THE STARTUP CHAT

[0:00:00]Steli Efti: Hey everybody this is Steli Efti.

 

[0:00:03]

Hiten Shah: And this is Hiten Shah..

 

[0:00:04]

Steli Efti: And today on the startup chat, a little Steli Efti rant on how not to negotiate and how not to give references to prospects. All right-

 

[0:00:14]

Hiten Shah: Let’s do it.

 

[0:00:14]

Steli Efti: So heres the deal Hiten, over the last two, three weeks, I’ve been helping a friend in a negotiation with a large customer that his company had, that was just going through the motions of currently considering to switch to a competitor right, so these guys were customers for them for a year, their renewal is coming up and so they are now thinking about switching to a larger competitor. My friend has tried to talk to them, visit them and kind of try to negotiate with them and figure out a way to keep them as customers and to convince them that his product at his company, his service is gonna be serving them much better than the competitor. Now, the competitor has gone through a lot of efforts to sway them and send over a huge team, rolled out the red carpet, you know, steaks, dinners at expensive restaurants, everything you could think of. My friend was not used to having to compete on that kind of very enterprise sales level, so he was surprised by that and he was also surprised that the customer was really appreciating the attention and time and care that that competitor was funneling their way and channeling their way. So throughout the entire time I’ve tried to give advice and give tips on how to help with the negotiation to keep the customer around. One really big thing was that switching to the competitor would take a long time in the transition, using the competitor would take a lot of money to integrate and customize and utilize that product. There were a lot of hidden cost that the competitor wasn’t highlighting that I wanted my friend to make them aware of. In the final hour, one thing that happened a few days ago is, it looked really good, it looked like they came around and they wanted to stay with him, they did a bit of research, they listened to his pitch or his argument, they appreciated his increased effort and showing them that he really cared and his company cared about keeping him as a customer as much as the competitor cared about winning them. It started to look really, really good and I started to become confident that they’re gonna be able to keep the customer and I was really happy about that, and then my friend calls me a few days ago and the conversation starts with “Steli Efti I have to make a confession, I did something you probably are gonna be really unhappy about.” I was like “Oh God.”-

 

[0:02:54]

Hiten Shah: Oh no.

 

[0:02:54]

Steli Efti: “Oh no, what happened?” He’s like “Well, in my last meeting.” He had a final meeting where he visited them to make his proposal pitch. He called me after that meeting and he told me almost everything that had happened, but he left out a really crucial thing, and that was the thing he was admitting to in that call. He’s like “Well one thing that happened that I didn’t tell you about is that, the very end this customer had asked me if I’d known any other company that had made the switch between our solution and our competitors solution, that they could talk to. I said I probably have and I had to think about it, and then what I did Steli without consulting you, without asking for your advice. I thought bout it a little bit and I thought I had done this in the past and sometimes it does work, and sometime it hasn’t, and I just thought I’ll roll the dice, so I connected them with a prior customer that left for that same competitor, and I knew that that customer, it had taken him much longer to make the transition and the transition wasn’t much more frustrating than they originally thought. So I just sent an intro hoping that would help us.” I was like “Okay, and what happened next?” He’s like “Well, this customer was supposed to make a decision by today, they just informed by email that they postponed the decision for another week and they are flying to this reference company that I made to them, their flying there tomorrow to visit with them to get more insight before they make a final decision.” Okay, heres my next question Hiten, to him. I go “Well, when you gave him that reference, do you know what that person will tell them exactly?” He’s like “Well I assumed they would be telling them that it was really frustrating.” I’m like “Yeah but would they tell them, hey it was frustrating because we made X, Y, Z mistake, heres how to avoid these mistakes? Or, we still stand by the decision to switch and we encourage you, we think this is the right thing to do, or will they say, no, never make the switch, stay with the other solution, this is a bad … Like do you know what exactly they told them?” And he obviously went “Ah, no.” And I was like “Okay, did you tell the reference customer what your expectation was? Did you tell them hey heres a current customer of ours, I don’t want them to leave, would you be open to talk to them and encourage them to stay with us? Or did you just say, heres a current customer that is trying to leave, they also want to leave just to the same competitor that you left us to, can you talk to them?” And he’s like “Well I did the latter.” This just caused me a little bit of frustration right? For obvious reasons. So heres what’s really happened, I wanted to share this one, to rant and vent, but also hopefully to share this as a lesson to people. What I think happened-

 

[0:06:07]

Hiten Shah: Don’t do that.

 

[0:06:08]

Steli Efti: Don’t fucking do that! Just never ever do that please. You might be able to even hear that I was like holding my face while I was saying that, just never do this.

 

[0:06:19]

Hiten Shah: Yes.

 

[0:06:20]

Steli Efti: Never ever do this. Heres what happened Hiten, I guarantee it to you-

 

[0:06:24]

Hiten Shah: Yeah.

 

[0:06:25]

Steli Efti: That reference customer, that person, he wasn’t aware what the intent and expectation was. He probably talked to them and said “Yeah we made a lot of mistakes, we underestimated X, Y, and Z. We worked through a few consultants that were able to help us and some of them were shit, but finally we found somebody that was good, heres how you should make the switch.” And then that customer was like “Wow, this is … Can I just fly over and see exactly how you set up the implementation, just learn more and I’ll bring my team with me to learn from your team, and maybe you can bring your consultant so we can get to know him and maybe we’ll use him too, or her.” And he was like “Yeah, sure, I’m happy to help.” Now they are much further down the line of making the switch rather than being encouraged to stay.

 

[0:07:11]

Hiten Shah: Yeah.

 

[0:07:12]

Steli Efti: Help me out here, give me your … Talk a little bit before I just keep ranting on this note.

 

[0:07:26]

Hiten Shah: You can’t stop people from dong stupid things. Especially when they’re under pressure. Your friend was under pressure.

 

[0:07:36]

Steli Efti: Yeah.

 

[0:07:37]

Hiten Shah: He did something stupid! You can’t stop people from doing stupid things when they’re under pressure. He had you helping him along the whole way and he knew what he did was stupid.

 

[0:07:49]

Steli Efti: Yep.

 

[0:07:49]

Hiten Shah: So, when you’re under pressure, don’t use that as an excuse to do something stupid.

 

[0:07:59]

Steli Efti: Yeah, well you-

 

[0:08:00]

Hiten Shah: That’s the lesson.

 

[0:08:03]

Steli Efti: I think-

 

[0:08:03]

Hiten Shah: Yeah, of course what he did was stupid, I mean he just didn’t think it through and he was really desperate.

 

[0:08:09]

Steli Efti: Yeah, so I wanna double click on what you just said, and I think that’s gonna be the lesson we should zero in on and focus on because it’s the more universal thing that we should highlight. The quick run through though the technical one that I want to do before that on the sale side of things, is this. Don’t give references when you don’t control the message, and you don’t create clear expectations to the messenger, right? Never ever do that, and never ever say the words, or think the words “I’m gonna roll the dice, sometimes this works, sometimes it doesn’t.” In a negotiation … This isn’t Vegas, you’re not playing a game, this is not the time to go “Ah, I don’t know what’s gonna happen, let’s just roll the dice and see what.” No! If rolling the dice is the next best thing in your mind, you need to keep looking for somebody to give you better advice and a better strategy. In a negotiation, you should never jut roll the dice and see what happens, just randomly do something and see if you get lucky. No. Now, coming back to your point, under pressure, none of us is safe from doing dumb things, we are all very qualified to do dumb things no matter how smart, quote unquote we think we are or how experienced we are, we all can do a dumb thing. The important tactic I think here, is that, when you know you’re under pressure, you cannot trust yourself, so you need to find somebody that’s gonna be your … The person that checks yourself to not wreck yourself, the person that you’re gonna be using as an advisor to a sanity check to prevent yourself from doing dumb shit. Two years ago I had a large negotiation that fell on my lap, I was busy with a bunch of other projects and I had no energy or time to handle that large negotiation, and I knew that about myself, and that person I was negotiating with was an incredibly good negotiator, I knew that as well, and a very annoying negotiator, I knew that as well. The moment I started the negotiation I knew I can’t trust myself. I know that some people, a lot of people come to me as like a negotiation quote unquote expert. I help all these people, I’ve written a book on negotiation, so I know a lot about this topic, but I know enough to know that I’m also just human and at times I cannot be trusted right? And so, the entire negotiation I had an advisor, a person that I would check in on every single decision I was making because I knew I was very impatient, I just wanted to get it over with and I knew that the person I was negotiating with was this annoying and very patient and very effective negotiator. So I knew that after a few weeks of negotiations, I wasn’t effective any more because I just wanted to get over it. So I needed somebody else to keep me straight and keep me from making this mistake. The two things here are, we all make dumb mistakes. Under pressure, humans make more dumb mistakes than usual, My tip here is, use an advisor, but now I want to ask you Hiten, he had an an advisor, he was talking to me. I was helpful, I was friendly, and still, the moment where he choose to do something dumb, he also chose not to tell me, which is a very human thing too. Why? Why do you think that is?

 

[0:11:52]

Hiten Shah: He was desperate. He was just desperate. He didn’t think, he didn’t realize that he shouldn’t do it. If you have someones advice and they’re an expert, and you’re using it, you’ve been using it, and you keep using it, you don’t go against that relationship, you don’t go against that advice. That’s like what you do, unless you don’t value that advice, or unless you’re so desperate that you’re just trying to do anything. ‘Cause honestly, he could have got to the same conclusion without any of your help. In a way, it’s like you wasted your time.

 

[0:12:32]

Steli Efti: Yeah.

 

[0:12:33]

Hiten Shah: That’s okay, I’m sure you don’t care too much, but you wanted him to succeed, you’re incentivized to do that, and the irony is just, he knew that he shouldn’t do it, but yet he also had your help. In a way, I’ll go a little extreme and say in a way it’s like a relationship killer if you’re gonna do that, cause it’s like you’re sitting there invested in getting him a win right?

 

[0:12:58]

Steli Efti: Yeah.

 

[0:12:59]

Hiten Shah: And he’s sitting there and he’s sabotaging it. He might have just fully sabotaged it, especially if that client is gonna fly over there. There’s only one reason, I don’t see any other reason, they’re spending their money, their time, they’re gonna fly over there, that also means this was probably a big deal.

 

[0:13:17]

Steli Efti: Yeah, it was.

 

[0:13:20]

Hiten Shah: So, yeah, I mean there’s nothing to really say, sometimes it’s a personality type that’ll do that, and sometimes it’s just literally just the fact that the person’s so desperate that they’ll just do anything. Often times, I see this happen when someones getting advice from multiple people on the same topic and just doesn’t know who to listen to and is getting conflicting advice, so that can happen as well.

 

[0:13:45]

Steli Efti: Yeah, very good point. All right, I think we’ll wrap this up here. Let this episode be a lesson to all of you start up people and the founders. Please, when you’re under pressure, just be self aware enough to know that your chances of making dumb mistakes increase every day and every hour and use somebody … And in this case, one person or group instead of multiple advisors. Use one person you truly trust to help you avoid these mistakes and then please, please, please keep that person in the loop. It makes no sense to use somebody and to ask for peoples advice, when you withhold information from them, where you tell them just parts of what’s going on cause other parts you’re embarrassed of. They’re not going to be able to give you advice, they’re probably gonna give you bad advice because they don’t know the full picture. So, that’s it for me and from us for this episode, we’ll hear you very soon.

 

[0:14:49]

Hiten Shah: Cheers.

[0:14:50]