2. Entrepreneurial Dealmaking:
Negotiating Something from Nothing
With Rhett Weiss, Executive
Director, Entrepreneurship and
Innovation Institute, Cornell
University

3. Chris Wofford
Video Content and Webinar Manager, eCornell
YouTube.com/eCornellOnline
blog.ecornell.com
cwofford@ecornell.com

4. Rhett Weiss
Class of ‟81 Executive Director
Entrepreneurship and Innovation Institute
Cornell University
Senior Lecturer of Management,
Samuel Curtis Johnson Graduate School of Mgmt.

5. Intro: Overview
• Goals
•
Provide quick exposure to process
•
Help you negotiate successfully, including with “big players”
•
•
•
Think and act like a strong, conscientious negotiator without being big
Warning: very high and quick orbit; short presentation (there is much more)
Content
•
Introduction; My Background
•
Typical Entrepreneur‟s View of Negotiation
•
Negotiation Defined; Process
•
3 Dynamic Parts
•
Common Startup Deal Types
•
Strategy Framework; Tactics
•
Best Practices (time permitting)
•
Conclude

6. Intro: Rhett Weiss at a glance
•
At Cornell
EII Executive Director; BR Startup Suite, Fellows Program, events, programming
Johnson Faculty: entrepreneurship, venture capital, & negotiations
Cornell Tech in NYC: Tech Enterprises (entrepreneurship); Pitch Lab; Innovation
•
At Google
Strategic acquisition & dev. projects; negotiated deals with heads of state, CEOs
Conducted negotiation training worldwide
•
Pre- and Post-Google
Entrepreneur, innovator, “dealaholic”
Founded, co-founded: bulk mailing (Jr HS through HS); DEALS® software (patent holder) &
DEALTEK consulting, data center, commercial bank, RE dev., aquaculture, XM Satellite
Radio (now Sirius), Orbital Sciences, Motorola, AOL, Oracle JV; others
Boards of Directors; C-level positions; bank COO; boards of advisors; mentor
Consultant; former Big 4 director and national mgt. team; now, global consulting
“Recovering attorney”; corporate, business, finance, and real estate transactions
Presenter, author

7. Hey Entrepreneur, does this look familiar?

8. Q: How do you negotiate with big players?
A: The same way you eat an elephant!

9. One bite at a time.

10. Negotiation
•
Multilateral
•
Interactive
•
Usually iterative
•
Sometimes repetitive
•
Process
•
To accomplish goals
•
At least 2 parties

11. Four-Stage Negotiation Process
Prepare
Set the
Stage
Make the
Deal
Close the
Deal

12. Four-Stage Negotiation Process
Prepare
• Prepare. Then, prepare some more.
• Develop Game Plan; goal setting; values
• Strategy and Tactics: links, de-links, and concessions
• Assess 3 Dynamic Parts: time, “leverage,” and information

13. Four-Stage Negotiation Process
Set the Stage
• Contact w/ OS starts; building relationship; questioning
• Likelihood of agreement/no agreement
• Determine each other‟s goals, values (2 meanings: valuations & standards),
parameters, constraints, upsides, and downsides
• Determine opportunities: one-time deal, piece of action, future deals
• Start framing interests, positions, and issues
• Reassess time, leverage, and information
• Set ground rules; protocols; agendas
• Decision making authority vs. responsibility

14. Four-Stage Negotiation Process
Make the Deal
Make the Deal
• Proposals: if ____, then ____; tentative/conditional
• Communication; watch for changes; question; listen
• Rapport or „chemistry‟
• Roles in communications and at meetings; watch for changes
• Separating interests and positions; solving issues
• Start compromising (make/trade interim concessions and agreements)

15. Four-Stage Negotiation Process
Close the Deal
• Going from tentative to firm agreements, iteratively
• Conflicting pressures to close
• Retrading
• Common types of closes
• Walkaway power (real ability vs. theatrical)
• Getting through slow times, breaking deadlocks/impasses
• Going to war; how to fight in tough situations
• Confirming/memorializing the deal

16. Negotiation Process Iceberg

17. Negotiation‟s 3 Dynamic Parts: Time, Power, & Info
Information - 4 Types:




Time
Known to all sides:
Internet/public -- industry,
market, or company info


Known only to your side
(YS) & can be disclosed to
other side (OS); vice versa
Known only to YS but
cannot be disclosed to OS;
vice versa
Available time to each parties; time
constraints
Timing strategy and tactics
Power - 7 Types:


Time



Needed but not yet
possessed by one or more
sides


Title
Reward/Punishment
Consistency
Charisma
Expertise
Situation
Information
David vs.
Goliath
Information
Power

18. Common Startup Deal Types
•
Contracts – from Ordinary Course of Business to Infrastructure to Strategic
•
•
Company-Level Buy/Sell (M&A); Asset vs. Stock Deal
•
Founders Agreements; Investment Agreements
•
Stock Option Agreements; Profit Sharing Agreements
•
Employment Agreements
•
•
Goods (supplies, materials), Services/Outsourcing (project-specific and functional), Utilities
IT Agreements: Data Center Hosting, Cloud, Storage, Service Level Agreements; Others
Intellectual Property
•
NDAs – Nondisclosure or Confidentiality Agreements
•
License Agreements
•
Development Agreements; Professional Services Agreements; “Work for Hire”
• Plans, Specs, Drawings, Designs, Trademark, Copyright
•
•
Patent Assignments
Leases
•
Equipment
•
Real Estate

19. Suggested Negotiation Strategy Framework
1.
Process
•
2.
1. Preparation; 2. Setting the Stage; 3. Making the Deal; & 4. Closing the Deal
Parties
•
Identify Your Side (YS) & Other Side or Sides (OS).
•
Any additional players that are calling shots in or influencing the negotiation?
•
Roles: Buyer, customer, seller, developer, strategic partner, acquisition target,
technology licensor, principal, agent, advertiser, etc.
•
Key team members for each.
3.
Deal Fundamentals
•
Subject or Object. What is the deal or negotiation about?
•
Only a one-time deal, or are there future opportunities to bring into the mix?
•
Transactional or relational? Desired deal structure? Alternative structures?

20. Negotiation Strategy Framework, continued
4.
Necessary Deal Points
•
Examples: subject/object, structure, price, duration, frequency, quantities,
definitions, IP ownership, due diligence/inspection rights, reps & warranties
Each Side‟s Key Goals or Interests
5.
•
Shared, complementary, and competing.
•
What does each side really need vs. want?
•
Separate positions from interests
Each Side‟s Issues
6.
•
7.
Problems, obstacles, or challenges that need solutions
Values, Principles, or Standards
•
What values (principles or standards) are important to each side?
•
Compare: What is something‟s value (valuation or worth) to each side?
•
Affect on each side‟s framing of interests, positions, issues?

21. Negotiation Strategy Framework, continued
8.
Time, Power (or Leverage or Influence), and Information
•
Time:
•
Available time to all parties; time constraints
•
Timing strategy and tactics
•
Power: presence of the various types among all parties –
•
Title
•
Reward/Punishment
•
Consistency (a/k/a “Referent”)
•
Charisma
•
Expertise
•
Situation
•
Information
•
Information
•
Known to all sides already (public, industry, market, or company info)
•
Known only to YS and can be disclosed to OS, and vice versa
•
Known only to YS but cannot be disclosed, and vice versa
•
Needed but not yet possessed by one or more sides

22. Negotiation Strategy Framework, continued
9.
Impasse(s) or Sticking Point(s)
•
What may prevent or is preventing an agreement?
•
Where and why might the parties become stuck?
•
Where and why are they stuck?
•
What are the alternatives and substitutes for all sides?
10.
Desired vs. Actual Results
•
What is YS‟s desired agreement? What is OS‟s desired agreement?
•
Must a complete agreement be reached by either side?
•
At end of process, was a complete agreement reached?
•
If so, what are its actual key provisions?
•
Reality Check: What is the detailed resolution of each difficult issue?
•
What exactly, if anything, is left unresolved or set aside? Only a partial deal?
•
Or, if no deal at all, why not? Unresolved issue? Did one side walk away? Other?

23. Common Tactics: Tools, Moves, Tricks of the Trade
•
Viability, Likely Success
•
•
Often are used incorrectly, like “splitting the difference”
•
Generally work when used correctly; never work all the time
•
•
May seem counterintuitive
Each has a counter-tactic
Recognize OS's tactics
•
•
Let OS know: decreases OS‟s game playing, increases your power
Recognize the Difference Among Smart Plays, Bluffs, and Lies
•
Tactics reveal each side‟s negotiation ethics, good or bad

24. 
Reluctant
buyer/seller
 Flinching
 Best offer
The list
Feel, felt, found
 Uproar (we want  Flinch; Grimace
it all)
 Play dumb, act
 First offer
smart

Trade-off


Good cop, bad cop 

Higher authority

Making the Deal


Set the Stage
Squeeze
Funny money

Set aside
Splitting the
difference

Decoy

Red herring

Nibble
•
24
Printed word
 Fait accompli
Closing the
Deal


Withdrawn offer
 Set aside

Hot potato
 Turn down, walk
away

Throw-away concession; So what?

25. Best Practices: 5 Traits of an Effective Negotiator
1. Understands and conducts negotiations as a process
• A multilateral, interactive, and often iterative process to accomplish the
goals of two or more parties
2. Does the homework on a regular basis
• Masters the issues & their interrelationships
• Masters information and adapts to changes in it
3. Maintains sensitivity and tolerance for interpersonal differences
• Personality types
• Nationalities, Cultures
• Communication styles, methods, and content; notice the changes
4. Emphasizes areas of agreement, not disagreement
• Explains and substantiates own points
5.
Instills strong belief in OS that YS will uphold the deal
• Shows integrity, reliability, and credibility

26. Best Practices: 5 Do‟s
1.
Know your stuff – be on top of all sides‟ facts, interests, and issues
2. Be a great communicator ( = listener, not just talker)
•
Keep your side informed of all key negotiation communications
•
Communicate regularly but carefully with OS
3. Consider own enthusiasm‟s affect on concessions, agreements
4. Be alert to pressure
• All sides are under pressure to deal, settle, compromise
• Generally, the side under the most real or perceived pressure "loses”
5. “Keep your eye on the ball”: focus on movement, measure progress
• Concessions and interim agreements
• Statements, sometimes silence
• Action, sometimes inaction

27. Best Practices: 5 Don‟ts
1. Don't assume money or price is the all-important deal point
• After all, it probably isn‟t
2. Don't unnecessarily narrow your negotiating range or flexibility
•
When possible, don‟t be the first side to make an offer or name a price
3. Don't narrow the negotiation down to only one issue
• Negotiations are so much easier with at least two issues in play
4. Don't disclose your side's time constraints, deadlines, or pressures
•
. . . unless there is a compelling reason to do so
5. Don't become emotionally involved or egotistical
•
Don‟t get personal
•
It‟s typically counterproductive, and it‟s a lonely place

28.  Time/Timing
 Power: 7 types
 Information: 4 types
 Strategies & Tactics
 Best Practices: 5+ traits,
5+ dos, & 5+ don‟ts
 Thoughts & Actions:
Know how Goliath thinks
but don‟t act like Goliath

29. Conclusion.

30. Build a Culture
of Growth
Ivy League
100% Online
Real World
Certificates
1:1 Experts
Collaboration

31. Thanks everyone, and stay in touch.
Please fill out the survey you‟ll receive via
email after this event.
www.ecornell.com/redshift
cwofford@ecornell.com