American History 1988
Chapter 209 - 203 Advancing Globally

Chapter 209: Chapter 203 Advancing Globally

Byte Company’s third round of financing valued the company at 400 million US Dollars, releasing 10% of its equity.

The previous total share capital of 8.57 million, after a 1:5 stock split, inflated to 42.85 million shares, with each share priced at 9.3 US Dollars.

After the new round of stock dilution, Dean’s shareholding ratio dropped to 40.32%, holding 17.27 million shares.

Sequoia Capital’s diluted stake was 13.5%, KeyPoint Ventures was 8.1%, and Morgan Tailer was left with 6.4%.

Apart from founder Dean, these three venture capital firms were the main shareholders of Byte Company.

Another co-founder, Marcus, now had 5.04% of the shares remaining, worth almost twenty million US Dollars.

David Fero, having sold stock worth one million US Dollars at 9.3 US Dollars per share, now had a remaining stake of 4.79%.

The employee stock option pool correspondingly shrunk to 10.8%, and the 10% equity released through financing was divided among more than twenty institutions.

Axel, who had reached a private agreement with Dean, took away a 2% investment share, making it the biggest contribution in this round of financing.

The rest was largely divided by influential personal relationships, such as the 1% snatched by Arthur Lock, who had cunningly wrangled it from Dick at Key Investments.

Anthony Kennedy, who had a private meeting with Dean at the PBK welcome event, and the generals who had called him, these individual investors were part of the second tier.

As for Dean’s friends, such as Jim Clark of Silicon Graphics, and Exxon of Oracle, among others, also bought some shares in a personal capacity.

Then there were those close to him, like good old Peter, Uncle Frank’s family, Uncle Bill’s family.

And Susie, Miranda, Jennifer Connolly, Dean would also set some aside for them.

But the shares given to them would not be priced at 9.3 US Dollars, as people really close to him would of course have a special discount.

Dean planned to place them in the employee stock option pool, to buy some employee shares at an exceptionally favorable price.

Anyway, there were still many unallocated shares in the option pool at present, which could be put to good use.

As for new employees joining in the future and encountering the shrinkage of the option pool.

Simple, after the IPO, Byte Company could repurchase some of the floating shares from the stock market to replenish the option pool.

In plain terms, it meant taking care of those close to him, and Byte Company would foot the bill.

This was just the most basic play in the capital game, and Dean was merely testing the waters.

As the board meeting convened and concluded, the third round of financing was also officially completed with the signing of contracts, witnessed by many shareholders.

"OK, welcome everyone to Byte Company," Dean said with brimming confidence as he surveyed the packed meeting room.

The once seven board seats had now expanded to fifteen.

The twenty institutions newly joined in the third round did not all enter the board; instead, they selected a few representatives.

Of course, a person from Axel, without question, assumed one of the board seats.

Arthur Lock, whom Dick Kramlich loathed to the bone, now sat leisurely in the meeting room.

"As I said before, the purpose of the third round of financing and Byte Company’s strategy this year is to enter the global market!"

With a nod from Dean, Anna distributed the materials that had been prepared beforehand.

"Considering the varying degrees of computer and network technology development around the world, our first market outside North America will be Europe.

They have a backbone network similar to the NSFnet, and the computer penetration rate is second only to America.

Therefore, after comprehensive consideration, Europe is the best choice; we have done preliminary research, and there isn’t even a true instant messaging software there."

Most people in the meeting had no objections to Dean’s strategic proposition.

In their view, Europe’s computer development was behind North America.

Especially in the business field, America’s software holds a dominant position.

Europe does not have its own commercial operating systems; Microsoft is their only choice.

The same goes for electronic spreadsheets, which use Lotus software, and the data system, which uses Oracle.

Therefore, if Byte focuses on office communication software, Teams is poised to naturally dominate the European market.

"Do we have a specific expansion plan?" an unnamed director asked.

"As written in the plan everyone has, the British Isles, France, and Germany are the first stops on our expansion.

Then, we will radiate to the surrounding regions from these strongholds, but the current problem is that we lack a strong leader."

Although Byte Company had grown rapidly, it also had a weakness—that its foundations were not deep.

When the company needed a senior executive to venture into the European market alone, it found no suitable candidates.

"So, gentlemen, do you have any suitable candidates to recommend?"

Dean knew that these venture capitalists had extensive networks and could sometimes act as headhunters.

The directors looked at each other and searched their minds for possible candidates.

But it was not an easy task without relevant global market experience to handle the job.

"I have a candidate!" Valentine raised his hand at that moment.

"I had planned to place him as Cisco’s vice president, but now perhaps Byte Company needs him more."

"So who is he?" Durell had no interest in Valentine’s riddle-like answers; he wanted a direct response.

"John Chambers, an outstanding management talent."

Durell had heard of him. Grove had discussed him with Durell back at Intel, Chambers was one of the candidates Intel had planned to poach from IBM at the time.

"I remember he served as a Sales Director at IBM, so he’s a former colleague of yours?"

"Mm-hm," Valentine said, lifting his chin with pride, "but that’s ancient history. Before that, Chambers was in charge of sales in the Asia-Pacific region at Wang Laboratories, and later became the vice president.

He has an almost obsessive attention to pursuing customers, I think Chambers is a very suitable candidate."

With experience in market development and senior management, he was a good choice.

"Very well," Dean turned his head to look at the other directors, "so when can we find the time to meet with him?"

"I have no objections," in matters of evaluating people, Durell trusted Valentine’s intuition.

"Neither do I." No other director expressed opposition.

"Then it’s settled," Dean said, moving to the next item cheerfully, "Another important matter this year, besides global strategy, is the IPO."

At the mention of this topic, everyone perked up. Wasn’t this the very reason they were sitting here?

"Before the IPO, we need to present an impressive report card, and we also need to secure strong and reliable support.

In other words, well-known underwriters; we need their clout to sell Byte Company’s stocks."

Byte Company, if going public, needed to undertake a series of preparations beforehand.

The underwriter was an absolutely crucial part; they would not only bring clients to Byte Company but would also participate in drafting the prospectus.

So, if they wanted to list in the second half of the year, now they needed to find the right help for themselves.

"I know people at Morgan Stanley, maybe it’s time to give them a call?" Arthur Lock, who had been sitting in the corner, finally found a chance to speak up.

Having been away from Silicon Valley for too long, he urgently needed to make his presence felt.

Byte Company’s IPO was seen by Arthur Lock as the perfect opportunity to regain the glory of his venture capital career.

"Good," Dean’s eyes lit up at the mention of a heavyweight investment bank. "If we have the assistance from Morgan Stanley, our chances of a successful IPO just increased.

I think April or May is a good time, what do you think, Mr. Lock?"

"Leave it to me," Lock said confidently, taking on the task.

During a vacation in Florida, people from Morgan Stanley had been taking the initiative to inquire about Byte Company.

"I’ll try Solomon Brothers," Valentine said, although he disliked the East Coast’s way of doing things, nothing was more important than the IPO at the moment.

"I’ll check with Deutsche Bank and Merrill Lynch," Durell also had his connections, and now was the time to use them.

"Great, fellas, let’s get moving now!" Dean clapped his hands to signal everyone to take action.

That’s why Byte Company had taken investments from so many venture capitalists—look, now was the time to use their networks.

The board meeting had just ended, and Dean was preparing to call someone from MCI, but David Morgentaler sought him out alone.

"Dean, a lot of old friends have been finding me lately," David Morgentaler said after closing the office door, finally revealing the purpose of his visit.

Dean, who was holding a newspaper, was taken aback, "Mr. Morgentaler, the third round of Byte Company’s fundraising has ended."

"No, it’s not about business," David Morgentaler pointed to the newspaper in his hand, "it’s about this."

Dean looked down, [The ’92 election, George is going to lose his throne in the White House!]

Politics? A flash of realization crossed Dean’s eyes.

Apart from entertainment stars, politics was a topic that the people of America often relished discussing.

The battle and mutual attacks between the two parties never stopped, each controlling media outlets to counter the other.

However, Dean hadn’t expected someone to seek him out so soon.

He was just under 21 years old, and Byte Company had not gone public yet. The influence they could wield was still lacking in many aspects.

The most crucial point was that Silicon Valley had always been light on politics and heavy on business. Everyone lacked enthusiasm for politics, and it was rarely a topic of discussion.

Yet even in such an environment, they could not escape the infiltration of political power.

"Alright," Dean sighed, putting down the newspaper, "who came looking, and what for?"

"The Brown Family," David Morgentaler said, lighting his pipe, "Jerry Brown."

"That former governor?" Dean had some recollection of the name; he seemed to have served as the Governor of California.

"Correct, served two terms consecutively from 1975 to 1983. Pat Brown is his father, also a former Governor of California."

"Wow, a political dynasty," Dean’s tone was ambiguous, neither sarcastic nor admiring.

Bullshit democracy. America was still playing the game of elitist succession.

If common people couldn’t make a class leap, they would likely remain at the bottom of society generation after generation.

Just like the people in the small town of Youngstown, who could never leave it and were forever relegated to being blue-collar workers.

He had seen through everything, which was why he longed to belong to that 0.1%, to enjoy genuine democracy and freedom.

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