The Term Sheet: A Startup Thriller Novel (14 page)

“
D
avid
,” said Andrea with a warm smile and open arms. “It has been far too long. You’re looking good. How has life been treating you?”

“Okay, I guess.”

David hugged Andrea halfheartedly.

“That good, huh?”

David sat down and made himself comfortable in one of Andrea’s blue swiveling chairs. He swiveled it back and forth. Andrea looked at David intently with her soft grey eyes. David was always impressed with how radiant and vibrant Andrea looked. He noticed that she had cut her blonde hair, which settled well with her face.

“Well, let’s see. I was kidnapped and interrogated by the Secret Service, my girlfriend broke up with me, I made a fool of myself in front of eight million people on national TV—”

“Yeah, I saw that. It wasn’t that bad. Many people never get exposed to millions of viewers like you did.”

“Thanks for saying so, but yes, it was that bad. I had an acquisition offer rescinded, my cofounder quit and took a day job with you, and I was nearly evicted from my apartment.”

“Nearly? How’d you get out of that mess?”

“I found an ad behind my couch for the auction website I used to buy the jellyfish website in the first place. In the excitement of Cryptobit, I forgot that I even owned the thing. I put it up for sale in a quick auction. I got a quarter for every dollar I originally spent, but that was enough quarters to pay rent for a couple more months.”

“David, can I ask you a question?” Andrea said as she leaned back in her chair.

“Sure.”

Andrea looked directly into David’s eyes. “When are you going to forgive yourself?”

“What do you mean?”

“Terrible things have happened to you. Clearly. You can’t choose the cards you’re dealt in life. Sure you have been dealt some pretty crummy ones recently, but how you react to life is always in your control.”

Andrea paused as the words sank into David’s consciousness.

“These things that have happened to you are not your fault. But you’re carrying them around like a ball of pain. You carry it with you and flog yourself with your misfortune. And you flog those around you. Your girlfriend, maybe? So again, I ask, when are you going to forgive yourself?”

David fidgeted in his seat. He felt something deep inside his belly like a cannonball coming up to his throat. He tried to respond, tried to say something, anything, but the words wouldn’t come.

Andrea continued: “These things didn’t happen to you because you weren’t good enough. They didn’t happen to you because you are failing at being an entrepreneur. These things happened to you precisely because you are succeeding at being an entrepreneur.”

“It doesn’t feel like that,” David managed to muster.

“I know it doesn’t. This is life, though. This is how it works. Let me tell you a story. I know you might not believe it on first glance, but I’ve been around the block a few times. This is not my first rodeo. The startup I did right before MochaToca started out as a huge success. We had created an analytics company right as online advertising started to take off. For years, it felt like we could do no wrong. It was the fastest growth I had ever experienced or seen in my career, even faster than MochaToca.

“We raised twenty million dollars over four years and hired a hundred and fifty people. We made millions of dollars, but we were hiring ahead of revenue and running out of cash quickly. I had almost finished putting together our next round of financing when…we…when life happened. One of our founders was sued for sexual harassment a few days before the investment was set to close. Then our biggest customer dropped us without notice. The investment fell apart and I went to the bank to get a loan, but we were spending so much and had so little left that the banks wouldn’t lend us a dime. I went back to our investors who got cold feet. With no other options, I had to fire most of the staff, which of course stalled our growth. This led to a death spiral and within a month, we shut down the company. I was devastated. For months it ruined me. I bought a one-way ticket to Hawaii and just sat on the beach for six months trying to figure out what I did wrong. Do you know what I learned on that beach?”

“Never trust investors?” David asked tentatively and with a slight smile.

“Dear goodness, no. If I were in their shoes, I would have made the same decisions. No, what I learned is that when they say nine out of ten startups fail, they’re not just talking about the bad ones. It’s equal parts luck and preparation, and all I can do is bring my best every day. I stopped taking it all so personally. There was nothing I could have done differently. It was like a sudden wave that came out of nowhere and ripped my ship in half. A wave isn’t good or bad. It doesn’t care, it has no motives. It’s just a wave. Mother Nature. I just happened to be in the way. And I projected the darkest parts of me to that wave. I blamed the world for what was inside of me. For the ball of hurt I was carrying around.”

Andrea paused.

“David, it’s not the startup troubles that are making you feel this way. Who made you feel not good enough? When did that happen to you? You know it’s not your fault, right?”

David looked up. His eyes filled with immense pressure.

A
fter Pitch Deck
, David received 112 congratulatory emails from friends, family and strangers, 92 consolation emails, also from friends, family and strangers, 243 sales inquiries predominantly from IT vendors and outsourced programming companies in India, 23 emails from eager job seekers who wanted to work for David, and 6 investors asking for opportunities to get to know David better.

The task of going through all of these emails felt overwhelming. It took him three days to respond to each and every one. At least the ones that weren’t clearly spam. It was painstaking, but if all these people had spent their time reaching out to him, the least he could do was offer a personal response.

The investors mostly seemed to be wealthy individuals who wanted to do an angel investment. However, two of them seemed to be part of a venture capital firm. One of the signatures said he was an associate and the other said he was a general partner. He emailed the investors with a similar note thanking them for their interest in his company and suggesting a few dates for a phone call, but Frank Atari, the general partner from Rocketship Ventures, was the first to respond. Frank asked if David could jump on a Cryptobit chat session with him for a minute.

David didn’t know what to expect when he pulled up to the Rocketship Ventures office building in Bellevue, Washington, but he surely thought it would be more grand and awe inspiring than the nondescript building in front of him. But it made sense. Venture capitalists were just normal businessmen like lawyers, bankers or accountants. They were all about the bottom line, not pomp and circumstance.

He made his way up the concrete stairs and to the second-floor office and saw dozens of beige cubicles sprinkled on either side of a wide open carpeted space. He walked to the front desk and smiled at a slender receptionist who was on a phone call. She reminded David of a young librarian, talking quietly and in hushed tones.

When she hung up, she looked up and said, “How can I help you?”

“David Alexander to see Frank Atari, but I’m early.”

“Ah yes, Frank will be with you in a few minutes. The partner meeting is running a little bit behind. I’ll let his assistant know you’re here. Would you like something to drink? Coffee? Soda?”

“A coffee sounds good, thank you.”

David second-guessed his decision to drink coffee as he realized his heart was already pounding through his chest. The last thing he needed was coffee. But he craved the warmth it gave him inside; he could use the courage.

David sat patiently for twenty minutes, but it felt like forever. He drank only half the coffee, but it did the job. A couple of guys with clean-cut slicked-back hair walked out of a conference room wearing dejected frowns.

“How do you not know Werner Vogels? Come on, you made us look like fools,” said the guy in a crisp suit who looked like a fresh MBA graduate.

“Sorry,” said the more awkward, nerdy-looking guy.

“I hope you didn’t fuck this whole thing up for us.”

“Sorry,” the nerd repeated.

A few minutes later, a good-looking middle-aged Asian man with a deep tan and short hair came out of the conference room. He saw David and approached with a smile full of charisma and a little mischief.

“David, thanks for coming.”

“Mr. Atari, thank you for inviting me. It’s really good to meet you in person.”

“Please, call me Frank. Still remember everything we talked about?”

“Yes, I think so.”

“Good, you will do great. Just relax and be yourself. I already told them about you, they just want to meet you and ask a few questions. And whatever you do, don’t freeze up like you did on
Pitch Deck
. You are with friends here, David. Relax.”

“Got it. Relax. I’m good.”

After their Cryptobit chat, David and Frank had talked many times on the phone. Even though David didn’t know who Frank was at first, a quick search showed that he was the real deal. Frank had started a few companies himself before becoming a venture capitalist and had since invested in some impressive security companies.

Frank had helped David with his pitch deck and coached him on what to say and how to say it. Usually, an entrepreneur like David would first pitch an associate and then, if he passed that test, a partner. The final pitch would be to an entire group of partners, but Frank knew he wanted to invest in David and had skipped those first two steps. This was the big time.

Frank patted David on the back and led him to the conference room. The room had all the pomp and circumstance that David had found lacking in the rest of the office. The thick wooden conference table was the biggest table David had ever seen in his life. It spanned the thirty-foot length of the room and was six inches thick. The chairs were all made of leather and there were personal power plugs inlaid in the table for every chair. The table was surrounded by middle-aged men and women and a few younger people whom David assumed must have been the associates. A few of the people greeted David with a slight nod or smile, but most were talking to each other.

“Hello everyone,” said Frank. “Let’s get started with the next company. This is David Alexander with Cryptobit.”

David stood and stared in the distance. The room went silent. Frank looked frantically at David.

Then he began: “Hello everyone, it is an honor and a privilege to meet you. Privacy. It is one of the most abused basic human rights we have today. As you and I stand right here, right now, nothing I say is being recorded, and as soon as I finish talking the words are gone forever. This is as natural as breathing. Nobody can hear me outside of this room—I know this because I couldn’t hear a single word from the well-dressed gentlemen who were in here right before me. It seems like you sure did a number on those two.”

This made all the investors in the room chuckle. Everyone relaxed into their seats and David continued.

“The nature of the physical world affords us natural privacy based on the simple rules of physics. Sound doesn’t travel through walls. The digital world, however, has a big problem. In the digital world there are no walls, which means there is no privacy. Every bit you create, every byte you transfer, is stored, tracked, analyzed, sold, and marketed. Google openly admits to using words in what should be your private emails and chats to select ads for you. And people have tacitly accepted this, mainly because it has been too hard to do anything different. It has been too hard to protect yourself with things like PGP and GPG. These are just geeky tools for geeks.

“Cryptobit is a simple tool for everyone else to easily and transparently encrypt all their chats and all their emails. There is no fidgeting with crypto keys and passwords. We encrypt the entire contents and meta-data of emails for you, which makes it impossible for anyone to read or sell your private conversations. And in order to protect you from any hacker or foreign governments who might be able to decrypt any single piece of data, we fill the network with faked messages. For every one legitimate message there are ten to a hundred fake messages. Users in our system will never see the faked messages because they will never be able to decrypt them. They’re just junk to hide the signal in the noise.”

“I have no clue what he is talking about, do you?” whispered one of the white-haired men to the young associate sitting next to him. The associate shrugged.

“You do this for chat and email?” said one of the men at the side of the table.

“Correct. We started with just the chat functionality, but the email feature is coming out this week.”

“How much does it cost to run?” said one of the young women associates.

“It costs us almost nothing. The system itself is mainly peer-to-peer, we’re just running the signup form in a centralized way.”

“David, first I’d like to congratulate you,” said one of the older women. “This presentation is night and day better than the one you gave on
Pitch Deck
. I believe if you had done this well earlier, we probably wouldn’t be here today talking with you. So kudos on that.” As she spoke, Frank smiled. He was sitting like a peacock guarding his prized egg. “But where is the guy who presented with you on
Pitch Deck
? Andrew?”

“Yes, Andrew was my cofounder and dealt with the legal, money, and business side of things. But we have parted ways.”

“That’s too bad,” said the woman. “Startups are always risky, but our job as professional investors is to mitigate that risk using heuristics that we have learned work after many years of doing these kinds of investments. Our general policy is to invest in early stage companies with at least two founders, and we prefer those founders to have a track record of working together. The job is incredibly hard for one person to do on their own, and you never know if strangers will get along. We find the chances of success go up significantly with two or more founders.”

Frank jumped in: “I am sure Andrew would come back if Cryptobit was venture funded, don’t you think, David?”

“Yes, of course he would. He just needs to cover some basic living expenses. With venture funding, we could both take salaries and it shouldn’t be a problem.”

David noticed one of the partners wince at this and begin taking notes in a moleskin notebook.

“Small salaries, of course,” added David.

The partners all smiled.