About the Author: William Fisher, a partner at Treetop Ventures in Omaha, is a regular guest contributor to Silicon Prairie News. In his series, View from the FishBowl, Fisher calls on his experience as a business executive and technology investor to lend his advice to entrepreneurs in the Silicon Prairie.
Fisher has served as a director for several prominent public companies and private firms, and he currently serves on the boards of Prism Technologies, Lodo Software and FTNI. To read his full bio, including a listing of companies he has been or is involved with, visit treetopventures.com.
Contact Fisher at fish@treetopventures.com.
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Negotiation Series: To read past posts in this series, see: “View from the FishBowl – Negotiation Series“.
William Fisher offers the above quote from President John F. Kennedy to sum up his series on negotiation. Photo from U.S. Embassy New Delhi via Flickr, graphic by Danny Schreiber.
My final blog on negotiation includes several points that I wanted to make when thinking about how I appraoch negotiations and various lessons I have learned that helped me in my career.
These points have to do with how to approach the negotiation table and how to manage yourself during the negotiations. This isn’t the definitive book on the subject; it is just one persons view of how to approach it. I hope you appreciate that.
Set Parameters
First, it is important to set parameters on the negotiation and stick to them. If there is a price that you will not exceed, make a note of it (and why) and stick to it unless the scope of the transaction changes. This is hard for people to do and especially hard when they let it get emotional; keep your internal mantra limited to “it’s only business” and stay focused on the transaction and keep the emotion at bay.
Avoid a “tie”
Once you have your parameters, then you can work towards getting what you want. One thing to avoid is negotiating to a “tie;” I call this agreeing to disagree. This is not a win for either side; it just says that the two sides were unable to put forth terms that could allow for a negotiation. Many times this isn’t on the quantifiable terms of the transaction; it is actually on the form and content of how to go about getting to a deal. Lack of experience will create a situation whereby you aren’t able to even get to the table because one side or the other takes a stance that prevents the negotiation from proceeding. Stay away from these; move the ball forward until it can be offered by one side and either accepted or rejected by the other side.
I can offer a simple analogy but I warn this concept is anything from simple. Someone offers a car for sale without a price; I offer $X for it and they say they are offended and not willing to negotiate. Who is wrong? Both sides are; however, unless this is properly managed, there will not be a transaction. Stay away from this sort of logic; the tie is that both feel they were justified in what they did and explain to their friends at the bar and look for reinforcement to their decision. Bad doggy … bad doggy.
Evaluate
Next, it is important for you to figure out a way to use your best skills to evaluate what can happen “before” you make an offer or accept an offer. This requires lots of forethought and is difficult for a lot of people. I can’t do it without the famous “Fisher tree diagrams” that others have chided me about for years. I have to think through the next 2-3 moves very much like a chess game; I don’t want to put myself in a box that I can’t get out of.
If you aren’t able to do this yourself, work with people who can. My lawyer friend, Dave Stokes, is a master at this. So is my personal lawyer, Virgil Johnson. For them, I think it is part training and part experience (means they have screwed up stuff early in their career; sorry boys!). However, I think it is key to the overall success of your negotiation and is important that you figure out whether you have “it” or need to hire “it.”
Negative Sell
After evaluating the options, it is now time to figure out how to play the cards. One of my early methods is one I call “how to date the prettiest girl in high school.” Under full disclosure, I need to admit that I wasn’t always able to make this work. However, if you have seen me in person (yikes) and have seen my wife, you will have to admit I did very well overall in this area. My logic on how to date the prettiest girl is not to pay attention to her; in fact, it is to act as if you are indifferent if she looks your way or not. For a very pretty girl, this is somewhat unsettling. Believe me, they are as insecure as anyone and become curious as to why you don’t think the sun rises and sets on them.
In the business world, this same insecurity exists and I like to use it against the other side where possible. My best closing line in a number of deals has been what my friend Ed Mangold calls a “negative sell.” I basically try to tell them that they don’t want the deal and I am ok with it; try to do with a “walking away” move. For whatever reason, it has worked for me. (Please, Brent, don’t use this against me going forward).
Out of time
Finally, and this is my best kept secret (isn’t really a secret but clearly a secret weapon) … run the other side out of time. Using time to your advantage is a huge weapon. If you are raising capital, make sure you have enough operating money to outlast the VCs. If you are trying to sell a business, make sure you understand their time frame and run them out of time. For sure, always seek to run the lawyers out of time (they are on a hourly billable basis and would re-write the opening of the Gettysburg Address over 100 times if given both scope and time). Nothing I have seen is as effective as this.
I was involved with CSG when they purchased a large software billing business that sold systems to telecommunication companies around the world. When we purchased the business, it was encumbered with a large contract that was put together by the previous owner (a hardware company) and this contract had some very onerous terms in it.
We had 50 people on site in Belgium putting a billing system together for the big cellular provider in Belgium and the contract basically said we would do whatever they felt was necessary to deliver the system (and they were taking advantage of us by continuously expanding the scope). The monies to pay for the contract went to the previous owner for hardware (who would have thunk) and we were left holding the bag.
My boss, the CEO of CSG and not the warmest of souls, told me to go fix it. It is pretty hard to negotiate a contract to get paid when the existing contract says everything is free. However, Mr. Warm and Friendly didn’t want to hear about that so off I went to Brussels. I had to come up with a logic quickly that would be effective.
Upon arriving on Monday and meeting the person in charge of the project, he proceeded to give me a list of things they were unhappy with that we would need to do. This would extend the project team for at least another six months if not longer and I would be paying for it. Sorting through my options, here was my response: Unfortunately, I can’t continue to work on the project and will pull my people off the project on Friday unless we come to a new deal that pays me for my effort.
He quickly pointed out that he would sue me and I quickly pointed out that he would probably win; however, it would take two years and in the meantime he wouldn’t be billing his subscribers with this system. I had to be firm and let him know that I was willing and able to pull everyone off unless we could come to a new agreement and gathered the team and told them to prepare to leave on Friday. This got back to the principals very quickly and they fired off a note to my boss telling them they would begin litigation as soon as the people left. (Mr Warm and Friendly called and asked me whether I had lost my mind or what … I told him to chew my butt next week but leave me alone this week).
In my mind, if I didn’t get this done, I would lose my job anyway (sorting through the alternatives and thinking a couple of steps ahead). The customer ignored me for two days and I worked in the conference room our team was using mostly reviewing their documents and hoping for a session at the negotiation table for a new contract. On Thursday, he showed up with his financial person and we worked throughout the day and into the evening and got a new contract. When I left to go back to the states, I told him that I appreciated his support and I know that projects always have bumps and the next bump we have, I will be willing to let it go his way. He never called me; the project got done in eight months and we were paid for our effort.
As I was leaving on Friday, he approached me and stuck out his hand and asked me if I ever played this game called “Poker.” He was asking whether I was bluffing! I told him I was prepared to pull the team just as I had told him; no bluff. He smiled and said, “Fish … I like you!”
Don’t be afraid to negotiate for what you need for your business; set your parameters and stick to them. Appear indifferent to the conclusion; run them out of time.
