Startup life is a series of negotiations, all day, every day, from the time you wake up to the time you go home. Customer contract terms, new hires, project scope, deadlines and deliverables, discussions on pricing strategy, creating partnerships and joint ventures – and dissolving them. 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. Finally it’s dinner time.
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 arguing over a curfew 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 skills in startups.
Never Split the Difference is an insightful book by Chris Voss and Tahl Raz on negotiations that I recommend to give you the competitive edge in terms of approaching any negotiation. Voss was the FBI’s lead international kidnapping negotiator. Never Split the Difference reveals the skills that helped him and colleagues 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 accepted and understood. Choosing to be an active listener is the most effective concession we can make to gain trust, we demonstrate empathy and show a desire to better understand the other side’s perspective.
Great negotiators practice empathy with the other party to quickly establish rapport, which helps to uncover obstacles and gain trust, and are thus open to all possibilities and are more intellectually agile to fluid situations.
2. Be a mirror
If you view negotiation as a battle of arguments, you’re taking too much of your own perspective. The truth is, negotiation isn’t a battle, it is an act of discovery, the objective to uncover as much information as is available.
Equally, what I often is ‘It depends on what the other side does’. To conquer this and the ‘win at all cost’ voice in your head, understand what the other party actually wants and get them feeling safe enough to talk about what they really need. Negotiation begins with listening to the other party, validating their concerns and emotions, creating a safety net that supports real conversations.
3. Flex your voice
According to Voss, there are three types of voices available to negotiators:
- The late-night DJ voice: keep it calm and slow. Use this selectively to make a point. When done properly, the late-night DJ voice has the power to create an aura of authority without making the other party defensive.
- The 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.
- The direct/assertive voice: This should be used as rarely as possible because this has the potential to create pushback.
Make sure the other party sees that there is something to lose by inaction, however, when the going gets tough, you need to shake things up and get the other party out of their rigid mindset by using different voices to make your point.
4. Track the emotions
Be aware of and track the other party’s emotions, pay close attention to changes people undergo when they respond to your words. People’s emotions have two levels. A ‘presenting’ behaviour, which is the part that one can see and hear, and the ‘underlying’ feeling which is the motivation behind the behaviour.
Address these underlying emotions – negatives diffuse them, whilst positives reinforce them. This approach deescalates situations because it acknowledges the other party’s feelings rather than continuing to act them out, helping reinforce positive perceptions and dynamics.
Using ‘I’ is also great at preventing 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 master ‘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 provides a great opportunity for both parties to clarify what they really want by eliminating what they don’t want –
‘No’ can be a powerful instrument in negotiation when it uncovers unknown points of contention, whilst pushing for a hard ‘Yes’ doesn’t get you any closer to a victory. It only irks the other party.
‘No’ can often mean I am not yet ready to agree, You make me feel uncomfortable, I can’t afford it or I need more information. Don’t view it as an ending, rather it can allow the real issues to be brought forth, rather it slows things down, giving you time to analyse the moment, and in reality, moves everyone forward in a more positive direction.
Thinking in binary terms is almost always counterproductive. Replaying back the other person’s responses is the best way to move the dialogue forward. The key two words are that’s right. That’s right is better than yes. Reaching that’s right in a negotiation creates breakthroughs. Use a summary to trigger a ‘that’s right’.
6. Negotiators are decision architects
As a negotiator, you have to dynamically and adaptively design every element of the negotiation to get both consent as well as execution. Voss cites the methods for using subtle verbal and nonverbal forms of communication to understand and modify the mental states of the other party, notably the 7%-38%-55% rule created by Albert Mehrabian states that only 7% of a message is based on the words while 38% comes from the tone of voice and 55% from the speaker’s body language and face.
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, you need to instill that element of uncertainty which makes the other party feel like they have everything to lose if the deal falls through. According to Voss, there are three types of leverage:
- Positive leverage:when you can withhold or provide what the other party wants.
- Negative leverage:your ability as a negotiator to make the other party suffer.
- Normative leverage:This is when you analyse the other party’s stance and use it to advance your position.
Black Swans are leverage multipliers. Discovering Black Swans that give you normative leverage can be as easy as questioning the other party’s beliefs and actively listening. You want to absorb what they speak and mirror it back to them.
8. Reshape the reality
There are often opportunities to change a deal’s scope and achieve better results. Fair is one of the most powerful words in any negotiation scenario. To get real leverage in a tough negotiation, you have to persuade the other party that what you have offered is a reasonable and fair suggestion. Voss suggests a number of approaches:
- Anchor their emotions: anchoring the other party’s emotions in preparation for a loss, you inflame the other party’s loss aversion so that they’ll jump at the chance to avoid it.
- Let them go first: Let the other side anchor negotiations. By letting them go first, you need to be prepared to withstand the first offer – the other party may just end up bending your perception of reality.
- 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: Numbers that end in a ‘000’ tend to feel like placeholders, but arbitrary numbers that sound less rounded feels like a figure that you came to as a result of a thoughtful calculation.
9. Using Silence
Perfecting the art of silence in negotiations can give a serious advantage if used wisely. We live in a world of noise where silence has almost ceased to exist to an extent that silence becomes awkward. We also live in a world of growing impatience. We do not pause enough.
Silence is uncomfortable for many people. They expect words from you more than silence. Most people cannot actually resist silence, and so in negotiations it can be a way of putting the other person 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. Against this, silence empowers you, Be silent or let the words be worth more than silence as Pythagoras said. People talking too much may give the impression of justifying themselves. The less you talk, the deeper you look.
Silence gives attention to your words and creates impact, it is important to have pauses to follow your sentences. Silence between sentences gives more clarity to your speech. Silence can also help gain or regain more attention when someone is monopolising the conversation. As Mark Twain once 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. Silence helps you to keep control. In hostage negotiation situations, silence can unnerve the other side such they lose the focus on their strategy.
10. Never be needy
The key is to never be needy. Remember, the person across the table is never the issue, the unsolved 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. The six-step process is:
- Set your target price (your goal).
- Set your first offer at 65% of your target price.
- Calculate three raises of decreasing 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 item (that they probably don’t want) to show you’re at your limit.
Before you head into a negotiation, carefully prepare your Ackerman plan, this will help you get the bargain and prevent the other party from trying to push your deal for their maximum value.
The stakes are clearly different in startups than in hostage situations, but Voss’ techniques will help you overcome one of their most challenging hurdles – none more so than closing the deal with your first customer.
Of course, in hostage situations a standoff arises, whereby one side must give way and compromise if there is to be a resolution. The scale of this can often be regarded as a climb down and a defeat, and the negotiation becomes a confrontation with no goodwill, a battle of attrition often leading to an unpleasant outcome on both sides.
This needn’t be the case for your first startup negotiation a position should be sought where ultimately both sides feel comfortable with a solution acceptable to both parties, leaving both feeling that they’ve taken away something positive from the discussion.
This first opportunity may be right to close, it may not be. Opportunities come and go, so It’s about reaching bona-fide, transparent agreement, finding solutions, and learning to get what you want and need for yourself whilst creating value and success for your prospect. Being an effective negotiator helps you find and keep balance.
Choreographing the sequence in which you address issues or engage different negotiations is also important. Resolving some issues may reset the stakes or reframe the remainder of the negotiation. Whatever the order, adopt Voss’ ten rules to optimise your negotiation outcomes.