The waiting room at Semper Investments in Boston hasn’t changed. In winter, heavier coats and some hats are on the racks by the elevator. The supplicant roadshow teams still mill around uncomfortably in the big waiting room where there aren’t enough seats, trying to avoid contact with each other and waiting for their assigned numbers to appear in red lights on the board.

One change is that half the teams have abandoned their pitch books.  Instead, the technically comfortable teams are making their PowerPoint presentations directly on laptops. The hackoff team is technically advanced; their junior banker, Jason Jamfus, carries Larry’s laptop as they wait for their appointment with Tom Chen.

When their number lights up, the salesman leads them towards the appointed room. In the hall going the other way, they pass the team from antihack.

“Good afternoon, Larry,” says antihack CEO George Wrobly. “Tommy and John Signal are in rare form today.” He stretches out his hand to shake.

“Fuck you, George,” says Larry and with a perfect simulation of a smile someone else might have used to say “Good afternoon.” He ignores George’s hand. The bankers nod to each other, and Donna shakes hands with the antihack CFO.  There is no time for anyone to break stride.

Tom Chen is alone in the small conference room.

“Is John Signal going to join us?” the salesman asks while Jason looks for power for the laptop and sets it up for Larry. “He told me he might be here. I think he has a pretty good hackoff position in his fund.”

“I don’t know,” says Tom Chen. “Haven’t seen him today. One of the analysts may be coming down, though. We’ll give them a couple of minutes. I’m mad at you guys,” Chen says to Larry.

“Why?” asks Larry. “We’re up eight x since you bought us.”

“Our rules require that the bankers leave,” says Tom Chen.

“I’m … uh … just setting up the pickle,” says Jason. “Then I’ll be out of here in a flash.”

The “pickle” is a pickle-shaped piece of plastic with buttons that communicates by infrared with a device plugged into the serial port of the laptop. It enables the presenter to advance slides on the computer without having to be able to reach keyboard or mouse. It only works sometimes.

“I can do the pickle,” says Larry.

The bankers and the Barcourt salesman leave.

“Why are you angry with us, Tom?” asks Donna with an ingratiatingly humble smile.

“The stock crashed when you announced the secondary,” says Tom Chen. “You cost me a bundle; you’re not helping this quarter at all.”

“But all stocks fall when the company announces a secondary,” objects Larry gently.

“Antihack has hardly fallen at all,” says Tom Chen. “I think you guys got greedy. I think you could have waited. You said you had enough cash for the company.”

“Well,” says Larry, “the bankers felt it was the right time to go. This is hardly dilutive to you guys who were in at the IPO. If we closed today, new investors would come in at eight times what you paid. The stock that’s coming from the selling stockholders — particularly that coming from the VCs — would have come out eventually anyway. And the company isn’t selling that much, so there is less dilution than there would be if the company were selling more shares.”

“You’re now down to 7.5 times the IPO price,” says Chen looking at his pager. “And we acquired some position after the IPO. Let’s get going; doesn’t look like anyone else is coming to the pitch and I don’t have a lot of time.”

Larry hasn’t been able to get the pickle to work while trying to keep up his end of the debate with Tom Chen. He sticks it in his pocket and seats himself so he can use the keyboard to advance the slides. 

“You see these okay?” he asks Tom Chen.

Outside the conference room window, snow is starting to fall.

“Go,” says Chen.

“You may remember this slide from our first roadshow,” says Larry.

“What is it?” asks Tom Chen.

“Well,” says Larry, forcing his strong speaking voice against Chen’s impassive hostility, “this was the slide we used to show hackoff’s status at the time of the IPO.”

“Why’s everything crossed out?” asks Tom Chen. “It’s hard to read.”

“The bankers gave it the prize for the ugliest slide they’d ever seen,” Donna interjects.

“It is ugly,” says Larry, glaring at Donna. “But I think it makes a point and that’s why I made it. It shows the progress we’ve made in the three quarters that have passed since the IPO. We’ve almost doubled the number of licenses we’ve sold. Being a public company has probably helped sales, actually.”

He pauses briefly, then goes on when there is no response. “There’s been a huge increase in the value of our portfolio — more than three x.  At the end of the fourth quarter it was worth more than 250 million dollars.”

“What’s it worth now?” Tom Chen asks Donna.

“Just a little more than that, we think,” she says. “We don’t value it daily and the market has slowed down a little, as you know.”

“I wouldn’t be surprised if it’s down,” says Chen. “I hold some of those positions myself. The market is nervous that hackoff’ll dump some of those positions and drop them further.”

“Then you should like the secondary,” says Larry reasserting control. “Extra cash for the company means we can hold the portfolio positions longer and that’s good for the whole market.”

“How do you value the companies that haven’t come public yet?” Chen asks Donna.

“We don’t value them ourselves,” she says. “John Braxton at Barcourt does. He assigns them a value based on what he thinks their IPO price’ll be. Since there’s always a pop on going public, we think that’s conservative and—”

“Assuming they do IPOs,” Chen interrupts.

“Right,” says Larry. “We’ve also made the traditional kind of progress. In fact, our revenue run rate for the fourth quarter is almost twice what it was when we saw you last time.”

“How much of that is cash revenue?”

“A little under a third of our revenue is cash, the rest equity,” Donna answers. “You asked that question last time we were here, if I remember correctly. At that point we were just over fifty percent equity and I said we were aiming to get the equity portion up to ninety percent. We’ve made progress on that, too, as you can see.”

“You’re not taking in much cash,” says Tom Chen. “Antihack was just in here. They are bringing in more actual cash revenue.”

“They don’t have any equity portfolio,” says Larry. “No one would give them equity for the crap they’re selling. They—”

“THEY say that no one will give you cash for your product,” says Chen.

“Look,” says Larry. “The only good thing I can say about them is that they know that security is a good market. They copy everything we do and still can’t get it right.”

“They haven’t copied you in accepting equity,” says Tom Chen.

“As I said,” Larry smiles tightly, “they can’t quite get it right. They don’t get the product right either. And, if you look at the fourth bullet on our slide, they aren’t going to be able to deliver what we deliver because we have patents — two new ones issued this year — on the technology our customers need.”

Tom Chen is impassive.

“If they’re doing so well,” Larry goes on “why do you think they have to raise debt as well as equity? They have to do that because they don’t have a portfolio the way we do and they can’t finance their business on the cash they’re bringing in.”

“I don’t like the debt part of their offer,” Tom Chen concedes.

He is largely silent as Larry proceeds through the rest of his presentation and as Donna presents the numbers at the end.

“Tom, we’d like your support for our offer,” says Donna as she wraps up. “I think one element of cash you might want to look at is the cash we’re generating from our equity positions without even trying. We brought in ten mil just last quarter when AOL bought one of our portfolio companies. I can’t give you the number for this quarter but I’d be surprised if it isn’t higher.”

“We already have a big position in hackoff,” says Tom Chen. “Maybe we should lighten up some.”

“I hear you already HAVE lightened up a little,” says Donna. “I know you’re smart. I think you took some profit in the highs before we announced the secondary, maybe you even helped to bring the stock down some but we don’t hold that against you, and now I think you’ll continue to be smart and buy back even more at the lower price.”

Tom Chen smiles for the first time in this meeting. “John Signal asked me to ask you if you have any announcements coming.”

Donna starts to answer but Larry interrupts. “I can’t be specific,” he says, “but big online booksellers are very security-conscious; they have to be with the volume of dollars and credit card transactions they do. And hackers’ve been targeting them.”

“Amazon?” asks Tom Chen.

“Well,” says Larry, “usually we find that we get the number two or three in a category signed up first. Then, after we announce that, it seems we have a better shot at number one.”

“iHudson.com,” says Chen. “They’re running short of cash.”

“As I said, I can’t be specific,” says Larry.

Tom Chen stands to signal the end of the show.

Donna rises with him. “Tom, we’ve done well for you up to now.”

“Except for announcing the secondary.”

“I know you figured out we’d do that,” says Donna. “You’re too smart not to. You’re just giving us a hard time. Fair enough. We’d like your support in the secondary. Your support’ll make us that much stronger and that’ll help your portfolio as well. We’re in this together. And we’ll do well for you going foreward, I promise.”

“I’ll look at it,” says Tom Chen. “Now I’ve really got to go.”

“Tom, thanks for your time,” says Larry. “You ask hard questions, but that’s what Donna and I like. We spend so much time pitching to bozos who have no idea what we’re talking about or even what THEY’RE talking about. I was looking forward to seeing you, and you haven’t disappointed us.”

“I’ll look at it,” says Tom Chen and shakes hands with reasonable warmth, especially Donna’s.

Wet, heavy snow is falling in thick grey globs and sticking to the streets.  The limo is not outside the door but, reached by cell phone, the bankers say that they are orbiting and should be outside the front door in ten minutes.  Larry and Donna wait in the muddy lobby. Larry dials a robot on his cell phone to get the closing prices of stocks he follows. He smiles, then frowns.

“Well, we’re back up,” he says. “Chen had me worried when he said we were at only 7 1/2 times the IPO. We did dip during the day; probably those fucking Barcourt guys asleep at the trading desk again. But we recovered and closed up two and 9/16 in a weak market. But fucking antihack is up three. Can you believe that?”

“You’re watching it too closely,” says Donna. “Nothing we can do about the stock price now.”

“We can get that iHudson announcement out. We can beat the shit out of Barcourt to do their job as market-makers and not let the stock keep getting derailed by accidents. And we gotta do these pitches right. You know after we see someone like Chen who’s already got a huge position, we fuck up the pitch, they could dump it. They’re not gonna buy now when they know they can buy in the secondary but they sure as hell can sell. I was worried, but you pulled that one out. Good job.”

“Thanks,” she says, “but I wouldn’t count on anything yet. Chen’s very nervous.”

“How do you know?”

“His foot jiggles all the time. It didn’t used to do that,” she says.

“Maybe he’s just horny. Maybe that’s why he liked you.”

“No. He’s gay.”

“How do you know?”

“Trust me. I don’t think he’s just nervous about us. He doesn’t seem to have the overall confidence he had before and he seemed distracted. Maybe he’s worried about his whole portfolio. Those guys live and die by their quarterly performance. He’s been living pretty high but he’s got a huge amount of money to manage. Hard to see how he can keep getting the returns he has been but that’s what investors expect. That’s probably why he’ll buy in the secondary, though.”

“Why? He won’t get that high a return from the secondary.”

“If he doesn’t buy, everybody’ll know. We’re a sizable position for him even though we’re a miniscule part of his whole portfolio. So, if he doesn’t buy, we tank. Then he’s got a loss he has to make up for somewhere else. Moreover, if we start to sell portfolio stocks — he was pretty plain about this —  then they go down as well. You know how you used to say we’re ‘e-com squared’ or ‘cubed’ or something?  Now maybe we’re a threat squared because not only can our stock go down, but we can hurt all the stocks in our portfolio and they’re in his portfolio too.”

“That’s not bad,” says Larry. “I don’t mind being a threat squared, so long as he buys. Anyway, you did a good job turning him around. The more I pitched him the more hostile he got. How did you work your charm if he’s gay?”

“Doesn’t stop him from being an egotistical little boy who needs to get told how smart he is,” says Donna. She isn’t smiling.

“Why do you think he lied to us about John Signal? Said he hadn’t seen him all morning. But Wrobly said he was in the antihack meeting.”

“Who knows?” answers Donna.

“Something bothering you?” asks Larry.

“I’ll be glad when we have the secondary sold,” says Donna. “At least we get to spend tonight at home. I’m looking forward to that.”

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