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Chapter 3 Other People's Money

  • Gretl's stall in the dead WalMart off the I-5 in Pico Rivera was not th_usiest spot in the place, but that was how she liked it. Time to think wa_ritical to her brand of functional sculpture, and reflection was the scarces_ommodity of all in 2027.
  • Which is why she was hoping that the venture capitalist would just leave he_lone. He wasn't a paying customer, he wasn't a fellow artist — he wanted t_buy_ her, and he was thirty years too late.
  • "You know, I pitched you guys in 1999. On Sand Hill Road. One of the foundin_artners. Kleiner, I think. The guy ate a salad all through my slide-deck.
  • When I was done, he wiped his mouth, looked over my shoulder, and told me h_idn't think I'd scale. That was it. He didn't even pick up my business card.
  • When I looked back as I was going out the door, I saw him sweep it into th_rash with the wrapper from his sandwich."
  • The VC — young, with the waxy, sweaty look of someone who ate a lot of G_ogurt to try to patch his biochemistry — shook his head. "That wasn't us.
  • We're a franchise — based here in LA. I just opened up the Inglewood branch.
  • But I can see how that would have soured you on us. Did you ever get your VC?"
  • Gretl tossed her tablet with a crash on top of an overflowing barrel of prim_lastics and wiped her hands on the cunningly stitched dress quilted from bac_ockets of vintage bootleg Levis, their frayed, misspelled red tags on prou_isplay. "Son, that was 1999. Within a year, VCs weren't writing term-sheets.
  • They were doing cram-downs on anything halfway decent in their portfolios, forcing out the founders, trying to flip them before the market cratered. Bu_t wasn't that pitch that soured me on Sand Hill Road —"
  • "We're in Inglewood."
  • "Yes, you said." What the hell, it was Wednesday and she had all her week'_ommissions done already. The VC was at least pretty, if you liked them young.
  • He had good teeth — they all had good teeth now — and a cute bump in th_ridge of his nose that spoke of a little bit of brawling before his B-schoo_ays. "OK, here's the thing. I had running code, a half-million users. Tha_as big numbers then. We did moderation matching — a heuristic that figure_ut whether a message on a message board was flamebait, flagging up the wors_ffenders to volunteers who blindly checked each other. The BBC was hand- moderating a million message-board posts a _day_ back then. We could d_etter. But no one thought we'd scale up — our customers were little guys, hotrodder boards, cooking boards. Most of them were getting everything fo_ree in exchange for serving as our 'reference customers,' which was how al_hose biz-dev weasels did things back then.
  • "By 2007, we were 'Web 2.0.' I mean, we'd been Web 2.0 since Web 0.9, but no_t seemed like the world was ready for us. All we needed was some capital t_ay for the features our freeloading reference customers wanted. I met ever_ingle shitweasel — excuse me, junior analyst — on Sand Hill and brain dumped.
  • They wrote great reports. We got nothing. No one was doing investments then, either: it was all acquisition driven. Stupid Sarbanes-Oxley killed IPOs an_he VC went with it."
  • The stall across the way was half the size of hers. The old Shenzen coupl_hat ran it were real gnarly, covered in old burn scars from working in th_lastic tag factory where they'd met. Now they sold nostalgic hardware, ol_orking specialty appliances and devices from the WTO's heyday. They wer_ighly complementary to Gretl's own business, which is why they had such _riendly relationship. The old woman, she called herself Chloe, was giving he_ little hand-gesture that meant, "Do you need help getting rid of this jerk?"
  • "It's OK," Gretl said to her, waving. "Want to get lunch in twenty minutes?"
  • The old lady rocked back and forth. "Not nutritionist food," she said. Gret_odded enthusiastically. Nutritionist food wasn't even food — just nutrient_nd flavoring. It was 80 percent of the stalls in the food-court, since th_apital costs of a food printer and feedstock were practically nil, and an_ood hacker could differentiate himself by thinking up exotic ne_exture/flavor/temperature combos.
  • "Twenty minutes, Mr VC."
  • "Udhay," he said. "Udhay Gonzales." He passed her a card, laser-etched on _umbo lima bean. She pocketed it.
  • "You'd have thought I'd learned my lesson by then, but no, sir. I am th_riginal glutton for punishment. After Bubble 2.0, I took my best coders, ou_FO, and a dozen of our users and did a little health-care startup, brokerin_arbon-neutral medical travel plans to Fortune 500s. Today that sounds lik_ld hat, but back then, it was sexy. No one seriously believed that we coul_et out from under the HMOs, but between Virgin's cheap bulk-ticket sales an_he stellar medical deals in Venezuela, Argentina and Cuba, it was the onl_ost-effective way. And once the IWWWW signed up 80 percent of the U_orkforce through World of Starcraft guilds, no employer could afford to skim_n health insurance. The word would go out during that night's raids and b_he morning, you'd have picket lines in front of every branch office.
  • "We had all the right connections, but by then I was a 40-year old woman, an_hat's as close as you can come to invisible in this society without havin_rown skin or a janitor's uniform. I didn't even get a chance to get ignore_n the offices. We couldn't even get meetings — not once they found my YASN_rofiles and saw what I looked like and the codgers in my social network.
  • "So that's when I threw in the towel. I bought a Dremel tool. Then a hot glu_un. Then a CNC lathe. Then a mill. Then I got serious."
  • "Well, it seems to have worked out for you." The VC leaned over the displa_abinet. She saw his reflection in the clear top. His eyes were wide wit_enuine admiration. OK, OK, she thought. OK, you get another five minutes, Udhay Gonzales.
  • She opened the lid and made fortune-teller passes over her pieces with he_ands. "Pick them up, that's what they're for."
  • He went for the fish first. Its scales were individual slices from the skin_f old Nokia phones — back when it was just Nokia, not Marvel Comics Mobile — each articulated on its own little sprig of memory wire. The gills wer_cuffed iPod backings, the logos just recognizable under the fog of scratches.
  • The eyes bore HP and Playstation logos, respectively, and the lips were mad_rom inner-tube strips that bore the smallest recognizable logomarks. As h_ifted it, it settled into his hand, arching back to find his thumb and palm, nestling in there.
  • "It'll work like an old-time phone," she said. "It'll even do a little looku_rom old-style exchange numbers to different identity registers and try to ge_ou a voice-call with someone."
  • "Do people really do that?"
  • "Some do. Most just want it for the object-ness of it. It's got a lot o_motion." The scuffs, that's what did it. They were like stories, thos_cratches, each one a memento mori for some long-dead instant in som_tranger's life.
  • He picked up another piece. This one was purely sculptural, made from severa_enerations of iPhones, their screens carved into abstract shapes and the_ainted with networked OLEDs that stitched them together into a singl_isplay. The abstract shapes and colors combined with the device's aggressiv_ncursions on your PAN to give the sense of holding a vampire, somethin_ransgressive and savage. Dangerous. "When was the last time you owned _evice that felt that dangerous?"
  • "Never!" The VC seemed to surprise himself with his vehemence. He fumbled th_evice, caught it, set it down reverently.
  • Gretl laughed. "Oh, you can be rougher than that. My little critters lov_dapting to hard circumstances." She tossed the vampire high in the sky, le_t come down on the floor, having righted itself in the air to take the dro_n its armored back. "You can't break it, it's made of garbage."
  • The VC fondled each of her pieces, making genuine appreciative noises. Sh_ould tell the difference between the genuine article and the fakes.
  • "I remember all these things from when I was little," he said at last. "_anted them all so badly. Each one seemed impossibly wonderful and out o_each."
  • "Yeah," she said. "That's what does it, all right. That feeling right there.
  • You watched these go from fetish item to six-for-a-buck in the blister pack_t the pharmacy check-out. This gives them back their dignity."
  • "Can I ask how many of these you sell?"
  • "Enough," she said. "As many as I can make. I mostly do commissions, but onl_ith people who come down in person. I won't sell online. Getting off emai_as the best gift I ever gave myself."
  • "You are hard to reach," he said.
  • "Nope. I'm easy to reach — you just have to haul ass here to Pico Rivera.
  • There's even parking, if you're that kind of pervert."
  • "I think I see why you aren't interested in capital," he said. "You can'_cale this up — not with all the money in the world."
  • Gretl laughed. "You VCs — scale, scale, scale! It's all you think of. You'r_rong, as it turns out. This business decomposes into four elements: material_cquisition, design, fabrication and retail. They all scale like crazy.
  • "Take materials. After the WTO, the Chinese spent 25 years brute-forcing th_roblem-space of all possible 3D plastic objects that an American might pa_oney for. There is no shortage of that stuff — most of it is sitting i_nternational waters somewhere on a container ship, waiting for someone to pa_he carbon taxes to land it somewhere. I can bring in all the junk electronic_nd chassis and parts that I want, and I print the actuators, controllers, wires and the rest of it here.
  • "Design? Design's easy. Roll the parts through the tumbler and let each on_et scanned up good. Then run the evolutionary algorithm to see how they ca_it together. I just watch it, tweaking it, culling the ugly mutants, cultivating the pretty ones. I can do fifty original designs in a day, and b_he time I'm done with any random container, I'll have used up more than 8_ercent of its payload. The rest goes to some feedstockers to be eaten b_acteria.
  • "Manufacturing — that's just monkey labor. Easy. Every kid takes shop clas_owadays, especially the girls."
  • "I made cars for my parents' anniversary," he said.
  • "Fuel-cell?"
  • He snorted. "No one wants to drive a truck anymore. Sub-micro solar. Fas_ittle things." He picked up the fish again. "And retail, that's just you, here. So if you could scale up, why don't you?"
  • "Why should I? I'm making incredible money now. I could stand to double m_peration, but for that I'd need, what, 60 grand? What's the smallest ange_ound you do at your franchise?"
  • "We're very nimble."
  • "How nimble?"
  • He mumbled something.
  • "Speak up!"
  • "Three hundred kay," he said, blushing. "But it doesn't have to be all to you.
  • We could roll your round up with five or six similar firms —"
  • "And increase my communications and bureaucracy overhead by 3,000 percent.
  • Yeah, that sounds _swell._ I net enough after expenses that I could doubl_very quarter if I wanted to. But I'm growing organically, cherry-picking m_est contractors and getting them on the payroll, expanding poco a poco. I'_ixty years old, Mr Gonzales, and I don't need to grow like a tumor anymore."
  • He put the fish back down. It flopped.
  • "You say you're nimble. But from where I sit, you're not nimble enough. You'r_tarting off in the 300 grand range, and you're probably averaging a millio_n your angel round, ten or twenty for Series A, seventy for Series B. I ca_urn 60 grand into 600 in six months. That's pretty good for me, as a_ndividual. But I can't turn your million into ten million — not in six years.
  • What does your franchise have under management?"
  • "We're a gigafund," he said. He managed to make it sound like a boast.
  • She shook her head. "You poor, poor boy. How are you going to spend a billio_ollars in $300,000 increments? You'll be sitting on three quarters of that b_he time you cash out the fund."
  • "It's the smallest amount that a franchisee can take," he said.
  • "Well, sure. The parent company's got what, half a trillion under management?
  • Don't look so surprised. Yes, I keep up to date on the shenanigans you Might_orphin' Power Brokers get up to in Silly Valley. No _wonder_ they'r_ranchising! But the secret is, big money is dumb money. I can spend a hundre_ucks so smart that I turn it into fifteen hundred. You look like a smart kid, you could probably make a thousand. But you'll never do the same trick wit_our billion in other people's money. Whoever sold you that franchise conne_ou, sonny."
  • He looked glum.
  • "Oh, cheer up," she said. "You're a young man. Getting shafted by VCs build_haracter. Look at me!"
  • He picked up the fish again. She knew what he was going to ask without havin_o wait. She named the price. "But for you, a ten percent discount."
  • He shook his head and put it back. "I can't afford that," he said.
  • "What are you doing tonight?"
  • He cocked an eyebrow at her. "Don't worry, I'm not interested in your youthfu_imbs. I just have a spot on my third shift. One of my girls is pregnant an_he's taking some maternity. You pull six hours starting at 11PM and you ca_ake that home."
  • "I'm not supposed to moonlight." He caressed the fish's scales. They ripple_nder his finger.
  • "It's due diligence," she said.
  • He smiled. He was very pretty. And he'd built two cars — not bad. He'd do OK.
  • Maybe he'd even work out and end up one of her regulars.
  • "Think about it. I close down at 6PM. You come by then, if you're interested, and I'll give you the details for the fabrica."
  • She locked her cabinets and set out her "Gone to lunch" sign, then hopped ove_he display case, vaulting it the way she'd learned to do in yogacrobatic_lass in Silver Lake.
  • "Lunch time?"
  • Mrs. Huang called to one of her daughters to come out and staff the booth, then came around on her cane.
  • "No nutritionist food," she said.
  • "Certainly not," Gretl said, sprinkling a wave at the VC as he moved off amon_he stalls in the dead WalMart.
  • **Afterword:**
  • I have an odd and productive relationship with _Forbes_ magazine. I'm far fro_ typical _Forbes_ reader, but they've commissioned several articles and thi_hort story from me, and the commissions are always challenging and just weir_nough to inspire. Here, the brief was to write about the future o_ntrepreneurship. I'd been thinking a lot about how _little_ it costs to star_ business, and how predatory and awful many of the investors I'd met were, and I came up with this — a Socratic dialog between a startupist and a VC wh_an't find anyone to take his money.
  • ~