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Alok's Posts / Startup

Ten Negotiation tips that will never fail you!

Each of us has won and lost a negotiation and have learnt our lessons.

These are my learnings!

1. Use Silence as a weapon

One of the toughest things to handle is ‘silence’. If you notice, most people begin to ramble immediately if you remain silent. Silence is very uncomfortable in between active conversations and that disarms many people. I remember a very tense conversation in 2001 when I was negotiating a small VC round for Contests2win.  I proposed my valuation and expected the VC to reply. She didn’t. I kept quiet too.

The silence was deafening.

I almost cracked and was about to say, “So why don’t you suggest what’s on your mind”, but I just held back. I heard breathing at the other end and then she said “Ok”. Silence won me a well priced round of Venture Capital for my Company!

2. Listen!!

So many negotiations can be handled by just listening. Usually, the more talkative person will do anything to keep the conversation going. This also means that the person lands up negotiating against himself! If you are attentive and train yourself to listen carefully, lots of insights and idiosyncrasies of the other party become evident. If you are negotiating with say, a middle level executive, then just by listening, you can find out whom he calls Sir, how does he speak to his spouse and what makes him giggle. Use all these finer learnings in your future negotiations with him.

Learn to listen really well…

3. Research, research, research

Ashish Patil (ex MTV India) told me something amazing about Niren Hiro (Now CEO of Crowdstar – at that time GM of MTV India and Ashish’s boss). He recalled a pitch that both of them were going for to Frito Lay India (Delhi). Ashish told me that Niren had researched everything about the marketing person they were meeting at that time – where she had studied, what she enjoyed talking about, her kids and her passions. They even rehearsed what would be the discussion if the lady was in a good mood/bad mood/no mood. In the conversation that followed, Niren just used his knowledge of the person to become supremely comfortable with her. Frito did massive business with MTV India in the years that followed.

Research the heck out of your subject!

4. Role Playing

If you are going for a meeting with a colleague, carve out role-playing way before the meeting starts. I love the concept of ‘good cop, bad cop’. I always play the bad cop and remain aggressive in meetings and keep blaming my colleague for all kinds of things. He usually wins the affection of the client whom we actually came to negotiate with and the ending is always positive for us.  The Client subconsciously ‘aligns’ with my colleague and hence the net negotiation always becomes positive for us.

Play different Roles

5. Refuse what you want!!

I learnt an amazing lesson from a Steel Scrap buyer at the office of the Jindal Iron and Steel Company at Peddar Road, Mumbai. I used to run a transport Company at that time and the Scrap buyer and I would often land up negotiating with this rather tough business manager at Jindal. What the Scrap dealer taught me was amazing. He knew WHAT (let’s say X) he wanted to buy from the Business manager but directly asking for X never gave him the best price. So, he adopted an amazing ‘negative negotiating strategy’.

In the first few seconds of meeting the Business Manager, he would immediately tell the Manager ‘I am OK buying all the rest of the material but NOT X. Please don’t ask me to buy X’. The truth was that the Scrap dealer wanted ONLY X, but refused it as part of the buying strategy. The business manager got a high stuffing people with the stuff that they didn’t want – so he would retort by telling the Scrap Dealer ‘No – you have to buy X first’!!

It’s easy to say ‘NO’. Try it!

6. Buy me or sell me.

In partnership discussions, when businesses sometimes need to get divided, valuing the share of the partner becomes very touchy and difficult. Assuming that you are an equal partner and selling out, the best stance is to approach say your partner and say ‘I am fine selling you my entire stake at, say, $100’. Remember to be reasonable and fair in your demands. Assuming that your partner is also fair, she will buy you at $100 or maybe say $95 or worst-case $90. Then it’s a small friendly discussion to wrap up the negotiation.

What happens if your partner says, ‘$100 is ridiculous. Sell me everything at $35’. Rather than arguing and creating acrimony, you should then completely change your stance and say ‘Fine, at $35, I am ready to buy your entire stake. Since that’s the price you offered to me, I assume that’s the same value for your stake’. This immediately drives home the point and lets the consenting and reasonable partners reach an amicable settlement.

Be in Buy or Sell mode. Not any middle mode

7. Don’t say Yes/No on the spot.

I still remember a historic lunch with Gaurav Deepak (ex ICICI Ventures and now founder of Avendus Capital), Rajesh Jog (VC and Founder of eVentures) and my financial advisor Sushanto Mitra  (Founder of Techcap Financial and now CEO of IIT Mumbai Incubator) at the MIG club at BKC Mumbai in 1999. I was negotiating my first ever funding in my life and could not contain the excitement when I was offered a couple of crores by each party in exchange for equity in my then cashless start-up. The moment they made the offer, I stood up, said ‘Done’ and shook hands with both Gaurav and Rajesh. Sushanto was destroyed by my impulsiveness.

I don’t care if I sold out cheap or not, but the lesson learnt was to have been much more patient while negotiating.

Say nothing. Stay Calm

8. Test the seriousness of the intent.

Are you negotiating with someone who is really serious and not just wasting you time?

Test them!

In 2000, Softbank China approached us and stated that they wanted to do a JV with us to replicate Contests2win.com in China. They invited us over for discussions. It was very tempting to have gone visiting China, but Ranga – then COO of c2w had a very interesting principle. He said ‘Alok, if they are serious, they should come to our office and pitch to us, rather than the other way around’. I agreed grudgingly. Softbank took the hint, arrived in our offices the next week, stayed at their cost for a few days and eventually funded what became Mobile2win.

Do you get what I’m saying?

9. Explain the negotiation logic clearly.

I explain the concept of salary appraisals and increment % to junior employees in 2win via examples. I ask them the price of vegetables and essentials that their parents buy and then ask them to imagine what would happen if the milk seller suddenly increased (appraised) his prices by 50% and asked their mothers to pay 50% extra overnight. Most of them agree that it’s unimaginable. That’s how I then drive the point that salaries are also based on a Country’s inflation and should be increased proportionately. Most folks get the point and understand why 40 and 50% increments never make sense.

Explain your position clearly.

10. Make it a Win –Win.

Deals where you fool the other party (either due to their ignorance or foolishness) usually land up broken.

The GOOD KARMA of deal making and negotiation is Win – Win.

Make sure that even if you have the upper hand, you are fair and honest to the other party and that way you will enjoy the benefits of the deal for as long as you want to. Badly negotiated deals always get unwound and then the loser typically is the one who was not fair. In my case, Softbank taught me a beautiful lesson very early in life – they told me that the fairest deal structure in the world is 50-50. It makes both partners work equally hard and enjoy the fruits of the toil without discontent.

In India and so many other parts of the world, Mobile Telco’s butchered mobile content providers (VAS content business providers) by offering very unfair non negotiable terms (typically 20-25% to the content owner). The Telcos thought that they gotten away with a kill – until iTunes and Apple Apps store came along. Apple offered 70% to content providers and today each and overnight destroyed the model of the Mobile Operator Deck Monopoly.

If you enjoyed the column, contribute by commenting and sharing below!

 

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First Published on: Dec 15, 2010

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38 Comments

  1. Profile photo of Abey John

    brilliant! thanks for the tips.

  2. Profile photo of Alok Rodinhood Kejriwal

    only if the Congress Party  could read this!

  3. Profile photo of Manoj Awasthi

    Awesome post sir! Thorough & a must keep for lifetime.

  4. Profile photo of Nishant Agrawal

    Excellent post. Points 1, 7 and 8 are particularly relevant. However, point 5, though good for the sake of an argument, is not practical.
    Also, point 5 seems to contradict point 10.

  5. Profile photo of Alok Rodinhood Kejriwal

    lets negotiate this 🙂

  6. Profile photo of Anshul Gupta

    Great post Alok !! .

    5 has really worked for me. However, I wud like to bring one more point which I have seen working.

    Promise high volumes and get cheaper rates. Let the seller do the math. If price is favorable, move fast and purchase at your original quantity. Seller will negotiate but will be happy eventually on getting order quickly.

  7. Profile photo of SUNIL KUMAR DHAVALA

    WoW. Great stuff. We may no longer need to keep Roger Fisher’s “Getting to Yes” in the book shelf, after reading Aloks 10 commandements.

     

  8. Profile photo of Girish Khera

    superb tips.  a page to bookmark.  very timely too, as i’m entering 6 months replete with negotiations…. will put your tips to a fire trial.

  9. Profile photo of Sai Rodinhood Pothuri

    Really must need to follow these during negotiation  thanks for sharing

    Thanks

    sai

  10. Profile photo of Karan Pandhi

    Alok Sir,

    Thank you for your points ….. will surely save this page for lifetime reference ……. 

  11. Profile photo of Ajay Mundra

    wow !!! Experience counts and the result is what we are getting… respect .. valid points and shall keep in my mind all the point in today’s meeting.. 🙂 🙂

  12. Profile photo of Nitish Mehta

    Amazing ..!!! I believe only good facebook did to me till now is that it introduced to one of post of yours via some random feed and then to Therodinhoods . Will bookmark this and will read it before going for some meetings ..!!! Thanks ..!!

  13. Profile photo of Preity Thomas

    So, this would be a chapter in one of the text books for the IIE! :-). Do I need to say anything more??

  14. Profile photo of Ashish Chowdhary

    It’s amazing that you have so many stories to share.. Each of your posts has some real life stories and that drives home the point very smoothly…

  15. Profile photo of Jitendra Jogeshwar

    I have +1 for your point. Have seen my mom buying everything using this strategy more often then not she gets the deal.

  16. Profile photo of Sanjeev Malani

    Brilliant indeed! No management school ever teaches this!

  17. Profile photo of kaanchan bugga

    Alok, rocking post!!!! Have bookmarked it! Thanks

  18. Profile photo of Dr.Tanmay Haldar

    Excellent!!!! An eye opener…

  19. Profile photo of Aman Jha

    Negotiation is all what my business is dependent on. Thanks for these awesome tips…

    Its better to read posts here and learn than wasting money n time on MBA. And I wonder still people talk abt quitting Rodinhoods….!

    Regards

  20. Profile photo of Ratnakar Gokarn

    No.8 is the big one for me. There is great advantage on home ground.

    Great post.

  21. Profile photo of deepak tiwari

    Dear Alok

    The tips you gave are very interesting.. Very helpful..

    Thanks .. Deepak

    Jakarta, Indonesia

     

  22. Profile photo of Anamika Joshi

    a post to be treasured forever!!!

  23. Profile photo of Tarun

    a fantastic crash course in negotiation….

  24. Profile photo of Aneja Raj

    Very useful post Alok & nicely written with examples that makes it easy to understand. I love point # 3 and 7 especially, which I strictly practice myself. Need to rehearse all the other points too.

    In addition I also prepare myself NOT to get emotional during a negotiation. When you go with that type of mindset, you have a psychological advantage over yourself and your opponent. You are more balanced and rationale in your conversation.

    Keep these posts rolling…..

  25. Profile photo of Sanchita Dutta

    Extremely insightful! my favorites though are 1,2,5,7  in that order!! 🙂

  26. Profile photo of Gaurang Agrawal

    Sometimes , silence is treated as affirmative. How to counter that ? 

    Btw, the article is eye-opener. Thanks a lot for sharing wisdom :))

  27. Profile photo of Kamal Matta

    Great tips for negotiation. I am not 100% agree with example in point 9. Point 10, win-win situation is necessary for negotiation. Thanks for sharing it.

  28. Profile photo of Ranjeet Pratap Singh

    Hi, 

    This is an extremely insightful post and I am sure it would help many of the readers(including me).

    Though, I don’t think the example given for the 9’th tip is an appropriate example. In an ideal case the salary(or the salary hike) should depend upon the value that the particular employee is providing to the business and not ‘just’ proportional to the inflation. Even if we take the example of vegetables, we would notice that even though the set of all vegetables would probably rise/fall in proportion to inflation, a particular vegetable may not.

  29. Profile photo of Prashant Pansare

    Excellent Article !

    Would understanding other parties proposal before starting with ours make better inroads ?

    So You could just start the conversation by trying to get what the other person has on mind. It is quite possible that he may have a better offer at hand for you 🙂

    I was on the other side to benefit from this. Had offered a job to someone at his expectations than what i had in mind which was much higher 🙂

  30. Profile photo of Bipul Agarwal

    I agree to be fair and ethical in negotiations – keeping in mind that Life takes a Full U turn 🙂 

    Two years ago I created a website (http://tinyurl.com/h4efenm) – It was fully funded by a friend who has always believed in my ideas and fortunately all of our previous projects have been successful (Profitable). 

    I charged him the development costs any other company would do – and he didn’t even negotiated. Why I did it is because the idea will work for both of us and I was losing on opportunity cost if my team was developing a project I wont make money it. 

    I was bit uncomfortable initially since I thought my friend (investor) would think I am making money out of the development and wont care about the business. I offered him that I will handle the project if we hire a third party development company (outsource) since I didn’t want any apprehensions.

    Few months after the product was ready – for multiple reasons – I had to quit (PAUSE) for a few months. I was shit scared of telling this to my investor-friend. I was so embarrassed (as  much proud I am today) on how to tell him. what will he think. I ruined all his money. I ditched his trust. and a thousands more thoughts. 

    BUT, I had to tell him and so I prepared an honest script. I met him on drinks and told him that I need to pause my work on that project atleast for 6 months. He was shocked (obviously, he paid for development on time). All the planning was going to drain and also his opportunity costs. 

    Finally, I made him an offer.. I will pay back all his money and will put the site down unless I am ready again. Or, I will help him handover smoothly, train another developer and he can keep full rights of the website. He took 3 days to decide and agreed to keep the website. His only concern was if I will stand by for support which I did. 

    Now after two years, the website is super successful and hardly needs any human intervention. Everything (well, almost) is automated from payment to delivery. I want to buy back my share/ his share and we discussed it peacefully. He has agreed happily to bring me back but only that the valuations has gone rocket high 🙂 

    Not sure why I wrote all of it – guess I wanted to tell everyone that it was tough for me but I stood fair 🙂

  31. Profile photo of asha chaudhry

    hey bipin, i really think you should also share this story of yours’ separately. do post it! i think there’s an inspiring post-in-the-making… who knows, your story might help someone else in dilemma?

    🙂

  32. Profile photo of Bipul Agarwal

    Bipul, Ma’am 🙂 

    Writing here would be lovely (an honour!).. I feel so connected reading all the posts and could relate to some and other bits of every post. I think I will write a detailed post on my next venture. Starting from my research till the MVP execution. As you said – it might just help some other Rodinhooder..

  33. Profile photo of asha chaudhry

    ooops – my bad bipul. i know a few bipins!!  

  34. Profile photo of Bipul Agarwal

    Hi5 😀

  35. Profile photo of Nitesh Karia

    Hi alok

    Your every blog i read with intrest because i get practical knowledge,and abount this artical i would say every points are felt by you and than expressed in words

  36. Profile photo of Devleena Bhattacharjee

    Absolutely Brilliant ! Why am I reading it so late 🙁 

  37. Profile photo of Vinit Mandlesha

    Must put this content into B School syllabus. Hats off to Alok’s genius mind !!!

    If I may add a point to it ;

    GREED : If you can help understand the opposite party about “What’s substantial is in their for me”, then chances of negotiation are far better. 

  38. Profile photo of Anand R Raghavan

    Travelling to Sharjah this weekend for a big negotiation & enjoyed taking in this useful primer 🙂

    As you highlight, all good negotiations begin with a happy & reasonable conversation and a quiet spell that allows the deal to settle at the right equilibruim for both parties.

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