Nov
5
You’re a geek. But don’t feel bad. I’m a geek too. We geeks suck at some things. These days we do a little better with the opposite sex - geeks are more appreciated now that some of us are billionaires. But we’re still bad at some things.
As a geek entrepreneur, you can give away a chunk of equity for each skill that you lack, or you can get good at that thing and do it yourself. Don’t bullshit yourself that you don’t have time. Writing code really isn’t that time consuming. In fact, laziness in software development is an asset - in the Perl and Ruby world anyway. I know the Java guys like to crank out millions of lines of code - but that’s their problem.
Out of the non-geek skills you can get good at, learning to negotiate will give you possibly the largest return on investment of all. You may not even realize that you’ve already been up against a master negotiator and cut yourself a much worse deal than you could have.
Many of the developer-founders I’ve chatted to are frustrated by the deal they’ve cut with their Angel or VC a few months after they signed. These investors negotiate deals like yours every week. They are much better negotiators than you are.
But you can fix that. Here are a few tricks you can use. They are taken from the bible of negotiating, Roger Dawson’s “Secrets of Power Negotiating”. I’ve had some of these used on me when I was still a dumb geek.
Henry Kissinger said “Effectiveness at the conference table depends on overstating one’s demands.” Ask for more than you expect to get.
And Never say yes to the first offer. If you do, the person you’re negotiating with will a) Think they could have cut themselves a better deal and b) think that something must be wrong.
Another tactic is to flinch at proposals, but I’m not a fan of that one because it’s a sleazy car salesman trick. But now you know about it in case it gets used on you.
One of my favorites, and something I got very wrong a while back was “Avoid confrontational negotiation.“. A while back I was negotiating a lawsuit. I called up opposing council directly and told them their suit had no merit. Way to set the tone for expensive litigation! A better approach is to never disagree directly with the person you’re negotiating with. Dawson suggests a “Feel, Felt, Found” formula. It sounds porno, but it goes like this: If someone takes a position with which you totally disagree, respond with “I know exactly how you feel about that. Many others have felt the same way as you do right now. But you know what we found in our research? We found that….”.
A great tactic used by many is the higher authority. When you’re negotiating, having a higher authority you need to get an OK from is very helpful. A business partner, a board of directors, a mentor, your dog - if you don’t have one, make one up that sounds plausible. This tactic buys you time to think. It also avoids confrontation by teaming you up with the person you’re negotiating with and now it’s you and them versus this nasty higher authority that just won’t budge.
There are many other ‘gambits’ in this book that require some finesse and a complete understanding of the tactic, so I’m not mentioning them here.
I’d also like to add 2 rules of my own: 1) Always conduct your negotiations honorably. When I was selling my last business, I had 2 offers on the table. I made sure I treated both suitors equally and respected their confidentiality. Once I’d shaken hands on a deal and agreed verbally, I stuck to that agreement. 2) Don’t be an asshole. When you’re in a position of power, it may be tempting to take advantage of folks less experienced than you. Remember the trust they’ve put in you and that they may have invested themselves in you and your company on faith alone.
You have a handful of opportunities to redefine your station in life. Buying property, getting a new job, negotiating your share of equity, raising funding for your company, selling your business. In many of these situations, it comes down to a critical 5 minutes of negotiation. Learn the basics and you wont regret it.
