Startup Best Practices #11 - Practice Negotiations Before the Meeting

My first major negotiation was a potential advertising agreement between Google and Facebook. I was PM on the social advertising team at the time. There was a call scheduled at 2pm one afternoon, and I had been told that morning about it.

I’m wasn’t an experienced negotiator, so I panicked. I didn’t know how these conversations worked. I called some a few other product managers I knew inside Google, and asked their advice. I downloaded a few eBooks on negotiation and took notes. When 2pm came, I dialed into the call. I’m sure the Facebook team could hear my ragged nerves over the phone.

I realized a few minutes into the conversation that these 60 minutes were the first step of many. We chatted on the phone, became acquainted and sketched the outlines of a partnership that might make sense. Ultimately, and for many different reasons, Facebook chose Microsoft as their advertising partner.

Since that frenetic morning almost a decade ago, I’ve been trying to learn as much as I can about negotiation. There are a multitude of approaches: the theoretical zone of possible alternatives and best alternative to negotiated agreement; hard counter offers & brinksmanship; maximizing leverage; wearing people down; never conceding, always trading. Each of these frameworks provides a negotiator a way of ensuring they win the points that are important to their startup, trading less important elements away, and to ensure the partnership is mutually beneficial.

After I understood the tenets of these frameworks, the most difficult part for me to understand became the mentality of the best negotiators. Take for example, this self-diagnostic question from Everything is Negotiable:

True or False: Faced with a difficult opponent in a negotiation, it is better to concede something of little value in order to create goodwill.

This question gets to the heart of the negotiator’s state of mind. Most people say true (I did). But that’s not the right answer. In fact, the question is structured to create a defensive posture in the reader. Look at the diction: stronger opponent (there are no opponents in negotiation); concede (never concede only trade); etc.

Because negotiation happens between two people, the personalities of the individuals and the chemistry between them will define the way the negotiations unfold. Frameworks for thinking through negotiation are helpful. But ultimately, practice forges the best negotiators. I’ve been told that the very best corporate M&A teams repeatedly practice their negotiation sessions among themselves, playing both sides of the table, before the real thing.

Founders negotiate every day. Financings, job offers, real estate leases, software contracts, promotions. Everything is a negotiation. Improving negotiation skills is a powerful way to improve a startup’s efficiency and ability to accomplish key goals on the right terms for the business. Make sure you invest the time to outline your goals, research the frameworks for negotiation and take the time to practice before a big meeting.

Published 2015-05-05 in Management 


I'm a partner at Redpoint. I invest in Series A and B SaaS companies. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 18,000 others receiving these blog posts by email.

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