“Yardley LaMotte hired a helicopter to do some kind of digital scan in the mountains, and he never came back. The chopper was found this morning on a ranch near Markleeville in Alpine County.” I decided not to add that I’d witnessed the chopper pull two men off a mountain.
“Evelyn told me he’d gone missing,” Lindholm said, “but she didn’t know about the chopper. How very strange.”
I nodded.
“What can I tell you about Yardley and his robotics business?”
“First, what motivated you to invest in Tahoe Robotics?”
“Same thing that drives all of my investments. I saw potential that wasn’t funded. I first met LaMotte at a VC conference, and his genius was manifest. I went in as an angel investor.”
“What is a VC conference?”
“A gathering where venture capitalists and entrepreneurs meet. This one was in San Francisco, and as always there was a strong focus on tech startups. The techies give the VCs their elevator pitches. It’s basically speed dating between people with ideas and people with the money to fund them. Yardley was clearly a force who wouldn’t be stopped. I saw money to be made.”
“As an angel investor,” I said. “What is that?”
“Typically, when a techie believes he or she has a hot idea, they need some initial funding before they can even start their business. So they ask family and friends and maybe former professors. Stanford. Caltech. MIT. And they often get a few thousand to buy office supplies and a dotcom address to put up a starter website. But of course, they soon need much more. So think of angels as the first-round of serious investors, a source of funding that is one step up from family and friends. Angels will put in more money than family, and, like family, an angel will often invest before the business is even officially started. In fact, the business is often dead in the water until an angel investor comes along.”
“So you were Yardley’s Nancy.”
“What? Oh, of course! Yes, I’m a good Nancy, saving helpless critters from oblivion.”
“Why are Nancies called angels?”
Lindholm grinned. “There’s no set definition for that. But among my colleagues, we use the term angels to describe putting money into an idea that has nothing solid behind it. No product, no test marketing, no sales contracts, no employees, no evidence that the idea can actually be turned into anything. How could we be anything but angels? In contrast, if the company is already going and generating buzz and has a long line of customers waiting to buy, then we have a lot more to go on. When that happens, we approach those companies as traditional venture capitalists. And we will often put millions into them. But as an angel investor, I put my own money into the entrepreneur’s business.”
“How is that different from a venture capitalist?”
“Venture capitalists work from a large fund, pooled by many investors. The venture capitalist puts a lot more money into a company, typically several million. The absolute risk in dollars is large, but the risk to the individual venture capitalist is relatively small. It’s the reverse with an angel. The total money invested is small, but all of it is the angel’s personal money.”
“How much is one of these small investments?”
“In this case, I put one hundred thousand into Yardley’s Tahoe Robotics.”
“May I ask, what do you get for one hundred thousand? A portion of ownership in the company?”
Lindholm sipped his whiskey, swirled it around his mouth, swallowed, once again closing his eyes as if eminently pleased. “Twenty percent,” he said.
“What made you go ahead with Yardley’s business?”
“Yardley had a novel idea of applying the subscription business model to robotics. I’d never heard of such a thing regarding robotics, and I found it exciting.”
“What does that mean, subscription business model?”
“You’re probably familiar with it. If you watch your movies from Netflix, you pay a monthly fee and can watch as much as you want. Same with getting your music from Spotify. Amazon readers who pay the monthly fee to Kindle Unlimited can read as many books as they want.”
Lindholm gestured toward his front door. “My Volvo out there is a subscription vehicle. It’s an automotive version of Netflix. Have you ever rented a car with full insurance coverage?”
“No, but I’ve heard of it.”
“It’s expensive, but if your time is expensive, it seems cheap. The rental company gives you a car and a key and that’s it. If you get in an accident, you can walk away, regardless of who’s at fault. A subscription car is like that. I pay seven hundred fifty a month. For that I get the car and all service and all insurance. And after a specified time, I drive it into the dealer and come back out with a new one. It’s like leasing a car but with insurance and everything else included. Other than buying gas, I have no variable expenses. And if a problem arises with the car, they take care of it, whether it’s mechanical or a computer glitch. My life is much easier.”
“This is what Yardley LaMotte is doing?”
“Not yet, but that is the goal. Robots that you pay for with a monthly fee. As the robot software gets more sophisticated, the software downloads are automatic. When your robot acquires a new ability, you don’t have to buy a new robot or pay any more money. It’s the same as when Netflix expands their movie selection. It’s all part of your monthly fee.”
“What did your hundred thousand finance?”
“Yardley explained that he needed to buy two kinds of scanners, a radar and something called a lidar. He said that once he had the scanners, he needed very little else, and his monthly burn rate would be under four thousand dollars.”
“Burn rate?”
“The outflow of cash just to make his scans and hire a temp a few hours a week to work on the beta version of his software. All the other necessary work would be Yardley writing the software. The temp would be an editor, checking and testing Yardley’s code. Of course, these things change rapidly.”
“Lucy told me that not long ago Yardley got an influx from another investor.”
“Yes. Anders Henriksson recently put up a bunch of money. Four million, if I recall correctly. Although I understand that half was for stock, ten percent of the company. The other half of it was a loan. Yardley didn’t want to sell any more ownership position. I found that an interesting development. Yardley probably told him that he’d let go of a ten percent stake only if Anders also floated him a loan. Yardley wants to ride this growth with just me along for the ride. Then, when Tahoe Robotics hits big, he’ll have a bigger stake for himself.”
Lindholm continued, “I certainly believe in the potential. Yardley has had inquiries from IBM and Google and Amazon. Two of his professors from Stanford have been trying to convince him to go in with them on a concept. He’s already gotten some contracts to supply AI software to a Chinese company. Based on that, he’s hired two dozen employees or so. I think they’ll eventually be the biggest robotics company in the world. My twenty percent could eventually be huge.”
“Interesting that you got twenty percent for one hundred thousand dollars and Anders got only ten percent for two million.”
Bill Lindholm smiled. “With highly speculative investments, it’s all about when you jump in. You probably know that Anders died, right?”
“Lucy told me.”
Lindholm said, “I just heard about it from Yardley last week. He’d been contacted by Anders’ brother. Apparently, it was a sudden massive heart attack. A real shame. I didn’t much care for Anders, but I respected his business acumen.”
“Lucy also told me that the brother explained that he was Anders’ heir, inheriting both the ten percent ownership in Tahoe Robotics and the loan. Apparently, Yardley was behind on the payments. So Anders’ brother told Yardley he was going to call the loan and foreclose on the collateral Yardley had pledged. That collateral included Yardley and Lucy’s house.”
Bill shook his head. “I’m shocked. What a heartless bastard. I’m the first to admit that we play hardball in the money business. But surprising Yardley with this news of calling his loan right after telling him that Anders had died… Wow.”
“Can you tell me Anders’ brother’s name?”
“I have no idea. I know nothing about Anders’ personal world. We only bumped into each other at various financial events.”
“Did Anders just focus on tech companies?”
“No. He was much less narrow about his approach to investing than most of us VC guys. He invests, he loans, he plays with hedge funds. If he sees a way to make money, he’ll even bet on horses. We think of ourselves as VC professionals. Anders was just an old-fashioned loan shark. He even said as much when he was in a joking mood. But what a smart loan shark he was.”
“Can you give me Anders’ contact information?”
“I don’t know it. But of course you could call his company. It’s called Reno Discovery Group. An LLC like my company. He’s in an office building on Liberty Street in Reno, not far from the Nevada Art Museum.”
“Will do. Thanks.”
In my peripheral vision, I saw Spot jump back from the chair where Bear Market sat like a king on a throne. Spot’s tail was wagging fast. I looked over as Spot turned his head toward me. Checking to see if I’d witnessed his altercation.
“I should be going,” Lindholm said. “I’ve got lots to do before a dinner appointment.”
“Thanks much for your help.”
I fetched Spot from Bear Market’s kingdom. As I brought Spot toward the door, I said, “Any chance you’ve heard of the Brödraskapet?”
“What’s that?”
“A Swedish prison gang.”
“No. Never heard of them. Why?”
“They may be involved in Yardley’s disappearance.”
“That’s ridiculous. Yardley is a computer nerd. He’s probably never even seen a prison or been to Sweden.”
“I agree that it seems ridiculous. One more question. I’ll be going to Tahoe Robotics to poke around and ask questions. Is there anyone there you know of that I should talk to?”
“Yes, but with a caveat. One of the guys is Tapper Logan. To hear Yardley tell it, Tapper is a brilliant software engineer, and he knows more than anyone else about Yardley’s work. But when I met him, I saw a real psychopath. No empathy. No regard for anyone else. A seemingly deadly focus on what he wants at the expense of everybody. In fact, if you suspect foul play in Yardley’s disappearance, you might take a close look at Tapper.”