I just read a book called Never Split the Difference by Chris Voss. Chris was one of the premiere FBI Hostage Negotiators in the world, and his tactics could be useful for negotiating with customers, vendors, and of course your VC. Excerpts from the book are below.
Create warmth by using first names. “I’m sorry, Robert, how do I know he’s even alive?” I said, using an apology and his first name, seeding more warmth into the interaction in order to complicate his gambit to bulldoze me.”
Rather than saying ‘no’, ask a question that forces problem solving. “While I wasn’t actually saying “No,” the question I kept asking sounded like it. They seemed to insinuate that the other side was being dishonest and unfair. And that was enough to make them falter and negotiate with themselves.”
Listen. “When individuals feel listened to, they tend to listen to themselves more carefully and to openly evaluate and clarify their own thoughts and feelings. In addition, they tend to become less defensive and oppositional and more willing to listen to other points of view, which gets them to the calm and logical place where they can be good.”
Don’t make assumptions. Explore. “Too often people find it easier just to stick with what they believe. Using what they’ve heard or their own biases, they often make assumptions about others even before meeting them. They even ignore their own perceptions to make them conform to foregone conclusions. These assumptions muck up our perceptual windows onto the world, showing us an unchanging — often flawed — version of the situation. Great negotiators are able to question the assumptions that the rest of the involved players accept on faith or in arrogance, and thus remain more emotionally open to all possibilities, and more intellectually agile to a fluid situation.”
Have a partner on the call. “We always worked in teams. The thinking behind this policy was that all these extra sets of ears would pick up extra information. In some standoffs, we had as many as five people on the line.”
Don’t focus on you. “There’s one powerful way to quiet the voice in your head and the voice in their head at the same time: treat two schizophrenics with just one pill. Instead of prioritizing your argument — in fact, instead of doing any thinking at all in the early goings about what you’re going to say — make your sole and all-encompassing focus othe other person and what they have to say. In that mode of true active listening — aided by the tactics you’ll learn in the following chapters — you’ll disarm your counterpart. You’ll make them feel safe. The voice in their head will begin to quiet down.”
Delivery. “People tend to focus all their energies on what to say or do, but it’s how we are (our general demeanor and delivery) that is both the easiest thing to enact and the most immediately effective mode of influence. Our brains don’t just process and understand the actions and words of others but their feelings and intentions too.”
Smile. “When we radiate warmth and acceptance, conversations just seem to flow. When we enter a room with a level of comfort and enthusiasm, we attract people toward us. Smile at someone on the street, and as a reflex they’ll smile back.. …smile while you’re talking. A smile, even while talking on the phone, have an impact tonally that the other person will pick up.”
Act like a vendor at a bazar. “They’ll use hospitality and friendliness in a powerful way to draw you in and create reciprocity that ends in an exchange of money. When people are in a positive frame of mind, they think more quickly, and are more likely to collaborate and problem-solve (of fight and resist). It applies to the smile-er as much as to the smile-ee.”
Kill the deal-killers right away. “If I see a work-for-hire clause, for example, I might say, “We don’t do work-for-hire.” Just like that, plain, simple, and friendly. I don’t offer up an alternative, because it would beg further discussion, so I just make a straightforward declaration. You can be very direct and to the point as long as you create safety by a tone of voice that says I’m okay, you’re okay, let’s figure things out.”
Use mirroring. “Mirroring, also called isopraxism, is essentially imitation. It’s another neurobehavior humans (and other animals) display in which we copy each other to comfort each other. It can be done with speech patterns, body language, vocabulary, tempo, and tone of voice. It’s generally an unconscious behavior — we are rarely aware of it when it’s happening — but it’s a sign that people are bonding, in sync, and establishing the kind of rapport that leads to trust.…deliver the mirror in an inquisitive tone. The intention behind most mirrors should be, “Please, help me understand.” Every time you mirror someone, they will reword what they’ve said. They will never say it exactly the same way they said it the first time. Ask someone, what do you mean by that?” and you’re likely to incite irritation or defensiveness.
Don’t use ‘I’. “Notice we said “It sounds like…” and not “I’m hearing that…” That’s because the word “I” gets people’s guard up. When you say “I,” it says you’re more interested in yourself than the other person, and it makes you take personal responsibility for the words that follow — and the offense they might cause.”
A good example of empathetic approach to Redskins seasons ticket holders. “The economy was in the toilet at the time, and Redskins season ticket holder were leaving in droves to avoid the cost. Worse, the team had been terrible the year before, and off-field player problems were alienating the fans. TJ saw right away that the script was a disaster. It began by saying that his colleagues had been trying to call for months, and the account had been escalated to him. “I wanted to inform you,” it read, “that in order to receive your tickets for the upcoming season opener against the NY Giants, you will need to pay your outstanding balance in full prior to September 10.” It was the stupidly aggressive, impersonal, tone-deaf style of communication that is the default for most business. It was all “me, me, me” from TJ, with no acknowledgment of the ticket holder’s situation. No empathy. No connection. Just give me the money. TJ changed the script. Now the team was “YOUR Washington Redskins: and the purpose of the call was to ensure that the team’s most valuable fans — the delinquent customers — would be there at the season opener. “The home-field advantage created by you each and every Sunday at FedEx Field does not o unnoticed,” TJ wrote. He then told them, “In these difficult times, we understand our fans have been hit hard and we are here to work with you,” and asked the ticket holder to call back to talk through their “unique situation.” The simple changes masked a complex understanding of empathy on TJ’s side. With the new script, TJ was able to set up payments plans with all the tickets holders before the Giants game.”
Take the sting out. “In court, defense lawyers do this properly by mentioning everything their client is accused of, and all the weaknesses of their case, in the opening statement. They call this technique “taking the sting out.”…Anna opened by acknowledging ABC’s biggest gripes. “We understand that we brought you on board with the shared goal of having you lead this work,” she said. “You may feel like we have treated you unfairly, and that we changed the deal significantly since then. We acknowledge that you believe you were promised this work. With the negatives labeled and the worst accusations laid bare Anna and Mark were able to turn the conversation to the contract. Watch what they do closely, as it’s brilliant: they acknowledge ABC’s situation while simultaneously shifting the onus of offering a solution to the smaller company.”
Don’t go for ‘yes’. Gun for a “Yes” straight off the bat, though, and your counterpart gets defensive, wary, and skittish. That’s why I tell my students that, if you’re trying to sell something, don’t start with “Do you have a few minutes to talk?” Instead ask, “Is now a bad time to talk?” Either you get “Yes, it is a bad time” followed by a good time or a request to go away, or you get “No, it’s not” and total focus. “No” is not failure. Used strategically it’s an answer that opens the path forward. The socially lubricating “yeses” and you’re rights” that get thrown out fast and furious early in any interaction — are in not in any way a substitute for real understanding between you and your partner.”
So how does this help with negotiating with your VC? Aside from psychological tactics like smiling on the phone, using their first name in conversation, making them feel welcome, etc, use the techniques above in understanding and improving the term sheet. If there are terms or figures you’re having issue with, before challenging those issues outright, ask about them. For instance ask how did the VC arrive at that valuation, what was their methodology, why do they need a board seat when a board observation right may achieve the same thing, why are certain controls in place, etc. Getting the VC talking about the rationale and logic of challenging terms will allow you to come up with alternative solutions together or reveal a way to get the term removed. For instance if a VC insists on a specific control (for example around executive salary increases), ask why or ask about their experience when that particular control was valuable for them. The answer may reveal they’ve never had to exercise that particular control, they may talk themselves out of it, or you may discover their past experiences with other companies won’t be relevant for yours and you can explain why. Chris Voss’s strategies are about listening, showing empathy and understanding, and using what you’ve learned by asking questions to then strengthen your hand. Negotiation is one case where information truly is power.
The book is well worth the read, and the above excerpts are not all of the ones we found valuable. We’ll print the rest in a post next week.
Find us at blossomstreetventures.com or reach out to Sammy directly at firstname.lastname@example.org