he had no complaints.

As for Dean... well, just this one dividend round, and 13 million dollars were pocketed by him alone.

As Byte’s largest shareholder and its most deserving soul, this was his rightful share.

Even though there was a 20% capital gains tax, it was still a whopping fortune.

After the destination of the 30 million dollars was decided, everyone in the conference room was smiling from ear to ear.

This was their best Christmas present—look, Jimmy was smiling even more than a child.

The champagne was right there; it would be such a shame not to celebrate this occasion.

"So gentlemen, should we now discuss next year’s global strategy?"

It was clear what Dean meant: where would the financing for the global strategy come from?

"We need forty million dollars, don’t we?" David Morgentaler looked at Jimmy, who nodded eagerly in response.

"That’s too easy," Durell wasn’t worried at all, "Everyone wants in on the deal."

"That’s right," Valentine nodded in agreement, "We don’t need the entire Silicon Valley; Sand Hill Road alone could raise that money."

"Wow," Dean said with a laugh, spreading his hands, "Has Byte Company become a star already?"

"Actually, it’s even more exaggerated than that," David Morgentaler winked at him, "What we need to consider now is setting a good valuation for Byte’s next funding round."

Yes, David Morgentaler believed Byte now had the right to set its price.

In the previous two funding rounds, it was the venture capitalists who made the first offer, and then Byte would negotiate on that basis.

But now Byte had the right to take the initiative and even the privilege of choosing the venture capitalists because Byte was not short on buyers.

"I suggest using the financial need of 40 million dollars as a base for the valuation."

Dean didn’t want too much dilution of the shares; Byte had already gained a solid footing.

"I agree," Valentine and Durell had no objections, none wanted their holdings to decrease.

"What about the percentage of equity released in the third round of funding?" David Morgentaler looked around; this was the crucial data.

"Hold on," Marcus, now accustomed to his status as a millionaire, raised his hand to ask a question.

"With just forty million dollars, why don’t we cough up the money ourselves?

I mean, wait a few months until Byte has more sales, then we can use that to execute the global strategy."

"Kid, I like your stupid question," Valentine, with a cigar wedged between his fingers, tapped him lightly.

"First of all, like we just discussed. You have to learn to use other people’s money to do business, otherwise, you’ll never get rich.

Secondly, the last round of financing before an IPO is a huge favor trade.

Usually, when this round takes place, it’s an open secret that the company’s IPO plans are almost public knowledge.

So long as the company doesn’t perform too poorly, everyone knows it’s an opportunity to make a fortune.

Just like now, everyone knows Byte is going public, and everyone knows this is the last chance to get on board.

So various people will come knocking on the door, some of which are hard to refuse.

Since that’s the case, why not treat it like a transaction for maintaining networking relations?

In every deal of ours, personal feelings are involved; this time we use favors, the next time we repay them.

That’s how the world works, kid.

As long as there are enough stakeholders, Byte Company’s IPO will be successful."

Valentine’s teachings made Marcus’s face change color over and over; he found himself like a naive young fool who knew nothing.

"You’ve learned one of the essences of business," David Morgentaler said with a smile as he patted Marcus on the shoulder.

The phrase in the newspaper was right, Dean indeed was a dual genius in entrepreneurship and business.

Look, he didn’t ask such naive questions because he had already started trading favors.

"How about 10%?" While Marcus was digesting the rules of the game, Dean threw out a number.

"Somewhat risky, but worth a try," David Morgentaler gave his opinion.

A 10% release of equity meant that Dean had valued Byte Company at 400 million dollars.

It was a bold decision, just compare with Oracle and Microsoft to know.

Both of these companies are leaders in the software industry, yet their valuations at the time of their IPOs were just over 200 million dollars.

Of course, that was an old story from the ’80s, and at that time neither had yet broken the 100 million dollars sales threshold.

However, taking Oracle’s financial report for this year as an example, its sales approached 900 million dollars, but its market cap was only 32.7 billion dollars.

Byte Company’s sales of 157 million dollars in comparison, a valuation of 400 million dollars was indeed high.

After all, investment institutions are looking for more returns; if it’s on par with the market, where would they make their money?

But Oracle’s market cap had just gone through a steep decline because its profit margin fell short of expectations, barely reaching around 14%.

Taking all these factors into account, a valuation of 400 million dollars for Byte Software was barely defensible.

At least a 20% high profit margin was enough to convince those investment institutions that there was a profit to be made.

"I think 400 million dollars is quite reasonable," Durell’s eyes filled with fervor again, he felt the valuation could be even higher.

Unfortunately, KeyPoint Ventures had too little say, and Dean had just done him a favor, so he could only suppress the impulse in his heart.

"We shouldn’t lack buyers," Valentine was also optimistic about this valuation.

The Teams 3.0 version hadn’t officially hit the market yet, but they had already received many orders at the West Coast Computer Festival.

Releasing this positive news, Byte Company was sure to gain more favor.

"Then let’s aim for that," Dean said relaxedly, dropping the material in his hand, "We’ll move after Christmas.

Of course, to make the financing plan smoother, IPO preparations can also start."

"Don’t bother me before my holiday is over, I bought a whole cellar of red wine."

Valentine rushed out of the meeting room, venture capitalists also have to enjoy life.

Jimmy and Marcus and others were eagerly looking outside the window, as the Christmas atmosphere had already spread into the meeting room.

Well, it seems everyone is eager to welcome the holiday.

Dean waved at them, "Your bonuses will be in your account before Christmas, now take some time to relax."

"Oh, Boss, you are the most charismatic leader in my career..."

"Do you know the company’s confidentiality requirements?"

"Of course!"

"Then you may leave."

Dean gestured, chasing all these annoying flies out of the meeting room.

This year for Christmas, he had no plans to return to Ohio; he had settled in California.

Of course, Byte Company was at a critical time, and Dean needed to keep an eye on its situation.

"Dean, if it’s convenient for you during Christmas, you can come to my place.

Bonnie has been wanting to meet you for a while, and so has Gary, he wants to invite you to his party," David Morgentaler came over and extended an invitation to Dean, both hailing from Ohio.

And both had close ties to Cleveland; David always regarded Dean as a fellow townsman.

"Thank you, Mr. Morgentaler, I will come," Dean didn’t refuse such an invitation.

America is also a society of personal relationships; many connections need to be carefully maintained.

"I heard that you’ve been dating someone recently?" David Morgentaler suddenly started gossiping about Dean’s private life.

Dean shrugged, "I guess the newspapers have already dissected our relationship several times over."

"Haha~" David Morgentaler laughed, "Dean, you are a young man, and it’s perfectly normal."

Since the West Coast Computer Festival, now the whole of Silicon Valley knew Dean got himself a Hollywood actress.

Because of it, Miranda hadn’t taken his calls for several days.

Tsk, Dean might have to go to Washington again.

But before that, first a perfect Christmas.

After that, the IPO journey for Byte Company can begin.

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