Startup entrepreneurs are often fueled more by passion than business savvy -- which is why so many flame out. Worse, when they believe conventional theory from negotiating gurus that says that compromise, if cleverly crafted, will drive the results they are seeking, they ultimately give away too much. According to leading negotiation trainer and bestselling author Jim Camp, these entrepreneurs can get into trouble with predatory investors, greedy suppliers, and unethical business partners if they don't learn how to negotiate agreements that are based on sound decision making, rather than compromise.
I know this from firsthand experience. I met Jim many years ago when I was being raked over the coals by a predatory VC fund. Jim became my coach and mentor. I sat down with Jim to see if he would impart a few secrets for entrepreneurs to help them succeed.
First off, let's get something out on the table. What do you have against compromise and win-win negotiating?
Where do I begin? Since the dawn of time, humans have been predators. Whether we like it or not, our instinct in negotiating any competitive agreement is to take advantage of weakness. Accordingly, when you go into a negotiation believing you'll have to give up something, you have the aura of a person in a weak or unstable position. This makes it easy for the predator to sense your fear, weakness, and lack of strong commitment -- leading them to demand more than you offer. You "believe" you have to give it, and so you do. Also, when you enter negotiations with a fixed, compromise mindset, you think you're avoiding conflict, but you're actually creating it. When we give up something important to us, it builds resentment. It promotes the feeling of being taken advantage of, which ultimately drives conflict. Finally, unnecessary compromise limits your level of success in business by taking precious resources that weaken your business effort and impede future opportunities.
Okay, what about suppliers -- how does an entrepreneur set up good supplier relationships?
Start by determining what you are bringing to this negotiation. First, determine your mission and purpose in terms of the benefits you might deliver to the supplier/suppliers in this arena. Your products and services might positively influence their potential growth, advancement in technology, product development, and so on. That will provide a vision of what you can deliver to them and will enhance your decision making as you go down the path of this long-term business relationship. Another example -- if you can provide a proving ground for their technology, then you should ask them to fund the effort or at least share the expense with reduced costs to you to be that showcase.
What mistakes do startups make in their critical first few negotiations with key people who can help them grow?
If you really flesh out a well-developed vision of how this agreement can benefit them, then you can help them see it also. If you haven't done that work up front, you will not be able to create vision for them and find out more specifically what they need and want so that you can then position yourself as the solution to their problem. If giving you what you want is to their benefit (according to your well-thought-out mission and purpose), you can avoid the biggest mistake.
When I first met you Jim, I thought I was expert at negotiation. But I was all over the place. You are the first person I ever heard using the word "system" with negotiation. So what's the big deal about having a system?
System, Bob, and specifically the Camp Negotiation System, rejects the failed notion that compromise can and should be manipulated in order to drive an "agreement for agreement's sake." The Camp System instead focuses on applying principles and rules, managing behaviors and activities to exert influence, and creating vision for our respected opponents in order drive the outcome we want. This system uniquely acknowledges the right of all negotiating parties to take responsibility of their decision, including a veto or rejection of the agreement, and in doing so leaves all parties free to develop the vision that delivers more effective decisions, stronger agreements, and measurable results without needless compromise.
Let's face it Jim, at this point you don't need to work with starving entrepreneurs when you have Fortune 500 CEOs calling you. What's your mission and purpose with entrepreneurs?
To deliver much higher levels of dollars and ownership to them so they can employ more people in the world, which benefits everyone. They should never feel lost, defeated, or taken advantage of in any negotiation, and should be in complete control of where they are and where they are going.
That was my first experience with you Jim -- regaining control from a billion-dollar bully. Muchas gracias.
If you'd like to learn more of Jim's negotiation secrets, he has offered a free downloadable copy of his book Start With No. He will also be speaking at Harvard's 2012 Negotiation & Leadership Conference on April 20 and 21 alongside Nobel Laureate Dr. Thomas Schelling and some other negotiation heavyweights.