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Key Takeaways

  • Entrepreneurs benefit significantly from having a trusted advisor or team, especially in negotiations. This support can provide diverse perspectives and preparation, leading to better outcomes.
  • Agents can offer expertise and act as a buffer in negotiations, protecting personal relationships. However, entrepreneurs must manage potential drawbacks such as lack of control and reliance on the agent’s strategies.
  • Designing and managing the negotiation process actively can prevent surprises and foster agreement. It involves setting objectives, adhering to a process, and realigning on outcomes, which can enhance the chances of favorable negotiations.
  • Entrepreneurs should be aware of and strategically navigate gender and cultural biases in negotiations. Strategies include preparation, reframing questions, changing negotiation dynamics, and being adaptable to overcome biases.
  • Entrepreneurs should adopt a multifaceted approach when dealing with large companies. They should map the decision-making landscape, craft a compelling narrative, engage in strategic refusal, and emphasize risk and reward to present a clear value proposition.
  • Entrepreneurs should avoid undervaluing their offer and ignoring organizational structures within the negotiating party. Instead, they should consider alternative value propositions and engage various stakeholders to bolster their negotiation power.
  • Entrepreneurs should view negotiation as a skill that can be developed through practice and reflection. They should use tools like negotiation journals to improve over time as it could help them unlearn bad habits and acquire new, effective negotiation strategies.

Executive Summary:

Hey folks! Welcome back to the NEGOTIATEx podcast. We are continuing our conversation with Samuel Dinnar, an expert in entrepreneurial negotiations. In part A, Samuel discussed his background as an engineer, pilot, and theater enthusiast and how these experiences had influenced his approach to negotiation. He also discussed entrepreneurial negotiation and shared advice for young engineering students interested in entrepreneurship. 

Furthermore, Samuel highlighted the unique challenges faced by entrepreneurs, such as managing risk and uncertainty, building authentic relationships, and avoiding common negotiation mistakes.

The Critical Role Of Trusted Advisors In Entrepreneurial Success

Aram notes the significance of having a trusted advisor or team for entrepreneurs, especially during negotiations. Samuel follows up by highlighting that negotiation is a team sport and advocates for preparation and rehearsal with a buddy or advisor to gain diverse perspectives. According to him, this approach can lead to better outcomes in negotiations, even if one ends up making decisions independently. 

Additionally, Samuel underscores the value of engaging with trusted advisors or mentors who have the expertise to provide constructive feedback, especially in critical negotiations and decision-making processes for company builders.

Strategic Use Of Agents In Entrepreneurial Negotiations

Moving on, Samuel discusses the strategic use of agents in negotiations, breaking down his response into three key aspects:

the rationale behind using agents

the benefits and drawbacks

the nature of the relationship with an agent

#1 Why Use An Agent?

Agents possess expertise, resources, or connections that the entrepreneur may lack, such as legal qualifications or local market knowledge. They can dedicate more time to tasks and negotiations, acting as a buffer to protect personal relationships from the strain of tough negotiations. For example, sports agents negotiate on behalf of athletes, allowing the athletes to maintain positive relationships with teams.

#2 Advantages And Disadvantages:

The main advantages include leveraging the agent’s specialized knowledge and separating the entrepreneur from direct negotiation, potentially preserving relationships. However, disadvantages include a lack of direct control and insight into the negotiation process, reliance on the agent’s reporting, and uncertainty about the agent’s dedication and strategy.

#3 Relationship With The Agent:

The relationship between the entrepreneur and their agent is itself subject to negotiation. It includes clarifying the agent’s roles and limits in negotiations, discussing fees and commissions, and addressing any potential conflicts of interest. 

For example, in real estate transactions, the interests of sellers, buyers, and their respective agents can diverge, necessitating clear communication and agreement on objectives and strategies.

Samuel emphasizes the importance of being intentional when working with agents. It might include setting clear expectations, understanding the terms of engagement, and actively managing potential conflicts of interest to ensure alignment with the entrepreneur’s goals.

NYPO In Shaping Effective Negotiation Processes

Next, Samuel highlights the critical importance of process design and management in negotiation, suggesting that entrepreneurs take an active role in shaping the negotiation process. 

He introduces the concept of NYPO (Negotiate Your Process Of Negotiation), advocating for negotiating the structure and rules of engagement at the start. It includes discussing the length of meetings, the objectives of each session, how time is allocated, and even how breaks are called for and utilized.

Samuel proposes a systematic method of negotiation:

Align: Begin by aligning on the objectives of the negotiation, setting it up as a joint problem-solving effort, and agreeing on the process.

Solve: Move into solving the problem, adhering to the agreed-upon process.

Realign: Conclude with realigning on what was accomplished, the next steps, and how outcomes will be communicated to relevant parties.

By negotiating and establishing these parameters early, participants can avoid surprises, manage expectations, and create a foundation for agreement. Samuel’s approach to negotiation process management emphasizes the importance of transparency, shared expectations, and the flexibility to adapt the process as needed. 

According to him, this proactive stance not only facilitates smoother negotiations but also enhances the likelihood of achieving favorable outcomes.

Strategies To Address Gender And Cultural Biases In Entrepreneurial Negotiations

Moving on, Nolan inquires about the specific challenges or biases related to gender and culture that affect negotiations within entrepreneurship. He seeks insights on how these biases can impact negotiation processes and what strategies can be used to effectively address and overcome these challenges. 

Samuel addresses the challenges of gender and cultural biases in entrepreneurial negotiations, drawing from his research and experiences documented in his book. He highlights the underrepresentation and challenges faced by women-led ventures in securing venture capital, attributing this disparity to existing biases and networking circles historically dominated by men.

Samuel suggests several strategies for overcoming these biases:

#1 Awareness And Preparation: 

Understanding the biases can enable entrepreneurs to anticipate and counteract them effectively.

#2 Reframing Questions: 

Analyzing the nature of questions posed to entrepreneurs, Samuel notes a tendency to ask men about potential successes and women about risk mitigation. He suggests that flipping the script—responding to risk-averse questions with ambitious, success-oriented answers—can significantly improve outcomes in fundraising.

#3 Changing The Dynamics: 

Sometimes, altering the composition of the negotiating table or the approach to interaction can mitigate bias. For instance, Samuel recounts a female CEO who brought a male vice president to meetings with a particular investor to navigate gender biases more effectively.

#4 Naming And Changing The Game:

Recognizing when biases cannot be overcome within the current setup and striving to change the people, process, or rules of engagement can be crucial.

Samuel emphasizes resilience and adaptability, encouraging entrepreneurs to recognize biases without being discouraged by them. By strategically addressing and navigating these challenges, entrepreneurs can work towards leveling the playing field and achieving successful outcomes despite the biases inherent in the negotiation landscape.

Navigating High-Stakes Negotiations With Large Insurance Companies

Next, Samuel recommends a multifaceted approach to Chris Moates, co-founder of TeamUp Therapy, for negotiating with large insurance companies that tend to rely on standard formulas for reimbursement rates. Drawing on the concept of three-dimensional negotiation developed by Sebenius and Lax, Samuel outlines several strategies:

#1 Pre-Negotiation Campaign 

Negotiation begins well before actual discussions. Samuel emphasizes the importance of mapping companies to identify decision-makers, influencers, champions, and blockers. Understanding the landscape allows for a targeted approach to highlight TeamUp Therapy’s unique value proposition.

#2 Crafting A Compelling Narrative 

It’s crucial to communicate the unique value of TeamUp Therapy’s virtual delivery model and parent coaching emphasis. By framing its services as not just another option but as a superior solution, TeamUp Therapy can differentiate itself from larger, more traditional providers.

#3 Strategic Refusal 

Learning to say “no” strategically can be a powerful tool. Samuel suggests using a “no sandwich” approach—politely declining non-feasible terms while emphasizing eagerness to work together under more suitable conditions. It involves presenting an alternative proposal that outlines how a mutually beneficial relationship can be established despite initial differences.

#4 Risk And Reward

Samuel shares a personal anecdote to illustrate the effectiveness of this approach. He describes how, in negotiations with a large Asian company, he responded to an unrealistic request for a proposal by submitting a revised, simplified set of terms. 

Although this risked losing the deal, it ultimately led the company to realize the impracticality of their original demands and reconsider TeamUp Therapy’s proposal.

Samuel’s advice underlines the importance of proactively shaping the negotiation process, presenting a clear and compelling value proposition, and being willing to navigate through the negotiation with flexibility and strategic insights.

Building Value And Influence In Negotiations Without Compromising

In the same vein, Samuel addresses Chris’s dilemma regarding whether to accept the insurance companies’ current offers to expedite growth and prove TeamUp Therapy’s value before renegotiating terms. He highlights the importance of considering alternatives to bolster negotiation power and cautions against devaluing one’s services for the sake of a quicker agreement.

He advises against two main pitfalls:

#1 Undervaluing Your Offer 

Setting a low value as a precedent can make it challenging to negotiate higher rates later. Maintaining your services’ perceived value while exploring creative ways to structure the deal without outright discounting is crucial.

#2 Ignoring Organizational Structures 

Understanding the motivations and constraints within the insurance company, such as procurement departments focused solely on cost reductions, is vital. Identifying and engaging with other stakeholders who value TeamUp Therapy’s unique offerings can support your case.

Additionally, Samuel suggests a strategic approach that goes beyond the immediate negotiation:

Consider offering value in different forms, such as exchanging services or providing additional features that justify a higher price

Utilize a campaign strategy that involves engaging with various insurance company stakeholders to create champions for TeamUp Therapy’s services

He also shares a case where an entrepreneur gained traction by providing free units to affiliates of a target company, thereby indirectly proving the product’s value. Thus, it shows the importance of a broader campaign, including strategic giveaways, stakeholder engagement, and leveraging indirect proof of value to influence negotiations.

Essential Wisdom For Entrepreneurs

As the conversation draws to a close, Nolan asks Samuel for one piece of advice or knowledge about negotiations that an inspiring entrepreneur should know.

Samuel encourages entrepreneurs to recognize negotiation as a fundamental, though complex, aspect of life where bad habits can be unlearned and new skills acquired through conscious effort and practice. 

His key advice for aspiring entrepreneurs is to keep a negotiation journal or logbook, documenting details of negotiations to reflect on what worked, what didn’t, and areas for improvement. Samuel strongly believes that this practice, coupled with the support of a buddy or mentor, can facilitate gradual but significant progress in negotiation skills. 

He reassures listeners that while formal education in negotiation is valuable, the lack of it should not deter one from beginning to improve their negotiation skills incrementally.

Samuel, Aram, and Nolan discuss more on this episode of the NEGOTIATEx podcast. Write to us at team@negotiatex.com and share your thoughts on this informational podcast episode. Also, if you enjoyed the episode, we’d be thrilled if you could rate us on Apple Podcasts. Your ratings help us grow and improve.

Thank you for your time!

Transcript

Nolan Martin : Hey everyone, thanks for joining us on the NEGOTIATEx podcast. We are continuing our conversation with Samuel Dinnar, entrepreneurial negotiations expert. If you haven't already checked out part A of this show, be sure to do that first. Let's jump into the conversation with Samuel.

Aram Donigian : The importance of a trusted advisor for that entrepreneur, even when he or she has a founding team that they've surrounded themselves with. In your experience, how important is it getting that initial team right or at least having someone you can go to, whether it's with prep or maybe it's a rehearsal or maybe it's in this work well do differently. How critical is it to have that trusted advisor?

Maximizing Negotiation Success: The Value Of Preparation And Diverse Perspectives [01:17]

Samuel Dinnar : I would say do it if you haven't found the trusted advisor or the ideal one. So negotiation is a team sport. A lot of people think you do it solo. Even if you're in the room on your own, you'd be much better off if you prepared with a buddy or with an advisor if you debriefed with a buddy or an advisor, if you just told the story of what you're going to do, someone with a different perspective, a different style may help you rethink and just by saying it, you may be rethinking it yourself.

So find a buddy even if you don't have a trusted advisor. Now, once you find somebody who is really at the level of they have the expertise and you trust them and they can give you feedback which you would listen to, then that's a keeper. Then absolutely try to keep those people engaged in your life and especially in critical negotiations.

If you're building a company and you found someone who's like you're trusted advisor for negotiation as a mentor to how it is to be a CEO, as a lawyer who can help with certain types of deals, then you keep those relationships and you build on them. But definitely use them because that pays off significantly.

We are so busy sometimes and we are so stuck in our own single perspective that having one or two other people prepare with us already opens our mind into other perspective even if their advice may not be something I want to listen to at the end. So I may be preparing with both of you and you both have different opinions of what I should do when I walk into the room and having that discussion is already valuable because we don't know what's going to happen when I go into that room and I'm going to have to make my own decision whether I adopt your advice or your advice or come up with something of my own. But by thinking about these different scenarios, I've already done a lot of prep work.

AD : Samuel, a related question. Are there times when an entrepreneur is forced to or at least might consider using an agent and working through someone else for whatever that conversation is needs to happen? And if so, what are some considerations about being really intentional when working through someone? Someone else?

Strategic Use Of Agents In Negotiations: Balancing Expertise, Representation, And Interests [03:36]

SD : Let me break that down into three parts. Why use an agent? What are the advantages and disadvantages of using one, how to do so and then what is your relationship with the agent? So we use agents a lot of the time when they have the expertise or the resources that we don't have. They're a certified lawyer, they can appear in court. They actually know the local real estate market, right? We don't know, we just moved here. So we use an agent there or they can spend now a hundred hours doing this work.

Well, I can't. I can only spend 10 hours on this in the following week. So I need someone to do most of the legwork and represent me. Those are the reasons we use agents and as well as separate the relationship, my relationship directly from the other side. So if sports agents, they can negotiate really, really hard with a certain sports team about salary and terms and all sorts of things, but when the athlete chose up, they don't have any baggage of that hard negotiation.

The athlete shows up and he's like, I'm here to play. I'm everybody's friend. That relationship wasn't damaged because it was hard negotiations happening on the salary and vice versa. If the relationship is tense, you may send an agent who's calmer and doesn't have the emotional baggage to ease up the channel and open it with the agent of the other side.

So that's why we use agents. What do we need to be careful is we don't know sometimes what really happens in the room, we're dependent on their reporting. We don't know how much hours they've actually put in or not. We don't know their strategy. So we have to be thinking of going into the room. What are we authorizing them to do or not on our behalf in the room. For example, I may say in this meeting, I don't expect you to even put offers on the table.

I expect you to negotiate the process and do this and do that. Well, if they ask me what your bottom line is, I need to tell 'em, well no, this meeting is not my bottom line. It's not about the deal itself, it's about the how do we get to a deal and we'll talk about that later, see what they say. So you could build it stage wise with that. And the third thing is remember that there is a negotiation between you and that agent all the time, right? In some places it's fixed the same way a dress price is fixed in a store with a ticket price, right? It's done so that we don't negotiate the price of the dress. You may still try, well, I don't know if I can afford it. Isn't there a discount? You could find me somehow. Well, are you a member of this or that?

So same way as realtors, and this is now in the news because of they're trying to fix, no, we always get this percentage, well, what's negotiable? What's not negotiable? How many hours are you going to put in for that percentage? Because sometimes there are conflicts of interests and we have to pay attention to that and incorporate that into our discussion. It's a negotiation.

For example, if I'm selling a house, I'm really interested in the higher price. My agent is really interested in the higher price, the buyer is interested in paying less. If the buyer's agent gets a commission based on the price, how motivated are they for a little discount in the price versus closing the deal? So, we have to pay attention to those kinds of conflicts of interests and expressively negotiate them.

AD : So you've mentioned process more than once now. And my opinion is process design and management absolutely critical to an effective negotiation and they rarely get the attention they should. We skip over this idea of process management. So how should entrepreneurs approach taking ownership of their negotiation process?

Empowering Negotiation Success: Mastering The Art Of Process Leadership [07:22]

SD : This is really key. So I think one of the things that I try to instill people is that you have a say about the process and you can show process leadership. For example, one thing I call N-Y-P-O-N, Negotiate Your Process of Negotiation at the beginning of a negotiation. How are we going to negotiate? A lot of times people walk in and they don't talk about what is the process. They don't even talk about basic things like, well, how long is our meeting?

What are we trying to accomplish in this one versus the next one? How are we going to allocate? We have two hours. How are we going to divide these two hours? What are we going to try and do in each of them? So these are all explicit things you can negotiate which would later avoid surprises. For example, negotiate why and how you're going to call for breaks in the negotiation, agree ahead of time.

And then that sets the norm and the expectation and the process around how we call for breaks. And they don't get alarmed if you say, well, I think we need a 10-minute break to consult. It's like, no, I told you in the beginning that every hour or two we would want a 10 minute break to just touch base within my team. And if that's okay with you, we'll call a break and we'll go and caucus and we'll come back.

Hopefully you can do the same, but that's part of our process. Is that okay with you? Right? And by negotiating the process, you're establishing a few very important things. You're getting people to agree on something already. You're modeling agreement and you are aligning expectations. I have this thing that I call, which is Align, Solve and Realign. I try to think of every meeting or every negotiation, start with align.

Let's align ourselves. What are we trying to do? Frame it as joint problem solving, negotiate our process, then get into the different stages of how we solve the problem and leave time at the end to realign. A lot of times people don't leave time at the end and then they run up to the clock and Oh, we're running out of time. I have to go. They shut the zoom off.

Or they walk out of the room and you're like, wait, what's the next step? Who's going to call whom and do what? Are we allowed to talk to our peers about what we accomplished? So I would always negotiate, let's plan to end at 3:45 and leave the last 15 minutes to talk about aligning again on what we accomplished, what the next steps are and how we communicate to our back tables. What we've got here, is that okay with you?

And now we know, okay, we're going to start with introductions. We're going to go to you telling your perspective, and I'll ask some questions. I'll tell you my perspective, you ask some questions, we'll try to chart out the main interests, try to come up with options. If we run out of time, we're going to have a hard stop here and we're going to continue in the afternoon. Is that okay with you? That sounds logical to me, but I would rather go first. Okay, then fine. Why don't you start and I'll go second.

Alright, so we've just negotiated our process of negotiation and it sets a much better tone moving in and then you increase your awareness and if you need to change it during the negotiation, you just pause and you say, Hey, I think this isn't productive. Let's change our process a little bit. Let's move to something else.

AD : But if I didn't set it up to start with, I've got nothing to change from or pull us back to. So really love how you laid that out.

NM : What do you see as specific obstacles or biases around gender and culture when it comes to entrepreneurial negotiation and how do you advise best handling these challenges?

Challenging Bias In Entrepreneurship: Strategies For Diverse Success [11:00]

SD : Yeah, so it's amazing. I wrote this book and I knew this, but when I started researching it, for me it was very important to interview a diversity of entrepreneurs. And the first list that I got off the entrepreneurship circles at MIT of entrepreneurs to talk to were very dominantly male, very dominantly white. And so I expanded, and you can see in the book there's a lot more diversity.

And we went into other domains and got more diversity in this issue of gender and culture was really important in two aspects. One, if you look at the VC world, about 5% of the deals are to women-led entrepreneurs, only 2% of the money. So it's less deals than smaller deals. And that's because of just historically the networking circles, the boys club, the whatever, the biases that exists and the challenges are in how do you break into these circles?

How do you then get the investment decision to be fair? And then how do you get the support, which is another issue. Once the investment is made, how do you then get the board support and the BC support to continue?

So I researched that and found that there are biases out there that are perpetuated, and if you learn and know about them, then you can overcome them somehow or set up a process or bring more players to the table to overcome. I'll give you maybe an example they found through analyzing the questions of similar entrepreneurs situations, but once it's a male and once it's a female, two thirds of the questions for the males were like upside questions. How are you going to be the number one in the market? How are you going to make sure that this thing gets approved by this date?

Whereas two thirds of the questions to the female were, well, how are you going to protect against being late to the market? They were like downside framed questions. How are you going to make sure the quality is going to be good enough so that people don't, blah blah. They were more about risk and about avoiding failure. And the interesting twist is when they dug deeper, if you, most people tend to answer the question they were asked.

So if I asked you how are you going to guarantee you're going to be number one, you're going to say, I'm going to guarantee being number one because so and so. And so if I asked you how are you going to guarantee that you're not going to be late to the market and number three is not going to have any market left. And you're going to say, well I'm, I'm going to try and protect against being late to the market by doing this.

But those who flipped the question, even though they were asked a downside question, answered an upside question, were 10 times more successful in the money that they raised in the end. So how are you going to make sure you're not late to the market? Well, the reason we're going to be number one in the market is because we're going to do this and this and this. And again, this will trigger some other biases, but it's worked in theory in the lab and in practice people have seen this.

And so biases are a funny thing because sometimes people tend to fulfill the prophecy and reinforce them and sometimes not. There was another study example, Asian women before they were taken the test were told usually women score lower on this test and they averaged lower. And the same kind of group of people were told usually Asians score higher on these tests and lo and behold, they scored a little higher than average on that test.

But what I found most is that when people were told what I just said, which is that whatever I tell you before, the test is going to bias your performance because if I tell you this and this and then that neutralize the effect. So sometimes, and there are more examples in the book like that that make you think and some practical tips on how to use it in that you're going to be able to overcome the bias.

You're not going to change the people at the other side of the table, but you may be able to change a little bit the tone. And sometimes you have to realize, okay, I have to change the people at the table. I'm trying to change the process, I'm trying to change the game and name the game, but maybe I need to change the people. And I've had one female CEO who first particular investor would always show up with her male vice president because it just made things better and they had this thing worked out.

Whereas if the question was directed at the vice president instead of the president and the president should be answering that, the VP was very nonchalant about saying, oh, that's a great question. Why don't I let her answer because she's been leading this effort and handed back to the CEO. So you find ways of dealing with it. But yeah, it is an important thing and I gave gender examples, but they're true for any other outside group or disadvantaged group in certain settings. Don't be discouraged. It's part of the landscape. If you get triggered because it's unfair, you may perform suboptimally. If you are able to recognize it and work with it, you may be able to actually turn it to be a good thing.

AD : So, Samuel, another real life example here from one of my former students who took my negotiations course, did an amazing job through the course, Chris Moates, he's a co-founder of TeamUp Therapy. It's a virtual speech therapy clinic and he shared the following with me. So Chris often faces the challenge of negotiating with giant insurance companies that operate on a very structured formulaic basis. These insurance companies tend to offer standardized reimbursement rates based on specific services and geographic locations. The TeamUp Therapy clinic is unique.

They have an innovative virtual delivery model with extra emphasis on parent coaching, but to the insurance company, they're just one of countless providers applying to join their network. Given the size and more rigid procedures of these insurance companies compared to Chris's small startup, what strategies would you recommend to get the insurance companies out of the formula mindset?

Three-Dimensional Negotiation: Mapping Influence And Crafting The Story Of Value [17:26]

SD : In this industry and with startups. Very typical situation. So Chris, that's a great question. I would encourage us to stink in what my colleagues Sebenius and Lax called three-dimensional negotiation is realize, like I said earlier, the negotiation doesn't start when you enter the room to negotiate the terms.

It starts way before that, right? It's a campaign of a series of things that engagements you have to do. So map out that organization, try to find out who the decision makers, who the influencers are, who could be your champions, who the blockers would be when you find that champion or potential influencer, give them what they need in order to stress your unique value. And that's the story. The story is about your unique value and why they need this and why even though you're a small company, you're better than this other big company solution that they have.

Why the urgency is there, why they need it now. So this goes well be it for they actually get to the cycle of the year where they have to say, okay, we have to sign the vendors for next year, bring them in. The other thing is know your value and then learn to say no in the right way, which is this little no kind of sandwich, which is no, I can't live up to your 300 page terms and conditions document. I'm a small startup, I could never do that.

And I had an example of dealing with a big Asian company that way. This is a very, very large contract. They put out a request for proposal with their terms and conditions and sent it out. But these were terms that conditions that were suited for big aerospace in Asia, they definitely weren't suited for a startup in the US. And my decision, and it required a lot of internal negotiation on how we would do this was to put a response, a very thick response that says, yes, we want to work with you.

Our solution is the best solution for what you need and here is how it answers all your questions. Unfortunately, we cannot work under the terms and conditions that you sent us, but yes, here are revised simpler terms in only a 10-page document where we could work together. If this is good for you, we would love to continue talking. Now you can imagine I was really stressed out when they went away for three months and looked at all our competitors, but then when they came back, I knew we had a deal because they had done their due diligence and they realized what they were asking for was unrealistic and they couldn't have a solution.

So you have to take that risk sometime and realized I can't work under these terms and these conditions, but use that opportunity to educate them and show them how you could actually work, how they could actually get this benefit.

AD : Chris also shared that anytime there's a negotiation, it can take several months. Chris and his team want to move more quickly so they can grow. The insurance companies don't feel that same urgency. Chris shared, it's very tempting to accept their current offer, come back to the table to after a year of proving the TeamUp Therapy’s value. That way they can move faster and have more legitimacy through proof of concept.

So his question is this, is that a crazy strategy? And would it be better than attempting a lengthy negotiation upfront that may feel like it's less likely to succeed but more focused on the terms they're trying to achieve?

Balancing Value And Alternatives For Optimal Outcomes [21:07]

SD : Yeah, it's a great dilemma and there is no textbook answer. I mean it really depends on the situation and what Chris's power in negotiation comes from his own alternatives, right? If this is the only insurance company in the state and he has to get them, then he's got this dilemma. If he has other alternatives, he could have more power at the table because he could focus his time on working someone else.

So, he has to make that decision per the particular case and the situations. I would caution against two things. I would caution against undervaluing your own value because one of the key elements in negotiation is objective standards and once you've set a value to something, it's going to be very hard to cut next year to go double the price. So if you say, yeah, we could do it for half the price, then that gets set as a precedent is very difficult.

So try to think of ways of keeping your value high, keeping the objective standard high and finding other ways to reduce the actual dollar maybe, by treating it something else, calling it something else. Why don't you buy it from us at full price, but then we'll buy from you something to hours of support or whatever. Try to structure the deal. Money has different names, right?

And Chris definitely has a motivation to not lower the value of what he's proposing just because the other side has a process and a structure of being difficult. They're built that way. If you think why procurement organizations are built the way they are and why their people are only incentivized on a percent reduction versus last year, then you're not going to get past them because all they get measured is by what kind of discount can you give me?

And when I come or Chris comes with three new features, they're going to say, I don't care about new features. I only get measured on the reduction in price. So you need the person on the back table, his marketing department or his engineers to say, yes, we really want those three features and those three features cost 20% increase.

So think about those other dimensions and how you can get past a particular negotiator you're facing and without alienating them obviously, but creating other people who could be your champions or influencers or at least back up your claim that your people need this by next month, go ask them, right? I remember a case that Chris may like this, where this one entrepreneur gave four units free to affiliates of the company he was targeting, right?

And so by the time they had their internal discussion and they called up the other people, they said, yeah, we know this company. We actually have a free unit on trial here. But he wouldn't give a free one to the actual company he was trying to sell because he wanted them to pay for the trials and then buy the products. So he was willing to work different deals, but he knew that word would get out that this other company is using it, this other company is using it. That really started getting some traction. So again, it's a campaign, it's not just this one negotiation or one meeting.

NM : As we wrap up, we acknowledge there's so much more we could explore on this topic. If there was one thing we didn't ask you, an inspiring entrepreneur should know about negotiations, what is it?

Harnessing Everyday Skills For Long-Term Success [24:46]

SD : I want to bring it back to it's not that complicated. There are many moving parts, but we are all negotiators. We all negotiate since the age of two and constantly and we've all created some bad habits and a lot of times what got us here is not going to get us to the next level. So we need to evolve. We need to be more conscious about the theory and practice of negotiation about our own self as negotiators and gradually move ourselves in the right direction. It's not going to be overnight, but the reward is there fairly quickly.

Negotiation classes are experiential. You try simulations, you do them. And the real learning goes when you try to apply some of those skills in real life. And I would probably, if I had the one important tip, I would say keep a journal, a logbook of your negotiations. Occasionally. Jot down, had this negotiation with this about this topic worked well, this do differently, this focus on this next time, move on.

And then together with, as Aram said, getting a buddy or a mentor that will do the trick. So we talked about some of it, but don't let the fact that you don't have time to read the books or take the courses stop you from starting to make incremental process with yourself.

AD : Well, Samuel, I love that you said keep a journal or a log book. That's something again, probably all of us that teach this have our students do it is so critical. So thanks for ending on that note. Thank you for everything you shared, what an interesting conversation, learned so much and just really did enjoy your book. So again, thanks for taking the time to be with us. It was a marvelous chat.

SD : Yeah, I've really enjoyed it. This is a fun podcast. I look forward to being in touch and helping your students in other ways in the future if possible. So good luck.

NM : Absolutely. Thanks Samuel. And that is it for us on today's podcast. If you haven't already, please rate and subscribe to the NEGOTIATEx podcast and we'll see you in the next episode.

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