Knowing How To Work with a Bully–Public Sector Negotiations
When two private sector entities conduct business, especially in the case of one purchasing product from the other, the terms of the exchange tends to adhere to tradition; both entities understand what is ethical and logical and closes the purchase relatively quickly. However, what I have learned incredibly quickly in my time with StreetLight Data, is that with these exact same exchanges, selling to the public sector is considerably more complex.
Whereas the exchange of terms of business within the private sector traditionally involves the seller sending their terms, and the buyer reading these terms and approving them upon noticing their fairness, the public sector, specifically government entity procurement offices, use this as an opportunity to take advantage of the much smaller private entity. In my experience with working with four very large government entities, I noticed a pattern in doing business. StreetLight would send their terms, the exact same terms private sector clients customarily agree to, and the public sector entity would send them back almost entirely covered in red as a result of “track changes” in Microsoft Word. Specific red flags in language have been ingrained in my mind. From Streetlight being a “vendor” of a product, the government entity would assume a “work for hire” relationship. From StreetLight agreeing to allow the entity a “subscription” to their data, the government entity would assume “ownership” of company intellectual property. From StreetLight allowing the entity to use the discovery of their findings using StreetLight data to be “used for commercial purposes,” the government entity would assume an “ownership of their discovery” entirely. Correspondingly, the problem with all three changes would be a) a work for hire assumes StreetLight works under the government entity, rather than an entity that is selling them a product, b) “ownership” of StreetLight Data would allow the government entity access to our data indefinitely, rather than the definite subscription advertised, and c) the government entity cannot assume ownership of their discoveries, for if another company purchases a StreetLight subscription for the exact same area as the government entity and discovers the same findings by coincidentally running an identical project, this new company should have access and commercial use for these findings just as much as the government entity. Therefore, StreetLight is required to explain why these changes to our terms are not ethical and cannot be met, however; rather than showing compliance, these government entities tend to force a third, fourth, fifth, sometimes even a sixth round of terms changes. As a result, StreetLight, and any other private sector company not worth a small nation, is inclined to compromise in some way.
Conversely however, my message is not to refrain from working with the private sector, as there are great benefits from inter-sector business. For example, when the two entities do finally close, the result is traditionally a long and affluent relationship, as government has plenty of money to throw at these private sector entities and tend to write in their services into their budget for years to come. The essential message of my post is if future and current Babson entrepreneurs wish to pursue the affluent public sector accounts, be prepared for the incredibly tedious, and moreover dangerous contractual disputes that come with negotiating with these entities.