Variation on a Theme, Book 6
Copyright© 2024 by Grey Wolf
Chapter 150: Working Vacation
Wednesday, June 11, 1986
I met Lee bright and early. We talked about today’s plans over breakfast. Basically, the mission was at least two-fold. The first (and official) purpose of the trip was to secure, if possible, both a moderately sizable loan and a more sizable line of credit from one financial institution or another. The second (and, perhaps, more important) purpose was to build relationships at a few firms.
The odds were high that any New York bank would know little more about P.C.’s Limited than what Lee (or Michael, perhaps) had told them while setting up these meetings. If it was on anyone’s radar here, that someone was probably a lower-level regional analyst. I doubted anyone we talked to would even give serious credence to the idea that Dell would have a well-received IPO within two years, yet that’s where we were.
And, as with Angie (and, now, Lee — and, most likely, Michael), I firmly believed Dell was going to seriously outperform the IPO of my first life. Double or triple, most likely, but quadruple was entirely possible. The company was in a significantly better position than it was in June 1986, in my first life.
I expected the growth rate to level off this year. First, because it’s virtually impossible to keep growing at the pace P.C.’s Limited had been growing. Seventy-five to one in six quarters would put Dell at over $5.5 billion in revenue by 1988. There was little to no chance of that happening. Growth had to slow.
Second, I expected hurdles to crop up. Sales challenges, parts challenges, quality issues, and a number of other things would happen. All of them were entirely surmountable, but there had been business-school class units covering the challenges P.C.’s Limited faced between now and their IPO in my first life. That’s largely where Angie got her insights from, after all. It was ridiculous to think history wouldn’t repeat itself. I hoped history would repeat itself all around, at least, only better.
Still, quadrupling the market capitalization of P.C.’s Limited was within reason. Perhaps even more? A lot of that rode on the back of the 386 project. Succeed, and they would be in an enviable position within the PC industry.
If it were something I could place a bet on now, I would bet on Michael and company succeeding. Betting against Michael Dell tended to be a fool’s game, after all. But I’d placed that bet over two years ago, before I even had an inkling this might happen. Now, it was just a matter of letting it ride.
Success would, of course, hasten our ascent to the land of the ultra-wealthy. I imagined it would do very good things for Lee, too. I had intentionally left the subject of his compensation to Michael, merely agreeing with the proposed pay package, but I knew he had options. How many options depended on how well things went. He wasn’t going to catch up to me, but he could well come out of this a very wealthy man.
The Lee of my first life had chosen to ‘give back’ after his health crisis, becoming a teacher and a mentor at the university level. This one probably would, too, no matter how great his finances were in a few years.
I had hopes of mitigating that health crisis, too. We would see. Lee had told me he (and Michael) were seriously searching for a CFO. That was a good sign. Lee being here was necessary, since they didn’t have that CFO, but Lee still acting as CFO six months from now would be a bad sign.
I wasn’t sure if I would be involved with the interviews for a CFO. Probably not, and I didn’t particularly want to be.
Angie? That was an interesting thought. What would most serious CFO candidates do if a twenty-year-old woman started asking tough questions? I imagined you could learn a lot, but you could also drive quite a few people away.
Once we wrapped up breakfast, Lee and I got a taxi and headed off to our first destination, Citibank. We were meeting with a guy named Tom Coleman. Lee knew relatively little about him, but that would be the case for most of the people we met with today.
My job was to convey the short history of P.C.’s Limited in a way Lee (as ‘the new guy’) couldn’t. I’d been there nearly from day one, and could speak to both the massive growth rate and the hurdles they had overcome along the way. I couldn’t speak to them in detail, of course, but the details were in documents Tom already had.
Lee said, “He’s got the information. The question is: has he read it? Most of the time, when it was me running my businesses, and we’d gotten past simple small business loans, the answer was ‘no.’ The application was pretty much like a resume. Enough gets read to get you to a face-to-face, but that’s it.”
I nodded and said, “That makes sense, though it’s somewhat disappointing.”
“It is!” he said, nodding. “But it explains why people who are, on paper, poor credit risks but are great salespeople get loans, while people who look great on paper sometimes don’t. We’re in the middle, I think. I’ve got some charm, and I know you do, too. But neither of us is the sort of smooth talker who’s pretty much on the edge of being a con man.”
“And I wouldn’t want to be,” I said. “Nor would you.”
He nodded.
“With your background, you could probably learn how to do it. I agree: you don’t want to. I sure don’t! The best con men con themselves first. You don’t have that right now. And it was that honesty that helped get me on board. That core value of ‘Aggies do not lie, cheat, or steal.’ That includes lying to yourself about the big stuff. We all tell ‘little white lies’ now and then, and no one expects the Honor Code to get invoked. When we talked in that first call — the honesty about cash-flow challenges, bank challenges, the need to grow or die — all of that meant a lot to me. Neither you nor Michael tried to sell me on anything being a given. That, and I could feel your sincerity in wanting the business to succeed and grow, not just wanting to make a mint off of your investment.”
“Thanks,” I said, really feeling what he said. I had just tried to lay it out as honestly as I could. At the time, it had felt like it had made a difference. It was nice to have Lee confirm it.
He smiled and said, “If, one day, you decide to become a venture capitalist, keep that if you can. Too many VCs try to make their money by throwing money around to one hundred companies and hoping two are hundred-to-one successes. If you can also throw expertise around, maybe you get ten or twenty ten-to-one successes. That’s good for everyone.”
“It’s not the same, but I like how Warren Buffett looks at it,” I said. “When they buy a company, they buy the leadership. They don’t replace the existing leadership team, or simply ignore them. They embrace and try to nurture them.”
He nodded, but then paused. After a second, he said, “Michael has a lot to say about ... well, that. Somewhat. How you’ve consistently understood the outline of what’s going on, even with little day-to-day connection to the company. And how you’ve urged him to take time off and delegate. That also says something. I mean, obviously, you two are friends. But money messes with that sometimes, and you have a lot to gain up front if things go up like a rocket.”
“Eh...” I said, waving my hand a bit. “We’ve already gained a lot, and we’ll gain a lot more. I said it before: we can’t just sell if there’s an IPO, and I wouldn’t if I could. Our hope is that Dell becomes the eight-hundred-pound gorilla in their area over time. If they do, we benefit a lot more from staying in than cashing out.”
“Smart again,” he said, chuckling. “And not something I expect from even most smart kids your age. Some of them! But the temptation to go wild is a lot. I know it! Heck, even Michael put a lot into a really nice car. Had he held onto that money another couple of years, who knows where things would have gone in the early going?”
“You and I probably wouldn’t be talking, for one thing,” I said, chuckling. “Maybe? But it certainly would have been a very different thing.”
We got off at Citicorp Center. I wasn’t supposed to know it, but I had read articles about the history of the building. As it turned out, a combination of bad decisions had rendered the building potentially unstable under various wind conditions if there was also a power failure causing the building’s mass damper to become inoperative. A couple of students had actually found the problem. The building had been reinforced in secret, with the whole thing coming out years later.
While there was little chance of inclement weather or power failures today, I hoped the reinforcements had been done in this universe, too. It seemed likely, at least.
Tom Coleman turned out to be polite enough. Very focused on the bottom line, but that was his job. He asked some tough questions, but Lee or I knew enough to answer all of them.
Was it enough? We didn’t know. He offered P.C.’s Limited a loan, but it wasn’t that big, and there was no attached line of credit. There were certainly hints that we might get a line of credit, though, if things went well. Since I felt nearly certain things would go well, that might be enough.
It wasn’t a home run, though, and we had a shot at a home run at another bank. For now, we thanked him, told him we would let him know, and headed on our way.
From Citicorp, we went to J.P. Morgan, then to Chase Manhattan. I couldn’t tell Lee, but those two firms would merge before too long. A decade? Two? Somewhere in there, anyway.
Neither visit was especially remarkable. The people we met with were very much focused on exactly what I would have expected: P.C.’s Limited’s need for loans, ability to repay, and growth potential. I was able to speak to their growth to date, while Lee waxed optimistic about their future.
All of that got us offers from both banks. Chase’s was the best of the three, so far. It wasn’t markedly better, though. No line of credit, but the hope of one was definitely there.
Lee and I grabbed lunch at a sandwich shop not far from Chase Manhattan’s office.
“What do you think so far?” he said, smiling, after we’d ordered and settled at a table.
“I think I would go crazy if I did this for a living,” I said, grinning a bit.
“Writing off that career as a Chief Financial Officer already?” he said, smiling back.
“Honestly, it was never on my bingo card. Now, ‘venture capitalist’ is, and I suppose that might be similar, if from the opposite perspective.”
“On the one hand, you need capital to be a venture capitalist,” he said, chuckling. “But, on the other hand, you had enough when you needed it, and you already have that first home-run success. At the risk of counting some chickens before they hatch, anyway.”
I nodded and said, “Well ... if they don’t hatch, I might well not have a shot at that bingo space.”