Trade Secrets

by Kathleen Knowles

  Sheila stared at Erica’s photograph. She was very young, which was expected, but she was both female and pretty, which was not. Most of Pacific Partners’ prospects were bright, talkative, scruffy young men. Ambitious nerds, as Sheila thought of them.

  Global HemoSolutions intended to totally alter the nature of blood testing. This highly unusual start-up wasn’t about unique software or a new platform to do an old thing in a new way; it was medical technology. Sheila needed to find out about the blood-testing market: who, how many companies were involved, and, of course, how much money they typically made. She wouldn’t rely on the prospectus since she could verify those figures elsewhere.

  Sheila looked at Erica’s picture again. She had lots of black, glossy hair, and big dark-brown eyes. Not only was she young, only twenty-six, and female, but astoundingly attractive. But did she have the brains and the deep motivation to make something like she was proposing to do a success? Was she worth them dropping millions of dollars into her hands? Roy had given Sheila this question to answer. He took Gary’s high estimation of Erica and the potential of her company seriously, but he expected Sheila to do an in-depth evaluation.

  Sheila read the GHS prospectus once, then read it again, more slowly, focusing on market share, growth predictions, expenses versus capital, and cash flow. She also perused the list of current investors and the names of the management team. Early on, friends and family had contributed relatively small sums. Sheila read the detailed description of GHS technology and business, the most unusual aspect of the company. Her dad’s firm and most of Silicon Valley focused on high-tech hardware and software. GHS was a biotech company, a whole other animal.

  Erica’s prospectus talked about a proprietary device. The word proprietary usually applied to software and must be similar when applied to a device. The device could run hundreds of tests from a couple drops of blood. Erica didn’t say how it would work, but Sheila didn’t have the background to understand such an explanation anyhow. The chair of Stanford University’s biochemistry department served on the board, so they had access to some scientific expertise. Yet Erica’s grandiose claims were just that: claims, though they all sounded terrific.

  After Sheila finished reading the prospectus, she stood up and stretched, holding her long arms over her head as she looked out the window at the Santa Clara hills. She cleared her mind and did a short stint of prana breathing.

  When she returned to her desk, she did some quick calculations. If GHS succeeded, Sheila’s profit share would increase, maybe by a lot. She tried not to focus on money too much, but it was hard not to, since venture capitalism was, in the end, all about money. She wanted to invest in good companies that aimed to better humankind, and after reading the prospectus, she believed GHS was one of those companies. And, if she could believe the prospectus, the potential for profit was astronomical.

  Sheila walked down the hall to Roy’s office and knocked on the door frame of his open door.

  “What’s the verdict?”

  “I say it’s a ‘go.’ But I’ll look a bit more deeply into the market.”

  He pumped his fist. “I had a feeling about this one. Sheila, if this works the way I think it will, you’ll be a full partner, and I’m positive they’ll approve you for a two percent share. I’m going to have you as point person for GHS.”

  She nodded and couldn’t stop a triumphant smile.

  “I’ll call Erica Sanders.”

  * * *

  The Global HemoSolutions facility was located in the Research Park area of Palo Alto. She’s in a good position, geographically at least. Sheila noted the names of other companies like Google, Twitter, and Hewlett Packard along the way. It was the Valley way: people were big on aspiration, on location and look and gestalt. It was like you joined the group of winners, and then if you followed the rules, you’d be a winner too. Proximity to success bred success, or so people believed.

  A security guard met Sheila at the door and gave her a visitor badge. High-tech people took security to almost ridiculous lengths. They had cube farms with lots of earnest-looking young people tapping away at their PCs or laptops. No one looking at them could possibly know what they were doing. Nonetheless, they liked to keep their visitors on short leashes to show how serious they were about everything.

  The security guard stayed by Sheila’s side as another guard left to notify Erica Sanders that the Pacific Partners rep had arrived. Roy made sure that all their clients knew that Sheila wasn’t a gofer. She was junior partner. But Sheila was always aware that, though nepotism had perhaps gotten her in the door of Pacific Partners, she would last only if she was effective at what she did. She was scrupulously thorough and professional.

  Sheila smiled at the guard and took a good look around. Ceiling-high windows surrounded the entryway to allow in as much light as possible. Behind the reception desk, the blue and white logo consisting of a large check mark, plus the company name, loomed. A few employees were sitting in a chair circle to her left, their heads bent together as they talked. These people could either be taking a break or having a real work meeting. It was impossible to say. The high-tech companies were notoriously casual about things like that.

  The time drew out, and Sheila finally checked her watch. Over twenty minutes had passed. By habit, she was always precisely on time for her meetings. She’d picked that habit up from Roy, who always insisted on punctuality. He said it indicated two things: you meant business and you respected the person you were to meet with and his or her time. On the other hand, her time was not always respected. Sheila composed herself and quelled her impatience.

  She picked a chair at random and sat down, crossed her legs, and looked at her email, composed and unruffled. Time delays could mean anything, but she hoped this one didn’t mean the CEO was pulling a power trip right at the beginning of their potential relationship. That wouldn’t bode well for the future. These entrepreneurs came to the VC as supplicants, and while they didn’t have to be obsequious, they at least had to have manners. This was another item on the list of Roy’s many criteria for judging prospective clients.

  The side door opened, and the security guard walked through with a woman Sheila recognized as Erica Sanders. The guard walked a half-step behind her, like a bodyguard.

  “Sheila Garrison?”

  Sheila stood up and stuck her hand out. “You must be Erica.”

  Erica didn’t smile, but she returned Sheila’s eye contact unflinchingly and held it. Her handshake was just short of too firm, but Sheila wasn’t easily intimidated or rattled.

  “Nice to meet you. Roy’s not with you?” Erica asked. It was clear she was disappointed.

  “No. He asked me to take the first meeting with you.”

  “I see. Let me show you to my office.” Her tone had lost its edge, as though Erica Sanders had made a lightning calculation about which approach, sugar or vinegar, was the best.

  The guard trailed them as they moved through a hallway with large open-plan work rooms on either side. Sheila wanted to ask if she would be able to see the laboratory and other technical spaces, but she decided to let Erica direct their meeting.

  They arrived at a large office next to a conference room. It was unadorned, with no pictures, no tchotchkes, no plants. This was a statement of sorts, Sheila speculated. I have no life or any time for anything other than business.

  Sheila sat in one of the two spartan chairs in front of Erica’s nearly empty desk that Erica indicated with a spare gesture. A laptop was placed precisely in front of the desk chair. That was it, other than a simple square of metal—a plaque of some sort, and Sheila couldn’t read what it said.

  Seated across from Erica, Sheila was able to observe her better, and she formed more impressions. The photograph in the prospectus didn’t do justice to the way her eyes looked. They were large, so dark they were almost black, and took in Sheila without moving or even blinking. She was of medium height and slight stature. Sheila couldn’t decide if her lack of mot
ion was a zen-like stillness or something else. Not zen. Sheila had some experience, since she was a Zen Buddhist who attended services on Fridays, dharma talks twice a week, and sat zazen, meditated, at least a half hour a day. Erica Sanders, Sheila was convinced, was not a Buddhist. She didn’t exude serenity in the least. She projected firm control and a veiled wariness. She didn’t speak for several seconds, but Sheila was unfazed. She wasn’t the least uncomfortable with silence. She treasured it for the rare commodity it was.

  Erica at last said, “Thank you for coming, but I’m sorry it may be a wasted trip. In general, I prepare a presentation for prospective investors and conduct a tour. Without Roy present, I’ll have to repeat it, and that’s inefficient.”

  “Roy has delegated the vetting of you and your company to me. He perhaps didn’t make it clear that I’ve been assigned to your account. I can have him call you. In the meantime, may we proceed? I’d love to see whatever you care to show me and whatever you feel may best inform me of your ideas, your plans for the company, your current operations. I’d like to make a thoroughly informed decision.”

  Sheila had plenty of experience working through negotiation snarls with clients. Like anything else involving more than one person, the venture-capital process worked best with the two parties cooperating instead of at odds. Erica, it was clear, was a control freak. She appeared to be unaware that it wasn’t possible or desirable to control everything, such as when dealing with the person who wanted to give you a large amount of money with which you were expected to make even more.

  Sheila watched Erica make more calculations. She seemed like the kind of person who would go along with what Sheila said and then call Roy later.

  “All right. Let me dive right in then. We’re around seven years old. I came up with the idea when I was a sophomore at Stanford and applied for a patent on a new way to do medical blood testing. My sister was deathly afraid of needles, and I thought there must be some way to perform blood testing that didn’t take tubes and tubes of blood. Some tests can be done with a finger prick. I came up with a method to miniaturize multiple types of lab tests and fit them into a box just a little bigger than a computer CPU.”

  Erica leaned back in her chair and watched as Sheila absorbed what she’d just said.

  “Quite impressive. How far are you from market?”

  Erica grinned confidently. “Three years.”

  Without experience with this type of device, Sheila had no idea if this timeframe was realistic, but software developers routinely underestimated how long it would take to make their products consumer-ready, so she assumed Erica was as overoptimistic as all start-up CEOs.

  “We have negotiated partnerships with the VA to place our devices in several medical centers, and several pharma companies plan to use our technology for clinical trials. The Graff Drugstores corporation wants to use our device to provide on-site testing in its stores. I can email you the details.”

  Sheila mirrored Erica’s expression. “I would like to see all those agreements, and please tell me about your management team.”

  Erica launched into a rundown of all the great technical people she’d managed to hire. Curiously, she talked at length about her board members, even though she knew Sheila had read the prospectus. They were all well-known and well-regarded men and not just from the Valley. One was a former secretary of state for the second President Bush. That they were all male wasn’t a huge surprise, but Sheila thought that Erica would have wanted at least one woman on her board. She’d perhaps probe her about that subject later, when they knew each other better.

  “Are you ready for a tour?” Erica asked. Her brightness turned a bit brittle.

  “I’d love to see your facility.”

  “Certainly. Please look this over and sign it.” Erica slid a multipage document across her desk toward her. “I have to see if all’s ready. Take your time and I’ll be back.” With that she stood up and left the office.

  Sheila examined the non-disclosure agreement she’d been given. It was elaborate and ran for six pages. New companies were wary of competitors poaching their ideas, especially from their employees, but couldn’t imagine how she, as an outsider on a show-and-tell tour, could possibly learn anything to disclose, let alone what this NDA was designed to cover. It was appropriate for an employee, especially a high-level manager. She shrugged, signed it, left it on the desk, and went to the door, thinking to use the bathroom, but the door was locked.

  Surprised, she sat back down and waited. Erica Sanders took her concern for security to stratospheric levels. Their technology must be truly something special. Erica returned and sat down behind her desk. “I apologize, Sheila, but we’ll have to reschedule. It might be for the best, since I’d very much like to have Roy come on the tour.”

  Stymied and a tad irritated, Sheila sighed but smiled briefly. “Of course. I understand. If you wouldn’t mind, would you send me the names of some of your competitors? I’d like to know more about the business of medical testing. And please send any current agreements you may have with testing partners.”

  Erica nodded. Sheila took several deep breaths to calm herself, then shook Erica’s hand and left.

  Chapter Two

  Back at her office, Sheila took a fifteen-minute break for meditation, and then she composed an email to her father with her thoughts better organized. In person, Erica was as compelling as her prospectus. She was mercurial and secretive, but those were practically built-in personality traits of start-up CEOs. GHS, from all available information, was a great investment prospect. Even if their income projections proved to be exaggerated, the business could still make a ton of money. Her email pinged with a message from Erica, containing the promised information on their industry partnerships and links to other blood-testing companies. She had sent nothing, however, from Graff Drugstores. Sheila made a note of that oversight. Erica or her assistant might have forgotten.

  Sheila saved the documents to her desktop and began to read the material and make notes. A knock at her door startled her. It was Roy.

  “Hi, sweetheart. How was the meeting with Erica?” Sheila wanted him not to use that term for her at work, but it was hard to persuade him to change.

  “Good, mostly. Let me have another half hour, and I’ll come talk to you.”

  She printed out all of Erica’s material so he could read it in hard copy. He hated reading things on his computer. She’d been able to convince him that email was okay, but he was still dubious about everything else: text, chat, etc. He claimed he was just old-fashioned and liked phone calls and paper. She smiled as she neatly clipped everything together.

  Roy was sitting with his feet up, tossing his nerf basketball into the net and missing when she entered his office. She put the stack of paper in front of him.

  “So?” He grinned and raised his eyebrow. “We going to pull the trigger?”

  “You’ve already decided, I think.” Sheila laughed.

  “No. I want to hear from you.”

  “Erica is persuasive, very persuasive. She’s like an evangelist.”

  “If evangelists looked like supermodels.” Roy gazed at the ceiling.

  “I noticed.” Sheila injected a note of dryness into her tone. She’d told herself that just because the woman was supernaturally beautiful, she wasn’t necessarily trustworthy. On the other hand, she could be. Sheila didn’t want to stereotype anyone.

  “Well. All that aside, what do you think?” Roy asked.

  Sheila took a breath. “The partnerships she’s talking about could be worth a ton of money. Currently only two companies do blood testing, and it’s a billion-dollar market. GHS would blow them away if they could do it faster and cheaper and with less blood. And no needles.”

  “Sounds great.”

  “Erica wouldn’t give me a tour of the facility without you being there.”

  “I know. She called, and I told her you were the point person.” Roy was working on his unconscious sexist language, and his
effort was endearing. “But as you might imagine, she sweet-talked me into coming over there with you. I’d like to see it anyhow.”

  “Dad, I’m not sure if either you or I would even know what we were looking at and if it works. We don’t know a thing about biotech labs. We’re software people. Give me a new and trippy program for something that no one ever thought of or an online service thousands of people don’t yet know they need, and I can judge those. I don’t know anything about blood testing. That concerns me.”

  “Oh, I think Erica’s smart enough to hire good technical help. We’ll see what she shows us and who.”

  “Right. I’ll set it up. Are we going to have dinner with Mom tonight?” Sheila’s mother and dad were divorced, but they maintained a best-friend sort of relationship that Sheila was grateful for. She could spend time with both of them. Since she’d moved back to the Bay Area from, she hadn’t had time to develop a social life. Her stint in New York had been short, and she’d been busy and not really done any dating there either. Here she was back in Silicon Valley, surrounded, theoretically, by a large population of smart, eligible women to choose from, and she’d had exactly two dates in a two-year-and-a-half span, neither of them worth a second look. This has to change.

  * * *

  Roy and Sheila sat at the shiny conference room table at GHS and listened to Erica as she ran through a polished presentation about her company visualized in a detailed, glossy, PowerPoint slideshow. Unlike the prospectus, the slideshow delved more deeply into the process of blood testing and how GHS proposed to transform it. Erica projected pictures of what she called “microcaps”—tiny tubes where samples were captured—and then a picture of something called a Leonardo. It looked like an older, larger piece of computer hardware.

  “We envision placing the Leonardo in people’s homes. Think of the convenience and ease that will give a cancer patient, who can then perform her own blood tests in the comfort of her own home. The data is transmitted wirelessly wherever it needs to go—to doctors, anywhere.”