As any of my clients will attest, whenever I’m asked, “how should I navigate this complex situation with (insert investor / partner / hire / whoever)?” my default response is, “with transparency and authenticity.”
While this line applies to a wide variety of situations and relationships, I see it at work most often when a startup is operating at a power deficit — working with their first major customer or trying to land a big investor. They need the customer/investor/partner far more than the reverse. Add to that an information deficit where it’s impossible to understand the other side’s motivations, competing priorities, or opportunities, and well, the whole thing starts to look like Captain Ahab up against Moby Dick. What happens is entirely up to the whale, and sometimes he’s gonna overturn your boat.
Recently, one of my clients was negotiating with a customer on price and was asked about COGS. Now, we all know that the Only. Correct. Answer. is, “it’s not about cost, it’s about value.” But this was a young CEO and he was flustered. Instead he said, “I don’t know my costs.” Boy, did that derail the conversation. No one trusts a startup that doesn’t even know how the hell its own business works. So, how to repair that relationship and make the sale?
Honesty, man. Transparency. Vulnerability. If you need an example, read Brad Feld’s blog “The Best SLA I’ve Seen in a While.” (Hint: it was mine.)
The CEO agreed to go back to the prospect (who in a lucky break thinks of himself as a bit of a mentor figure) and say, flat out, “I totally knew my costs but and I didn’t want to get pinned down because I don’t want to be a ‘cost plus’ business, and I didn’t know what else to say.” The negotiation is back on.
Another client of mine is trying to land a huge deal for his enterprise software with a large electronics manufacturer. He’s up against some big competition, including a public company, to get the business. He wants to make himself look like the best option, but the fact is, there’s no way for him to do that. He doesn’t know enough about his competition to speak to them, and the minute he starts comparing himself to a company he doesn’t understand, the customer will see he’s talking out of his ass and lose trust. What he does know is the only reason he’s even being considered is because the customer has concerns about the complexity of the other company’s product, which means he can sell them on what he does understand (the simplicity of his own product) and keep asking questions. That builds trust, and you always want more of that.
His situation is also compounded by the fact he needs their business in order to raise capital. Let me say right away, don’t ever tell you potential customers that. You don’t want to look helpless, and at the end of the day, you can’t force anyone to do anything to help you. But you can be honest and transparent about the fact that you’re trying to raise capital in order to build the product they’re interested in faster. No BS, just flat out, we need your help to get you what you want as quickly as possible.
There is a difference between saying, “how can I help you?” and, “help me help you.” There’s also a difference between saying, “I need X, Y and Z to be a better partner,” and, “we’re screwed and need your help.” It’s the difference between mutual support and selfishness. When you’re raising capital or selling customers, you’re not Oliver Twist begging for gruel. No one is doing you a favor. You’re presenting an opportunity, and telling a story that other people might want to be a part of.
But, you’re also not fooling anyone on the other side of the table. As a startup, they know you’re new. And small. And unproven. You aren’t selling them on reputation or scale or “no one ever got fired for choosing IBM”. You’re selling your fucking dream. And trying to pretend you’re bigger than you are, or more successful than you are, or cooler, or whatever, is just going to make you seem like a fraud. So embrace your scrappy underdog position and make shit happen. There’s a reason everyone loves a Disney movie.
— Eric Marcoullier
As a coach and a human being, I value humility more than anything else. That’s, in my mind, where authenticity and transparency stem from. It’s the ability to stand without artifice in front of others and be honest about one’s self. It’s the ability to be completely real and not want to hide one’s self under the covers of bravado or ego. It’s where true power lies — the belief that you’re good enough to show up honestly and take your lumps if necessary. If that describes you (or the founder you’d like to be), send me a note at firstname.lastname@example.org or visit my coaching site.