At last he spoke. ‘Have you ever run a company before?’
‘No, I haven’t.’
‘Have you ever sold a computer? Or any industrial goods?’
‘No.’
‘Have you ever drawn up budgets, sales forecasts, production schedules?’
‘No.’
‘How many people have you managed?’
‘Look, David,’ I said impatiently. ‘We both know I have no experience. But I pick up things quickly. I work hard. I have common sense. And I have good people around me who understand these things. One of whom is you.’
He paused again, weighing me up. He was trying to embarrass me, but I was determined he wasn’t going to succeed. ‘OK. I’ll help you,’ he said at last. ‘But you have to understand that the VR business is a very difficult one. It’s not for amateurs. I have a lot of personal capital invested in this company, and I don’t want to see it all blown away. I know how to steer this business through the next few months, so you had better listen to what I have to say.’
‘I’ll listen, David. But, remember, I take the decisions.’ We stared at each other. This was not going to be easy. ‘Right, then. Tell me about our customers.’
David ran through everything professionally. And it was a professional operation, especially for a small firm like FairSystems. There were some big-name customers: the US military, NASA, DEC, Framatome, Deutsche Telekom, Sears Roebuck, the RAF, the Metropolitan Police, and a scattering of large corporations around the world. But, as Sorenson had pointed out at the board meeting, they only bought a handful of systems each. None seemed about to put in the orders for hundreds of machines that would make FairSystems really take off.
I mentioned this to David.
‘You’re right. That’s the next big challenge. But we have laid a good foundation. I think it’s an outstanding achievement for a young company like ours to have put together a customer list like this. Especially with only six salesmen. Once we have the product at a sensible price, we’ll sell thousands. You’ve got to get Rachel and her boys to come up with something that costs less than twenty-five thousand dollars, and then see what we can do.’
It was true, he had done a good job.
‘But even with the product at current prices, I’m sure we’ll see strong sales growth,’ David continued. ‘For example, I’m putting together a deal with Onada Industries that should earn us big royalties over the next few years.’
‘Who are they?’ I asked.
‘They’re a Japanese electronics company that’s just getting into entertainment. They have their eye on catching up with Sega and Nintendo. Now, entertainment is an area in which we’re very weak. We developed a system with Virtual America, but that’s it. There are only a couple of dozen of our systems out there. A company called Virtuality in Leicester have a stranglehold on the world market at the moment. This is our chance to break it.
‘So, I’m negotiating a deal where we work with Onada to help them develop a virtual reality entertainment system of their own that will wipe the floor with Virtuality and Sega.’
‘Great,’ I said. ‘Sounds like a good opportunity. Well done.’
‘I hope I can close the deal soon. They’ll be here next week to discuss it.’ Once David said this, I could see he regretted it.
‘Oh good. I look forward to meeting them.’
‘Oh, I don’t think you need bother.’
‘If Onada are about to become our biggest customer, I want to meet them. And I’d like to see documents on the negotiations so far.’
David sat back in his chair.
‘You know Richard would have wanted to be involved,’ I said. ‘All I want to do is follow what’s going on. I won’t interfere.’
David wasn’t happy, but he gave in. ‘OK. The meeting is at nine next Monday.’
‘Good.’ I stood up to go. David stopped me.
‘Oh, Mark?’
‘Yes.’
David forced a smile. ‘I was meaning to ask you. Would you like to come round to dinner on Saturday night? I’m inviting Rachel, and Willie too. I hope you can make it.’
I, too, forced a smile. ‘Thank you,’ I said, seeing my weekend in London with Karen disappearing. I couldn’t refuse David’s hospitality, even though I suspected it was politically motivated. I really had to go. ‘I’d be delighted to come.’
It was six thirty, and I was tired. But there was one more thing I wanted to do before I went home. I went back upstairs to Software. Everyone was still there. Rachel was talking to Andy, the man-boy I had seen coming out of the Project Platform room. He saw me and hurried off. He had developed dark bags under his eyes, his hair was tousled, and his shirt-tail was hanging out. His mother would not have been pleased.
‘Rachel?’
‘Yes?’ She looked straight at me, defying me to ask some more about Project Platform.
That could wait.
‘I want to learn as much as I can about programming and virtual reality,’ I said.
‘Oh yes?’ said Rachel, trying not to smile. It was a difficult thing to ask. But I knew that there were many managers in the computer business, David amongst them, who knew very little about how computers worked and were programmed. I was determined not to be one of them, even if I risked some humiliation at the start.
She looked round the room. ‘These people have spent years on software design. It’s not something you can pick up over a wet weekend.’
‘I know that,’ I said. ‘But there must be some books I could read. Something that would tell me how you go about writing a program. How you organise the programmers, what’s possible, what’s impossible, that sort of thing. And anything you have on the background to virtual reality would be very interesting.’
Rachel looked at me sceptically. ‘Are you serious?’
‘Yes. It’s important.’
She thought for a moment. She pulled out a couple of books from her bookshelf: The Art of Computer Programming by Knuth, and Virtual Reality Now by Larry Stevens. ‘Start on these. When you’ve read them, we’ll talk.’
It was strange. Since the age of fourteen, if not before, I had steadfastly refused to show any interest in mathematics or computing. That was for ‘computer freaks’, nerds like my father and brother. Sure, I had learned how to draw up spread-sheets, but that was only because it was an essential tool for trading the markets. But that evening I found reading the books Rachel had given me stimulated parts of my brain I didn’t even know I had. I resolved to borrow some software and a computer from Rachel to try out programming for real.
David was true to his word, and I was able to move into Richard’s office the next morning. I put his photographs of the prototype VR machines back on the wall, and worked out how to switch on the electronic window. It showed the view of the Firth of Forth from Kirkhaven. The Isle of May, with its two lighthouses, was clearly visible to the east. The sea moved gently, and small fishing boats chugged in and out of the harbour. Over the course of the morning, I saw the sun move across the sea, from left to right. I liked it, and decided to keep it.
I looked around the office. It was small, but it was all mine. I had never had my own office before. It felt a bit claustrophobic and lonely; I was used to having a hundred people within my field of vision. I paced around for a minute or two, and then opened the door wide.
Susan, Richard’s secretary, and now mine, came in. She was about thirty, with permed brown hair, and a motherly look about her. ‘Can I get you a cup of tea or anything?’
Having spent most of my working life in a trading room, where secretaries are a rare sight, I wasn’t used to being waited on. ‘No, let me get you one.’
In the end, we both made our way to the machine which dispensed tea.
‘It’s good to have someone in that office again,’ said Susan as we walked back. ‘Especially Richard’s brother.’
‘Had you worked for him for long?’
‘Three years. He was a good boss, although he worked much too hard.’
‘Ah ha. But they do it because they want to.’
‘You miss him?’
‘Yes, I do,’ she said, biting her lower lip. ‘The place has had an awful feel about it since he died. I mean his personality used to be everywhere, it lit up the whole factory.’
‘Well, I know I won’t be able to replace him,’ I said, ‘but I will do my best for the company and the people in it. For his sake, as much as anything else.’
‘I’m sure you will. You know, you look quite a lot like him,’ Susan said, eyeing me up and down. ‘And don’t underestimate the goodwill towards you here. We all feel for you, and we’ll all do our best to help.’
‘Thanks.’ I smiled, and took my cup of tea into Richard’s office. FairSystems felt a bit like a family, and if it had been Richard’s family, it was my family now.
I sat down at the smooth black desk, and thought about the company. David Baker bothered me. He was clearly very good at his job. And he clearly didn’t like me being around. Somehow I would have to run the company without alienating him so much that we lost him. We couldn’t afford that. I wondered what had been the cause of the big argument he had had with Richard.
Rachel, too, was impressive, and I was much more confident of being able to work with her. Technologically, it was clear that FairSystems was very strong. We just needed that breakthrough she had spoken about; the high-volume production and mass-marketing that would bring down the price of VR systems so that everybody could use them. That would involve significant risk even for a company as big as IBM. For a company of FairSystems’ size and financial position, it seemed impossible.
I was still intrigued by Steve Schwartz’s theory that a buyer was accumulating FairSystems’ stock at low prices with the connivance of Wagner Phillips. Well, I had a perfect opportunity to find out more about that. Willie and I were having lunch with Mr Wagner himself that very day.
I turned on my computer. It beeped and told me I had an e-mail waiting for me. With a small smile of gratification that my presence in the company had been noticed by the computer as well as everyone else, I clicked on a couple of menu options to call up the message.
The smile disappeared.
Give Up. Go home. FairSystems is fucked.
Doogie
12
Scott Wagner was smooth. He looked good. Broad shoulders under a well-cut suit. Tanned face with a square jaw. Blue eyes that held mine steadily as he talked. Immaculately groomed thick hair. A fit thirty-five-year-old body that emanated well-controlled energy.
He sounded good too. A soft spoken, pleasing American voice. Diction that was clear, slow and measured. Sincere. Powerful, but in a low-key way.
He was in the UK for three days to check out a possible candidate for flotation on NASDAQ, and wanted to meet Willie and me. Willie was obviously in awe of him, alternately flattered to receive his attention, and scared to be in his presence. As he sat at the conference table, he reminded me a little of David Baker, but he was altogether a classier act. He represented what David wanted to become.
We were in the restaurant of the Balbirnie House Hotel, which had been the local laird’s residence when Glenrothes had been no more than an estate between villages. We were the first in the elegant dining room; Wagner was anxious to catch a three o’clock flight from Edinburgh airport.
The waiter came, and Wagner ordered smoked salmon, followed by a salad. No wine, just still water. I thought I would get stuck into some venison, and yes I would like some of the Pomerol, thank you very much.
‘I had a fascinating meeting with Scottish Enterprise this morning,’ Wagner said.
‘Oh yes?’
‘Do you know how many things were invented by Scotsmen?’
‘The haggis? The kilt? The caber? McEwan’s Export?’
Wagner smiled. ‘Much more than that. The telephone, the television, radar, Tarmacadam, penicillin, chloroform, the pneumatic tyre. Even the adhesive stamp! What I can’t figure out is why this country isn’t as wealthy as California.’
‘Because they all left Scotland before they invented any of this stuff?’
‘I guess that must be it. But I still think there’s a great opportunity here for firms like ours which know how to finance young companies.’
‘I hope you’re right,’ I said. ‘Tell me a bit about Wagner Phillips. You have quite a reputation in small-company stocks. But you haven’t been going that long, have you?’
‘We’re coming up to our fourth anniversary. Dwayne Phillips and I set the operation up with half a dozen of our old colleagues. We now employ a hundred people. We’ve had a good few years. The breaks have come our way.’ Wagner’s voice was tinged with pride.
‘Very impressive. Where did you all come from?’
‘Drexel Burnham. I’m sure you remember them, you’re in the business.’
‘I certainly do.’ Drexel had risen from obscurity to become one of the most powerful investment banks on Wall Street. It was Drexel which had organised the biggest leveraged buy-out in history, when Kohlberg Kravis and Roberts had purchased RJR Nabisco for twenty-five billion dollars. They had achieved this through the financial genius Michael Milken, a maverick who had broken all the rules, and ended up in jail for it. Drexel’s excesses eventually caught up with them too; they’d gone bankrupt in 1990.
‘You’ve probably heard some bad things about Drexel,’ Wagner said, ‘and there’s no doubt that towards the end, some in the firm went too far. But there were some exceptionally talented people there, real entrepreneurs. It struck me that that culture would be well suited to financing young growing companies with equity. So, we set up Wagner Phillips to do just that.’
‘And it worked?’
‘It sure did. We’ve done over a hundred initial public offerings since we started out. That’s a hundred companies that have raised finance from the stockmarket to develop new ideas and create jobs for America.’ Wagner hesitated, and then grinned, ‘And Scotland too, of course.’
‘And who buys these shares?’
‘Oh, a range of institutions and individuals. We’re not afraid of risk, and neither are the investors we talk to. They’re often entrepreneurs who have been successful in their own right. They trust us. We look after them.’
Ah, stuffees! Every broker likes to have stuffees, investors who will buy whatever the broker stuffs down their throat.
‘So you have a lot of discretionary money?’ I asked innocently.
Wagner smiled. ‘Let’s just say we like to feel that we have created a little community of investors and companies with similar goals and ambitions. In my view, that was one of the things Mike did very well at Drexel. And everyone benefits.’
‘And FairSystems is part of this community?’
‘Sure,’ said Wagner smiling. ‘And I know we’re going to be right there for you as you grow.’
I wasn’t at all sure I wanted FairSystems to be part of Wagner’s little coterie. He was right that Michael Milken’s success had been built up on a network of clients, all of whom had owed him favours of one sort or another. This network had done wonders for Milken; it had given him the power to frighten the largest corporations in America. True, it had also worked well for many of his clients, but many more had ended up either bankrupt or in jail.
The food came, and we tucked into it. Wagner seemed to have little enthusiasm for his salad, but I liked the venison. The wine was good, too. I looked around me. The dining room was filling up with businessmen, and a few wayward American tourists who had wandered a little off the beaten track and ended up in Glenrothes.
‘Tell me about the share placing last November.’
‘We were very pleased with it,’ he said. ‘We achieved an excellent price of ten dollars, and of course the shares traded up to a twenty per cent premium in the first couple of days. We attracted an excellent investor base, the shares are broadly held. Quite a result.’
And one that ha
d cost FairSystems more than one million of the eight million dollars raised, I thought.
‘Take me through the share price movements,’ I said. ‘After that initial leap, the shares stuck at twelve dollars for a couple of months, and then slid down to six, didn’t they?’ They had fallen further since Richard’s death, but that was hardly Wagner Phillips’ fault.
‘Yes, that was disappointing. But you know, the company wasn’t coming through with what it had promised in the prospectus.’
I wasn’t going to let him wriggle out of it. ‘But the company didn’t release any information at all before the price fell, or indeed until my brother died.’
‘The American markets expect quick results, Mark.’ Wagner was polite, but there was an edge to his tone that implied I didn’t know what I was talking about and I should leave it to the experts. Not enough to be rude, but enough to cause me to feel unsure of myself.
‘I’ve watched the share price closely,’ I said. ‘And something else must be going on to drive the price down, especially given the high volume of shares traded. What is it?’ I knew I sounded aggressive, but I thought the direct question would demand a direct answer.
It demanded but didn’t receive. ‘Gee, I guess the markets just act strange sometimes. We all have to live with it.’
‘What are you telling your customers about us?’
Wagner paused a moment. ‘I guess we’re being a little cautious right now. Not negative, just cautious.’ He saw my frown. ‘You have to understand, Mark, that our analysts must be free to take their own view on a stock. I’d like it if they were a lot more positive, but I can’t tell them what to think.’
Like hell he couldn’t. He had told his sales people and analysts to bad-mouth FairSystems, and the share price was going down as a result.
‘So, who’s been buying?’
‘I’m afraid I can’t say.’
‘You can’t say? But aren’t you our broker?’
‘It’s a difficult situation,’ Wagner said apologetically. ‘But our clients expect us to keep their dealings confidential. We have to respect that.’
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