Hi Reader,

Last Thursday, we hosted a live panel on negotiations for founders as part of a16z's SF Tech Week.

Most founders don't think of their day as a negotiation. As Connor (CEO of Hyperspell) said while welcoming everyone, "Fundraising and sales and hiring, and basically everything you do all the time is a negotiation." Your cofounder split, design partners, vendors, key hires, and someday an acquisition are all governed by the same negotiation dynamics.

Below are the key principles we covered (which are applicable to both founders and job seekers!), plus the most thought-provoking questions from the Q&A.

The full recording is on our podcast here: YouTube | Spotify | Apple​

Thank you Hyperspell and Pharus Consulting Group for hosting and sponsoring the event!

ICYMI: ONE MORE live CASE STUDY SESSION (Wed, 10/21)

Due to overwhelming demand, we're hosting one more case study session next Wednesday, 10/21, at 12pm PT / 3pm ET. On this call, we'll walk through one of our real client negotiations that resulted in a $215K / 41% increase over the initial offer.

​You'll see exactly how our advice played out, from the first recruiter call to the signed offer.

​In this workshop, we'll cover:

• ​The client's situation going in, including the role, the initial offer, and what was at stake.
• ​How we approached the negotiation, and the thinking behind the key decisions.
• ​What the client actually said and did at important moments in the process.
• ​What worked, what didn't, and the lessons you can take into your own negotiations.
• ​Q&A to help you apply all of this to your situation.

Register for the session here: https://luma.com/phjvckpz​

1. Write your priorities down, in order

When clients come to us, the first thing we ask is what their priorities are, as that will set up their entire negotiation strategy.

A founder negotiating with a cofounder will say they just want as much equity as possible. But let’s say you're a non-technical founder who's found a technical cofounder excited about the idea. Getting them to say yes is probably more important than a few extra points of equity, because non-technical founders historically have a harder time fundraising.

"I cannot emphasize how important it is for you to actually sit down and write out your priorities," Alex said. When our clients do this, they almost always discover that some priorities are subsets of bigger ones, so one ask covers both, and that related priorities can go into a single request.

For example, a past job-seeking client of ours was adamant about getting specific long-term disability coverage and pregnancy benefits added to her offer. We ran the back-of-the-envelope math, and those benefits came out to a couple thousand dollars a year, $5K at most. So in effect, it ultimately came down to cash, so we focused our efforts on negotiating the monetary comp and increased their base salary by $40K. This freed us up entirely from wasting negotiation capital on asking for fringe benefits that are typically not covered in standard offers.

2. Budget your asks

As Gerta put it, "Think of your negotiation as you having a bank of chips." Every ask spends some of those chips, so the order and the number of asks both matter.

For example, say your top priority with a design partner is getting paid. If you open by asking whether they'd write you a testimonial and they agree, it gets harder to come back and ask for more money.

Instead, lead with the payment, and if they tell you they can’t come up much, you can counter with a lower price in exchange for a testimonial or case study that you can then show the next prospect.

When the other side is firm on one dimension, get creative and ask for a concession on another.

3. The TRAIT that makes you great at your job hurts you IN YOUR NEGOTIATION

Over-communicating makes people rock stars at work, especially in tech, where many cross-functional teams need to stay aligned. In a negotiation, over-communicating will kill your leverage.

Let’s say a candidate with offers from TikTok and a seed-stage healthtech startup proudly tells the startup about TikTok. The startup knows it can’t come close to the TikTok offer, so why raise the offer even a little? And TikTok won’t budge after hearing about a small startup offer because they know they’ve likely beaten their competition to close you.

All a company needs to know is that you have other opportunities. Keep the company name, role, industry, and size to yourself, since even small startups have access to employer-reported comp data and recruiters can backchannel with their recruiter friends across industries.

Founders do this too. We angel invested in a friend's company, and one monthly update opened with "Status update: we're NOT doing well." The next line was "Revenue this month = $30."

With investors, share enough to build hype and stop before you give away too much leverage.

4. When you're cornered, buy time or turn it around

An aspiring founder asked how to handle gotcha questions, like being pressed on monetization for an idea that's still in the ideation phase.

First off, skip language like "I'm not comfortable sharing that." Gerta said it "could make the other party feel that they’ve overstepped" or even conclude that you don’t know how to handle yourself in high-stakes conversations.

A go-to line like "Let me sit down with the details and get back to you" buys you time, and you can send a sharp follow-up email once you've thought everything through.

Or turn the question back on them: "I'm curious why you ask" or “Have you seen any GTM strategies that you found particularly memorable?”

Whichever you pick, keep it warm. Playing it cool or hard to get doesn't help. As Alex said: "all you're doing is introducing risk that you’re not aligned with them. You're stacking odds against you."

5. Fundraising momentum starts months before the round

A founder asked what to do when every VC is waiting for another VC to jump into the fundraising round, and we gave a few experienced founders in the room the floor.

One pointed to his personal experience, where he “opened the round on Monday. By Wednesday, we were oversubscribed."

What he said most people don’t see is the months the founder spent building relationships with one or two VCs first. By the time outside investors heard his pitch, there was already a term sheet, and that's what created the urgency. (This reminded us of the Japanese negotiation technique, “nemawashi”, on this past Gentle Power podcast episode! TLDR: the negotiation is done before the actual meeting.)

Gerta saw this firsthand when she was advising for an AI startup. Other investors were dragging their feet until the founder mentioned a term sheet from a16z, and then everyone jumped in.

Whether you name your lead depends on the strength of the name: share a name that opens doors and keep an unknown one to yourself.

6. "We don't negotiate" usually just means "please don't"

During one of Alex's past job searches, the recruiter repeated the same line in every single conversation: "Just so you know, we have a company policy where the first offer is the best and final. We don't negotiate." Alex negotiated anyway and added more than $200K to the offer. (We went in-depth on this story in this past newsletter here)

After he started, the founders spent a week wooing a product leader candidate who had competing offers. They threw him a pizza party and gave him a lot more than the first offer.

Even companies known publicly for not negotiating will negotiate, and we've helped clients do it.

We covered a lot more in the room, including how to fill out the target comp field on a job application and why women still get penalized for negotiating.

Watch or listen to the full talk here: YouTube | Spotify | Apple​

Warmly,

Gerta & Alex

Founders, YourNegotiations.com

P.S. Are you job searching or have upcoming negotiations?

If you have an offer coming or are mid-process, we’re always happy to help you think through how to approach it. Book a free call here: https://calendly.com/alexhapki/call​

P.P.S. Know someone interested in negotiations?

Send them our way and we’ll thank you with $250 for each person who becomes a client. No cap.

A quick intro or an email to alex@yournegotiations.com works.