Blood and tech, p.26
Blood and Tech, page 26
“Let’s write it up now. We need to let our investors know that we are on top of things. We need to be perceived as proactive, we need to be perceived as in control,” Roman said, and threw a pen towards Richard.
During the next half hour they carved out a press release, and a plan for how to attack the issue. Andrew, however, felt sidelined. Roman seemed to mostly rely on Richard and Ken for input, and when Andrew offered his opinion, it didn’t seem to be seriously considered. Andrew was the CEO of Tuna Life, but in this setting he felt more like an observer, a junior employee who had been brought along to learn how the executives arrived at their decisions.
Was Roman blaming Andrew?
Should he prepare to suffer the same fate as Frank? To be squeezed out of the company and lose his shares?
“Ok. We have a plan. What we now need is a war chest,” Roman said.
“A war chest?” Andrew repeated.
“Money,” Richard answered. “We have a week of runway, and then we are broke. The plan was to do the new share issue this Friday. But I can guarantee you that Ferdeko Ventures won’t be very keen to invest until we have sorted out this issue. Not at the valuation we are asking for, anyway.”
“So how do we avoid going broke? How do we raise money in less than a week?” Andrew asked; he was visibly stressed.
“As main shareholders you can all inject money,” Richard said.
Andrew felt the nausea lingering. True, he had received two hundred thousand in the last share emission, but there wasn’t much left of it. There was actually none left of it. Not even enough to cover the tax bill he would receive in twelve months’ time.
“How much do we need?” Ken asked calmly.
“Well, the new share issue was intended to be for twenty million, but I guess five million would give us enough runway,” Richard said.
Ken whistled.
Roman remained silent.
Andrew could see where this was heading. “So Roman will become the new majority shareholder? That’s the plan isn’t it? Ken and I are out. You are just going to take over our shares, just like you did with Frank’s.”
“You and Ken have the same opportunity to invest as Roman. Nobody is either forcing or denying you to invest.”
“And what will the valuation be? A couple of days ago you talked about a valuation of half a billion. Is that the price we will be investing money at?”
Richard shook his head. “Don’t be difficult, Andrew. You know, as well as I, that that valuation was based on different circumstances. This is a crisis-emission. We need to raise cash by the end of this week, otherwise we risk having to declare bankruptcy. The valuation will reflect this situation.”
Andrew rose from the table. “I want to know what the valuation is going to be before I accept anything.”
“Sit down, sit the fuck down.” Roman pushed his chair out with his legs, and got up. The fat stocky man looked like he was fuming with anger as he stared at Andrew with his lizard eyes. “No one leaves this table until we have made some decisions. Andrew, let me be totally clear on this: You do not work in a big corporation, you do not work in the public sector. You work for me. I don’t employ committees or bureaucrats. That is my strength. When the shit hits the fan, I make decisions. And today, you are going to do the same. Today we either save Tuna Life, or we let it die. Either way, we will all bleed today. The question is how much.” Roman pushed his chair closer to the table, and rested against it. “How much do you have left of your two hundred?” Roman asked.
Andrew did a quick calculation in his head. “About forty thousand,” he answered.
Richard glanced over at Roman, genuinely surprised, as if he was a father who had just been told his son had gambled away his inheritance.
“How much do you have left?” Roman asked Ken without missing a beat.
“Two hundred thousand,” Ken replied.
Andrew sighed. Ken came from a family rolling in money. Of course he hadn’t had to dip into any of the cash.
“Ok. This is how we do it,” Roman said.
“You, Ken and I inject one million each. We all maintain our respective percentages. There is no change in ownership.”
“Didn’t you listen to what I just said? I can’t come up with a million. The forty thousand I’ve got left won’t even cover my tax bill for next year,” said Andrew.
“I’ll lend you the money, on commercial terms, using your shares as collateral. You’ll have twelve months before you get that tax bill, Andrew. Plenty of time to make more money.”
Andrew considered the unexpected proposal. He had felt sidelined throughout the whole discussion about how to deal with the camera crisis. Quite frankly, he had thought that Roman was about to push him out of the company. Now Roman offered to lend him the money so that he could maintain his shareholding. It was the strongest vote of confidence he could have asked for. Roman still wanted him as CEO.
He wasn’t on his way out, like Frank.
Andrew extended his hand. It was an offer too good not to accept.
Surprisingly, Ken was the one who baulked. “I can come up with a million, Roman. I just need some time,” he said.
“How much time?” Roman asked.
“A week? I’ll have to talk to my dad. And the money will have to be transferred from Hong Kong.”
“We can’t wait that long,” Roman said. “You can borrow money from me. Pay me back in a week’s time if that’s what you want. But we do this now.”
“Why can’t we just lend Tuna Life the money? If this is just a short-term solution there is no real need to do a share issue.”
“I already told you, Ken, I don’t employ committees. We do it this way. End of discussion.” Roman then pointed to Andrew. “You and Ken should head back to the office. It is important that you are present over the next few days. Richard can handle the share emission.”
Andrew and Ken nodded.
“Richard, contact the lawyers. I want to have the new share emission placed before tomorrow afternoon.”
Richard nodded, before rising to leave.
“You stay, Richard. You and I have other matters to discuss,” Roman said.
“What do you think they are talking about?” Andrew asked, as he and Ken left Roman’s house.
“Your guess is as good as mine. But they’ve got other investments too. Tuna Life is probably not the only company with problems.”
Ken’s assessment made Andrew let his shoulders down. “See you in the office,” he said, and walked over to the Tesla.
“Why do you hold on to him?” Richard asked. “He’s not mature enough for the role. He’ll never be mature enough.”
“Relax,” Roman answered. “Andrew is already gone. He just borrowed money from me. Always remember, Richard. He, who holds the gold, makes the rules.”
Richard studied his boss. He had said it with such casualness. He was planning to force Andrew out of the company, and it didn’t bother him at all. Richard hoped he would never end up on the wrong side of Roman in business, he hoped he would never end up on the wrong side of Roman in anything.
Andrew only made it to Runaway Bay before the Tesla’s battery gauge finally made good on the threats it had been throwing for the last few weeks. The electric engine gave up in the middle of a roundabout.
Andrew swore as he exited the car.
It had truly been a shitty week.
Just how shitty, he would soon know.
69
The emergency capital raising was finalised the next day. Andrew and Ken had brought their own lawyer to the sign-off meeting, and when the lawyer had given his nod of approval, both Ken and Andrew had felt better about the transaction. If any, Ken had been the most negative. He still felt a share issue wasn’t strictly required, and had accused Roman of rushing the process. He wanted more time, more time to peruse the documents, more time to consider his options and maybe ask his father for an advance on his inheritance. Instead he had ended up in almost the same situation as Andrew. Andrew had borrowed a million, and Ken eight hundred thousand. It couldn’t be good to owe Roman that much money, they both thought as they signed the papers. But sign they did.
Andrew had seemed more concerned about being sidelined, and ousted as CEO, than borrowing money from Roman. He had been genuinely worried that he was about to receive the Roman-treatment, but his lawyer’s assurance that the deal was good, and the fact that Roman had personally lent him the money, gave him confidence that his job was still safe.
Andrew also noticed a new trait with Ken, a trait he had never before noticed. Ken seemed like he was always alert, like he didn’t trust Roman. Ken always used to be the laid-back one, the one who never cared about anything. Now the roles had been reversed.
They hadn’t had many alternatives though. It was an undeniable fact that the company needed cash, and with the deal, everything remained unchanged. Status quo was maintained.
The only external investor, if you counted Roman as one of the co-founders, something he had started to insist on, hadn’t even bothered to send a representative to the signing. They had so much faith in Tuna Life that they had just wired the money. As long as they maintained their shareholding they were happy.
There wasn’t any time for celebration though, not even when the funds hit the account. They had managed to secure funding for some time forward, extended the runway as the phrase went, but gone were the days when they were a small start-up. Tuna Life now employed forty-five staff, they rented expensive premises and had their own chef. And every time one of their users uploaded a picture of a piece of clothing, it cost Tuna Life money. Not much, but when you multiplied it by thirty million active users, it soon became a decent amount. The reality was that they had become a large company with massive fixed costs. Talent acquisition and retention didn’t come cheap, and they couldn’t afford to be stingy. They had to spend money to fuel the growth, and then they could always start cutting back once the growth stalled. At the moment they were printing money. And they had to keep their foot on the pedal because the market valued every new customer at more than a hundred times the cost of acquiring that customer. It was insane. They were virtually printing money. Paper money.
And then they had this big fire to put out: The Tuna Life app had without warning started to take pictures and shoot videos of thousands of its unsuspecting users.
The problem with the Tuna Life app disappeared almost as fast as it had come about, though. As soon as the share emission was finalised, the company stopped receiving complaints. There were still a lot of rumours on the internet, speculations about what had really transpired, and there had been a rather dramatic drop in downloads. But the number of uninstalls was surprisingly low. It appeared as if the Tuna Life users were awaiting some official statement from Andrew before deciding whether to uninstall the app or not.
And the official statement turned out to be something Andrew hadn’t seen coming.
“We have to let you go, Andrew.”
“Are you fucking kidding me? No way. No way.”
“This is not a negotiation, Andrew,” Richard continued. “The press release has already been prepared. It’s ready to go.”
“But why?”
“You can’t continue, Andrew. You promised, on live TV of all things, to revert the user agreements back to what they were. You promised we would never access our users’ devices without their knowledge. They’ve been replaying your conversation with Horne on every bloody radio and TV channel the last twenty-four hours. You broke a promise, Andrew. There’s no way back from that.”
“But it was an accident. There was a glitch in our software. People will understand.”
“Somebody has to take responsibility, Andrew. That’s how the world works. You stepping down is the only thing that can save Tuna Life. And don’t forget, you’ll still be a multimillionaire the day we do our IPO.”
Andrew wasn’t so certain of that. He had just borrowed money from Roman to avoid getting diluted in the crisis-emission. A million fucking dollars. If he left Tuna Life now he would have no control of what happened in the company going forward. Before he knew it, he could find himself removed as a shareholder. Screwed like Frank Geitner. Maybe it was karma? Andrew hadn’t objected too much when Roman fucked Frank.
“What if I refuse? What if I refuse to step down?”
“Then you will be sacked, Andrew. You can leave on good terms, or you can leave on bad terms. The end result will be the same.”
“Try, Try to fucking fire me!” Andrew spat out, before storming out of Richard’s office.
“Don’t need to. You managed that all by yourself,” Richard said to himself after Andrew had slammed the door shut.
Richard looked down at the press release he had prepared earlier in the day. They needed a scapegoat, and Andrew happened to be the perfect one. He had never had a management position before being appointed CEO of Tuna Life, he had no background in technology, and he had been lying about his background in all of his interviews. He had made it all up. Nothing of what he had been telling the public had been true.
He was a phony.
A phony and a fraud.
And now, now Tuna Life’s board was taking decisive action and sacking him.
Part III
70
MONTH 7
NUMBER OF EMPLOYEES: 90
NUMBER OF USERS: 60M
VALUATION: $1 BILLION
Andrew was drooping in his car, at the parking lot outside the Easy-T Shopping Centre in Robina. He had just been to Aldi, the German discount supermarket, to pick up some groceries. He was amazed how quickly it had all happened. A few weeks back he had been dining at the finest restaurants on the Gold Coast. Now he had to resort to a frozen pizza from the supermarket. Not any supermarket, either. It was Aldi, the discount one. Woolies and Coles were outside his budget at the moment.
He had received two hundred thousand dollars when Tuna Life raised money from external investors. Now he risked not being able to pay his tax bill for next year. He wasn’t stupid; he knew that Roman somehow would be able to acquire his shares for nickels and dimes. Roman had insisted on including a right to convert his personal loan to Andrew into Tuna Life shares if Andrew ever was found guilty of fraud or serious negligence as CEO of the company. Andrew had, within hours of being sacked, sought out his lawyer. But at the lawyer’s office he had received the surprise of a lifetime. The lawyer was now working full-time for Roman. A cold shiver had run down Andrew’s spine when he realised that the lawyer he and Ken had used for advice, most likely had been Roman’s man all along.
Andrew had been played. And he hadn’t even seen it coming.
Perhaps it was deserved, he thought.
Karma.
Andrew had done the same to Frank.
But where had all the money disappeared? How had he managed to spend all that money in such a short amount of time? It was like crazy-Mike-Tyson-spending.
The truth was that he had stopped worrying. Throughout his life he had always worried about money, worried that there wouldn’t be enough to pay the bills, worried that the bank would move in and take over his apartment if he lost his job. He had always just made enough to keep his head a few centimetres above the water. One month’s salary as a buffer. Always one month away from being broke. And then Roman had given him an envelope filled with cash. And then two hundred thousand had been deposited straight into his account. And then Richard had told him his shares were worth seventy-five million. To spend five thousand on a night out clubbing didn’t seem like such a stretch when you knew you were good for almost a hundred million. Andrew’s largest expense hadn’t been partying though. It had been investing. Poor investing. After Andrew had been declared an A-celebrity in the tech community, and a C-celebrity in the rest of the population, every dumbass with a half-baked idea had approached him. And Andrew had willingly handed out money. It had worked well in the beginning. The fact that Andrew invested in a company was enough for it to have its moment in the sun. It would get publicity, and the publicity would attract new investors at ever higher valuations. Andrew’s investments had tripled in a matter of months. But then of course the bubble had burst. The companies he had invested in weren’t like Tuna Life, they were dead ducks. None of them made money, none of them even had any good idea of how to ever make money, and they would all soon run out of cash. The next time they raised funds from investors, Andrew would be out – diluted into obscurity.
Andrew turned the ignition key in his old Mazda 3. He had left the Tesla at home. For some reason it refused to start. Well, it wouldn’t have to start for a while. Tesla hadn’t yet opened any service centres in Australia. They didn’t even plan to launch the car until a full year away. And there was no way Andrew would bring the Tesla to his local mechanic, the retired Mazda guy who got stressed if he had to do something more advanced than changing oil filters. The Tesla needed someone with a fucking computer science background, not a mechanic. The freaking thing was an iPhone on wheels.
Andrew’s phone rang. For a brief moment he just stared at the vibrating phone. The Samsung. The smartphone that had been at the centre of this short adventure of his.
The smartphone.
Mobile apps.
Andrew still used the Tuna Life logo as his wallpaper, even though he had stopped using the app the day he got fired. The problems with the cameras turning on had disappeared almost as fast as they had appeared. It was beyond suspicious. Andrew was now certain that it had all been orchestrated by Roman. That Roman was the man behind the virus in the Tuna Life software. That it had all been part of an elaborate plan to get rid of Andrew.
Roman Bezhrev now owned more than half of the company. On paper Andrew still had his shareholding intact, but he knew that wouldn’t last. He couldn’t possibly envision either Ken or he keeping any of their shares. Somehow, in some way, Ken and Andrew would become minority shareholders – they had after all borrowed money from the devil himself – and then they would soon be out of the of the company.
