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Chapter One

The Pitch

"We're going to put the fun back into funerals."

    With that declaration, the meeting began. It was a curious elevator pitch.

    "The fun back into funerals?" I asked.

    "Absolutely. We're going to make it easy to make choices when someone dies. You know, the casket, the liner, flowers, that kind of thing."

    "Fun?"

    "Sure. All those decisions. It's not easy. So why not use the Internet?"

    "But fun? Why fun?"

    "Come on. Catchy marketing. You know, a play on words."

    "Ah, the fun in fun-erals."

    "Right. That's it. How many hits do you think you get now if you put the words 'fun' and 'funeral' into Yahoo!? Hundreds? I doubt it. You'll get one, just one. Us."

    Giving the pitch is a fellow named Lenny. Something about using the Internet to sell items most people buy at a funeral home when someone dies, items that arouse as many varied and complex feelings as sex toys.

    We are seated in the Konditorei, a comfy coffee shop nestled in bucolic Portola Valley. With the Santa Cruz Mountains to the west and Palo Alto and Route 280 to the east, we are but one exit away from Sand Hill Road, the famous home to Silicon Valley venture capital. The Konditorei is where I meet people like Lenny, the pitchmen of the Internet era. Here, or in a couple of restaurants in the same rustic strip mall. This is my office. (Forget Buck's Restaurant in next-doorWoodside. That's where venture capitalists prefer to meet supplicants and huddle around deals under a giant painting of Roy Rogers on Trigger rampant. If you sit in the corner of Buck's all morning, starting with the power breakfast crowd, you can quietly observe who is funding whom. It's a voyeur's embarrassment.)

    Every morning a stream of humanity stops at the Konditorei for coffee—joggers fueling up, businesspeople in a rush, Stanford students on their way to class, and a handful of deal makers en route from hillside homes to Sand Hill castles. It's also, ironically, a stop for the parade of incoming workers who saw, mow, paint, rake, and hammer away busily at the homes of the Valley shakers. Porsches, Mercedes, and BMW's queue up to enter the freeway, indifferent to the oncoming line of pickup trucks that replace them each morning.

    I had arrived a few minutes earlier, and Lenny was waiting for me.

    "You're Randy," he began. "I'm Lenny. Frank said you'd be easy to spot."

    Shaved head, cowboy boots, jeans, motorcycle jacket—I seldom get mistaken at these blind dates.

    With a solid grip, he shook my hand; then, his left hand on my elbow like a politician, he guided me to the table where he'd already set up shop. I could tell by his amped up confidence that he was probably not an engineer. Too outgoing. Too well dressed. So it's not a technology pitch, I said to myself.

    I looked at my watch on the arm he didn't have in a power lock. Nine o'clock exactly.

    "I hope I didn't keep you waiting," I said. "I had this down for nine."

    "Nine is right. Come on," he commanded. "I'll get you some coffee. My treat. You take cream, sugar?"

    "Thanks. I don't know what I'll have. Why don't you sit down while I decide."

    He started to resist, but I retrieved my arm and walked to the counter. He took one step to follow but then turned and sat down. I let out the breath I'd been holding since he grabbed my arm.

    I watched him askance as I waited for my low-fat chai latte, putting his age at twenty-eight. I took stock of his thick, blue-black hair and his pale and drawn face. He looked like he'd been pulling some all-nighters, and by noon he would need another shave. Beneath two smudges of eyebrows, his dark eyes gripped his target like his double-lock handshake—no gazing off and gathering his thoughts. He sat with his body coiled, tense, ready to spring. At me.

    Lenny's standard-issue corporate uniform—navy blue suit, crisp white shirt, tie a rich mosaic of reds and yellows—pegged him as not from the Valley: sales guy, I'd guess. The only one in the Konditorei wearing a suit and tie. Personally I hadn't worn a suit in years. When I was at GO Corporation a few years ago, spending several months negotiating an investment in the company by IBM, my opposite number was one of their seasoned negotiators, Dick Seymour. He was a classic IBM fixer. The equivalent of Foreign Service diplomats, these fixers knew how to manage both the internal IBM organization—all the different inside stakeholders whose interests could often be at odds—and the outside oddballs like us at GO. Seymour was probably in his fifties, fit, highly articulate, utterly professional, and impeccably dressed in a blue suit and crisp white shirt. There I was, in my thirties, in my jeans and T-shirt and florid socks and skateboard shoes, going nose to nose on complicated deal points. Dick treated me like a professional through all our wrangling, not as if I were a creature from a valley of lunatics. GO accepted some tough terms to get IBM's support, but I came away with nothing but admiration for Dick. He had class. He was the consummate deal guy. For all his professional savvy and maturity, though, I couldn't ever imagine a guy like Dick founding a startup.

    Now I'm wondering whether Lenny is the corporate type, just younger than Dick and not yet so polished and accomplished.

    Connie leaned over the register as she handed me my chai.

    "Your friend want another cup of coffee?" she asked.

    "I don't know. Sure. You know what he takes?"

    "You bet. French roast, black." She whispered, "He's had five cups in the last hour. I'm surprised he can sit still at all. I hope you're wearing your surge protector today." With her sleeves rolled up to handle the morning onslaught, Connie still had time to offer some neighborly advice.

    When I rejoined him at his table, Lenny glanced at the coffee I put in front of him and laid a black three-ring notebook in front of me. "Thanks" was obviously not in the script.

    "I usually make the presentation on a computer, you know, throw it up on a screen, if I can. That's how Frank saw it. But I checked it out earlier. Too much glare in here. So we'll use the dead tree version."

    Here it comes. The pitch. People present ideas for new businesses to me two or three times a week. If I chose to, I could hear a pitch every day—all day, every day. Just as everyone in L.A. has a screenplay, everyone in Silicon Valley has a business plan—most of them nowadays for Internet businesses. I've been around Silicon Valley and involved with young companies since the early '80s—startups, spinouts, spin-ins, what have you. I'm not in the phone book or listed in any professional directory. If you don't know someone I know, you can't find me.

    I wonder what Frank had in mind when he set me up with Lenny. I prefer to riff on ideas, brainstorm, prod and provoke, have some constructive give-and-take around a business concept. It didn't feel like there was going to be much of that with Lenny. I gazed out the picture window at the bright California day, the eucalyptus trees rustling in the breeze.

    "Before you get started, Lenny, tell me how you know Frank," I said.

    "He's, uh, a friend of a friend. We presented to him Monday, and he sounded interested. He wanted us to meet with you right away."

    Sounds like the early bird special, a quick chat before Frank and his partners hold their weekly gathering to talk shop and audition new deals. Obviously Lenny didn't know Frank at all. Thanks, Frank. You owe me.

    Frank is a headliner in the VC world, whom I've known since I raised money for GO. His firm is "top tier," a term reserved for firms with such a long wake of winners that the mere mention of their names imparts instant credibility and a whiff of inevitability to a startup. We stay in touch. A few days ago he'd called to say he was sending me a prospect. "Intense guy," he confided, "unusual idea but may be 'interesting'. If you like it perhaps we can work together on this one."

    "What do you do, Lenny?"

    "I sell group life insurance to companies, part of the employee benefit package. National accounts. So I'm out to the West Coast every two or three weeks. I'm the company leader in new sales the last two years. Millions of dollars in value."

    Lenny paused a split second and slid some kind of legal document across the table.

    "I brought along an NDA. Could you please sign it before I go on." For a second his supreme confidence faltered.

    Without a glance, I pushed it back at Lenny.

    "I see dozens of companies each month, Lenny. I can't sign a confidentiality agreement. It exposes me to inadvertent liability. My integrity is my stock in trade. If Frank referred you, he can vouch for me. If you're uncomfortable with that, don't tell me anything you think is a trade secret. Frank didn't sign your NDA, did he?"

    "Ah, no. I just thought ..." Lenny said, skidding for a split second. "OK. Let me start."

    He flipped open the binder. It was a professional presentation, the kind you see in boardrooms all the time. From his pocket he extracted an extendable pointer. He pulled it out a few inches and tapped at the title page.

    "We want to call this business 'Funerals.com,' but some undertaker in Oklahoma already has the URL," he said. "When we get funding we'll buy the rights to the name."

    Funerals.com. Oh, brother. What next?

    "I understand," I said. Below the title were the date and the words "Presentation to Randy Komisar." He would probably read aloud all the words to me.

    "Presentation to Randy Komisar."

    "You don't need to read it to me, Lenny," I said. "Just tell me about it."

    "Sure, if that's what you'd prefer." He flipped to a page that proclaimed, in a blaze of black type: "The Amazon.com of the Funeral Goods Business."

    Now that's a new one.

    "This window of opportunity is going to close soon, but if we act now, we can make this the Amazon of the funeral business," Lenny began. "It's going to be big. The world is moving to the Internet—I'll explain that in a minute—and these products will move there too. The Internet's changing the way we live, and it will change the way people die. Someone's going to ride this opportunity all the way to the bank"—or the pearly gates, I said to myself—"and we think we should be the ones."

    Next page: "Projected Revenues."

    "In the first full year after we're up and running, we expect $10 million in revenue. Fifty million the second year. The third year we really hit our stride—100 million." Lenny paused for effect. "Exciting, right? It's big." He waited for my response, then leaned forward and whispered conspiratorially, "Most people don't like to talk about this. Death, dying. Loved ones passing on. But that's part of the opportunity. You understand that, right? It's a competitive barrier, a hurdle to entry. Most people won't want to do this. Would you?" He looked at me but didn't wait for an honest response. "I wouldn't, if I weren't so damn excited about it."

    Until this last line, Lenny's pitch sounded like dozens of others I've heard. Everyone's going to be the Amazon, or the Yahoo!, or the eBay of the you-fill-in-the-blank business. Manifest destiny. Millions—billions even—of dollars overnight. Then sell out, or do an IPO and cash out.

    "You know what makes this business so exciting?" he asked.

    I waited. The warm spring air wafted through the open doors of the Konditorei.

    "People are dying, that's what. It's inevitable. Death and taxes, right? Doesn't matter, rich or poor, what you believe, where you live, how you live, what you think. In the end, everybody has to die sometime, and we're going to be there, ready to provide the goods that people have to buy. They must buy! That's the point. You understand? This isn't about eyeballs visiting your site. These aren't eyeballs. These are people who need what Funerals.com has, because everybody dies. And when somebody dies, there has to be one final shopping day to assuage a life of guilt. To buy all these things, expensive things, high-margin things" — he thumped the table and stressed "things" every time he said it—"all these things, expensive things. And there's no getting around it. These are necessities aimed at the biggest aggregate market in the world—biggest because it includes everyone. Everyone." He paused again for effect. "That's the business, and it's a dream business, because you don't have to convince anybody they need what you have. They know it, brother, they know it. We sell the solution everyone ultimately wants. No demand creation, just redirect it, to us."

    I looked around the coffee shop sheepishly. Lenny should have asked everyone in the Konditorei to sign nondisclosure agreements. Sure, he might never see these people again, but these are my homies. Connie rolled her eyes. Having overheard so many pitches herself, she knew the drill cold.

    Next page: A shaded graph probably sold ready-made in any office superstore in the country. The shameless "Projected Growth" chart inevitably traces the outline of a hockey stick and assumes that a short period of investment will be obliterated by years of exponential increases in whatever—revenues, net income, profits, customers, corpses. Lenny's chart was all about revenues, certainly not profits, because this was, after all, an Internet business.

    "Hundred million, three years, easy." Lenny poked his pointer at the highest end of the graph. "Who knows how far it can go. The potential is unlimited, and in three years the exit strategy kicks in. May be an IPO. Depends on the stock market. Probably a buyout."

    "Getting to $100 million annual sales in three short years is no small task," I cautioned.

    I went on to explain that in the late '80s I'd been one of the founders of a software company, Claris Corporation, that grew to nearly a $90 million annual run rate in three years, and we were profitable to boot. That was when $90 million was $90 million, not like today when $90 million in stock options alone is chump change. I remember all too well how much hard work and good fortune must come together to make that happen.

    "Selling software? No offense, but what was that? Hundred dollars a pop? Two hundred? This is thousands of dollars a sale. Thousands. I'm talking about an order of magnitude difference. No comparison. Besides, the numbers here only include the U.S. You understand that? The U.S. alone. But, people die everywhere, right, not just here? This is truly global. The world market for these goods is at the very least triple, quadruple the U.S. market—tens of billions of dollars, easy."

    I pictured some Tibetan ordering the hack-into-small-pieces-and-feed-to-the-vultures economy option. How would Lenny price that?

    "Let me tell you something that I absolutely, positively, sincerely believe is the gospel truth." Lenny leaned forward and focused on me with his dark gaze. "You would have to convince me"—he tapped on his chest every time he said "me"—"convince me that these numbers are a stretch. A stretch? I don't think so. Listen, somebody's going to do this. No doubt about it. And I say, why not us? Why not us?"

    Lenny obviously didn't ask questions to get answers, and so I waited through his dramatic pause.

    "And I'm not alone in this." He flipped to a page of quotes from analysts and forecasters.

    He started to read the first aloud, from Jeff Bezos, founder of Amazon.com, something about "the migration of the $4 trillion global economy onto the Internet."

    I held up my hand so I could read in silence. In a world inhabited by people who think the Internet and the universe are converging, no shortage of proselytizers are willing to endorse any kind of cockamamie scheme as the next big thing. But Bezos deserved to be read. I noticed that he made no mention of funerals or caskets.

    "Have you been in a funeral home lately?" Lenny said suddenly.

    Well, no, I confessed, I hadn't.

    "Most people, they'd rather have a root canal. Research reveals that people think funeral homes are creepy places. Not good places for making decisions that can add up to the price of a small car. You're not there because something pleasant is happening in your life. You're there to see someone off, say good-bye. All the queasy questions you never ask yourself in daily life seem to be lurking in the next room, waiting to leap out and grab you by the throat. You know: What happens when you die? Is there life after death? Am I going to be called up next?"

    "If you could answer those questions on the Internet," I advised, "that would be a great business."

    "Oh, there are sites that claim to have the answers, but that's not what we're doing."

    Lenny would not be deterred, not with humor, not with questions, not with sidelong glances from strangers at the next table.

    "Then there's the guilt: You didn't call enough. You didn't stop in enough. You didn't help enough. Whatever you did, it wasn't enough. Now, by God, your dearly departed dad is going to have the casket of his dreams."

    He paused and glared at me, slightly indignant. Was I supposed to be the grieving fool about to spring for the most expensive casket or the conniving funeral director profiteering from human suffering?

    "Have you ever heard the pitch?"

    "Your pitch?"

    "No, no. The spiel you get in a funeral home."

    "No, I never have."

    He brightened. "All right, let me set it up for you. Imagine suddenly somebody's dead."

    Again, Lenny had everybody's attention.

    "Somebody important to you. You're in shock. Grief has you on your knees. But you're the one who has to make all the final arrangements. So, first, you have to figure out where to go. You've never done this before. It's all new. If you belong to a church or synagogue, you could ask the priest or rabbi. They would probably steer you to one or two homes—and it's not unknown, you know, for the funeral home to give the church a little something in return, by the way—and so you go there. Or you look up the Yellow Pages. Or an acquaintance says she knows somebody had a nice time over to Joe Blow's place. So, tears in your eyes because a light is gone from your life, you head over there. You figure they're all the same anyway, right? First thing, they say, 'We're here to help you.' Help you? I doubt it. They're thinking when you walk through the door, before you walk through the door, about everything they can sell you. Cremation? Sure. How about a $12,000 casket? Let's burn that up too, show some respect. Oh, then there are sealed caskets. I love this. Buy one of those, just a few bucks more, so you can seal the old guy away from all that water and dirt underground. But when you seal it, the anaerobic bacteria can have a feast. Putrefaction sets in...."

    A little far, I thought, for an eating establishment. They'll never let me back in.

    "Lenny," I interrupted, "it doesn't make sense to go down this road. Just give me the conclusions." I didn't feel like hearing any more of the standard funeral home pitch.

    "Wait a minute," someone two tables over called out. "What about those anaerobic bacteria?" Connie shushed him.

    "But you've never heard the spiel," Lenny continued. "That's what you said."

    "I don't need the experience. Most of your customers won't have had the experience either. If your market is only people who've been suckered in their first funeral, that's not a ready market."

    He was undeterred. From his file he pulled out a four-color brochure and spread it in front of me. I suppressed a grin. Even if I did seem to be the sole focus of his sepulchral sell, I had to admire his spirit. He knew what he wanted, and nothing was going to stop him.

    I could more than relate to Lenny's single-minded sincerity. Years ago, when I was a young lawyer new to Silicon Valley, I represented a client in an arbitration hearing. Contrary to what you see in the movies or sensational TV trials, many legal proceedings are blandly cordial affairs conducted by lawyers who know each other socially, belong to the same private clubs, and break bread together. Trial histrionics can be as phony as professional wrestling. But I cared very little back then for the lawyer's code of civility. My job was to win for my client, and I was willing to do whatever that took, even if it irritated everybody else in the courtroom. I challenged nearly every one of my opponent's assertions and failed to show respect for my esteemed adversary, a friend of the arbitrator and, unbeknownst to me, a pillar of the local bar association. At the end of the hearing, my boss, the lead partner in the ease, turned to me shaking his head. "You're a lawyer's worst nightmare. A guy works all his life to rise above the fray, and you go for the jugular. You don t give a damn, you just want to win." He was bemused and dismayed at the same time. I suppose it's a privilege of youth to be admired and admonished by the wise guys who have gone before.

    Lenny pressed on. The brochure showed the latest fashions in caskets: metal caskets in pink and blue with matching satin lining, walnut caskets lined in white satin, and even some Greek sarcophagus-looking numbers. They all had model names, like cars: Peaceful Rest, Solitude, Heavenly Gates.

    "Is there one called Hand Basket?" I asked.

    "Hand Basket?"

    "As in 'Go to hell in a hand basket'?"

    He didn't even blink.

    "Look at this. Look at this."

    He took out two pens and began writing—upside down so I could read what he wrote—dollar numbers next to each casket. It's a trick used by presenters to keep your attention while they write. So far Lenny had shown me his mastery of the Inevitable Growth Curve, and now the magic Upside-Down Writing Trick. Somewhere in his pitch, if I could wait long enough, Lenny would surely reduce the entire world to a four-cell matrix.

    Granted, Lenny struggled a little in writing the upside-down numbers, switching back and forth between red and black pens. He wrote two shaky but legible numbers by each casket.

    "The red number is the price typically charged by the funeral home," he said finally. Those numbers ranged anywhere from just under $1,000 to several thousand dollars.

    "The black number is the cost to the funeral home." Those numbers were all in the hundreds of dollars, some in the low hundreds.

    "The margins these guys get are unconscionable. Markups of thirteen, fourteen times cost. They get away with it because nobody feels like shopping around. Everybody thinks funerals have to cost thousands and thousands of dollars. But they don't."

    If no one felt like shopping around, I wondered what that meant for his business.

    "What margins are you taking?" I asked.

    "Good margins, but not rip-offs like many funeral homes. That's the opportunity. We can beat the funeral home prices and still make a tidy profit."

    "So this is a price-cutter's business. You're competing on price."

    He reached out again and flipped back a few pages.

    "Price, convenience, and information. It's the Information Age, and information is what sells on the Internet. We give you the information you need about the product in the quiet of your home. We'll do the price comparison shopping for you in every major city, eventually every city and town. Federal regulations require funeral homes to quote prices over the phone. You don't have to go in person. So we can call them all up and compare what they charge."

    He paused. "Sometimes they try to refuse, make it tough, imply you really have to drop by. Those are the sneaky ones I love to get. I used to blast them on the phone, ream 'em. Now I play along, let them refuse. Then I write the FTC and send a copy of the letter to the home. Afterwards, I call up and blast them, only now they got me and the FTC together, kind of a one-two punch, you know?"

    Nice business practice. Obviously, something about the funeral industry had gotten under Lenny's skin.

    "Pretty compelling, right?" he asked.

    One of the regulars at the next table smiled as he rose to leave, carefully folding the business section of The Merc and cradling it under his arm. "Very compelling, kid, can I invest?" He winked at me as he walked into the sunshine, offering what was probably the only bite Lenny had gotten on the fundraising trail.

    "How do you know people want to make these decisions on the Internet?" I asked.

    Lenny beamed. Here comes the Internet pitch, I realized just a second too late. He gathered himself and once again reached over and flipped several pages in the "Presentation to Randy Komisar" binder.

    "The Internet changes everything. Why drive to the bookstore to buy a book when you can order it from your couch and receive it FedEx the next day? Why buy airline tickets from your local travel agency when you can take control of your schedule and pricing on-line and accept your e-ticket at the gate? Why buy milk from the local market when you can check off a box on your screen and have it delivered by noon?"

    Lenny's rendition of the future made me feel like a prisoner in my own home. "Do you have a graph of Internet profits?" I asked.

    Lenny glared at me.

    It was a joke. Few Internet companies are willing to discuss profits, let alone produce them. No one knows what a piece of the Internet is really worth, or which economic models will ultimately produce profits, but everyone's betting their patch is rich bottom land, and they're willing to place their bets before anyone has shown they can grow much of anything on it. The market will eventually sort it all out, but the land grab is on.

    "You don't get it, do you?" Lenny said. "Let me explain."

    With that he launched into yet another rehearsed speech. Obviously he had developed micro pitch modules, and now I was getting the one on the current economics of the Internet, or the lack of them, and why the really smart companies were building brand and staking out territory, at the expense of profits. He said he'd never invest in a company that expected to make a profit in the near future on the Internet. Soon as they make a profit, they've fallen behind. It's growth or profits, etc., etc., etc. I wondered whether there could ever be enough day traders to keep these leaky boats afloat.

    While Lenny blasted on, I imagined myself standing outside the Konditorei, looking in through the picture window to see the Pitchman wind up for another inning and wondering how the other guy, me, managed to sit so still as the ball came toward him. My secret was counting my breaths—in, out, in, out—as I planned my escape.

    His idea was intriguing in some ways, but it was mostly just another plan for flogging merchandise on the Internet, and esoteric merchandise at that. It wasn't his intensity that irritated me. I expect that in people who found companies. They have to be a little irrational, passionate beyond analysis. If they don't believe in the face of doubt, they'll never make it. But Lenny was operating on automatic pilot set all the way to frantic. I d have to tell Frank that Lenny and I talked but we never really connected. Frank would have to come to his own conclusions.

    A cell phone rang. It wasn't mine—I don't own one. Lenny paused midsentence. For future reference, here was one way to interrupt his relentless pitch. It rang again. He opened his briefcase on the table, snatched out his phone, and snapped it open. "Lenny here," he said, as he strode out the door without a word to me.

    Rudeness is as good an excuse as any for an exit. I pulled my jacket off the back of my chair with one last look at Lenny's open briefcase. It revealed a stack of files, an assortment of pens, a family picture stuck on with a paper clip, an economy-size bottle of Pepto-Bismol, and some kind of homemade sandwich—tuna salad?—oozing around the edge of the plastic wrapper. Well, I thought, somebody loves him enough to make a sandwich. Or, maybe he's brown-bagging to save money.

    I told Connie I would be back later. She promised to hold my regular table. We both watched Lenny as he sat at one of the tables just outside the open door. Still oblivious to the possibility that someone might overhear, he argued and pleaded into the phone. "Wait! You didn't accept, did you? You said ... six months. No, one more month ... we made a commitment."

    "Sounds like trouble," Connie said to me.

    "Sounds like someone is bailing out," I said.

    "No, no, it's too important," Lenny yelped. "Remember what we said after my dad's funeral."

    "Aha!" Connie said. "Someone did die. I knew it!"

    "No, not a hundred," Lenny argued. "Komisar's only number twenty-six."

    "Well," Connie said. "twenty-six? You've moved up. You deserve a better table."

    "No, he loves it," Lenny said. "I can see ... he's in ... Frank ... fund it."

    "I get it," Connie said. "You're rushing home to get your checkbook, right?"

    Now I rolled my eyes.

    "Listen ... one more month. Just a month ... please. Please. Give me ..." He was still talking, but, to my surprise, his voice had downshifted, so we couldn't hear him, even as we both strained toward the door. He slumped, wordless, as though the wind had been knocked out of him.

    "Is he all right?" Connie whispered to me.

    He sat still, his head down, the phone dangling in his hand.

    I had to admit this was a different Lenny. For a second, I was a bit worried about him.

    Slowly, Lenny sat up and gathered himself. He put the phone back to his ear and spoke again. The words "two more weeks" were clear enough.

    "So, Mr. Last-Chance Twenty-six. You were leaving?" Connie wanted to know. She looked at me hard. "How about another thai?" she asked finally. "On the house."

    Perhaps this wasn't the most opportune moment to sneak out. I still had some time before my next meeting, and for all his bravado, this kid could really use a clue.

    I took my coat off. "My friend out there," I said, "he'd like a decaf."