American History 1988
Chapter 242 - 235 Expecting Tomorrow

Chapter 242: Chapter 235 Expecting Tomorrow

With the public offering of Byte Company’s prospectus, key figures such as stock pricing, issued shares, and total equity have been essentially determined.

Valued at 1.667 billion US dollars, the shares were priced at 18 US dollars each, with a total of 92.6 million shares.

Compared to the 42.85 million shares during the third round of financing, a 1:2 stock split was performed again for this IPO.

The newly issued 7.28 million shares for the public listing accounted for approximately 8% of the total shares, with the possibility of additional issuance depending on market conditions.

After the initial dilution, Dean’s stake dropped to 37.09%, holding about 34.34 million shares.

This definitely ranks as one of the higher founder ownership percentages among listed companies, but it is still less than Gates’s.

When Microsoft went public in 1986, Bill Gates held a 45% stake, and the other co-founder Allen owned 25%.

Look, these two founders held a combined 70% of Microsoft’s shares, which is no wonder Microsoft essentially operated as Gates’s word being law.

The publicly traded shares and those held by investment institutions together made up less than 30%, making their presence almost negligible.

Although Gates devised a divestiture plan for himself, cashing out parts of his Microsoft shares annually.

But this plan spanned over decades, so he unquestionably would dominate Microsoft for a very long time.

As a founder starting out young, how did Gates manage to keep his shares in the midst of many investment institutions circling around?

Of course, we cannot fail to mention his banker grandfather, his lawyer father, and his mother, who was an executive at IBM.

Forget about that self-made story—Dean Price is the truly self-made one!

That he could emerge from Ohio and lead Byte Company to go public, there’s no disputing he’s an exemplary American Dream.

By virtue of his series of far-sighted strategies, Dean successfully juggled numerous investment institutions and secured his position as the primary shareholder.

As the second-largest shareholder, Sequoia Capital now holds 12.42% of Byte Company.

Without any surprises, Valentine is expected to cash out a bit by selling some shares after the official listing goes live.

He is of an impatient nature, having done such things before.

Once, right before Apple’s listing, Valentine sold his shares prematurely...

It was a foul move, although it seemed he earned 13 times profit for Sequoia Capital at the time.

Yet, had he waited just a few more days for Apple to actually go public, that return would’ve multiplied to more than 26 times.

As someone born in the 1930s, although Valentine was involved in venture capital, he experienced the Great Depression and grew up under the shadow of war.

They lived continually in fear of losing everything, so when it came to venture capital, he was still somewhat conservative in his approach.

John Durell, on the other hand, was quite the opposite, bold and aggressive with the resolve to put all his eggs in one basket.

Provided the investors behind KeyPoint Ventures are not excessively forceful, the probability is high that he will retain around 7.5% of Byte Company’s shares.

Only if the stock price is sufficiently high to satisfy his expectations would he consider cashing out.

After this round of dilution, Morgan Tailer’s shareholdings dropped to 5.9%.

Marcus is left with 4.6%, David Fero with 4.4%, and the employee stock option pool is rounded out with just about 10%.

As for the 10% equity released in the last third-round financing, it’s too fragmented to identify specific shareholders.

These are the current main shareholder proportions of Byte Company; with the IPO happening in a few days, a considerable portion may choose to cash out.

Especially the investors who took the last chance during the third round of financing, their aim is very clear—to make a quick buck off the profits.

The so-called quick buck refers to the income earned from selling shares on the very first day of a new listing to capitalize on the price difference.

In the American stock market, there are particularly many such investors who specialize in profiting from new listings.

They even have a special nickname, "rolling donkeys," which in earlier times also referred to those who charged exorbitant interest on loans.

It can be said that the listing of Byte Company is a celebration for many people.

The publicly listed company raises funds, underwriters reap significant profits, and the primary market anticipates skimming the wallets of individual investors.

Speculators are ready to move, always prepared to make a quick trade on the shares.

Even ordinary employees of Byte Company have been distracted from work lately, as they too have purchased a substantial number of employee stocks.

According to the board’s resolution, any employee of Byte Company could purchase up to 5000 employee shares.

Offered far below the issuing price of 18 US dollars, Byte Company’s employees only needed to pay 5 dollars per share as part of a benefits policy.

This meant that as long as Byte Company’s shares successfully went public, and the price didn’t fall below the issuing price of 18 dollars.

Earning thrice the investment was almost a certainty for everyone.

Any employee at Byte Company knew what to choose—no one would pass up this opportunity for free money.

Many even borrowed money from friends and family because they couldn’t gather the required 25,000 US dollars to purchase the full 5000 shares.

As for these benefit shares, none of the major shareholders like Dean objected.

Because these shares were originally part of the employee stock options pool, isolated as a separate entity during the first round of financing.

Byte Company now has less than two thousand employees, even if everyone purchased the full 5000 shares, there would still be a slight surplus in the options pool.

Of course, the actual situation is that very few can gather 25,000 US dollars, as Americans are accustomed to spending in advance.

The Securities Regulatory Commission has no restrictions on employee shares, which means many employees will cash out their shares after Byte Company goes public.

To maintain the size of the option pool, Byte Company will periodically buy back shares from the market to replenish the option pool.

Even for employees who plan to hold on to their shares in the long term, Byte Company will force a cash-out every four years.

This is to ensure there are enough incentive shares left for new employees, otherwise, how would Byte Company attract talent?

Of course, these are concerns for later, as going public is everything right now.

In order to cheer on their own company, two to three hundred employees from Byte Company formed a group and headed to New York.

Their expenses would be covered by the company, and in exchange, they needed to help arrange the venue at Nasdaq.

As mentioned before, as one of the largest IPOs in recent years, Nasdaq allowed Byte Company to set up their own themed event there.

This inspiring publicity is significant not only for Byte Company but also for the current downward economy.

As its founder, Dean arrived at the Nasdaq stock exchange on the eve of the IPO.

"Look at these guys, all brimming with energy."

Valentine, who also couldn’t sleep, had lost count of how many sheep he had counted over the past few nights.

"Tomorrow belongs to Byte Company, to you and me, and of course to them as well."

Some were hanging banners, others were pasting posters, and seeing the bustling scene all around, Dean was also filled with excitement.

"You’re right, tomorrow belongs to Byte Company," Valentine greeted everyone he passed with enthusiasm.

He loved such scenes, which reminded him of his experiences as a sailor.

Back then, he was young, and just like this, he and his teammates would struggle over giant water balloons for a 5-dollar salary.

"By the way, Dean, have you heard? Microsoft is in touch with RAS CALL."

Although Valentine didn’t want to bring up such disheartening matters, he cared too much about Byte Company’s going public.

Clearly, he didn’t see it as good news.

If it were just RAS CALL, maybe he would not have cared about the small company either, just like Dean.

But if they got involved with Microsoft, that was a completely different story.

The antics of Microsoft were well-known throughout Silicon Valley.

It would definitely acquire that small company and then develop its own instant messaging software.

They’ve done it many times, and to this day, Apple and MITS are still litigating against it.

But Valentine also had to admit, as much as Microsoft was despised in Silicon Valley, it was still a powerful competitor.

"I’m not surprised by Gates’ actions, as long as we launch Worktitle before Microsoft does, they stand no chance."

Dean knew Microsoft would definitely enter the instant messaging software market, as evidenced by their previous attempt to acquire Byte Company.

But it was too late, Byte Company was about to complete its office software ecosystem.

If there were only Teams, perhaps he would indeed be worried.

But with Worktitle, Teams was no longer just an instant messaging application.

The two could form an ecosystem, their combined competitive strength greater than any other potential competitor on the market.

And as Byte Company continued to release more software like this in the future, its position in the office domain would be unshakable, even by Microsoft.

Could Microsoft now complete its instant messaging software development before Byte Company released Worktitle?

That seemed unlikely, even if they took RAS CALL under their wing right now.

Because Byte Company planned to launch this much-anticipated project collaboration management software after the IPO quiet period was over.

At this moment, the release was less than a month away, but Microsoft was still negotiating with RAS CALL.

That was where Dean’s confidence lay—he respected Microsoft but would not sell himself short.

RAS CALL had contacted Byte Company as well, but their improvised offer immediately disinterested Dean.

To put it politely, that was a quote, but to Dean, it seemed more like extortion.

One hundred million dollars? Bullshit! Dean wouldn’t even have dared to quote such a figure to investors during Byte Company’s first round of financing.

What gave them the right? The crap-like RAS CALL, or the mention of Microsoft behind the scenes?

With their blatantly extortionate demeanor, Dean had no interest in negotiating with them.

"Well, let’s hope everything goes as you’ve analyzed," Valentine said quietly, drawing a cross on his chest.

Since he had suffered abuse from a nun in his childhood, he had seldom prayed to God.

All had happened under God’s watchful eye, but now Valentine found himself making a gesture he had nearly forgotten.

"Relax, Valentine, maybe something good will happen, like their negotiation falling apart."

Dean said jokingly, his anticipation set solely on tomorrow.

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