Chapter 7 - The Secondary, February 3 - March 28, 2000 - Episode 9Listen to podcast
Larry and Donna are in Larry’s room at the Four Seasons in Houston which is where they will be pitching tomorrow. They’ve just connected with Sales VP Frank Folger on the conference phone.
"Where are you guys?" asks Frank.
"Fucking Houston," says Larry.
"How’s it going?" asks Frank.
"How do you think it’s going with the stock down thirty percent?" says Larry. "What’re you doing to help?"
"I’ve got some good news for you, boss."
"I can use it. What?"
"Got the iHudson deal."
"They signed? Great!"
"They’ll sign tomorrow; I’m sure of it."
"It’s not signed until it’s signed. What kind of bullshit is this?"
"They’ll sign tomorrow, trust me," says Frank. "I’m playing golf with the CEO tomorrow afternoon. It’s in the bag."
"Okay," says Larry. "That’s good, if it really is in the bag. Is Eve working on the press release?"
"There’s a little problem there…"
"What? What little problem? The whole point is to get the press release out and get the stock back up before we price this fucking secondary. I told you that."
"They haven’t given us clearance on the release," says Frank. "They’re sensitive about that, so they took the standard PR permission out of the contract."
"Get it back in."
"I don’t think we want to do that, boss. It’ll slow things down. We don’t want this going back to the lawyers; we want it signed by the time the CEO and me tee off. Otherwise it can get delayed forever."
"Jesus Christ. Okay, sign the fucking contract, but be sure you get permission from the CEO before you finish your round of golf."
"I’m on it, boss. Marcele said you and Donna want a sales update. I emailed you some numbers. Did you get them?"
"I’ve got them," says Donna. "They don’t look very good. You’re not going to make your quota this quarter."
"Well, I’m being conservative but things are soft…"
"Why?" asks Larry. "What changed? You said you were being conservative when you gave us the original numbers for the quarter."
"You were pushing for profitability," says Frank. "You were pushing us to stretch."
"You committed to those numbers, Frank," says Larry. "You looked me in the eye and you said you were going to make them. Now you’re telling me you’re not. What the fuck is going on?"
"Deals aren’t closing when we think they will," says Frank. "And the iHudson deal took a lot of work, but there isn’t much money in it. You wanted us to do that one."
"Don’t throw iHudson back in my face," says Larry, "because you guys couldn’t close it without practically giving the license away. What kind of deals aren’t closing? Is it all salespeople? Some salespeople? All segments?"
"Well, I really haven’t had time…"
"It looks like we’re way below forecast on small equity deals," says Donna. "We’re not doing bad with the cash deals with the porno sites. The late stage equity deals look okay. But we have way less small deals than we thought we would."
"It does look like that," says Frank, "if you look at it that way."
"Why?" asks Larry.
"Let me talk to some of the sales people and get back to you on that, boss."
"I don’t have time for that bullshit," says Larry. "It’s your job to be talking to the salespeople. It’s your job to look at the numbers and know if there’s anything fucking wrong and to figure out what and fix it. Donna shouldn’t have to figure out where the problem is. Fucking THINK. What’ve the salespeople been telling you? What are their excuses?"
"Well, accounting has been turning down more of our equity deals," says Frank. "I can’t get them through Donna’s people."
"They turn them down when they don’t meet our rules," says Donna. "That’s nothing new. You’ve been sending us more crap lately and we’ve been sending it back. You’ve been sending us equity deals from companies that haven’t raised even first round financing yet. Is that what you’re talking about?"
"I think so," says Frank. "It seems like financing has sort of slowed down. A lot of prospects we thought would’ve closed their financing by now haven’t. But we know they will, so we’ve been trying to get the deals approved…"
"You don’t know they will," says Donna. "That’s bullshit. You don’t know why they aren’t closing their financing and you don’t know that they ever will. That’s why we turn down those deals. There just a bullshit way for salesmen to get paid without making a real sale."
"Well, that’s what’s hurting us," says Frank. "We can’t book sales if accounting won’t approve the contracts and we can’t make these companies close their financing any faster than they are."
"So now you understand why you aren’t making your numbers," says Donna in a dangerously low voice. "Now you understand, and it’s all Accounting’s fault. Ten minutes ago you didn’t have the slightest fucking idea what was wrong and now—"
"Okay," says Larry. "Now we know something. We know we’re not closing the small equity deals and we know — or Frank thinks he knows — that it’s because the new companies aren’t completing their financing as fast as they thought they would. And we know this could mean that we don’t meet our fucking numbers for the quarter. And we know we have to meet or exceed the numbers. No fucking question about that. Not this quarter. So what the fuck are we gonna do about it?"
"I have three ideas, boss, if you want to listen to them," says Frank.
"That’s amazing in a guy who didn’t even know he was in trouble until we asked," says Donna.
"Let him talk," says Larry. "Go ahead, Frank."
"One: seeing this quarter is so important, we could add a kicker to everyone’s comp in sales to make sure they focus and bring stuff home…"
"Forget that," says Larry. "What’re your other two ideas?"
"I’ll get back to you on that one, boss," says Frank. "Anyway, another thing we can do is loosen up on the criteria for approving these sales. If we take a chance on the guys who haven’t closed their first rounds yet, if we cut them some slack, they’ll be very grateful and we’ll get the sale. They can’t buy from antihack before they get their financing because they have no cash or credit…"
"We’re not going to do that," says Donna. "We have those rules for a reason."
"I don’t see why," says Frank. "Suppose just for the sake of argument that some of them don’t get financing. It’s not like we’re out anything. Another copy of the software doesn’t cost us anything. And when they do get financing, we’re in like Flynn. I always thought this was a stupid rule. I…"
"What’s your third idea, Frank?" asks Larry.
"We’re doing good on the cash deals and the bigger equity deals. We could do even better if we didn’t bargain so hard."
"We don’t lose any deals on price," says Larry.
"No, we don’t," says Frank. "But price slows them down. Our prospects hold out, thinking we’ll cave. We don’t, and usually they sign if antihack doesn’t get to them, but it costs us time. If we offer ‘em an incentive to close before the end of the quarter, then we can get some of the good stuff out of the pipeline in time to help us."
Donna is making a time-out signal. She mutes the phone. "Don’t agree to anything, Lar," she says. "We’ve got to talk."
"Frank, do you have any other ideas?" asks Larry.
"I really think we should revisit a special incentive for sales…"
"Do you have any other ideas?"
"Not right at the moment. What do you want me to do?"
"This sucks, Frank. Donna and I gotta talk it over. We’ll get back to you. And don’t forget to get permission for the fucking press release from iHudson."
"You got it, boss."