What is it like to do a deal with H. Ross Perot? in early 1988 a 29-year-old inventor from Austin named Steve McElroy had a patent pending on a one-size-fits-all lid for cups, cans, and other food containers. But to get his invention to market, he needed a savvy partner. He decided that he wanted Perot. Three days after McElroy mailed a letter to Perot, he received a call from Perot himself. For the next three and a half years, McElroy kept letters and notes of his dealings with Perot, as their partnership flourished and foundered and Perot put McElroy to test after test. Here is McElroy’s story.
February 22, 1988
Dear Mr. Perot:
Rubbermaid, Mitsubishi International, Continental Bondware and other large companies in the packaging industry have approached me regarding the exclusive rights to my patent pending for a biodegradable, one-size-fits-all lid for all soft drink cups as well as household containers for food storage.…
My problem is, Mr. Perot, I’m green behind the ears and could use some guidance from a negotiating standpoint. I’m 29 years old and I realize these negotiations go beyond my business experiences. I want to make sure my concept is in every store and in every household, instead of nondegradable plastic products. Do you ever take on partners for this type of transaction? … The cause is a good one and offers the opportunity to solve many problems for business, the customer and the environment while making an honest profit in the huge disposable packaging industry. I think that’s good business, Mr. Perot. Thank you.
ON AGAIN, OFF AGAIN
Thursday, February 25
“Steve, this is Ross Perot,” boomed the voice that I had heard so many times on television, in the salutation that would begin every phone conversation. “I got your letter and loved your idea,” he said and immediately began to fire questions at me. I reached for a chair to steady my shaking free hand.
Within seconds, he had fleshed out my background. “Well,” he said, apparently satisfied with my responses, “I can see this in every refrigerator in America. Can you Federal Express me a few so that I can play with them over the weekend? No, wait. I’ll be out of town next week. Can you come up here and see me midmorning on Monday, March 7?”
Six months earlier, I had invented the stretchable lid I call Total Top. When I filed for a patent, I sent a short press release to a few industry trade publications to see what kind of response I would get. Three hundred letters from soft-drink and fast-food businesses told me what I had hoped to hear. Now I had an appointment to see Ross Perot, the ultimate businessman, who represented honesty and integrity, as well as success. I’d be there.
Monday, February 29
Perot called again: “Steve, I have an assignment for you. Here’s my fax number. Would you briefly write down how you envision the two of us working together?”
I spent that day and the next hammering out a two-page agreement with my attorney, Mike Cook. The stock of our corporation would be owned fifty-fifty by Perot and myself, I would own the patent and license it to the company, and I would manage the company until such time as the patent was granted, the lid’s development completed, and a market for it established. Perot would supply marketing and management expertise and his name recognition.
On Wednesday, we faxed the agreement to Perot. An hour later he called: “Good, good. I like it. Come on down on Monday.”
Monday, March 7
I arrived in Dallas Sunday evening and stayed with my brother. I had given Perot my brother’s office number, and I went to his office at seven-thirty to await Perot’s midmorning call. Just as I was walking in the door, the secretary was answering the phone. A look of incredulity washed over her face as she pressed the hold button: “Are you Steve McElroy? Ross Perot is on the phone for you.” Perot told me he had finished early—“What time did he start?” I wondered—and gave me directions to his North Dallas office.
Nervously swigging from the cup of coffee that I was counting on to spur me on to peak performance, I pulled into the parking lot of the impressive silver-glass office tower. Outside the car, I hastily balanced the components of my Total Top demo set on my briefcase to free a hand to lock the car door—and jostled the coffee cup, spilling its contents all over my shirt and tie. Within seconds of the most important meeting of my life, I stood drenched in coffee. Oh, well. Emerging from the elevator on the seventeenth floor, I identified myself before one-way mirrored doors. A male attendant allowed me to pass through the doors, by his small wooden cubicle, and into the simply decorated lobby. I passed an eagle-shaped wall hanging captioned “Eagles Don’t Flock” and a collection of carved wooden birds and wild animals arranged along a wall recess. There were a few wing-back chairs arranged around side tables, a large bronze bust of Abraham Lincoln, a few paintings, and a framed Early American flag. Beyond the lobby, through another set of glass doors, I could see a long corridor lined with Norman Rockwell paintings, a few bronze busts, and framed awards and memorabilia.
After a few minutes, Perot’s secretary escorted me down the long, imposing corridor, through yet another set of glass doors, into Perot’s suite of offices. As we entered, I could hear him talking on the phone. As I waited, a very attractive blond woman who I guessed to be in her mid-twenties walked past me and into Perot’s office. A few minutes later, she emerged and introduced herself. She was Nancy Perot Mulford, one of Perot’s four daughters. She worked with her father on his venture capital projects. She was kind and polite, and I immediately felt at ease with her.
Before we made it into Perot’s office, he dashed out to greet me. Much shorter than I’d expected him to be—he and I were about the same height—he had a loud, brash voice.
The three of us took seats facing each other in very red chairs in front of Perot’s carved wood desk. As I relaxed in my chair, just beginning to feel comfortable, Perot abruptly dispensed with the small talk and began pelting me with questions about Total Top. I brought out a lid and showed him how it would fit all shapes and sizes of containers. Perot could barely conceal his delight: “This is a world-class idea,” he said and turned to his daughter. “Nancy, can’t you just see me demonstrating this on TV and every housewife in America buying them?”
Then Perot refocused on me: What was I doing for a living at the time? Figuring that Perot was trying to flesh out the breadth of my business acumen, I earnestly and in great detail described the real estate and medical products ventures that I was involved in. Suddenly, Perot’s expression darkened and he stood up: “That’s way too many things for a young man to be doing. Thank you for coming by, but I’m no longer interested. A project like this would require one hundred percent of your time; you’d have to move to Dallas if we did this deal together. But obviously you couldn’t possibly spend one hundred percent of your time on this project.” He started to show me out.
Perot had turned on me so quickly, I felt as if I’d been kicked in the stomach. I’d been in his office for all of five minutes and now I was being tossed. Somehow I summoned the presence of mind to look Perot directly in the eye. “With all due respect, Mr. Perot, I don’t do anything unless it’s one hundred percent. Although I know that your time is valuable, I’m working on a project here and my time is valuable too. At your invitation, I drove a long way, and I am insulted that you would imply that I would waste your time or mine with something my heart isn’t in. You are going to see this product on store shelves, and you’re looking at the guy who’s going to get it there.”
Nancy, who seconds earlier had registered an expression of veiled pity at the undoubtedly familiar sight of yet another felled aspirant, now looked as stunned as I felt. I stood up to shake hands with Perot and leave.
“Good answer,” thundered Perot. “I just wanted to see if you were totally committed to this project.”
I had passed his test, but there was no doubt in my mind that had I given a bad answer, or no answer, Perot would have let me go without a second thought. As it would turn out, there would always be a fine line between pleasing and displeasing Perot.
Before I left his office that first day, I was handed two quintessential bits of Perot advice: “Young man, you have to go out and collect scars in life before you can be successful” and “Never screw people who helped you get started,” as well as one of his favorite aphorisms: “All you need is one invention to live like a king.” This was a reference to a friend of his who now lived like a king after having invented the “twisty,” the plastic-coated wire that you twist to close bread bags.
I returned to Austin and called Mike Cook with the good news. I told him that Perot needed to see the patent application file. He said that before I showed anyone that information, I should make them sign a confidentiality agreement.
Tuesday, March 8
Perot’s response to the request that he sign a confidentiality agreement was swift and gruff: “I don’t sign those agreements!” People have him sign those agreements, he said, and then they sue him. No, I would just have to take his word. Chastened by the intimation that I had breached some sacred trust between prospective business partners, I agreed to accept his promise of confidentiality in place of a written agreement.
When I called Cook to relay my agreement with Perot, he told me that Perot’s financial investment adviser, Steve Blasnik, had already called, saying they would sign the agreement after all. Another test.
Monday, March 21
Blasnik called today to tell me that Perot’s patent attorneys had reviewed the patent applications and didn’t believe that a strong patent would be granted. Since a lesser patent would be worthless—virtually no protection for the venture—he had advised Perot not to participate. The deal was off.
Monday, May 23
It took me a while to decide what to do. Over the next few months, I wrote Perot a series of letters, culminating with one that said, “I apologize for my persistence. If you don’t admire persistence, I suppose you won’t admire me. … You would not have built your business on the basis of a patent. You would have built it on the basis of being the best.”
I copied the letter to Nancy.
Thursday, May 26
Nancy called today. She said that she and her father were impressed with my determination and would like to be partners with me after all. This roller coaster business deal was beginning to upset my equilibrium. Oh, she added almost apologetically, we will need to run a background check on you. She asked for a list of former employers.
Thursday, November 10
After months of negotiations between the lawyers, Perot and I finally signed an agreement to be fifty-fifty partners in Total Top, Inc. The company would sublet space from my brother in a building about a mile from Perot’s offices. Perot asked me to fire my patent lawyers and use his, the firm of Hughes and Luce. I did. I was not asked to take a drug test, for which Perot is well-known as stickler, but the background check was done. We were now ready to get Total Top to market.
Monday, December 12
Perot is taking an active role in Total Top’s development. Although I deal most often with Blasnik, Perot and I talk on the phone regularly. Consultants tell us that it will take at least five years to move the product from development to market, but it is our goal to do it in two years or less and to take the company public at some point in the future.
Much to my delight, we have been approached by the largest paper cup companies in the world. Apparently their fast-food customers have learned of the lid and are inquiring about it. The cup companies are pressing us for exclusive development and distribution deals.
To my dismay, Perot said that he rarely enters into exclusive arrangements with anyone, much less a cup company; their interests are never the same as ours. With the exclusive rights that they were clamoring for, he explained, they could easily shelve Total Top to protect the market for their own plastic lids. I could see his point, but I was more than a little alarmed when Perot’s intransigent bargaining position—he would have required them to sell as many of our lids as they were then selling of their plastic ones—made it impossible to complete a deal. “If they want to be a champion of Total Top, they have to be the champion of Total Top,” he would tell me.
Although risking the loss of these companies’ business made me, as a neophyte businessman, nervous, I reminded myself whom I was working with. If Ross Perot said we should deal directly with the customers, maximize the price, and make more money, who was I to argue?
Friday, May 24, 1989
We unveiled the Total Top lid and automatic dispensing machine to the fast-food industry at the National Restaurant Association Trade Show in Chicago. Perot did not go with us to the show because we wanted people to come to our booth to see Total Top, not H. Ross Perot. It was a watershed event for the product—an overwhelming success. We were rushed by all the major players of the soft-drink and fast-food empires. The lid’s improved design promised to be a boon to beverage sales at fast-food establishments, where soft drinks command the largest profit margin of any item on the menu. Even American Airlines wanted to know if there was a place for Total Top on its in-flight meal trays.
Monday, August 28
We received informal notification that the patent for the lid would be granted, and Perot called from his large, luxurious, if somewhat dated, 1969 Gulfstream jet, the office in the sky he had purchased from Southland Corporation: “Congratulations! I hope we get along as well thirty years from now as we do today.”
Wednesday, November 22
Another important milestone for the company: Along with several associates, I have developed a second function for the lid—a cup with the lid attached, a single, spill-proof unit. The advantage is ease of use for the fast-food operator and a considerable savings of space and handling time. Perot thinks it is the greatest thing since the invention of the bread twisty—the ultimate compliment—and he insists that we file an immediate Thanksgiving Eve patent application.
Friday, November 24
Perot, Blasnik, and I want to transfer the management of the company’s day-to-day operations to his organization, the Perot Group. We have been looking for a CEO to replace me, all according to our original long-range plans. In the past four months, we have interviewed many candidates for the job, from former presidents of Frito-Lay and Burger King to a few vice presidents of General Foods. For one reason or another, Perot found something to disqualify each one of them. He didn’t feel like he could work with any of them.
Of course, Perot was an intimidating interviewer for even the most seasoned applicant. He called me once, after interviewing a former CEO of a Fortune 500 company with whom I had been favorably impressed. “Very sharp guy,” he reported, “but he acts as if he’s got poison ivy when he’s around me. Very jittery. I couldn’t work with him on a daily basis.” I had to wonder whether that poor guy’s case of nerves had anything to do with the fact that Perot had arrived for the interview by private helicopter, alighting right outside the conference room where the applicant waited.
Monday, December 18
Perot called to tell me that he had hired a fellow by the name of T. J. Marquez to work with me on the project. T.J. is the son of one of Perot’s first Electronic Data Systems employees, Tom Marquez. T.J. told me a terrific story about the day he was born: His father and Perot were in a meeting with Frito-Lay, negotiating one of EDS’s first multimillion-dollar deals, when word came in that Tom’s wife had gone into labor. Tom, caught up in the high-level negotiations, said he didn’t want to leave until after the meeting. Perot, the story goes, told Tom that he was fired unless he left immediately to be with his wife. Since T.J. was born on the day EDS consummated this major deal with Frito-Lay, Perot regards him as something of a good luck charm.
Thursday, February 1, 1990
T.J. came to work today after spending a week with Perot, learning the ropes. I was surprised to learn that even he was required to take the obligatory drug test.
Thursday, April 5
It is not unusual now for executed contracts from major soft-drink and packaging companies to arrive by Federal Express, followed in close pursuit by signed papers from their competitors. Things are going unbelievably well for the company, and I am having the time of my life working with Ross Perot.
I am considering calling him Ross, instead of the “Mr. Perot” that seemed so appropriate—even obligatory—at first. Perot and I have an easy working relationship. He has a strong opinion about almost everything and usually introduces an idea or suggestion with a “Don’t you think we ought to do X?” I am no longer intimidated by him. I feel that he is impressed with my job performance so far, and I have no problem disagreeing with him. I think he respects me for it. Perot dislikes people who are cowed by him.
Working with Perot on a regular basis has been an MBA course in how to amass wealth and hold on to it. Perot has a hands-on business style. It is not his style to govern by written memo; when I need to consult with him, we speak in person or by phone. Perot makes his decisions on the spot. Never has he taken anything under advisement.
He is anything but the stereotypical hypertensive Type A executive. Perot is feisty but unflappable, never out of control—or out of touch. The 1984 Oldsmobile that he is so attached to has three antennas; his Gulfstream jet is a fully equipped office—fax, phones, dictating machine. The corporate Lear jet that his employees use—only when, at $1 a mile, it is cheaper than flying commercial airlines—has phones at each of its passenger seats. Even the Dallas hangar where he stores his aircraft doubles as an office. One of the most striking things about Perot is his inability to treat money casually. Nothing is so certain to arouse his ire as the intimation that, to a man of his means, what is $100 here, $1,000 there? When I called Perot to tell him I had found a products-liability insurance policy for us that would cost $2,000, his terse response was “Steve, that’s a lot of money.” I bit my tongue.
Wednesday, April 11
Steve Blasnik called today and asked me to meet with him tomorrow. He didn’t say about what, but that is not unusual. I frequently run over to Perot’s offices on short notice—sometimes two to three times or more a week.
Thursday, April 12
When I arrived at Blasnik’s office, T.J. was there with him. They both seemed a little nervous. Blasnik wasted little time telling me why he had called me over. He wanted to become CEO or president of Total Top. “Well, Ross is my partner,” I replied, trying to cover my shock. “Does he know about this?” Blasnik assured me that he did. He made it very clear that he was hoping to get me to sign on the dotted line right then and there.
Blasnik was someone I had never felt extremely comfortable with—he had always seemed so stiff and strictly business and annoyingly eager to interpose himself between me and Perot—but he was Perot’s golden boy, his right-hand man on the venture capital projects. Perot had hired Blasnik away from Hughes and Luce when he was a young associate, so he must have distinguished himself in a big way. Blasnik, now in his early thirties, was clearly competent, but why, after such a vigorous inspection of so many outside candidates, would we suddenly, and without prior consultation, turn around and install an insider like Blasnik?
I called Perot to find out what was going on. At first, he acted as though he didn’t know: “Did you and Steve work something out?”
“Blasnik tells me he’d like to be the CEO or president of Total Top.”
“Do you have a problem with that?”
“I guess a Harvard lawyer is good enough for me if he’s good enough for you.” My inclination was to defer to Perot’s judgment on this one.
That settled, Perot had another matter to discuss with me. He was going to inject substantial capital into the project, and he thought I should convert my royalty interest (5 percent of gross sales) into an equity interest (stock). “I can’t tell you how strongly I feel that you should do that,” Perot said. “Stock is where real wealth is created.”
He was persuasive. When a man of his billions tells you how to make more money, only a fool would disregard the advice. I agreed to consider the conversion.
“I’ll send over the necessary papers, and you review them. I’d like for you to convert that royalty.”
Monday, April 16
I expected to receive the papers the next day, but I still have not received them. Today at the Perot Group offices, I overheard Perot, standing outside the conference room where I was waiting, conversing impatiently with Tom Luce, his longtime friend, adviser, and lawyer. When I heard my name mentioned, I moved closer to hear more. All I could catch was “I want those papers finished and sent to McElroy, or I’m going to raise some hell!”
MY SUSPICIONS WERE AROUSED.
Tuesday, April 17
I received a stack of papers one inch thick today, entitled “Reorganization Agreement.” After wading through a few pages of dense legalese, I realized that deciphering this very complicated product of Perot’s fine legal team was a job for a legal team of my own.
I selected Katherine Seaborn, a partner in the Dallas firm of Gardere and Wynne, someone I believed to be one of the toughest and brightest business lawyers in the state. A woman in her late thirties, Katherine had lived in Dallas all her life and was quite familiar with Perot’s business empire. She agreed to review the documents and get back to me.
Wednesday, April 18
Katherine called today and, to my surprise, informed me that it would not be in my best interests to agree to the deal that Perot was proposing—I should hold on to my royalty interest.
Perot has been calling two or three times a day to ask when I will discuss the deal. I called him and we scheduled a meeting for tomorrow at Hughes and Luce’s downtown Dallas office.
Thursday, April 19
Katherine and I walked into the Hughes and Luce conference room expecting to meet casually with Perot and, equally casually, decline his proposal—no big deal. Instead, we found ourselves up against five poker-faced lawyers, lined up like tin soldiers on one side of the conference table. Blasnik was there but not Perot.
We sat down and I told Blasnik, the only one I knew in the room, that I did not feel that it would be in my best interests to do what he and Perot were asking me to do. Blasnik stood up and stormed out of the room. A few minutes later, he returned and said that Perot wanted to speak with me. I stood up to walk outside, but Blasnik waved me back into my seat. “No, he wants to talk to you on the speakerphone.”
Perot began to lecture me: “Steve, I’ve known you for a long time, haven’t I?” I concurred. “We’ve covered a lot of miles together, haven’t we? And I’ve helped you a lot.” Yes, yes, couldn’t argue with any of that. “I’ve never steered you wrong, have I?” No. “Well, I’ve thought long and hard about this, and I think you’ll agree I’m pretty good at building a company. Well, in my opinion, this is what we should do.”
I held fast to my refusal. Perot was clearly exasperated by my unwillingness to be swayed by his do-it-just-because-I-say-you-should argument. I asked him why he was now attempting to alter the terms of the deal we had signed in 1988. Well, he parried, businesses change; you have to be flexible.
The royalty was my main source of income from the venture. Sure, it was an advantage over Perot’s interest, in that he owned only stock. But I had invented the lid, and I felt I was entitled to the royalty. (Later it occurred to me that what might have set Perot off on the royalty issue were five-year projections that he had recently seen, which estimated the income from my 5 percent royalty to be a whopping $9 million in the fifth year.)
Perot and I went back and forth on the speakerphone. I was agitated and embarrassed after twenty minutes of verbal fisticuffs with him in front of a roomful of grim-faced lawyers. Mostly, I was feeling increasingly shaky about why any of this was happening in the first place. Perot’s next question dispelled my bewilderment.
“Well, then, what will it take to buy you out of Total Top?”
I had no time to reel from the impact of the question. Luckily, the same survival instinct that had mobilized me at my first meeting with Perot kicked in again. I dug in my heels; Perot was not going to edge me out of Total Top. “With all due respect, I built this company, and it was and continues to be my dream. It is my dream, just like your dream was to build your company, EDS, years ago. Now I would like to buy you out of Total Top.”
A long silence at the other end. I had never known Perot, who is a master at thinking on his feet, to be rendered speechless. Then he said, “Well, we’ve all had a long day, so let’s both think about all of this and talk again tomorrow.” I was relieved. I really did need time to think.
Friday, April 20
Today I felt more certain than yesterday about my impetuous offer to buy Perot out if he was going to insist that I relinquish my royalty. I called him to resume our conversation. Apparently he had had second thoughts about even considering a sale of his interest in Total Top: “I’ve decided that my interest is not for sale at any price. I didn’t get into this deal with an exit strategy,” he said.
Then he had a third thought: “Well, I’ll tell you what. You come up with a figure for which I can either buy your share or sell my share, and then we will flip a coin. The winner will get the right to buy out the loser. Be careful now, because the price could come back to haunt you,” he added, unable even in an adversarial posture to resist giving advice.
I told Perot I wasn’t interested in that game.
Friday, April 27
Katherine Seaborn and I came up with a figure of $580,000 to offer Perot for his shares. I pitched it to Perot, packaging it with a little guilt: It was my idea, my only business, and with my offer, he would be getting a great return for his original investment of $150,000—without ruining me financially.
“Okay, okay, I’ll sell this damn company back to you,” Perot said. But he added a killer condition: The transaction had to be closed by Tuesday—four days from today. I was certain that he thought the proviso would make me say uncle, especially since he knew that my lawyers were out of town and would be unable to work on the deal over the weekend. Perot then rolled another boulder onto the road. I would have to come up with a $50,000 deposit—have a check in his hands—by noon Monday.
Perot had upped the ante to the sky: “Remember, my interest is not for sale on Wednesday morning.” He expected me to try and fail and then agree to the restructuring that he wanted. But he underestimated the strength of my determination to hold on to my company. I agreed to the impossible terms he had proposed without any idea how I was going to pull it off.
Sunday, April 29
After frantically trying for two days to get through to Katherine, I finally reached her today. We decided the best potential buyer would be a company that had approached us several months ago wanting to invest in Total Top. Perot and I had declined the advances of this billion-dollar-a-year automobile distributor. Now I needed them. I reached the CEO at his home and breathlessly briefed him on the situation. I expected him to laugh when I mentioned the timetable, but he instantly picked up the gauntlet: “No problem. We’ll fly in first thing in the morning.” I am beginning to like this prospective partner of mine.
Monday, April 30
Their plane was supposed to arrive before 8 a.m. A little after 10, I received word that their takeoff had been delayed due to air traffic. I panicked; the noon deadline was approaching. Then I received word at Katherine’s office that they were in flight and that I was to fax a final outline of our proposed deal to their hangar in Dallas. At 11, they had still not landed.
Katherine and I decided to send someone to Perot’s office with the check. We could not actually deliver the check to Perot until we had a commitment from our buyers, along with their promise to wire funds to the escrow account that day to cover the check. We dispatched Fred Griesbach, Total Top’s office manager, to Perot’s office at 11:05. He had instructions to call us every five minutes from a pay phone in the lobby of Perot’s building.
At 11:20, the buyers’ plane touched down at Love Field. Things started to move quickly. At 11:30, the buyers approved our terms. They agreed to wire the funds to the escrow account today. At 11:40, Fred called: “Perot is leaving the building.”
I told Fred to hand him the check. Perot was backing his Oldsmobile out of the parking lot when Fred ran up to his car and waved wildly for him to stop. Perot waved back, apparently thinking that Fred was someone he knew—or an admirer. Then Fred motioned for him to roll down the window. He handed Perot the envelope and walked away, without responding when Perot called out to ask who it was from. Oh, to have been a fly on the windshield of Perot’s car and seen the look on his face when he discovered that I had cleared the first hurdle!
Perot left word that he had received the check and the closing would be late tomorrow afternoon at the offices of Hughes and Luce. Then he cashed the check.
The rest of the afternoon and late into the night the buyers and I hammered out the details of our agreement. We had only 24 hours to fill in all the blanks of an agreement that Perot and I had worked on for months.
Tuesday, May 1
We worked frenziedly until the scheduled closing, ten lawyers generating stacks of documents with blank signature lines. At 3:50, as we were putting the finishing touches on the papers that we had to sign among ourselves before the closing, Katherine’s secretary called to say that Perot was trying to find me. I dialed his number and put him on the speakerphone, as lawyers and paralegals shuffled papers around me.
“Steve, who is your buyer?”
Even my fatigue-numbed brain recognized his question as a zero-hour assault on a deal he didn’t want to do. The buyers had stipulated as a condition of their participation that their identities be withheld from Perot until after the closing; they were not comfortable with Perot knowing who they were beforehand.
I reminded Perot that that information could not be given out.
“Well, I won’t sell to someone when I don’t know who it is,” said Perot. “I’m choosy about who I’m in business with.”
Katherine—who had never been intimidated by Perot and whom he always referred to with grudging admiration as “that damn smart lawyer”—chimed in irreverently that he wasn’t going to be in business with these people; they were buying him out. Anyway, she added, the way the deal was structured, I was the actual purchaser of his interest. They were just fronting me the money.
“Steve, are you flipping this?” asked Perot.
“No,” I replied.
“Because it wouldn’t be fair for you to buy me out at a good price—it’s worth more, but I’m selling it to you for less because it’s your baby—and then for you to turn around and flip it for a higher price.” Perot asked me to give him my word that I was not flipping the deal. I did.
“So you won’t tell me who the buyer is. Is it a major soft-drink company?”
“A major fast-food company?”
“No.” I turned around to look at my party, who were emphatically shaking their heads and zipping their lips. “Ross, I can’t tell you any more.”
“Well, we don’t have any more to discuss then. This deal is dead. Thank you.” Perot hung up.
There was a heavy, exhausted silence in the room. I called Perot back several times, trying to persuade him to change his mind. He wouldn’t budge, and the buyers were wearing out. Perot offered one slim compromise: We could disclose the buyers’ identities on a confidential basis to Tom Luce, and Luce would simply confirm to Perot that they were, in fact, “God-fearing men.”
We knew it would be a mistake to reveal the buyers’ identities to Luce, who had a fiduciary relationship with Perot. For their part, although they stood to lose the deal entirely, the buyers felt that the more Perot wanted to know who they were, the more critical it was that he not know.
At 5:25 p.m., the buyers, discouraged, disgusted, and exhausted, packed up their briefcases and prepared to head for the airport. They were convinced that Perot had never had any intention of selling. Before they left, Katherine called Perot’s lawyer one more time to tell him that our party had no other option but to dismantle and go home—unless Perot changed his mind. “No,” said Perot, “the deal is off.”
After everyone left, I hung around the office for about 45 minutes, feeling completely dejected and defeated. By the time I got home, Perot’s lawyers had left messages there and at the law firm’s office that he had reconsidered and would go ahead with the closing after all, if we closed that night. The close of his business hours, he said, was sometimes around nine. His timing was perfect: The messages came in just as the buyers’ plane became airborne.
We would each blame the other for calling off the deal.
Wednesday, May 9
Perot and I are clearly deadlocked—our fifty-fifty voting rights determine that. I won’t agree to sell to him, he won’t agree to sell to me, and we can’t agree on the royalty issue. Two unyielding egos. The sad fact is that the only remaining option is for both of us to sell. Perot must feel as if he has created a monster—a young kid who stands up to him. The truth is, I wish none of this had happened. I just want to be back in business with Perot like before. Unfortunately, it seems that things have gone too far for that.
Friday, June 1
Blasnik suggested that Perot and I each sell our interests to a third party. Our lawyers negotiated the only way out of our partnership.
Friday, December 21
Today I signed off on a $5 million deal to sell my Total Top interests, including two worldwide patents, to a Houston company that has been negotiating with us for months.
Sunday, December 23
Perot signed off on a separate agreement for his interests; he will receive $2.6 million. The buyer now has several months to arrange financing.
Monday, June 24, 1991
Our buyer has requested a short extension to the agreement; the financing has not shaped up. Perot called me tonight and said he had been thinking about it and really didn’t want to sell Total Top. “Don’t give up your first really big deal. It’s our cash slot machine. I don’t want to sell it,” said the Great Persuader, back in the business of trying to convince me that our interests were the same.
I thought about it. I had agreed to sell only because there seemed to be no other option. If Perot was willing to resume our relationship on its original terms, well, so was I. When Total Top made its debut on grocery store shelves and fast-food trays—as I knew it soon would—I wanted to look with pride, not turn away with remorse because I had cashed in on my invention too soon. And perhaps more compelling, I wanted to stay in business with Perot. He had put me through a lot, made me jump through a lot of hoops to stay where I had wanted to be, but somehow I didn’t take any of it personally. Perot, I now understood, made decisions based solely on his business judgment. He expected no less from those with whom he dealt. Working with Perot was the ultimate adult challenge and exhilaration. I wanted to learn more.
Monday, July 1
Perot and I declined the buyer’s request for an extension, terminated the agreement, and reinstated our original arrangement. We are partners again.
Thursday, May 7, 1992
Our new business arrangement is working smoothly; Perot and I are getting along famously now. The stretchable Total Top lid and integrated cup and lid unit have been patented in every country that has discovered fast food. And we are looking forward to its U.S. marketing debut.