In a way, Peter was right. He pushed us to get a first-rate, big-name accounting firm when I had previously used only a solo practitioner. He convinced me to buy the twenty-thousand-square-foot building in Hackensack we now hardly fit into, when I was happy with the twelve hundred square feet we had in the Bronx. He was even the one to convince me to do a public offering several years later, when I might have restricted our market share forever due to lack of capital.

The fact is, however, that for everything there is a season. Had we started out Peter’s way, with fancy officers, big law and accounting firms, and other needless start-up expenses, we’d have gone broke before we ever got to the next stage. Today our law firm, accountants, and underwriters are all the largest and most prestigious in America. We did get bargain rates from them, though. Our desks are still secondhand, but, unlike most people in our business, we’re profitable. You’ve got to set your priorities early.

I was so happy about my deal with Peter that I convinced Harvey Beker, another philanthropist I knew from Michael Becher (and the head of a large commodities trading firm), to also buy about $100,000 worth of equipment for me. I got around the problem of how I could sell the same boxes to two different people in an interesting way. We created what we called shadow boxes. Each box, we explained, needed a certain amount of marketing budget to see it was placed into service. The second investor could put up this money and receive another 10 percent of the generated revenues. Now I had money to pay my salespeople and their expenses, as well as the money to buy the boxes. And the best part was I still got to keep 80 percent of the revenues. High finance was really fun.

Unfortunately, though, the business went really well but expansion expenses came up that I hadn’t anticipated. I had never run a phone company before, and so things like switches and cable and monitoring equipment were new to me. Maintaining the network required an around-the-clock crew. It seemed that every $1 in sales cost $2 in expenses. In less than a year, I had sold out all the boxes. The investors were getting a good return, but I was almost broke again. No problem, I thought; I’ll just sell Dave, Peter, and Harvey some more equipment. This time it didn’t work.

Dave and Peter sat me down and put it to me this way. “This business can really become significant if you start running it right. The days for individual modem boxes are passing and you need to develop some large-scale commercial switches. All the major business magazines have already written you up. You have tremendous potential. A chance like this comes only once in a lifetime. All you’re missing is capital. We have it. We’ll give you one million dollars for ten percent of the company. We don’t want any more of your boxes or shadow boxes. Give us the equity, and together we’ll make this a great company.”