negotiation

The first point in negotiation is not the art of the deal.

It’s the realisation that the default position to every deal is no.

Every time you agree to anything in a negotiation, you cede power to others, and that includes the people you need things from to be successful.

But you must understand that just because another party has what you want, or has more power over you, does not mean the deal is good for you.

In fact, in many, many, many situations, the deals offered by others are terrible.

I’ve lived it. The extent to which organisations will push you, in return for what they give, is mind-boggling. And they ship mediocrity at enterprise scale.

Don’t fall for it. Understand what you’re buying into, what they want, what you will be giving, and what you get out of it in return.

There are two things that should be non negotiable to you:

• Family:
• Don’t move to India three weeks in four for a job while your kids are young.
• You might think it’s to pay for the best school or whatever.
• In truth, they’re exploiting you.
• Tell me to f*ck off.
• Health: This manifests itself in a few ways:
• Being able to have the time to exercise, eat, and relax is essential to your health and well-being. A lot of jobs will cut into that. That’s okay in short bursts. But realise that in the long term, you’re killing yourself.
• The second is stress. If your job leaves you with heightened cortisol over long periods of time, you’ll lose your health over time. It’s just biology. Obey it.

So now you know the foundational power of no, let’s work through how to do a deal that is mutually beneficial, better for you, and preserves relationships.

When you prepare to negotiate you need to think through your BATNA

The best mental trick prior to a negotiation is to work out your Best Alternative to a Negotiated Agreement (BATNA):

• Here you want to clearly define your fallback if the talks fail.
• A strong BATNA gives you leverage and confidence.
• The BATNA might simply be your current job.
• It could also just be some kind of generic or non desirable job to pay the bills while you work on another attack vector.
• Knowing the world won’t burn down if a deal fails is essential to negotiating calmly.

The second thing to do is spend some real time researching your counterparty:

• There are some absolutely awesome AI tools to do this now. Use them. You can delve deep inside any organisation now and tease out negative comments, problems, organisational politics, or charts, financials.
• The more information you know about an organisation, the better you’ll be at teasing out options. In addition to this, you can find the lever points to throw them off balance, delight them, or get them to empathise with you.
• The second trick here is just talk to people. You’d be shocked what people will conversationally tell you about what’s going on in an organisation if you just ask. People will always gossip generically.

The third thing is to set the frame of how you want to do business with a counterparty:

• What do you want?
• What does the counterparty want?
• What do you get? What do they get? It’s a simple equation.

Once you’ve done that you can frame your minimum acceptable terms, and work out your walk away points before the discussion begins.

One of the biggest traps people fall for is going for a job that might look good on the resume, or escaping an existing organisation due to politics and thinking it’ll be better somewhere else.

That’s not guaranteed at all. In fact it could get worse. Any deal you make, stops you from making an alternative deal and that’s a problem in itself as you waste the runway of life.

Framing and anchoring a negotiation

Explaining precisely what you want to achieve in clear language is a great way to begin a negotiation.

But at the same time you also need to listen carefully to what they want.

They’ll let slip all sorts of information about what they want and the barriers they see in getting it.

You need to be really careful not to ‘assume’ what they want as well, as that only leads to tears later, and you should also VALIDATE what they’re saying as best as you can too. Employers will flat out lie to people to get them in the door.

The framing step is super important people get wrong. The best thing you can do, is pitch your own anchor proposition. Tell them, in a perfect world what you’re looking for. It may be ambitious and crazy, but the power here is, its a lattice from which to negotiate from in reverse.

That’ll often elicit back what they can and cannot see happening, and they may share with you what their constraints are. With respect to value there are a number of points to consider:

• Figure out how scarce what you offer is. You may have a skill no one else has, or have but will not deliver the same level of value. If that’s true, what everybody else is paid for an equivalent role is pretty moot. And if the organisation isn’t prepared to pay for the premium, they may not even be serious which is a warning in itself.
• You should look to the market and look for equivalent benchmarks. If you are at level X, and there are other level X type people earning X, then you should earn X. It’s simple. If another organisation is willing to pay X+2, then that’s a consideration but not a hard fact. Other organisations may be in a different position or value the worth of something differently.
• The other thing to note is, just because you got X five years ago, doesn’t mean it’s what people are paying now. AI is going to brutally expose this. The old world was predicated on hierarchies and information capture. That’s all been flipped on its head. Now it’s not just your position that will dictate what you earn. It’s likely to be what you can functionally deliver as an outcome. I cannot stress this last point enough.

Here’s how a negotiation could look:

• Pitch a client the answer to the problem you have expertly identified online.
• Drop onto LinkedIn, or X, or Facebook and openly share the answer.
• When they reach out, neg them. You’re an AI whiz and just playing around. You don’t possibly have the time to build something production for them.
• But frame out what you’re really trying to do.
• In that negotiation, they’re trying to sell you rather than the other way around.
• The only way you get that power is if you get them on the hook, and you’re willing to walk away with nothing.
• You’ll bend their mind. They’re so used to paying a certain way. When you say no, they’ll do a double take. But personalize it and place a nugget of the non-negotiable on it.

Another technique is not to sell at all:

• Tell the client you are doing something.
• Invite them to participate.
• Then they have a choice on your terms.
• If the offer is good, it’s good, and it’s all on your terms. They are a passenger.
• And remember, the default deal is no.
• Doing a deal takes your energy away. You have hundreds of pathways. Don’t choose the dumb path.

Building rapport and empathy when negotiating

This is split into two frames:

• build empathy for your position;
• and build empathy for their position.

This is perhaps one of the most powerful reframes. You have kids, your family comes first, you have particular health needs. There are non negotiables in your life you don’t have to give up. Make those clear from the outset.

A key skill here is active listening:

• Listen to what the buying party’s needs are. And I mean really listen.
• Don’t assume they know. They might have a vague understanding, but it’s tremendously valuable to respectfully unpack their needs. They’ll inadvertently share their limitations with you and lay out all the problems they’re having.
• Watch out for fake assumptions. In any negotiation, the counterparty might tell you stories about challenges they face. They’ll use these later to negotiate. Some of these could be real, and some of them could be complete BS.
• Another clever tactic is to simply listen to their constraint and then just dig into it. Just ask why. If you ask why 3 times and they can’t answer the question, it could be BS.

Mirroring and matching:

• You may be in a negotiation and the other person is excited, positive, and on board.
• Next minute, when it gets to the money part or the strategy part, things may go quiet.
• They may simply disappear for a time or slow things down.
• This is a classic sign the negotiation has begun.
• They may be able to deliver what you want but want to negotiate a better deal, or they may just be trying to bottom you out to get around a barrier they have.
• The smartest and most ethical thing is just to put the challenges on the table and work through it. But if they know you’ll say no, they may just string you along to see if they can dampen your enthusiasm to see if you’ll come back and negotiate to a position they can deliver.
• Whether you play that game or not is up to you, but I think it’s disingenuous.

Ask open ended questions:

• It’s the best way to figure out what’s going on and gives you the vectors to shape a deal that’s most beneficial for both parties.
• The key here is to find not only the implicit motivations but also the hidden ones.
• Don’t be afraid to just ask. If they are evasive and shut down areas of discussion, you know there’s more to it that needs consideration and investigation.

Be clear on what you are willing to conceed

Another starting point is to understand what you’re willing to do in a worse case scenario and know the non-negotiables.

Then frame out a the lower-value items you’re willing to trade to get a deal.

The ultimate is when you can frame a deal where both parties win.

It’s smart to have concessions, because psychologically it gives them some lever points to negotiate within their organisation.

Dealing with nasties up front

You may also want to clarify terms of the employment too. E.g.

• Can you work from home? How often?
• How much travel is involved?
• How much paperwork do you need to do?
• What’s the team size?

All of these are important questions to consider. If you don’t define them, they can impose anything on you later.

Structure win-win situations

Most deal makers focus on deals like a tit-for-tat. They look at the slate of variables and lever the value they see.

Great deal makers don’t even go for that kind of deal. I’ll explain with an example.

Building a startup as an example: Everyone assumes you need co-founders, and everyone assumes you need an investor. It’s almost the first thing everyone in the startup community does.

So the first thing you do is:

• Spend all your time on pitch packs.
• Talk to investors when you are at your most weak point; and
• Invite risk into your organisation. LOL

It’s crazy!

Instead why don’t you focus on doing things you can control, and start making some revenue that way, and invest it back into yourself. That way other individuals have Zero control over you.

When you are ready to scale you want to focus on deals that expand the pie, not just eat the pie

Here’s how you could approach it:

Ask for holding fees, not immediate payouts. You need money to live while working on the deal, and that's fair. But focus on creating long term value rather than quick cash.

Target future value, not existing revenue. Structure deals where you get a percentage of new value you help create. If you're extending their existing revenue stream, you become a contractual partner they can't easily remove.

Use future options instead of equity. Don't give away stock to incentivise people. Instead, offer future options that pay out if certain criteria are met at a specific time. This creates alignment without trust issues or giving away your business today.

Design win win structures. Good deals work whether the venture succeeds or fails. You get paid when value is created, they don't pay until results materialise, and you maintain independence until then.

Never rush negotiations. If someone demands a deal happen their way on their timeline, say no and keep negotiating. If they walk away, find another path. Bad deal structures aren't worth the risk.

Get legal help. These arrangements can lead to lawsuits if structured poorly. They can sink you before you even start!

Dealing with impass/deadlocks and stubborn bastards

Just remember, if someones negotiating they probably want a deal, and they will 100% bluff their way to a good outcome. Your reaction to offers gives them a lot of insight. But alternatively - you can have emotional outbursts too, and show them what you’re thinking if you think that’s a valuable thing.

Here’s some classic things they’ll do:

They defer to lawyers after they make an offer:

• Why do they do this? The lawyer introduces a whole heap of nasties and caveats into the deal that are ridiculous. If you are unsophisticated, you may fall for it.
• I can’t give legal advice, but all I can say is use your brain first and foremost and trust your instincts. You can read. You can run legal material through AI and ask it for feedback.
• Don’t make important legal decisions without counsel, but don’t also assume you need to spend tens of thousands on lawyers to get fair agreements done,
• If the deal stinks, dont sign it.
• Perhaps you just need to sit back and ask tough questions and see what they say. They’ll hope you don’t.
• Sometimes they’ll say terms and conditions are standard. Laugh at that. Everything is negotiable.
• Don’t sign anything without proper and full consideration.
• If they pressure you to sign and place a time limit, politely say no.

Silence and patience:

• After you make an offer, stay silent. You want them to talk through how they feel. People often fill gaps by immediately offering concessions. Stupid. See what comes and see.
• If someone makes you an offer, you should stay silent. Give yourself time to consider it. If you don’t understand it, ask them questions and perhaps get them to put things in writing.
• Offers and acceptance rarely happen instantly. Don’t get angry if you don’t immediately get what you want. The other party may not even understand their own offer. The key is to work through it methodically to get a deal that works for everyone.

Use the “Feel–Felt–Found” method:

• Sometimes what you want isn’t really what they can offer, and that’s okay too. Don’t get angry. Just say, I understand—man, this is hard. And that’s okay to leave it at that.
• The flip here is to work out if there’s any other value in the deal. Is there some other way you could work together, or is it a hard no?
• Often the constraints aren’t even the counterparty’s. It’s just reality, or the market, or some other institutional constraint.

Deadline leverage:

• You can use a deadline lever, or they can use it against you.
• Sometimes its real. Sometimes it’s not. I wouldn’t stress.
• You could miss a deadline, and next week they’ll call you. Or next week you can be working on another deal. It’s not the end of the world.
• The worst deal is when a time limitation is used to strong-arm you. For example, We. We need a decision by Friday or this deal is off. If the deal is sub-optimal, just politely say the answer is no.
• You can also use this in reverse. If they’re taking too long, just say times up and apologise you don’t want to bother them anymore.
• Another good way to bottom out a back and forth is just to say you’ve invested enough in consideration. They’re either ready to do a deal or not. Then just leave.
• If there is a real offer that’s when it’ll come out or it’ll come quickly because you could make another decision.

How to close a deal correctly

Negotation is a bit of a sport, and difficult for many. But you should be a good sport after the match too. Once it’s done, celebrate and affirm the commitments. The whole idea is to do a good deal and not screw anyone. Once the deal phase is over you want to focus on the relationship.

Conclusion

Effective negotiation does not deviate much from persuasion. There is a certain precision to it.

Successful people say no way more than they say yes. They also see time as an asset.

Good deal makers should always be looking for win win opportunities.

Don’t let the lawyers throw you off. Control the deal and be your own person.

If you ask why 3 times and they cant give you a straight answer they’re not telling the truth.

If someone tries to strong arm you, just stand your ground.

Remember, good negotiators respect good negotiators.

If someone gets angry over a negotiation - then they’re probably trying to screw you.