Ship of Gold in the Deep Blue Sea (27 page)

“My confidence level in him just grew as I spent time with him, and I became increasingly intrigued by his knowledge.Sometimes I didn’t know what he was talking about, but he just came across with a lot of credibility. He could talk fluently about his subject, and his small-town Midwest background came across, good character.”

Months went by, months of talking with Tommy, answering questions, giving advice, and meeting with him occasionally. In that time, with Ashby’s knowledge and input, Tommy had pursued financing with the Scientologists, the billionaire, and Harry John, none of which had worked out. But Ashby could see that eventually he would find a way to finance his project. As Ashby watched him, saw his commitment, realized the enormous amount of energy he put into everything he did, his confidence in Tommy grew even more until the idea that he could work on the bottom of the deep ocean, where no one had ever worked before, seemed no longer wild, but only highly speculative.

Several months later, Ashby had talked to Tommy so many times he knew everything he wanted to know about him and his project. He could learn nothing more from talking, and he was a busy man. On the phone one day, he said, “We’ve been talking about this a long time, and
I’m to the point where I feel I have to decide whether I’m in this project or out of this project, and I want to think about that.” A few days later, he called Tommy back, and he said, “I want to be in this project. What can we do?”

B
Y NOW, IT
was early summer of 1984. Tommy had worked three years at Battelle, and his hours at the institute had begun to taper down, from over sixty to around fifty, and then to forty. Meeting with Bob on the historical research and phoning experts about technology and talking to Ashby and pursuing investors and trying to figure out how to organize the project required more hours than he was now able to squeeze into his weekends and his evenings at Robbie’s. He was certain that Harry John had not found the
Central America
, and Mike Williamson seemed more committed than ever to building the SeaMARC IA. As much as he loved Battelle, Tommy’s thoughts were elsewhere.

Tommy made an appointment with Don Frink and explained to him that he had a project he had been pursuing outside Battelle, that he was attempting a recovery operation in the deep ocean. He couldn’t keep working ten or twelve hours a day as he had been. He told Frink he wanted to go on a partial leave without pay, cutting back to half time or three-quarter time.

Frink called it “a shared arrangement” and agreed to let Tommy divide his loyalties as long as he worked a set number of hours each month at Battelle.

But over the next few months, Frink saw less and less of Tommy, and gradually, his hours fell to the minimum for him to remain with Battelle. “Sometimes,” remembered Frink, “he came in at four in the morning, and I got a note on my desk: ‘Did such and so. This’ll take care of it for this month.’”

W
AYNE
A
SHBY TOLD
Tommy that the first thing they had to do to give the project a businesslike structure was to get a big downtown law firm involved. To raise a large sum of money from investors in a public offering, Tommy would have to comply with strict regulations from the Securities and Exchange Commission and the Ohio Securities Division, and all of the papers had to be filed properly. Robbie Hoffman had
gotten him this far with friendly legal advice, but if people of the calibre Ashby wanted to pursue were going to invest, Tommy needed a name those people knew.

One of the prominent lawyers in Columbus was Art Vorys, of Vorys, Sater, Seymour and Pease, a firm of 265 lawyers. Vorys had attended the investors’ luncheon with Wayne Ashby and, like Ashby, had come away thinking that the previous hour had been interesting. Since that day he had thought little about shipwrecks or Tommy, but when Ashby called, he agreed to assemble some of his venture-capital lawyers in one of the firm’s conference rooms, have Ashby bring over a few of his CPAs, and let them all mull over how they might structure a project to search for and recover a shipwreck.

Tommy’s presentation went well until Vorys asked, “How far down is this?”

“Well,” said Tommy, “it’s at least eight thousand feet.”

Vorys’s jaw dropped. “Eight thousand feet!” He thought about the time he had scuba dived in the Bahamas and blew out both eardrums at thirty feet. “What has ever been done at eight thousand feet?”

“Nothing,” said Tommy.

“It’ll never work!” said Vorys. “That’s too far, too deep.”

“That’s when he lost me,” Vorys said later. Vorys thought that eight thousand feet was “an absolutely ridiculous depth to find anything over a hundred years later.” Just the technicalities bothered him. How do you direct something eight thousand feet down to move some kind of hand four or five inches this way and then four or five inches that way?

“Tommy didn’t connive you,” said Vorys. “He was always very serious and very constrained and not prone to exaggeration. But I couldn’t get over that eight thousand feet two hundred miles offshore!”

One of the CPAs Ashby had brought to the Vorys meeting was Fred Dauterman, the tax partner at Deloitte for twenty-five years. When Deloitte clients wanted to put their money into tax-sheltered investments, Ashby brought the deal to Dauterman. For years Dauterman had written articles and presented programs for the New York Tax Institute on tax shelters, particularly for high-risk investments like oil and gas. As tax partner in the firm, he had analyzed roughly five thousand
deals, and out of those five thousand he could count on two hands the ones that turned out to be good investments.

During Tommy’s presentation at Vorys, Dauterman had sat across the table from a CPA friend, and when Tommy began his talk, their eyes met. “He and I kind oflooked at each other and thought, Hmmmm. This sounds like another wild one.” But by the time Tommy had finished, Dauterman thought it might not be so wild after all. After the meeting, he and Ashby went back to Ashby’s office.

“Ashby,” said Dauterman, “this is the craziest deal I’ve ever heard in the world, but it’s crazy enough that it might have something to it.”

Dauterman thought at first that Tommy came across as a “country bumpkin,” but as he listened to Tommy speak and field questions from the others, he found himself impressed with the young man’s knowledge. With a steady voice and overwhelming detail, Tommy could wither a roomful of crisp, professional cynicism. “The more contact you have with Tommy,” said Dauterman, “the more you’re convinced that the man’s a genius. He thinks on a different level than most people.” That was important, because, for a deal like this to work, two things had to come together in the point man, and the first was that he had to know unequivocally what he was talking about.

The second was that he had to be trustworthy. On this, they had the recommendation of Dean Glower and contacts at Battelle; they also had Ashby’s own confidence in Tommy, which had only grown after hours of listening to him talk about going to the bottom of the sea. Glower had assured Ashby that Tommy’s ideas were sound, and that someday someone would do it. Slowly, Ashby had come to this thought: There was a reasonable chance that the only thing that stood between Tommy Thompson and the floor of the deep ocean was money, and the only thing that stood between Tommy Thompson and money was credibility with big investors, and that was the one thing that Ashby could give him: credibility.

Over the next few weeks, Ashby and Dauterman tossed figures back and forth, talked more to Tommy, and finally decided that the project had one chance in ten of succeeding. But if Tommy got all of the technology together to find the ship and then do the wonderful things on the bottom of the sea that he wanted to do, the payoff could be a hundred to one.

Ashby told Dauterman, “If you go out to Las Vegas and find tento-one odds on an even bet, you’re not going to play it because you’ll lose. But if the payoff is a hundred to one, you take that bet every time.”

“You won’t let go of this, will you?” said Dauterman.

“If I don’t get it put together,” said Ashby, “I won’t get to make my bet. The only way I can make my bet is for Tommy to go to sea.”

Art Vorys had turned them down, and he probably would not be the last to do so; Ashby understood, and in different circumstances he would agree. But he had grown to believe so deeply that this young man could do what he said he could do that something inside told him to throw his own integrity behind the project, and in Columbus that was a lot of integrity. “They all trust Wayne,” said Dean Glower, “because Wayne is a very good, honest guy.”

But before Ashby went to friends asking for money, he still wanted a big law firm to structure the deal and walk Tommy through the securities regulation maze, and to help lend credence to the idea. Art Vorys had been at the luncheon, so Ashby had gone to him first. He now went to the other big firm in town, Porter, Wright, Morris & Arthur, specifically to Bill Arthur. Around Columbus, Arthur was known as Mr. Venture Capital, a lawyer who had syndicated real estate deals and oil and gas exploration and myriad start-ups. He had heard more crazy pitches than anyone else in the city, so Tommy’s proposal was not out of the ordinary. What was out of the ordinary was that Wayne Ashby had made the call, and that got Arthur excited about the deal before he even met Tommy.

“Here is this absolutely flabbergasting experience,” said Arthur. “Wayne Ashby having people buy equity interests in one of these high-risk deals? Wayne is an accountant! He’s never promoted anything in his life! He’s never even hinted that somebody might invest in something he might know about!”

When Ashby brought Tommy over to meet with Arthur, Arthur didn’t even grill him; he didn’t need to. The whole thing sounded plausible. His firm represented Battelle, and he thought of the institute as “a bunch of crazies up there doing all kinds of wonderful, exciting things.” Tommy was just one of a breed, and he had calculated as carefully as humanly possible that this could be done. “With a guy like that,”
said Arthur, “coupled with the thrill of finding a hundred times your money, why in the hell wouldn’t ya?”

Arthur told Ashby, Hell, yes, his firm would structure the deal, and he turned the project over to one of his younger partners, Curt Loveland, to see if Loveland could put it all into a framework that would encourage people to invest in it. Loveland was not so enthusiastic. His job as a lawyer in the securities field was to be cynical, and after years of experience he could not have been much more so. He was surprised Bill Arthur was even dragging him to a meeting to talk about the deal, but an hour with Tommy changed his mind. “I came away from the first meeting, and I’m thinking, God, I think this guy can do it! And then at the second meeting I was convinced this guy can do it.”

Loveland brought in another colleague, Bill Kelly, to help him structure the deal, and Kelly had the same reaction. He assumed Tommy was a crazed inventor until he heard his methodical speech, the carefully selected words, and saw in him what Don Prink at Battelle had seen: someone sincere, knowledgeable, and intelligent, who made you feel good to be around him. When Tommy spoke, somehow the ideas didn’t sound so crazy.

Tommy, the CPAs, and the lawyers now got together and tried to structure the idea as an organization that would make sense to an investor. But no one had ever seen a deal like this. It wasn’t like real estate, where they could look at it and touch it and smell it. Dauterman had done so many of those deals he had a checklist: If the numbers added up, the investment was good; if they didn’t, it wasn’t. And if he made a mistake, over time inflation might rescue him.

At the first meeting in Ashby’s office, they all sat around tapping pencils on blank legal pads and asking each other, What should this thing look like? “What really set it off from other offerings,” said Kelly, “was that it was so speculative.” Someone looking for venture capital usually had invented a new computer screen or a new piece of software, and they could tell you the size of the market and the competition and what their product did that the competition’s didn’t and their production costs and the number of units they could sell in the first year and how many they expected to sell in year two. That’s what venture-capital investors were accustomed to seeing. They analyzed spreadsheets; the
market survey, the pro forma financial statements and decided. Whether it was computers or medical technology didn’t matter. “But this one,” said Kelly, “was unique, to say the least.”

Bill Arthur had suggested to Ashby that they try to raise only a little money at first, some seed money, and use that to improve the presentation materials and allow Tommy a few months to pursue the real money he would need for the search phase. Loveland reiterated Arthur’s point. “You’ve got to take it in pieces and not try to raise $5 million the first day, because you’re going to fail: People want to give you a little bit and see how you use that.” But they emphasized to Tommy not to budget that seed phase at $100,000 if he really needed $200,000. Too many startup companies failed because they went in underfunded.

The meetings ran through the winter and into the spring of 1985, the lawyers and the CPAs impressed with Tommy’s quick grasp of legal and accounting concepts and his determination to keep within budget. They decided it would be a limited partnership offered privately to persons of substantial means, and that nobody involved with the project would be paid up front. “We had to make sure,” said Dauterman, “that when we went to people we knew, we could say, ‘Look, we’re not getting a nickel out of this. We’re putting our money in the same as you are, so you can’t bitch.’ If you look at every other deal in the world, there is somebody taking some kind of a cut for promoting it. Here, there were no commissions. Every dollar went into the project.”

They set up the funding in three phases: the Seed Phase, the Search Phase, and the Recovery Phase. To the Seed Phase they allocated 10 percent of the partnership, twenty units at $10,000 per unit, trying to raise $200,000, so Tommy could organize, line up contractors, complete the research, reimburse himself for past expenses, and cover the expenses of trying to raise funds for the next phase. It would give Tommy a chance to show his investors not only that he was scientifically capable, but also that he could manage a company and use their money wisely.