American History 1988
Chapter 60 - 56 Negotiating Business

Chapter 60: Chapter 56 Negotiating Business

Leaving the coffee shop and heading back to Cleveland State University, Dean was digesting the news in his mind.

The federal ban on online commerce was actually targeted at the NSFnet! Dean had a moment of clarity, but at the same time, he couldn’t help but laugh at himself for almost missing the chance to profit from Price’s List.

But he couldn’t entirely blame himself, who would study the laws concerning the internet other than a lawyer?

Gary was right, Dean wasn’t omnipotent. To ensure a company’s healthy growth, the importance of the team cannot be overlooked.

But now that he knew, it wasn’t too late, in fact, it was just the right time. Because the number of registered users for Price’s List in Cleveland had surged towards thirty thousand, and before this, it had no commercial significance.

And it was precisely because Price’s List was beginning to extend its influence beyond the college town that it attracted the attention of Morgan Tailer Venture Capital.

It seemed coincidental, but everything was interwoven to create an inevitable outcome. Dean was bound to learn of this news, and the timing wouldn’t be too far off.

Initially, he was worried about the operation of Price’s List, as surviving within the confines of the ban was not easy. After having coffee with Gary today, Dean finally felt like he was seeing the light at the end of the tunnel.

The core base of Price’s List was on the commercial internet, and it was not part of the NSFnet system. This meant that if Dean wanted to, Price’s List on the commercial internet could be commercialized immediately.

About this, Dean already had his own ideas forming. Youngstown aside, he could at least give it a try in Cleveland.

Then there was Gary from Morgan Tailer, who offered Dean an investment of $50,000 in support of the operation of Price’s List, in exchange for a 16% stake.

Frankly speaking, the price was not low, and the proportion of equity divided was also reasonable. If it were someone else, they would probably accept without hesitation.

$50,000 was already a substantial amount of money now, and with it, Dean could even buy a former mansion on Euclid Avenue.

And although Gary said it was an investment, the actual expenditure of the money wasn’t important. No financial statements, no account books, no breakdown of costs incurred, this was essentially like giving money to the founder indirectly.

Gary was aware of this too, but it was a common practice in seed funding rounds. Because of the relatively small amount of capital, they wouldn’t fuss over it, considering it a way to improve the founder’s living standards.

But faced with such favorable conditions, Dean still refused. It wasn’t that he rejected venture capital firms, but he believed that Price’s List could fetch a better price.

To develop in the future internet industry, fundraising was inevitable. But before that, if he could make Price’s List profitable first and pioneer commercial websites,

then Dean would have the confidence to ask Morgan Tailer for a higher price later, and they would reassess the value of Price’s List.

Commercial internet, Price’s List, Cleveland... Having gotten off the car, Dean kept pondering these terms on his way to class.

...

"Father, he refused."

At the Morgan Tailer headquarters on Euclid Avenue in the city center, Gary was reporting the results of the afternoon’s meeting to his father, David Morgentaler.

"An 18-year-old student, he turned down a huge sum like $50,000?" David Morgentaler, whose hair had turned gray, looked up in surprise from his desk.

"He wants to talk about it in six months," Gary shrugged, not understanding where Dean got his confidence.

"Six months?" David Morgentaler showed a puzzled look.

"Yes, he always thought his website couldn’t engage in commercial activity. Not until today when I told him that the ban was against ARPAnet and not other private networks," Gary explained his earlier conversation with Dean to his father.

After hearing Gary’s account, David Morgentaler put down his pen and his eyes showed a look of interest. "Interesting kid, do you know where he’s from?"

"A local from Ohio, born in Youngstown." Gary had already investigated all this information.

"OK~ let’s adjust the rating of Price’s List to B+, and we’ll talk about this deal again in six months," David Morgentaler didn’t mind giving Dean some more time.

As an experienced investor, he had the patience to wait for those charismatic founders to make their first transformation.

He could tolerate someone as obsessive as Jobs, let alone a bit of insignificant time.

Hearing his father raise the rating of Price’s List to B+, meaning the first round of funding could increase to $50,000 to $150,000, Gary wasn’t surprised.

After the initial contact with Dean in the afternoon, Gary discovered that the other had a calmness and patience far beyond his peers. Just this alone put him ahead of most programmer founders. Usually, those programmers would be ecstatic upon hearing someone was willing to invest in their websites, readily agreeing and then using the infusion of cash to upgrade their living space or even buy a car.

But Dean didn’t. After weighing the pros and cons, he decided to act immediately to create a higher profile for himself, and Gary admired such a person.

"By the way, Father, before I met him, I accidentally saw a letter from Stanford University addressed to him. If I’m not mistaken, it must be materials related to transferring," Gary recognized the university’s crest at a glance.

"Stanford?" David Morgentaler’s eyes revealed a trace of nostalgia, which was quickly replaced by greater interest, "It seems we might meet him in California, an unexpected ending indeed."

The headquarters of Morgentaler Venture Capital was in Cleveland, and David Morgentaler had lived here for decades, but the company headquarters was about to be relocated to Silicon Valley in California.

The reason for this move was greatly linked to David Morgentaler’s first business trip to California 40 years prior.

Back then, David Morgentaler was a tall, burly young man from the north. He was born in Florida but settled in Ohio.

He graduated from MIT at 21, then instead of accepting an offer from General Electric, he joined the military as a communications technician due to the Pearl Harbor incident, eventually retiring with the rank of major.

In ’49, as David Morgentaler resumed civilian life, he first came to California to promote steam boilers for power generation.

One of the stops in his presentations was the campus of Stanford University, set against the coastal hills some 50 kilometers south of San Francisco.

Under the mild Californian sunshine, David Morgentaler had, for the first time, the thought, "It would be nice to find a job here." Unfortunately, he was disappointed to learn that there were no enterprises in California at the time that could afford to employ him.

Although David Morgentaler eventually returned to Cleveland, this idea was never forgotten. In ’69, twenty years later, he returned to Silicon Valley in Palo Alto and used his own money to set up a fund company.

In this way, David Morgentaler entered the venture capital industry at the "advanced" age of 48 and began his journey through Silicon Valley. He acquired dozens of small companies, and among the early venture investors in Apple was David Morgentaler.

This investment had yielded him millions of US dollars in profits by the end of ’78. It was the largest profit for Morgentaler Venture Capital at the time.

Since then, David Morgentaler’s investments were mainly concentrated in the emerging computer industry, covering the entire industry chain from hardware to software.

However, he had grown up in Cleveland, and many of his connections were there too, so the headquarters of Morgentaler Venture Capital was also established in Cleveland.

But as time passed, David Morgentaler had realized that Cleveland was no longer suitable for the growth of Morgentaler, and the thriving Silicon Valley was the golden zone for the survival of venture capital.

The decision to relocate the headquarters to Silicon Valley had been communicated internally last year. Unexpectedly, before leaving, he discovered the existence of Price’s List.

It was rare to find computer talent in Ohio, and moreover, someone local like himself. David Morgentaler stood by the office window, silently gazing out at Lake Erie in the distance, silently deciding that as long as Dean didn’t perform too poorly, Morgentaler wouldn’t mind offering him some extra help.

...

"Dean, what exactly are we doing coming out here?" Simon was happily coding Tetris in front of his computer when Dean had called him out midway.

"Simon, tell me, are there a lot of empty houses in Cleveland?" Dean asked an unrelated question as he looked at the rather desolate city center.

Empty houses? Simon turned his head and looked around; the best proof was in the old houses with worn exterior walls.

"Of course, in Cleveland..." However, before he could finish his sentence, Simon was filled with a mouthful of cold wind that came whooshing in.

"Cough—cough—, this damn weather..." Simon coughed twice and couldn’t help but curse, it was almost the end of February, yet still so cold.

"The population in the suburbs of Cleveland is larger than in the city center. Because of the freeway, many middle-class families have moved to the suburbs. Now the city center is actually facing hollowing out. Look at those houses," Simon pointed to a nearby building with peeling brown wall paint, "they probably haven’t had owners in a very long time."

"Very good," Dean nodded in satisfaction, as long as there were still people, he wasn’t worried that the houses would be empty.

"By the way, Dean, you still haven’t told me what we’re here to do?" Simon quickened his pace, catching up with Dean in front.

"We’re going to a cheap rental company."

"Another party?" Simon’s eyes brightened.

"No," Dean turned his head with a smile, "We’re going to talk