Never Not Negotiating: How 2 Negotiate in the Life of a Startup
Aside from pitching, one of the most important skills for an entrepreneur to master is negotiation. Entrepreneurs find themselves negotiating across all aspects of their venture, from raising funding to convincing co-founders to join their team. The Blank Center recently had the privilege of welcoming one of the foremost experts in entrepreneurial negotiation, Samuel “Mooly” Dinnar, for a How 2 Tuesday event. Dinnar is an instructor with Harvard’s Program on Negotiation, and recently co-authored the book Entrepreneurial Negotiation with Lawrence Susskind based on his decades of research and field experience. During How 2 Negotiate in the Life of a Startup, Dinnar shared some of his negotiation advice and answered questions from Babson’s student entrepreneurs. Here are some of our favorite insights from the event!
Recognize your opportunities for negotiation: In the traditional sense, entrepreneurs might only consider themselves negotiating when it comes to creating formal agreements. But as Dinnar explained to us, entrepreneurs are engaging in negotiations nearly all of the time. During interactions with customers, investors, and employees, entrepreneurs encounter unique trade-offs which represent opportunities for negotiation. As he studied the existing entrepreneurship literature about why startups succeed or fail, Dinnar was surprised that such little attention had been given to the importance of negotiation skills. In Dinnar’s experience, entrepreneurs who recognize the opportunities for negotiation and navigate them thoughtfully best position themselves for startup success. Convincing talented entrepreneurs to join your founding team is one of the best examples of a key negotiation; do you understand your prospective co-founder’s motivations and concerns, and what can you offer to encourage them to join you on the founding journey?
Negotiating Your Norms of Negotiation: What are some red flags entrepreneurs should be aware of when negotiating? From Dinnar’s perspective, establishing the norms of negotiation with the other party helps create a groundwork for a relationship built on trust. This means deciding from the get-go how the two parties will communicate as they negotiate, choosing both the medium and frequency of discourse. If the other party deviates from these pre-established norms, entrepreneurs should quickly reach out to re-negotiate or consider ending the relationship. Without these norms of negotiation, entrepreneurs might not know what to reasonably expect from the other party, or how they should be approaching the other party with their questions and updates.
Viewing Negotiations from All Perspectives: During our How 2 Tuesdays this semester, we’ve heard time and time again from experts that most entrepreneurs trying to raise capital fail because they don’t take a step back and look at things from their potential investors’ perspectives. Dinnar is a proponent of viewing your entrepreneurial negotiations from three different perspectives: yours, the other party’s, and an outside observer. In particular, he recommends this skill for founders who find themselves struggling in their negotiations with venture capital partners. As entrepreneurs negotiate across cultures, Dinnar also suggests entrepreneurs become attuned to cultural norms influencing the negotiation. Ultimately, Dinnar sees improving awareness of your own ego and emotions, and focusing on connection and humility as the key precursors for founders’ success in these negotiations.
We hope you enjoyed these negotiation insights from Dinnar’s talk, and that you check out the rest of the Blank Center’s How 2 Tuesday events this semester! On Tuesday, November 19th at 5pm, we’ll be welcoming Jamie Steenbakkers ’18, co-founder and COO of Busy Beauty and Babson Global Entrepreneur in Residence, for How to Make a Product. Register for the event at https://h2product.eventbrite.com.