Chapter 10: Deal or No Deal?

April 5, 1990, Chicago, Illinois

As I drove towards the Loop to meet Dante for dinner, I had a lot on my mind — Kara, NIKA, my sister, and the meeting with Dante. I tried to push the other stuff out of my mind and think about how I’d respond to what Zeke had tipped me about. Obviously, it was something we’d be interested in, but I knew Dante well enough that the entire project was fraught with potential trouble, not to mention the fact that he’d try to structure our agreement to be heavily in his favor.

“Getting a new BMW this Summer?” Dante asked when he pulled up behind me at the valet in his Mercedes.

“Yes. A two-year corporate lease. I see you brought the Mercedes, not the Ferrari.”

“I don’t trust these car jockeys! I even hate letting them take the Mercedes, but what choice do I have?”

“I felt that way the first time I had to turn over the keys to my Trans Am!” I said.

“You should have slipped them $50 to steal the thing, and then you could have filed an insurance claim!”

“I filed one when I was rear-ended in Georgia,” I said.

We walked into the restaurant, and I witnessed a Dante explosion in person for the first time, fortunately directed at someone else. They didn’t have his reservation despite him showing what appeared to be a valid confirmation number. I wasn’t sure what would happen first — Dante having a stroke or Dante choking the maître d’. I simply stood back and enjoyed the show. Or rather enjoyed not being part of this particular show.

For me personally, I’d have taken the ‘nice’ approach, and if that didn’t work, walked my guest to one of the half-a-dozen good restaurants within four or five blocks that didn’t require reservations. And if that didn’t work, go into the Loop proper and go to Berghoff or Maxim’s or someplace like that. But not Dante. No, he was going to have his table here if they had to drive to a forest preserve and hew a new table and chairs from a freshly cut tree.

It took nearly ten minutes, but we ended up being seated. And that led to ANOTHER outburst because Dante didn’t like the table. This time, I decided to intervene.

“Dante, this table is fine. Just relax, and let’s have a nice dinner.”

“Don’t let people push you around! You’ll never get anywhere!”

“Push me around? This was the result of some clerical error where they didn’t transfer your name to the reservation sheet at the maître d’s podium. In my opinion, you could have resolved the issue with a quiet word. But that’s just me. Look, we’re here, we have a table, and you said you had a proposal. Let’s just relax and enjoy the meal.”

He looked at me and gave a slight shake of his head, “I need tough, hard-driving partners.”

What I wanted to say was that I’d stood up to him on several occasions, and if THAT wasn’t ‘tough’ enough, I didn’t know what would be. But I knew how to get Dante back on track.

“If you didn’t think I was ‘tough’ and ‘hard-driving’, we wouldn’t be sitting here! How many other companies did you call to present this proposal to?”

“That’s confidential!” he responded quickly.

I knew Dante well enough to know that meant the answer was ‘zero’ because otherwise, he’d have held out some other company, even if it remained nameless, as competition to try to create an advantage in negotiations. But I suspected he knew that I knew I was his first and best option, and that gave ME more leverage. Not to mention that, as things stood, I didn’t NEED Dante, but it sure seemed like he needed me.

“Fair enough,” I answered smoothly. “I appreciate your need to keep your cards close to your vest.”

Stroking Dante’s ego was easy, I thought to myself as our waiter came by and offered drinks. I knew I was going to get an eye-roll, but I was driving, so I ordered San Pellegrino with lemon. Dante accepted a top-shelf Scotch on the house, offered as an emolument by the maître d’.

“You can’t even have a drink with me?” he asked.

“Doctor’s orders,” I said. “In addition to my usual bit about 0.0 being my limit for driving.”

“Doctor’s orders? Is something wrong?”

“I have fainting spells, which are probably related to my naturally low blood pressure. Doctor Albert Barton, Chief of Emergency Medicine at UofC, who’s also a friend of mine, has me restricting my alcohol and tobacco usage and watching my consumption of sugary foods. I had a CT scan which was negative, all my blood work is good, and my heart and lungs are fine. Al’s just being careful. My wife, the doctor, works for him in the ER. And my personal physician is on board.”

“And if we were to reach a deal, you’d be willing to get a notarized statement to that effect? If we make a deal, it’s between you and me. Yes, our companies’ names are on the documents, but something like this has to be personal as well.”

I shrugged, “Sure. I run around three miles a day and practice karate four or five times a week. I walk several more miles each day when I walk my wife to work, and I walk to work myself. Trust me; I’m as healthy as can be. But you know damned well that anyone can drop dead at any moment, or be hit by the proverbial truck, or whatever. I’m healthy.”

I wanted to ask what his proposal was, but it was his dime, so to speak, and I’d let him tell his story however he chose to tell it. We placed our orders and made small talk about the upcoming baseball season and the hockey playoffs. The Blackhawks had won their division but had lost their first playoff game against the Minnesota North Stars. The Penguins, on the other hand, had only been over .500 for three days during the entire season.

My salad and Dante’s soup arrived, and we ate, talking about the events in Russia and the rest of the Eastern Bloc, and that continued while we ate our main courses. It wasn’t until we were drinking coffee after the meal that Dante broached the subject that had generated his invitation. It was precisely what Zeke had predicted — computer-controlled testing equipment controlled through the serial port. But he was also thinking about designing cards that would fit in ISA slots and have customized input connectors. He needed a partner to write the software.

I’d thought the idea through, and I’d had a brief chat with Dave and Charlie about it. We agreed that this was something that was right up Greg’s alley, though we still had a concern about putting him and Dante together. That said, we were also fairly sure that we’d need a second person on the project. And that meant we needed enough revenue from any deal to cover two salaries and still make a profit.

My dad, Julia, and Elyse were reluctant to do any kind of deal with Dante that was based purely on royalties because we’d have absolutely no control over the sales cycle. I’d agreed with them, and we’d come up with a combination of a fixed payment plus a royalty schedule. One thing that Dave had proposed — that we control the software licenses — was quickly agreed to internally as well. We’d ask for a fixed fee per license plus ongoing royalties.

“So what do you think?” he asked.

“I think we’d be interested, but as always, the devil is in the details. What kind of financial arrangement were you proposing?”

“A percentage of sales,” he said.

I nodded, “Only a percentage of sales? That would represent a pretty big risk on our part because we don’t know much about your market, sales cycle, or volumes. Nor do we know anything about how much support would be required. May I make a counter-proposal?”

He nodded, “Sure. Let’s hear how you’re going to bend me over. You seem to be pretty good at it.”

I chuckled, “You’re not my type!”

He laughed hard, “Good one! Go on.”

“We’d like a small fixed fee upfront to defray the cost of developing the software. Not even at cost. That puts some of the risk on us. Then, we’d like a license fee for each system sold. We’ll sell you the licenses, and you just incorporate that fee onto your price however you like. We’d also set a per-system support fee, which you would incorporate into your support fee, again, however you like. We’d provide full documentation, and our phone support people would be trained to support your field engineers. That way, all the contact goes through you. And,” I knew this sweetener would help reel him in, “all title and copyrights for the source code would be assigned to you, and we’d sign an ironclad non-compete.”

“So I take ALL the risk? That’s how this works?” he asked.

I noticed he didn’t bluster. That confirmed that he didn’t have another proposal on the table with another company, nor any plans to make one.

“Not at all. That small fixed fee for developing the software would be exactly that — small. Not enough to cover all of our costs, but enough to ensure that if things went south, we didn’t come out of this with nothing to show for it. The other option would be for you to contract with us to write the software and do bug fixes and for you to handle everything else. Then, you keep all the revenue. That would actually put all the risk on you because we’d require payment per our usual terms for writing custom software.”

“My attorney told me you’d give me those two options,” he said. “Though I’m surprised that you’re offering me copyright and title without an argument.”

His attorney had talked to Jamie and Julia often enough that he knew how we operated. And my dad had been the one to suggest we simply lay our cards on the table for Dante instead of arguing and fighting over terms. That way, in the end, we could get an outline of a deal fairly quickly, and it would be a quibble over numbers. I’d pointed out that was exactly the kind of quibble Dante relished and that he was prone to outbursts when he felt he wasn’t getting the lion’s share of any deal. My dad’s point had simply been to lay out the terms and walk away if he didn’t like them.

“Your attorney knows us pretty well, then. Which means you’re prepared. And you probably suspect that I knew what you were coming here to ask. I did. So I prepared by talking to the team, which also included Jamie.”

“More take-it-or-leave-it ‘negotiation’?” he asked, sounding exasperated.

“Do YOU have time for bullshit? I sure don’t! I’ve outlined a fair deal. It’s up to you to decide if it’s ‘Deal’ or ‘No deal’. Yes, we have to negotiate numbers, but I think the broad outline works well for both of us. You know me well enough that I won’t accept any deal that isn’t equitable. In this case, my risk tolerance is actually higher than normal — we’re not looking to be made whole by the up-front development fee, even though I’m going to have to hire someone.”

“If we do this deal, I want your top person working on this.”

“And you’ll have him,” I said. “The new hire would pick up some of the slack for things that had to be moved to someone else so my best engineer could work on your project. Most likely, a second programmer would be involved as well, and my QA and Technical writers.” I had one additional sweetener for him. “And I’d be directly managing this project.”

“You? Really? What changed?”

“Just rearranging the chairs a bit. Julia needs to focus on expanding the consulting team and growing that part of the business. I’m going to take on more leadership responsibilities.”

“It’s about damned time. If you do THAT, then yes, we can shake hands on the outline of a deal. Send me some proposed numbers.”

I smiled, “We’ll need to know your target selling price for the testing units and the PC boards so we can get an idea of what reasonable charges might be and what we can expect in terms of revenue.”

“I’ll send over our internal proposal. Some things will have to be redacted, but nothing that should matter for this. But anyone who sees it will need to sign the NDA personally.”

“Agreed.”

He extended his hand across the table, “Then we have a deal.”

I took his hand and shook it. I knew Dante wasn’t a pussycat, which meant that he felt this deal was so lucrative that he could agree to my terms without bluster. Either that, or he knew if I walked away, his plans would be seriously delayed, if not ruined. It seemed as if all the work I’d done to establish that I wouldn’t put up with any bullshit was paying off. I stifled a chuckle — I’d actually enjoyed what I just did. Maybe running NIKA for a few years wouldn’t be such a bad thing.

April 6, 1990, Chicago, Illinois

“You’re joking!” Julia said, but she sounded excited.

“No, I’m not. My dad more or less pushed me into it. We’ll have to hire someone to pick up the programming slack, but we’re right at the end of the semester.”

“It’ll take two people to pick up your slack, and we can’t afford that,” she objected.

“That’s the other thing I wanted to talk to you about. Dante agreed to the terms we came up with yesterday. Without a fight.”

Julia rocked back in her chair, “Maybe you SHOULD run the company!”

I chuckled, “I actually enjoyed the back-and-forth with him. The devil will be in the details with Dante, as it always is. Once we work out the numbers, Greg will need to work on this full-time. He’s the only one on staff that I know plays around with stuff at the circuit level. Penny can help with machine language stuff when she comes back during the Summer part-time, which she told me she wanted to do last week. But we’ll need another programmer or engineer to pick up some of Greg’s slack. They could work on other things as well.”

“So, two more for the development side of things.”

I nodded, “Yes. And I’m going to manage this project personally. That way, you can focus on your plan to grow the consulting side of the business, and Dave doesn’t lose focus on the legal and medical software.”

“What about your sister?” Julia asked.

“My dad was very clear that he and Joyce disapprove of putting her into the role immediately after she graduates. I’d hoped that she’d mature enough to do the job with guidance from my dad, Joyce, Doctor Lambert, you, and me, but he’s adamant that she get a few years of work under her belt first. And I’d have to say, given recent events, that I agree with him.”

“When?”

“Let’s call it July 1st. I’ll still need your help on things after that, and I’m going to delegate stuff to you, and Elyse and Cindi as well. That date lets us get the new programmers here and gives Dave and Zo time to adjust to the changes.”

“I’d kiss you if it wouldn’t violate so many rules!” she laughed. “It’s like getting let out of prison a year early!”

“If you’re trying to convince me to change my mind, you’re doing a good job!”

“Never mind!” she laughed. “Forget I said that! It’s a wonderful job that you’re going to love!”

“We both know THAT’S bullshit, Julia!” I chuckled. “Anyway, Dante is going to send over their internal proposals, though all of us — you, Dave, Greg, Elyse, and me — will need to sign an NDA before we can look at them. Penny will probably need to sign as well, so we can talk to her about it.”

“And the numbers?”

“Elyse, Jamie, you, and I will have to figure that out once you and Greg give us an idea of the effort needed. I figure we’ll try to set the fee at 25% to 35% of what our costs will be. That lets Dante see us taking some of the risk but ensures we have some revenue from this in the event it flames out.”

“Sounds like a good plan. When do you want to announce the transition?”

“Let’s talk with my dad this afternoon. Don’t forget we have the dinner with him and the rest of the leadership team tonight.”