The Term Sheet | Wattys 2016 Winner

Chapter 36

When she hung up, she looked up and said, "How can I help you?"

"David Alexander to see Frank Atari, but I'm early."

"Ah yes, Frank will be with you in a few minutes. The partner meeting is running a little bit behind. I'll let his assistant know you're here. Would you like something to drink? Coffee? Soda?"

"A coffee sounds good, thank you."

David second-guessed his decision to drink coffee as he realized his heart was already pounding through his chest. The last thing he needed was coffee. But he craved the warmth it gave him inside; he could use the courage.

David sat patiently for twenty minutes, but it felt like forever. He drank only half the coffee, but it did the job. A couple of guys with clean-cut slicked-back hair walked out of a conference room wearing dejected frowns.

"How do you not know Werner Vogels? Come on, you made us look like fools," said the guy in a crisp suit who looked like a fresh MBA graduate.

"Sorry," said the more awkward, nerdy-looking guy.

"I hope you didn't fuck this whole thing up for us."

"Sorry," the nerd repeated.

A few minutes later, a good-looking middle-aged Asian man with a deep tan and short hair came out of the conference room. He saw David and approached with a smile full of charisma and a little mischief.

"David, thanks for coming."

"Mr. Atari, thank you for inviting me. It's really good to meet you in person."

"Please, call me Frank. Still remember everything we talked about?"

"Yes, I think so."

"Good, you will do great. Just relax and be yourself. I already told them about you, they just want to meet you and ask a few questions. And whatever you do, don't freeze up like you did on Pitch Deck. You are with friends here, David. Relax."

"Got it. Relax. I'm good."

After their Cryptobit chat, David and Frank had talked many times on the phone. Even though David didn't know who Frank was at first, a quick search showed that he was the real deal. Frank had started a few companies himself before becoming a venture capitalist and had since invested in some impressive security companies.

Frank had helped David with his pitch deck and coached him on what to say and how to say it. Usually, an entrepreneur like David would first pitch an associate and then, if he passed that test, a partner. The final pitch would be to an entire group of partners, but Frank knew he wanted to invest in David and had skipped those first two steps. This was the big time.

Frank patted David on the back and led him to the conference room. The room had all the pomp and circumstance that David had found lacking in the rest of the office. The thick wooden conference table was the biggest table David had ever seen in his life. It spanned the thirty-foot length of the room and was six inches thick. The chairs were all made of leather and there were personal power plugs inlaid in the table for every chair. The table was surrounded by middle-aged men and women and a few younger people whom David assumed must have been the associates. A few of the people greeted David with a slight nod or smile, but most were talking to each other.

"Hello everyone," said Frank. "Let's get started with the next company. This is David Alexander with Cryptobit."

David stood and stared in the distance. The room went silent. Frank looked frantically at David.

Then he began: "Hello everyone, it is an honor and a privilege to meet you. Privacy. It is one of the most abused basic human rights we have today. As you and I stand right here, right now, nothing I say is being recorded, and as soon as I finish talking the words are gone forever. This is as natural as breathing. Nobody can hear me outside of this room—I know this because I couldn't hear a single word from the well-dressed gentlemen who were in here right before me. It seems like you sure did a number on those two."

This made all the investors in the room chuckle. Everyone relaxed into their seats and David continued.

"The nature of the physical world affords us natural privacy based on the simple rules of physics. Sound doesn't travel through walls. The digital world, however, has a big problem. In the digital world there are no walls, which means there is no privacy. Every bit you create, every byte you transfer, is stored, tracked, analyzed, sold, and marketed. Google openly admits to using words in what should be your private emails and chats to select ads for you. And people have tacitly accepted this, mainly because it has been too hard to do anything different. It has been too hard to protect yourself with things like PGP and GPG. These are just geeky tools for geeks.

"Cryptobit is a simple tool for everyone else to easily and transparently encrypt all their chats and all their emails. There is no fidgeting with crypto keys and passwords. We encrypt the entire contents and meta-data of emails for you, which makes it impossible for anyone to read or sell your private conversations. And in order to protect you from any hacker or foreign governments who might be able to decrypt any single piece of data, we fill the network with faked messages. For every one legitimate message there are ten to a hundred fake messages. Users in our system will never see the faked messages because they will never be able to decrypt them. They're just junk to hide the signal in the noise."

"I have no clue what he is talking about, do you?" whispered one of the white-haired men to the young associate sitting next to him. The associate shrugged.

"You do this for chat and email?" said one of the men at the side of the table.

"Correct. We started with just the chat functionality, but the email feature is coming out this week."

"How much does it cost to run?" said one of the young women associates.

"It costs us almost nothing. The system itself is mainly peer-to-peer, we're just running the signup form in a centralized way."

"David, first I'd like to congratulate you," said one of the older women. "This presentation is night and day better than the one you gave on Pitch Deck. I believe if you had done this well earlier, we probably wouldn't be here today talking with you. So kudos on that." As she spoke, Frank smiled. He was sitting like a peacock guarding his prized egg. "But where is the guy who presented with you on Pitch Deck? Andrew?"

"Yes, Andrew was my cofounder and dealt with the legal, money, and business side of things. But we have parted ways."

"That's too bad," said the woman. "Startups are always risky, but our job as professional investors is to mitigate that risk using heuristics that we have learned work after many years of doing these kinds of investments. Our general policy is to invest in early stage companies with at least two founders, and we prefer those founders to have a track record of working together. The job is incredibly hard for one person to do on their own, and you never know if strangers will get along. We find the chances of success go up significantly with two or more founders."

Frank jumped in: "I am sure Andrew would come back if Cryptobit was venture funded, don't you think, David?"

"Yes, of course he would. He just needs to cover some basic living expenses. With venture funding, we could both take salaries and it shouldn't be a problem."

David noticed one of the partners wince at this and begin taking notes in a moleskin notebook.

"Small salaries, of course," added David.

The partners all smiled.