hackoff.com: Chapter 2 - The Beauty Contest, February 1999

E-mail, February 26, 1999

From: Donna Langhorne [mailto: donnal@hackoff.com]

Sent: Friday, February 26, 1999 8:30 AM

To: Joseph Windaw; Franklin Adams

CC: Larry Lazard

Subject: Harvey Maklin

Joe, Frank:

Got a favor to ask. Larry and I like John Braxton at Barcourt even though he’s a software analyst and we think we like their trader, Sam Gutfreund, but not sure whether Harvey Maklin, the VP who would own our transaction, is the “big dick” Franklin says we need. Frankly, seems to be a bit of a pansy.

What do you guys know about him?

Thanks.

Donna

From: Franklin Adams

Sent: Friday, February 26, 1999 8:32 AM

To: Joseph Windaw; Donna Langhorne

CC: Larry Lazard

Subject: RE: Harvey Maklin

Don’t know him. Will check and get back to you. Gutfreund is a mean poker player. Braxton’ll burn you big time if you miss your numbers but can tell a story.

Franklin

From: Joseph Windaw [mailto:jwindaw@windawwallar.com]

Sent: Friday, February 26, 1999 10:00 AM

To: Franklin Adams; Donna Langhorne; Joanne Ankers

CC: Larry Lazard

Subject: RE: Harvey Maklin

Donna:

I agree about John Braxton but don’t know Sam Gutfreund. I did some checking around and found that Harvey is “respected but not well-liked” at Barcourt. Most of his companies are big so he’s usually doing secondaries or debt placements or complicated hedge stuff for them but he does have a pretty good track record with IPOs, too. Mostly software, of course. With the companies he has, he must be able to get stuff done at Barcourt, which can be rather bureaucratic, because these companies would insist on it. However, it is easier to get things done for big companies than for small ones like us.

Regards,

Joseph

From: Joanne Ankers [mailto:joanne.ankers@bigrouter.com]

Sent: Friday, February 26, 1999 10:02 AM

To: Donna Langhorne;

CC: Larry Lazard; Franklin Adams; Joseph Windaw

Subject: RE: Harvey Maklin

Donna:

I’m sure it was an oversight but would really appreciate it if you would copy me on e-mail like this; I could have started helping earlier if I didn’t have to wait until I got the copy of Joe’s mail.

I will get back to you on what experience Big Router Ventures has had with Barcourt and these gentleman.

Joanne

From: Larry Lazard

Sent: Friday, February 26, 1999 10:10 AM

To: Donna Langhorne

Subject: RE: Harvey Maklin

You got your tit in a wringer on that one:-}

From: Donna Langhorne [mailto: donnal@hackoff.com]

Sent: Friday, February 26, 1999 10:12 AM

To: Larry Lazard

Subject: RE: Harvey Maklin

That’ll never happen to her :-{. Probably why she has to try so hard to add value. Besides, she’s dumb.

From: Franklin Adams

Sent: Friday, February 26, 1999 8:32 AM

To: Joseph Windaw; Donna Langhorne; Joanne Ankers

CC: Larry Lazard

Subject: RE: Harvey Maklin

I’m hearing about what Joe heard about Maklin. One strange story: he’s made a bundle of dough — bonuses the last couple of years so he moves into town from the burbs. Got a couple of small kids so that costs a bundle to start.

About a year ago buys a co-op on Central Park West, big one in one of those big old renovated buildings. But no one from Barcourt that anyone knows is ever invited there. One day this woman has to bring some stuff up for him to sign — he’s being Mr. Mom because his wife is doing something. He invites her in while he reads the stuff.

The place has NO furniture — at least not in the rooms that she can see. Like not a stick. A few kids toys around but thats it. Strange after a year and strange that he doesn’t use the place to entertain.

But probably not here or there. He seems to get the job done.

Franklin

From: Joanne Ankers [mailto:joanne.ankers@bigrouter.com]

Sent: Friday, February 26, 1999 2:00 PM

To: Donna Langhorne; Larry Lazard; Franklin Adams; Joseph Windaw

Subject: RE: Harvey Maklin

Gentlemen and Donna:

No one here has had direct experience with Barcourt or any of the other people mentioned. Of course, there are very few software companies in our portfolio so that may be the reason. We understand that Maklin has a pretty good relationship with Microsoft so that makes us a little nervous.

Joanne

From: Donna Langhorne [mailto: donnal@hackoff.com]

Sent: Friday, February 26, 1999 2:30 PM

To: Larry Lazard

Subject: RE: Harvey Maklin

Boy, I’m sure glad we got her input.

From: Joseph Windaw [mailto:jwindaw@windawwallar.com]

Sent: Friday, February 26, 1999 10:00 AM

To: Franklin Adams; Donna Langhorne; Joanne Ankers

CC: Larry Lazard

Subject: RE: Harvey Maklin

Joanne:

This is good input. However, I think we can forgive him for being close to Microsoft if he can get a good deal done for us.

Regards,

Joseph

###

The hackoff Board meeting on March 5 is telephonic. Larry, Donna and Aaron Smyth are in Larry’s office in New York. Joseph, Franklin, and Joanne are in other places, connected through the Polycom on Larry’s conference table.

“Joanne, sorry to get you up so early,” Donna says. It’s 8:30 AM on the East Coast; 5:30 AM on the West Coast where Big Router is located. “It was the only time that everyone was available and we want to move fast.”

“I’m used to it,” Joanne says shortly.

“Okay,” Larry says, “we’ve talked to all the bankers and we have a recommendation. I think all of you have the information they left for us.”

“I didn’t get anything from Oppenheimer,” says Joanne.

“It was Fedexed out last week,” says Donna.

“Well I don’t have it.”

“Do you want me to get the tracking number?” Donna asks.

“What difference does it make? She either has it or doesn’t have it,” says Larry.

“Well, I do like to have all the material,” says Joanne.

“Management isn’t recommending Oppy, anyway, are you?” asks Franklin.

“No, we’re not,” says Donna. “So it’s sort of a moot point.”

“It’s not moot,” argues Joanne. “I should have all the material. There’s a reason why you’re not recommending them; that’s a recommendation in itself.”

“I only have half-an-hour,” says Franklin. “Donna, I’m sure you’ll get a copy of the Oppy material to Joanne for her file. Won’t you? Let’s go over the recommendation if that’s okay with everyone.”

“Fine,” says Joe.

Joanne doesn’t reply.

“Okay,” says Larry. “As you know, we’re recommending that Barcourt & Brotherson be the lead. John Braxton understands the value of our portfolio and our strategy better than anyone else. We think he’ll do the best job of telling the story to investors. I like the trader, Sam Gutfreund. I get the feeling he’ll do a good job at the desk for us. On the down side, Harvey Maklin, who’s the senior guy on the transaction is sort of an asshole, but all the feedback we’ve had is that he does a good job for his companies. On the downside is that we don’t think Barcourt is as close to some of the high-tech funds at Semper and Fido and other places that we want to target as Oppy is.”

“Then why aren’t we going with Oppy?” asks Joanne. “Big Router HAS had experience with them.”

Donna starts to answer but Larry waves her quiet and says: “Good question, Joanne. The problem is that the Oppy analyst who would’ve covered us just left and the new guy doesn’t know shit from shinola. He doesn’t understand e-commerce; he doesn’t understand software; he doesn’t understand our strategy. He used to cover shipping and I doubt if he understands that either.”

“Yeah,” says Franklin. “I know him. He doesn’t understand shipping either.”

“But it would still seem…” Joanne begins.

“Joanne, let’s let management finish,” says Joe gently. “Franklin has to get off quickly and I’ve got another appointment as well.”

While Donna makes rude faces at the Polycom, Larry puts on a conciliatory voice and says: “We would have liked to have Oppy on the deal. They were willing to be a co-lead with Barcourt and Donna asked Barcourt about that and they turned us down flat. They’ll take the lead or nothing. You know I believe in taking a hard line with these assholes, but I don’t think they’re bluffing. And Oppy won’t take any position less than co-lead. So it’s either Barcourt or Oppy as the lead and the other one out. Also, Oppy is talking to anithack about their IPO and we don’t want their bank as lead; too much chance for leakage, despite all the Chinese walls. Maybe Oppy would’ve agreed not to do antihack if we could’ve got them the lead but we couldn’t.”

“I might be able to get my boss to talk to Barcourt about letting Oppy be co-lead,” says Joanne. “He’s in Asia now, though; he’ll be back next week.”

“Could you get him to call today?” asks Larry.

“No. I don’t think I’ll be able to reach him until at least Monday. It’s already the weekend in Asia and he doesn’t like to be disturbed on the weekend. Maybe I can get to him late Sunday — it’s already Monday there — but that’s hard to do without help from his assistant here. I’m not sure he can do anything until he’s back and we can have a thorough discussion. Then he might decide that a call wouldn’t help. Larry, I think it’s important that we have all pertinent information before we make such a critical decision. I mean…”

Donna pushes the mute button on the Polycom and says to Larry: “Dumb bitch thinks she’s still in B-School. ‘All the information!’ You don’t get ‘all the information’ except in a fucking case study. This is the real world. She doesn’t even have enough clout to reach the guy without going thru his EA. What does that tell you?”

Larry unmutes the Polycom. “Joanne, we really would like his help. However, we’re on a very tight schedule. There’s no way to predict how long it will take to get the prospectus through the SEC. In my opinion, it would be very bad to miss the window and have to wait until September. Antihack might even beat us to market and position themselves as number one. It is critical that we make a decision during this call.”

“Even if we don’t have all the information we need?” objects Joanne.

Donna rolls her eyes.

“I’m sorry,” interjects Franklin, “but I only have fifteen minutes left. I think Larry’s right; we’ve got to move before the window closes. That’s my two cents.”

“Joe?” Joanne appeals.

“Joanne,” says Joe, “in ordinary times I’d agree with taking our time and getting it right but these aren’t ordinary times. You’ve said yourself that there’s no guarantee your boss’ll make a call or that it’ll change Barcourt’s mind if he does. By all means, lets keep him in reserve for future dealings with Barcourt, but I think we have to move ahead. Your help is very valuable in this.”

“Please go ahead with the rest of the management recommendation,” says Joanne.

“Thank you,” says Larry. “We are recommending that FCBC and Web & Stinger also be on the book. We’ve sent you the stuff on them. FCBC has some of the same contacts Oppy does so they’ll help set up pitches. Plus, their analyst isn’t completely brain dead. Web & Stinger is a boutique firm—”

“Never heard of them,” says Franklin.

“That’s because they’re in St. Louis, Franklin,” says Larry. “You probably flew over it a couple a thousand times but it’s in the middle of the country where you bi-coastal types don’t land.”

“Not if we can help it.”

“So, anyway, they’re a boutique firm in St. Louis that concentrates on software. They’ve got a following in the Midwest — we know we’ll be stopping there on the roadshow even though Franklin never does — and their software analyst is really good; a woman who used to write code. Doesn’t know shit about e-commerce, but understands the difference between our technology and antihack’s, which no one else does. So we’re recommending they be on the prospectus cover as well. For what it’s worth, our buddy Harvey Maklin does want FCBC on the deal — I think he likes having them on the right side of the cover with Barcourt on the left — and he didn’t want Web & Stinger on because he never heard of them. But we insisted-”

“I don’t want to beat a dead horse, but why couldn’t we insist on Oppy being co-lead if we could insist on Web & Stinger?” Joanne interrupts.

“I’ve really got to go,” says Franklin. “Aaron, do we need a motion?”

“Yes,” says Aaron, “I’m still waiting to hear from outside counsel on a part of the wording so I’ll probably get it to you in e-mail this afternoon. Substance is that the Board chooses Barcourt as the lead and FCBC and the St. Louis guys for the book runners and authorizes management to sign the usual and appropriate documents to make it happen.”

“So moved,” says Franklin.

“Seconded,” says Joe.

“Any objection?” asks Larry.

There is only silence.

“See ya,” says Franklin.

“Thank you all,” says Larry. “Meeting adjourned.”

###

E-mail, March 5, 1999

From: Joanne Ankers [mailto:Joanne.ankers@bigrouter.com]

Sent: Friday, March 5, 1999 9:05 AM

To: Joseph Windaw

Subject: Board Meeting

Joe:

It frosts me the way management doesn’t do their homework, especially Donna, and then there’s a big hurry and we can’t get all the information we need.

I appreciate your mentoring and backed off because clearly you felt this was right. But it does bother me.

Joanne

BTW: I will be in NYC March 24-26. Any chance of dinner or a drink? I’m free both the evenings of the 25th and 26th right now.

From: Joseph Windaw [mailto:jwindaw@windawwallar.com]

Sent: Friday, March 5, 1999 12:07 PM

To: Joanne Ankers

Subject: RE: Board Meeting

Joanne:

Your diligence is praiseworthy.

It would be my pleasure to take you to dinner on the night of the 26th. Anne and the kids are in Europe then (she sends her best).

Can you join me at 7:00 PM at the Harvard Club? It’s at 27th W. 44th, just West of 5th Avenue. The food is good although you may be appalled by the head of an elephant that Teddy Roosevelt or some other grad killed and sent to the club.

Regards,

Joe

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