Chapter 59: Initial Public Offering (IPO)

The Securities and Exchange Commission requires some extensive financial filings in order to go public – that is, to sell shares of your company on the open market in order to get capital for dividends, repay loans, expand, or whatever.

We had our inside financial staff and our outside accounting firm prepare the small mountain of data required, and sent that off electronically to the SEC for approval. We were asked about a date, and we just said, ASAP. Ultimately, I went to Washington and New York to press the flesh and try to speed things along. Again, I traded on my fame from resolving the Satanic Virus problem.

I guess I was successful. We got the greenlight to hold the IPO the first week of November. Kim was ecstatic. The time from application to approval had been just over six months.

Cyber Solutions got the ticker symbol CNSX. We were to be listed on the NASDAQ exchange, the usual place that new high-tech listings were placed. Merrill Lynch was handling the launch of our company into the public domain.

Over the past year the compensation committee of Cyber Solutions had met and doled out shares of stock to the employees and investors of the company. Since the company was private at that point there was no need to have an accounting of what was done or why.

Kim Stanley was the major investor in CS, and despite recusing herself, since she was on the comp committee, she received the lion’s share of the paper stock. I received the next largest distribution of stock, and then so on down through the ranks of the company. The only requirement for eligibility had to be a one-year tenure with the company. It was funny money at that point. Phil Rothman, the original owner of the company also got a pile of the then nearly worthless shares. Well, they were worthless at the time.

Merrill Lynch and their parent Bank of America had managed the publicity about the IPO. They wanted the public and the institutional investors to know, in no uncertain terms, that the man heading the company about to go public was David Toller, the man who’d conquered the Satanic Virus a year earlier.

I put up with the PR blitz and got a dose of the hero worship all over again. That stuff had calmed down after a few months. Again, I had difficulty going out in public without being recognized, sought after for autographs, or even receiving proposals of marriage from some pretty girl. I liked to dine out, so this was becoming an issue.

The IPO, like many, was going to occur on a Monday. History had shown higher returns with launches on that day of the week compared to any other. Our stock would start trading at eleven a.m., with a starting price of $25 per share. I was hoping for a small run-up to maybe $35 before the closing bell.

Kim, Crystal, Carol, Elynn, Cory, Paul, Ross, and I sat in Ross’s office watching the electronic data feeds that my father had coming into his place of business.

Exactly at eleven o’clock, we saw the ‘Asked’ price for CNSX stock at $25 as the ticker reported on other Bid or Asked trades. Less than a minute later, I saw what I was sure was an error – a completed sale at $137.50 for a thousand shares.

I looked at Ross and he was grinning broadly. Another completed trade went by at $157, and then another at $164.50. The stock price was rising very quickly. Other trades went by and then there was one for $201.75. Fuck, we’d broken the $200 barrier. That was supposed to be a big deal for tech stocks.

I started pacing and ran into Kim. We hugged. “Is this going the way you thought?” I asked her.

“Fuck no. I thought and hoped we’d get to about $50.”

“Why this?”

“Tech is back ‘in’ right now, plus there’s the hero factor for the CEO – you. If you can solve the Satanic Virus, you must be a good investment.”

I rolled my eyes.

By the end of the day, I was nervous wreck. The stock had closed at its peak for its opening day - $248.50.

Ross patted me on the back. “How’s it feel to be a real millionaire?”

“Shit. The math was easy, take two million shares of what had been relatively worthless stock and multiply by the closing price. I just became worth just shy of a half-of-a-billion dollars. I was chagrined when I allowed the comp and investment committees to strike a $25 asking price for the IPO; that would mean I was worth $25 million. I’d augured for a lot less. This was TWENTY TIMES that amount.

I was numb. I was nonplussed.

I looked at Kim. She was doing a jig with my father. My father looked very happy. She let him buy some pre-IPO shares, too. The whole family had just become very rich.

Since it was the end of the business day, we all went home. Everyone came over to the house. Ross had bought two cases of very expensive champagne and we toasted the IPO, Cyber Solutions, Kim, and me, and then everyone we could think of.

Ross called Maison Robert and ordered dinner delivered to the house. This was not something they normally did, but he bribed them with a lot of money and they took the bait. We had a splendid five-star meal a little over an hour later. They sent their chef to our kitchen with all the ingredients.

Our (relatively) small group then made love with each other. Well, in male-female pairs. And then we took our partners and went to bed. I had Crystal, Carol, Elynn in my bed. Heather had come home late and missed a good part of the celebration. Carol explained to her about the IPO, but didn’t go into details about why we were so happy.

The next day, I had the lawyers and my M&A staff complete two mergers that we’d been preparing contingent on the IPO being a success. The two takeovers were friendly and they were announced in the media by Merrill Lynch. Moreover, to everyone’s amazement, the stock doubled in price AGAIN! The closing price on day two was $489.75. That pushed my networth up near a billion dollars on paper. Kim was deep into the billions.

I was really worried about the stock being in its own little bubble, and that it would crash and burn at any minute. Shares on the market were in short supply so I sold ten percent of my holdings. That was apparently normal for a ‘high flying’ IPO. I then had about $100-million in cash by the end of trading. WTF!

Wednesday, the stock settled down slightly, only a few percent, but it did have a few wild swings. Thursday, it went up a tad, and Friday, it seemed to get in synch with the rest of the NASDAQ.

During the week, I got calls from Elon Musk, Warren Buffett, and Jeff Bezos congratulating me on the remarkable performance of my little tech company. I also got welcomed into the club of the very rich. Of course, Kim knew each of them personally from prior investment dealings.

I flew the rental jet to San Jose for a trip to Silicon Valley to visit Mitron Network Systems, one of the companies we just bought. They were skittish about my presence, but I assured them that they would only see better days – and I meant that for everyone in the company. I did a Town Meeting in the small cafeteria and everyone in the company attended. The questions were tough, but I made commitments to them that I’d stick by. Alice was with me and took notes. Meg nicely represented the HR packages of the new corporate envelope, and those were better than what they had. I took time to shake hands with most of the people in the company.

The return trip took me through Chicago and a visit to Central State Networking, my other acquisition. They were smaller and more laid back about the impact. My Town Meeting and meet and greet with employees went equally well.

After talking with my board, I contacted Egon Zender, the International head-hunting firm. They found me a COO and also helped me understand the compensation package for such a person. I got a new head of marketing – a hot-shot woman recruiting from another tech firm. Slowly, I rebuilt my executive team with a few from the outside and the rest from internal promotions.

The new management team was announced in a corporate press release and the stock went up ten percent and stayed there. I got several impressive national figures for my growing board of directors. As each appointment was announced the stock went up.

Harley Palmer, Lisa’s friend was still in college, but I made him my part-time special assistant. He was still a propeller head, so I gave him assignments that didn’t fit elsewhere in the growing company, and some of them were pet projects. He loved the white hat hacking and I put him to work on our own website. That proved interesting, especially the meeting with my I.T. vice president when Harley showed him our webpage with Lisa lurking, naked, in part of one of the background pictures. That hole got fixed fast.

Every day there were more viruses plaguing the I.T. world. Their nature was changing. Microsoft had been the target for so many hackers, in part because they were so vulnerable. The company fixed many of the problems with its operating systems and with it, the openness to unwanted software modifications typical of a virus. Apple and other software were ahead of them and doing the same thing.

At the same time, the demand for bandwidth and very high-speed data transfers propelled the importance of networks to unforeseen heights that few companies were ready to cope with. Cyber Solutions, however, was ready and stood out as an industry leader.

One thing stood out to some of the executives in our operations branch was the lack of adequate equipment to cope with the new realities of a networked business.

We had a management retreat at the local college so we wouldn’t be disturbed as much. When we were through, CS had decided to go into the manufacturing business. We bought a small electronics manufacturing company that was marginal, and used them as the wedge to get into the equipment market. Now, we weren’t just setting up and operating, we were also making the equipment that our customers needed. The stock went up another ten percent.

Crystal Blue Photography was also thriving. Crystal’s division of the company into two parts proved a wise decision. The ‘straight’ portion – Gulf Coast Photo Studios – was thriving. Crystal had hired four photographers and photo editor types for that part of the business. They were handling the portrait work and the weddings that got booked at a growing rate. One of the men, submitted some freelance work that GCPS had backed, and he won all sorts of prestigious award and got a lot of press for the company in the newspaper. That begat more business.

The ‘commercial’ side of the business was the original Crystal Blue Photography or CBP. Specifically, they were doing the pornography videos and also handling the ‘private porn’ work. They also helped past customers that wanted to take their ‘private porn’ work and get it on the Internet.

Crystal had added a separate studio for her ‘commercial’ work, although she did continue to use the house. The studio had several rooms, and she created an office, living room, and bedroom setting, and then a space that she adapted on the fly for other videos. Any of the rooms could be changed, but those were the central motifs. She called the place her studio, and it was that. The big advantage was that she could control the lighting and even leave them set up all the time.

CPB continued to grow and develop. Crystal and Carol, the partners in the business, had hired Temple and Troy to work as cameramen and video editors. Temple was a superb videographer. They still needed more as the business grew, so three more got added – Dane Anders, Molly Walters, and Kent Savage. The editing team worked in the new space that CBP had rented.