Page 111 of Due Diligence

By the time Friday rolled around, I had come to terms with two revelations:

The first: Cass Pierson had a mind as stunning and remarkable as her body—and that was a feat.

The second: Cass Pierson was head over heels for me—and every morning, eighteen-year-old Marcus was smiling at me from some parallel universe and applauding me for being the absolute legend I was.

With exactly two weeks left to go before the end of due diligence, the time she and I spent together at work had tapered down. My documentation had long been submitted for auditing, and Cass was spending more time managing the teams of in-person auditors who worked in the on-site data room. Normally, I would have been downright annoyed she wasn’t six-feet away from me at all times in the fishbowl, but I could lean on the reassurance she spent most nights in my apartment. In my bed.

That Friday morning, Cass was meeting with a team of lawyers, so I took a call in the fishbowl. At Libra we had our own team of auditors, who had managed our financial accounting records for close to a decade. My primary contact, Eliza, had been working with me to investigate the “mystery deposits”—as we had started to call them. For a couple of weeks, Eliza and I had spoken on the phone as we reverse-engineered the trail—only to come up cold. Today, she was following up with me on what she referred to as, “a compelling lead.”

“Just so you know, Fitz, I feel like a private detective at this point,” she said when we started the call. “The phone tree you’ve sent me on to figure out the origin of these transactions is…well, anyway. How are you?”

Hearing this, I frowned as a sense of foreboding tore through me. Call it business instincts or call it experience; I knew something was off. “Good, Eliza.” After a long pause, I continued, saying, “I’ve had enough rocky conversations about finances to know you don’t have good news for me.”

Like any good financial analyst, Eliza was careful to stay neutral. “I’m not going to pass judgment on this news, good or bad. I’m just going to tell you what I’ve learned.”

“Shit,” I murmured softly. “Sorry—shoot. Oh no, that was annoying. I really regret saying that. ‘Shoot?’ What am I, a soccer mom?”

Eliza chuckled lightly, not because I was funny, but because I was rich. “Relax,” she recommended. “Let me give you the facts and then we’ll go from there.”

“Sounds good.”

“So you have recurring transactions documented in your ledgers under a ‘general funds’ account. The vendor is listed as ‘Transaction balance,’ which is obviously nonsensical, and the credits for these transactions range. You knew all this already, of course, but here’s what I thought was interesting: There’s apositive correlation between your accounts receivable and the amount of these transactions.”

“Hold on,” I cut in. “Can I just sit with that for a second?”

“Sure.”

The amount deposited to our account was higher when accounts receivable was higher. That meant there was a positive relationship between the money owed to us by customers, and the money we received from this mystery account. I tapped my fingers on the flat shell of my laptop, wishing Cass were with me. I needed someone to help me think this through, and Eliza clearly wanted to stay in an all-facts-no-conclusions-zone—which terrified me from a legal perspective.

Financial analysts kept their mouths shut because it was too easy for them to accidentally give financial advice—and then it was a slippery slope to white collar crime and an inevitable Netflix documentary that would feed the country’s potent desire to eat the rich. For Eliza to be this cagey meant she thought something wasverywrong here.

“Eliza,” I said once I had thought about this information for a couple of minutes, “have you ever seen this kind of transaction on any of your other clients’ ledgers?”

“That’s the thing. Per confidentiality, I can’t tell you about any of my other clients’ financial structures. Therefore, I can’t tell youwhichcompanies have the same mystery transactions,” she responded. “But Icantell you I have two other clients, both fintech.”

Fintech. Financial technology.

Eliza didn’t have anything else to share with me, so we ended the call. Minutes later, I found myself staring at the note I had typed out for myself:

Correlation between accounts receivable and the transaction amount.

I stared at that note for at least an hour, frowning at it, tugging on my hair, and chugging another coffee. It wasn’t until Cass walked in that I finally stopped. When I did, I realized my eyes stung because my contact lenses had dried from staring at my screen for so long.

“What’s wrong?” she asked, concern crossing her face as she saw my expression. She put her laptop down on the table. “I only have a couple minutes before I have to get back to the meeting, but if you need to talk…”

I took a deep breath. “Cass, if you saw a positive correlation between a transaction amount and accounts receivable over a long period of time, what would you think about that?”

“What would I think about that?” she asked. For several seconds, she hummed as her gaze drifted to the side. “Well, that’s easy. Accounts receivable is the amount of money you receive via in-app purchases—the money owed to you from customers.”

“Exactly.”

“Your financial model is straightforward,” she went on, “because you have paying customers and non-paying customers.”

She was right: either customers used the free version of the Libra app, or they paid just under two dollars a month for a premium version.

“So, when accounts receivable goes up for you, it’s an indication that you’re either getting brand new customers, or you’re converting free customers into paying customers.” She leaned against the table, balancing on the edge of it. “Now, to answer your question about the relationship between accounts receivable and a given transaction amount…the transaction is a credit, right?”

“Right,” I confirmed. “All credits and no debits.” A credit meant we had regularlyreceivedmoney from these transactionsand hadn’t lost any money (where a debit would have indicated money expensed or lost).

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