I was on the phone with an old friend last week. We were talking about a few things around a negotiation, and he said something profound.
“I just want things to be fair and reasonable.”
I loved this phrase. I learned this value from Len Fassler and Jerry Poch in 1993 when they acquired my first company. I had never bought, sold, or invested in anything up to that point. My partner Dave and I were clueless about selling our company, so it would have been easy to take advantage of us. When I reflect on the deal that Len and Jerry offered us, it was fair and reasonable. There wasn’t much of a negotiation as they knew what they were willing to pay for a business like ours. Instinctively, we knew their offer was fair and reasonable.
At the time, I struggled mightily with the offer, wanting to sell the company on Monday, Wednesday, and Friday. I didn’t want to sell on Tuesday, Thursday, or Saturday. On Sunday, I rested. Dave got very frustrated with me but hung in there. Len and Jerry didn’t change their price or the terms but said the offer was available for however long we wanted as long as our business performance didn’t change. Six months after they made the offer we accepted it.
When I reflect on this 25 years later, they were fair and reasonable. And it set the tone for all of my future deal activity, whether I an investor, a buyer, or a seller. While I’ve dealt with all styles of negotiators, complex multi-party negotiations, and circumstances around all aspects of deals, I’ve always tried to bring the concept of fair and reasonable to the table.
I don’t like the cliche “always leave some money on the table.” I don’t like approaching things as a win-lose or win-win, where the concept of win dominates. I don’t like the statement “that’s what the legal docs say” as that’s a similar cop-out to the phrase “that’s market.” I’m not a fan of histrionics, table pounding, demands, head fakes, lies, and hiding behind – well – anything.
But it doesn’t matter that I don’t like these things or am not a fan of people who lead with them in negotiations. I’ve accepted that everyone has their own style and approach, independent of how I’d like them to behave. Instead, I’d rather approach everything from a perspective of being fair and reasonable. If we can’t get to a deal, so be it. If the other party doesn’t think I’m being fair and reasonable, I’m happy to listen to their explanation why and reconsider my position.
One of the benefits of this approach, at least for me, is that I can make decisions very quickly. I don’t have to do a bunch of analysis. I don’t have to check with lawyers. I don’t have to worry about whether I’m making the right call. While I’ll obviously make some decisions that are wrong and end up with deals that don’t happen, I’ll always feel that I’ve been fair and reasonable.
I think that’s a fair and reasonable approach.
I’ll be doing a fireside chat on university entrepreneurship at CU Boulder on 7/26 from 10:30 to noon with Bill Aulet, Managing Director of the Martin Trust Center for MIT Entrepreneurship. Register and join us.
In June, Amy and I had three friends die. One was a mentor of Amy’s from Wellesley, one was the father of a close friend, and one was the wife of a good friend of over 25 years.
Yesterday, while sitting at my desk between calls, I noticed an email from another friend titled Thank You For The Throne. The email said:
After spending many days visiting my mom in the hospital, I felt the need to thank you for your support of Boulder Community Hospital. I found it hilarious and appropriate that you were the sponsor of the bathroom. So, thanks for the throne and the humor during dark days. She is on the rebound after a brutal fight and back at home doing rehab. Hope you’re well.
I sat there trying to process that. I didn’t know the mom was in the hospital. The mom is a fixture in our community, a long-time friend, and an amazing woman. I responded with:
1. Thanks.
2. OH MY GOSH. WHAT HAPPENED TO XX? IS THERE ANYTHING WE CAN DO TO HELP?
I’m 51, and I have an extensive network. I know this is going to start happening more frequently. In The End, Entropy Always Wins was an effort last week for me to process this a little.
But the email yesterday was a shock. I’m still processing it. I’m thankful our friend is stable and out of the hospital. But it’s just another reminder that our experience on this planet is short and not under our control.
Over the years, I’ve been in many multi-party negotiations. I don’t know the maximum number of participants in a single negotiation, but I’m sure it’s greater than ten active negotiating parties in a transaction.
I don’t mean the number of entities participating in the transaction, but the actual number of active negotiating entities. The best way to figure this out is to count the number of different law firms involved in the transaction.
We shifted our behavior some years ago. Often, we lead deals. When we lead, we negotiate the terms. We work collaboratively with any other co-investors, but we’ll take the lead.
But, if we don’t lead, we follow. This can be tricky, as our instincts (or ego) can often get in the way since we are used to leading deals. Or, the lawyers can get confused about what our real goals and intentions are in the negotiation. We always have a few key things that we need, but these are almost always non-controversial. But they can get mixed up in the fog of a transaction, making the unimportant seem important, and the unemotional seem emotional.
I’ve grown to like the phrases “term setters” and “term accepters.” Simply put, if we lead we negotiate the terms. If we follow we accept the terms. The lawyer fees are much lower when you behave this way.
In October 2015, Pioneer Square Labs launched. We led the financing, and I joined the board to work more closely with Greg Gottesman, Geoff Entress, Mike Galgon, and Ben Gilbert to build a long-lasting and enduring startup studio in Seattle.
Today, Julie Sandler joined Pioneer Square Labs as the fourth managing director. Julie previously was a partner at Madrona Venture Group and is deeply involved in the Seattle startup community. She has also been a leading voice for women in technology as a founding member of the Seattle Entrepreneurial Women’s Network and Startup Weekend Women’s Edition.
Basically, Julie is awesome. And it makes me super excited to get a chance to work more closely with her at PSL.
Foundry Group has a deep connection to Seattle. In addition to currently being investors in Pioneer Square Labs, we are also investors in Boundless, Glowforge, Mighty Ai, Moz, and Rover. Over the years, Techstars has expanded their footprint, now running Techstars Seattle as well as the Alexa Accelerator (powered by Techstars). And, as many of you likely know, Techstars acquired UP Global several years ago, which was headquartered in Seattle.
As I’ve gotten to know Julie over the years, I can’t think of a better person to join the PSL team. The PSL entrepreneur-in-residence program has become an attractor for quality entrepreneurs in Seattle – both experienced and emerging ones. In some cases, entrepreneurs come to PSL to work on a specific idea the PSL team has developed, while others choose to iterate on a product of their own and launch something new with the PSL team.
This has happened in an incredibly short time. If you had told me 18 months ago that PSL would have already spun out six VC-backed companies already, along with building out the now 17 person PSL team, I wouldn’t have believed you and would have suggested a time frame about double that. But the PSL team has achieved that and, with the addition of Julie to the team, is moving even faster on its mission.
Julie – welcome!
I woke up to an email from a close friend of 25 years that his wife had passed away unexpectedly last night. She’d been fighting cancer for several years, had made progress, then had setbacks, and then made progress again. While I knew them both, I’d spent many hours over the years with my friend, so I immediately felt his sense of loss because I know how central his wife was to his life. I just hugged Amy and sent her out into the world for her day with tears in my eyes the phrase “In the end, entropy always wins.”
Last week, when another close friend died of cancer, Amy said to me “We fight the good fight our whole lives, and then we lose.” It wasn’t meant in a negative way but was an acknowledgment that in the end, we die.
Two other lines that always come to my mind in moments like this are “Life is a process of continuous oxidation” and “Life is a fatal disease.” The second is lodged particularly deep in my brain, as a friend told it to me after his child died at age 21.
While this applies to humans, it applies to everything else. I’ve yet to meet an immortal animal or plant. Many of the Built to Last companies have struggled or failed since Jim Collins wrote his iconic book. Granted, while Rome, which wasn’t built in a day, is still around, the Roman Empire had a finite life.
Companies don’t last forever. Institutions don’t last forever. Physical objects don’t last forever. Our planet won’t last forever. Human civilization won’t last forever.
In the end, entropy always wins. Consider that when you make decisions trying to control the outcome of something.
Are you a woman who is an undergraduate or graduate student enrolled full-time at an accredited university in the US, in a STEM field? If you are, you now have an opportunity to apply for a Women Forward in Technology Scholarship.
Distil Networks just led a group of us, including Foundry Group, Techstars, Cooley, Yesware, Help Scout, Cloudability, Kulesa Faul, FullContact, and Anchor Point Foundation, to raise $50,000 to advance female representation in technology.
We will be awarding multiple scholarships of $3,000. The first deadline to submit is August 1st, 2017, and winners will be announced on September 1st, 2017. Interested applicants must complete a 1,000-word essay, present educational transcripts and deliver one letter of recommendation via the Women Forward in Technology application site.
I would love to see many more women involved in computer science, technology, and entrepreneurship. I’m hopeful that the $50,000 we raised for these scholarships is the start of something that can grow much larger. If you are interested in learning how you or your company can contribute to the scholarship fund, email me.
I don’t believe that one starts an apology with the sentence “The past 24 hours have been the darkest of my life.” In my world, the apology is to another person. It’s not a tone setting exercise, or a plea for sympathy, for the one making the apology.
I was fuming after seeing the public apology on Axios from Justin Caldbeck. I could be wrong, but it felt like it was written by a crisis management PR firm. I spent most of Friday evening angry and upset. Embarrassed by the behavior of some men. Proud of the women who broke their silence about the abuse they had been on the receiving end of. But mostly just ashamed of myself for not doing more about the issue of sexual harassment in our industry.
I read Reid Hoffman’s The Human Rights of Women Entrepreneurs and Joanne Wilson’s The Gig Is Up. My partners and I had an extensive conversation over the weekend. Amy and I talked about it over dinner Friday and Saturday night.
And then I read Brenden Mulligan’s Everything I hate about Justin Caldbeck’s statement. I nodded my head all the way through. I knew what I was feeling, which was what Brenden was articulating. His post is an angry one, which he acknowledges, and the fierceness of it makes the point even more powerful.
It takes a lot to get me angry. I continued to stew all day Saturday. I thought about this during my entire run. I tried to process what I wanted to do and how I wanted to respond. Every time I thought about my anger, I reminded myself that this wasn’t about me. I knew that a quick response, driven by my own anger, wasn’t healthy. So I kept talking to my partners and to Amy.
Clarity of thought for me finally came together on my run Sunday. After lunch and a shower, my partners and I co-wrote the post Our Zero Tolerance Policy On Sexual Harassment which appears on our Foundry Group website.
I hope I, and my partners at Foundry Group, am viewed as a safe place for anyone in our industry. Specifically, if anyone ever feels sexual harassed in any context, I offer myself up as a resource for them to try to be a source of good in the universe.
And, a hint for anyone who wants to apologize for anything. The way to do it, as I learned from my mother, is to say, simply, “Joan, I’m sorry.”
I’m a huge Charlie Munger fan. I spent the weekend stewing on a few things, including why human beings do what they do.
Andrew Wilkinson sent me this animated and abridged video of a famous Charlie Munger speech called The Psychology of Human Misjudgment. It’s well worth a quiet 15 minutes of your day to sit and watch it.
https://www.youtube.com/watch?v=7-fe01CA3vc