Negotiating More Than You Bargained For

There are two all-important elements of a negotiation in general and at startups in particular: what you can get and what you should get during a negotiation.

What can you get? Negotiations have a lot to do with leverage, perception and both parties’ BATNA’s (Best Alternative To a Negotiated Agreement). Roughly, in a negotiation, your strength is equal to the quality of your BATNA minus the strength of the other person’s BATNA. There are other factors and I highly recommend reading Getting to Yes if you want to learn more.

However, once you get some experience with negotiation, you start to get a pretty good feel for it. You can tell when you have leverage or a strong position and you develop a sixth sense for when you can get a good deal. Sometimes you can buy something below its cost. Sometimes it is a revenue split that is unfairly skewed to you.

If you are not familiar with the signs that indicate you are about to get a good deal, I recommend you practice negotiating more. Use Craig’s List or play Monopoly.

The next question is, “What should you get?” What you can get is very different than what you should actually take. Just because you can hire a great employee cheaply, does not mean you should. If they feel they are underpaid, they will be less motivated and may eventually leave. Just because you can get an astronomical valuation because you had an auction, does not mean you should take a valuation you do not feel you can grow into. If you are negotiating with someone who you want to have an ongoing relationship with, then do not take excessive advantage of your negotiating position. Short-term wins can come at the expense of a long-term relationship. It is important to know how much you can get in a negotiation, but it is more important to know how much you should take.

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