Startup life is a series of negotiations, all day, every day, from the time you wake up to the time you go home. Customers, new hires, project scope, deadlines and deliverables, discussions on pricing, creating partnerships. You make offers, you make counter proposals, you say no, you say nothing to buy time to think, you get to yes and you shake on the deal.
Then when you get home, the negotiations continue, some easier than others. Deliberating with your partner on preferences for tea, which broadband provider, or how much screen time the kids are allowed. The stakes of negotiating at home can feel sky-high and often need you to take emotional intelligence to a new level. Sometimes I feel my toughest negotiations are with my dog: no, not another walk today.
From the major to the mundane, negotiating is the way we get things done. Whether pitching to a prospect or discussing wallpaper options at the kitchen table, we are trying to persuade others of a different point of view. Negotiations, both the process and outcomes, determine the quality of our lives.
Learning to communicate well and to influence other people are essential startups skills. Many founders fear negotiations from either lack of experience, self-belief (‘we’re a startup’) or absence of a framework to structure the dialogue. Many I work with bargain themselves down before they get to the table. Too many negotiate out of fear when they shouldn’t fear to negotiate.
Successful negotiation is not about getting to ‘yes’; it’s about mastering ‘no’ and understanding what the path to an agreement is. Conflict is good in a negotiation process, it’s the clash of two ideas which all being well, produces a third idea. Everything is negotiable. Whether or not the negotiation is easy is another thing. Negotiation is empathy. If you can’t put yourself in the seat of the other person you’re speaking with, you’re not going to do well. It’s not about being a winner. It’s about creating a relationship, not a transaction.
Never Split the Difference is an insightful book by Chris Voss and Tahl Raz on negotiations that I recommend to founders on how to approach any negotiation. Voss was an FBI international kidnapping negotiator. Never Split the Difference reveals the skills that helped him succeed where it mattered most: saving lives.
For Voss, the key to success was tactical empathy, which he describes as emotional intelligence on steroids. Here’s a summary:
1. Be an active listener Negotiation begins with the simple premise that we want to be understood. Being an active listener is the most effective act we can make to demonstrate empathy, showing a desire to better understand the other side’s perspective and establish rapport. This helps to uncover obstacles, gain trust, and open up possibilities in a more fluid environment. By listening to the other party, you can understand their concerns and emotions, creating a safety net that supports real conversations. It also enables you to identify all possible scenarios.
2. Be a mirror If you view negotiation as a battle of arguments, you’re taking too much of your own perspective. Negotiation isn’t a battle, it is an act of discovery, the objective to uncover as much information as is available. A common perspective is ‘It depends on what the other side does. Ask yourself what you’re most worried about. For example, ‘What is the question I really hope they don’t ask?’ and start preparing your potential response. Conquer this and the ‘win at all costs’ voice in your head, instead understand what the other party wants and then get them feeling safe enough to talk about what they need.
3. Flex your voice According to Voss, there are three types of voices available to negotiators:
- late-night DJ voice: keep it calm and slow. When done properly, this has the power to create an aura of authority without making the other party defensive.
- playful/positive voice: This should be your default voice. It’s the voice of an easy going, good-natured person. Your attitude is light and encouraging.
- direct/assertive voice: This should be used rarely because this has the potential to create pushback.
Use different voices selectively and tactically to make your point.
4. Track the emotions Be aware of the other party’s emotions, pay close attention to changes you see and hear when they respond to your words and respond to these underlying emotions accordingly. This approach acknowledges the other party’s feelings, helping reinforce positive perceptions and dynamics of ‘we’re in this together’. Using ‘I’ also prevents confrontation. For instance, if you were to say, I’m sorry that doesn’t work for me, the ‘I’ brings the other party’s attention and emotion back on to you.
5. Beware ‘Yes’ and ‘No’ – focus on getting to ‘that’s right’ Contrary to popular belief, ‘No’ is the start of the negotiation, not the end of it, it’s a press pause moment that provides the opportunity for both parties to clarify what they really want. ‘No’ can often mean I am not yet ready to agree, or I need more information. Don’t view it as an ending, rather it can allow deeper issues to be brought out, moving everyone forward in a more positive direction.
Thinking in binary terms is almost always counterproductive and can create a stalemate. Replaying back the other person’s responses is the best way to move the dialogue forward. Reaching that’s right in a negotiation creates breakthroughs. Use a summary to trigger a ‘that’s right’.
6. Negotiators are decision architects Voss cites the methods for using verbal and nonverbal forms of communication, notably the 7%-38%-55% rule created by Albert Mehrabian that only 7% of a message is based on the words, 38% comes from the tone of voice and 55% from the speaker’s body language and face.
Of course, standoffs arise whereby compromise is needed if there is to be a resolution. This can often be regarded as a climb down or defeat, and the negotiation becomes a confrontation with no goodwill, a battle of attrition. This needn’t be the case, a position should be sought where ultimately both sides feel comfortable with a compromise solution acceptable to both, leaving both feeling that they’ve taken away something positive from the discussion.
Meeting half-way thought, isn’t a result. Playing split-the-difference on the spot is lazy, it’s the midpoint between two arbitrary standpoints. Where is the logic in that? Ask for what you want, but what will you trade? Don’t be afraid to explain your objectives and what you’d like as an outcome but do so in a non-confrontational tone of voice. What do you and the other person have that you can trade? What are you each comfortable giving away?
7. Find the Black Swan Black Swans are the hidden elements that can totally change the negotiation if uncovered and used. Voss derived this from Nassim Nicholas Taleb’s book regarding the impact of the rare and unpredictable events (outliers). As a negotiator, instil uncertainty with three types of leverage:
- Positive leverage: when you can provide what the other party wants.
- Negative leverage: when you can withhold what the other party wants.
- Normative leverage: when you understand the other party’s stance completely and use it to advance your position.
8. Own the perception Fair is one of the most powerful words in any negotiation scenario. To get to this point you must persuade the other party that what you have offered is a reasonable suggestion. Voss suggests several approaches:
- Anchor their emotions: anchoring the other party’s emotions in your solution.
- Let them go first: Let the other side anchor negotiations but withstand the first offer.
- Establish a range: Establish a ballpark figure with credible references to support your statement. That gets your point across without making the other party defensive.
- When you talk numbers, use odd ones: Rounded numbers that end in a ‘000’ tend to feel like placeholders, but arbitrary numbers feel like figures that you came to as a result of a thoughtful calculation.
9. Using Silence Perfecting the art of silence in negotiations can give advantage if used wisely. For many, silence becomes awkward. We live in a world of growing impatience. We do not pause enough. People expect words from you more than silence, most cannot resist silence in a negotiation and so silence can be good tactic to pull the conversation to your thinking and unnerve the other side and put them off their stride.
In some instances, silence pushes the other person to fill in the void, share more information and show their position in greater detail than planned. Silence empowers you. People talking too much may give the impression of justifying themselves. As Mark Twain said The right word may be effective, but no word was ever as effective as a rightly timed pause. Master the art of silence and play this subtle game. Speaking too much and not at the right time can weaken your position.
10. Never be needy Remember, the person across the table is never the issue, the uncompleted deal is. Voss highlighted the Ackerman model as a way of orchestrating an offer-counter offer method without appearing to be desperately seeking a deal. It’s a bargaining approach using a tapering model. For example, if you’re looking to buy:
- Set your target price (your goal). Understand your ‘walkaway’ point.
- Set your first offer at 65% of your target price.
- Calculate three raises of increments to 85%, 95%, and 100%.
- Use empathy and different ways of saying No to get the other side to counter before you increase your offer.
- When calculating the final amount, use precise, non-round numbers. It gives the number credibility and weight.
- On your final number, throw in a non-monetary comment to show you’re at your limit.
Use the reverse of this if you’re selling. Before you head into a negotiation prepare your Ackerman plan to get the bargain you seek and prevent the other party from pushing the deal for their maximum value. The genius of Voss’s system is that it incorporates the psychological tactics of reciprocity, extreme anchors, and loss aversion, without you needing to think about them.
An opening offer may be a big slap in the face, the shock of an extreme anchor will induce a flight-or-fight reaction in most of us, limiting our cognitive abilities and pushing us into rash action. But look at the progressive offer increases in the Ackerman model. You’re going to drop these in sparingly: after the counterpart has made another offer on their end, and after you’ve thrown out a few calibrated questions to see if you can bait them into bidding against themselves.
When I have employed Voss’s model, I have had negotiations during which I could care less about my counterpart’s response to a proposal. I knew what my next offer was going to be. This allows me to respond quickly if I want to do so (I may not).
When you make these offers, they work on various levels. First, they play on the norm of reciprocity, then it gets commercial – the diminishing size of the increases (notice that they decrease by half each time) convinces your counterpart that he’s squeezing you to the point of decision. But it’s actually your scale.
I enjoy negotiations, they are opportunities to test your wit and intellectual agility in a spot of verbal jousting. Yes, we want success, but startups founders must learn to live in the moment of dialogue ebb and flow, because negotiation skills are a key part of your armoury. You can only do this by adopting a process as outlined above.
This gives you a foundation for not being fearful or nervous, simply ‘living from the inside out’ – respecting yourself, being clear and firm, but being open, reasonable, and showing respect to the other person. It makes you easy to do business with, and don’t under estimate that as a sentiment, being personable and authentic will influence people to wanting to work with you.
