A Startup's Guide To Negotiating With Investors

good morning everybody can you all hear me wonderful what a beautiful room thank you scott for the introduction thank you arabian business for organizing this thank you for bringing us all together despite the times we're in for a live event i'm so happy to be in a live room again and not in a zoom room thank you all for coming here as god said i will share with you today some negotiation techniques that can help you after the pitch so you've done the pitch you warmed up an investor somebody wants to invest in you and that's where the negotiation starts so before i start i want to know who i'm talking to so can you please raise your hand if you are a startup if you're created to come oh wow as god said i also have tremendous respect for entrepreneurs who create something out of nothing now can you raise your hand if you are an investor if you've invested in companies if you're interested in investing in companies okay so we have both in the room which is fantastic because the skills i'm going to share with you is going to help us bring both together now the last question please raise your hand if you love to negotiate so that's about a third of the room that means two-thirds doesn't like to negotiate and that is the majority of people everywhere now the question is why so i would like to know from a few people can we have the mic please who doesn't like to negotiate and why hi i'm bobby uh i don't like to negotiate because i always feel like there's all this unsaid stuff on both sides of the table and you never quite know if they're trusting you or if you should trust them right thank you exactly there's a lot of uncertainty and what is behind uncertainty often bobby correct me if i'm wrong but there is fear right fear of the unknown fear of what are they thinking fear of what what are they gonna say what are they gonna think of me and and i wanna give you skills today to get rid of that fear okay so at the end of the session i'm gonna ask you again who loves to negotiate and we're going to have more hands up all right is that a deal it's a non-negotiable deal all right let's get to this i'll tell you in a nutshell my background what i do what i've learned and then share with you the skills that can help in your startup negotiations and in any business negotiations really so my background is in finance and business negotiation i've spent 15 years on trading floors of investment bank stock exchange where i was mainly dealing with sales strategy so the negotiations i handled were corporate negotiations contracts business negotiations and while i was there i was fortunate enough to work for a company that invested a lot in corporate training and they brought in two professional negotiators to give us a year-long master class on negotiations and these are some of the world's best negotiators who taught me and my colleagues everything we needed to know about deal making about lie detection about profiling all those things human behavior and their background was in hostage negotiation so it was fascinating to learn from them and i remember sitting in a room like this looking at them while they were teaching us and thinking i want to do what you do fast forward a few years i joined them my partner is now from the adn group which is an international negotiation company and we help companies with their complex negotiation we help government institutions any type of crisis negotiations that's where we come in so it can be hostage negotiation suicide negotiations but also business negotiations m a ipos everything with high stakes that's where we come in and today i'm also fortunate to share that knowledge i give trainings talks like this but also i have a podcast where i talk to some of the world's best negotiators yesterday i launched an episode with chris voss chris voss is a former fbi hostage negotiator who's doing a great job in spreading the skills of negotiation and teaching people that whether we want it or not whether we realize it or not we all negotiate every single day now having learned a lot from them having learned so much on the field of doing this now i came up with some of the stuff that i think are the most impactful that when you implement those negotiations really take another turn and we can might sound cheesy but i don't care i truly believe that we make the world a better place when we negotiate better we make it a world with less conflict with more collaboration with more agreements and that is why i'm so passionate about sharing this because if everybody would apply the negotiation skills that the fbi applies i promise you we would have a much much much better world now let's jump right into it why do i like to learn from hostage negotiators so much well as we all know the stakes are extremely high when they are negotiating right we are literally talking about life or death we're literally talking about human lives one mistake one error can get somebody killed so how do they do it another thing is although they have of course the swat team and the guns and they can barricade the door and everything the main weapon they use is their words that is the way they resolve conflict now a quick guest how high do you think the success rate is of hostage negotiators what is the percentage of success when they are negotiating a deal without fatalities give me a wild guess [Music] less than more than 90 percent who agrees who disagrees 70 50 hostage negotiators succeed without any fatalities by using their words in 95 of the cases in 95 so then the question is how do they do it what do they apply the same things that they apply that i'm going to share with you now i apply every single day when we're doing business negotiations it works ready number one obviously is preparation where hostage negotiators are called in despite all the training that they've had they only have time to prepare from the second they jump in their car until they get on the scene that's not much preparation time we've seen with the people who were presenting previously you have time to prepare you have time to prepare your pitch you have time to prepare your story so use it this is a main advantage that other negotiators don't always have although they have to succeed and when you're preparing the story the pitch the slides that's all great but i want you to go deeper and say number one why am i negotiating if your answer is to get money go deeper why are you really negotiating why are you there what is the goal of that negotiation and hang on to that because that is what will serve you to understand your non-negotiables your walk away points and everything that is important to keep you more calm more relaxed more authentic and less stressed then super crucial and i see many people don't do this in the preparation phase it's who are you negotiating with who are you sitting across and what matters to them of course it's nice to know the name the title the company they represent but who are they really and what is the need that they are trying to satisfy and again if you think oh he or she wants to invest to make money dig deeper because as startups you might watch a youtube story on how to pitch for investors right now i'm here to invite you to do the opposite to really go and stand in the shoes of the investor and google maybe how to select the best company to invest in which startup should i invest in think like them because when you start thinking like your counterpart you will start talking like your counterpart and you will speak the same language and that is what will connect you and then of course the what many people go into a negotiation without understanding what they're really really negotiating so of course you're negotiating for money of course you're negotiating for funding but what about all the other details what about all the important stuff because what is the most effective way of resolving a conflict the most effective way is to prevent it right why would you resolve a conflict if you don't have to have the conflict and the whole idea of negotiating up front is to negotiate and agree on all the things that might become a conflict in the future and this goes very much into detail when you're negotiating with a potential partner you also have to think about the exit strategy how are they going to leave all the corporate governance what is important once you have an agreement for the future and all those things we need to think about before we go on a negotiation table if you know your part you will be less surprised by what they want so do your homework prepare as much as you can this is a big advantage that you have that hostage negotiators don't have so let's use that all right next you want to understand what the situation is really about now what does wtf stand for who said that no it doesn't stand for what you think it stands for you see when we negotiate we want to understand what the situation really is we want to understand the market we want to understand the person we're negotiating with but what we truly really really want to understand is what is the need that they're trying to satisfy and now here i am again telling you something that might sound very counterintuitive but never negotiate on what somebody says they want it doesn't matter when i go into a negotiation and my counterpart tells me what they want i don't even write it down i specifically don't repeat it back i don't want to anchor that because what they say they want doesn't matter now how's that you might think you know the number one mistake people make when they negotiate is they negotiate on the ask somebody says they want something and you start negotiating on it now if you want to be a good negotiator an impactful negotiator you don't negotiate on what somebody says they want but you try to understand what do they believe is obtainable you try to understand their objective the what are they thinking what do they believe is realistic now we're not here to be good negotiators we're here to be great negotiators so if you want to be a great negotiator you don't stop there either you keep digging and you dig further to understand what do they need not what they say they want not what they think they can obtain what do they need what is the need because the need is the non-negotiable and more often than not the need has an emotional element so when you hit that that's when you know this is party time because once you understand the need all of a sudden there are so many possibilities to satisfy that need without necessarily satisfying the ask does that make sense yep wonderful so a very simple way to remember this is always analyze the wtf of the situation of your counterpart where wtf stands for w for words this is what they say they want this is what you hear this is what they write in an email this is the proposal everything that is expressed we don't care about that forget about it don't even write it down forget about it it's just a detail it's just the beginning point don't be impressed by it we're gonna dig dig dig and i will give you the tools on how to do that to understand what are they thinking what are the thoughts what do they believe is obtainable and as we're here to be excellent negotiators we're going to dig even further this will make you stand out from most of the negotiators out there and try to understand the f word which is feelings so wtf before you go into a negotiation okay now let's say you understood the need of a negotiator the need of an investor that needs your own needs that's when we connect the dots and we come to a common ground so since we're here with both negotiators and investors in the same room i think it's a beautiful opportunity to talk about these needs upfront so that you have an idea of what matters to the other party what can matter to the other party okay so i wanna know from the startup first think about your needs when you're pitching your company when you're negotiating for money what else are you negotiating for what is your need besides money money is fine okay what else i want to hear from you the startups don't even need the mic i don't know network network okay what else mentorship what else perhaps we would be looking for uh partners that share the same vision or can help and shipping it somebody who has the same vision to achieve your dreams team building okay what else recognition i love that one what kind of recognition recognition of what you're doing recognition of what you stand for i love this one because this one is deep and this is the need these are the type of needs that then become non-negotiables right because if your need is recognition and you can't get recognition from the deal you're about to negotiate that's where you walk away what else do startups have as needs when they're negotiating so to analyze the situation referrals yeah so that can be the network or referrals as a standalone anything else legacy beautiful i love it respect and trust wow now we're talking anything else a clear indication of whether you should continue or not so whether you should waste your time on them or whether you should walk away the earlier the better okay and what would that clear indication be for you that's difficult because a lot of the times the investors don't want to put you down as well so they'll say nice things but then it just carries on and then nothing ever really comes through okay so to know immediately what will make you continue with me and what will make you walk away yeah excellent you see the way we are changing already the mindset of we're here to talk about money no we're not here to talk about money some companies they need the network they need address they need the investor to open doors other companies say i want mentorship to know what am i doing and is this the best way we have vision team building recognition referrals legacy there is so much more than money alone and you want to find a partner who has the same needs that's how we can connect and that's how we can have a long-term vision looking in the same direction and going for success all right now let's hear from the investors i saw there was a big group there tell me gentlemen when you are negotiating on that table when you are negotiating with the company that you want to invest in it's your money what are you looking for passion that's what you said right yeah beautiful what else story integrity of the persons integrity love it commitment what else humility wow any female investors here i haven't heard from a woman yet are they going to make me money return on investment yes yep okay so startups read this list this is what you want to know this is what you want to add in your pitch this is what you want to speak about when you're talking to investors yes of course they want to know your id and how beautiful it is and how fantastic it is and that you're going to be the next what's up both by facebook of course but this is what they're really looking for doesn't come from me this is what they said and you will stand out in your pitch if you talk their language does this make sense when you're negotiating with somebody even somebody that you hate you know sometimes i'm negotiating with somebody and i think they're a complete with what they're doing or what they're asking it doesn't matter i still have to speak their language to connect with them because what somebody believes is fair might not be what you think is fair what somebody believes is honest might be very different from your view of honesty and trust etc so it doesn't matter really your beliefs and your wants and you're asked what you want to connect is your needs with their needs that's when we move uh extremely competitive negotiation into a collaborative one because unfortunately today statistics 90 of negotiations are competitive 90 i win you lose that types of strategy and a lot of nonsense that we've been taught in negotiation books about how competitive it should be and how you can win and how you can ask for more and blah blah blah no in this type of negotiation you can't afford to make it competitive because you're going to negotiate with somebody that you're going to partner up with that you're going to have to work with that you're going to have to collaborate with that you're going to have to have an exit strategy negotiation with so it has to be collaborative you don't have a choice and if hostage negotiators can be collaborative with the hostage taker i'm sure you can be collaborative with your investor right i'm sure you can be collaborative with your startups we don't have a choice this has to be a collaborative one so then how do you do it how do you transform a competitive negotiation into a collaborative one obviously we need the willingness to do it but i'm gonna share something that might sound very simple and yet is the massive game changer in every type of negotiation to put it from competitive into collaborative to calm things down and what's that a common objective you see when you go into a startup pitch negotiation and you say the company tells you we are willing to give you 100k for 10 of your business and you start there that's the ask remember we don't negotiate on that but that's what you do no that's ridiculous if you want 10 you need to give us 200k or 400k we'll give you five percent whatever it is you're already starting to negotiate on the ask don't do it ask questions try to understand what is the common objective now there are things like this companies are investing to make money of course but some are also investing to i don't know leave a legacy make an impact transmit their knowledge that is what you want to connect on and then verbalize it say it once you know what they want and that's what you want to say it and keep repeating it during the negotiation so it will sound something like this well we both want this company to grow so that we both make an impact and we both earn money from it right how does that sound it brings you into this collaborative mode of saying we have the same vision we're going in the same direction we want the same things now how we're gonna do it might be different but that we're gonna do it is the same line and this obviously applies to any type of negotiation when you start with the common objective it calms things down it calms people down and that's when you can think in solutions instead of give take more or less uh 0.1 percent here point one percent there what is the bigger vision why are we here we're here because we both have the same goal and this is how we're going to do it all right so you've talked about your needs you know why you're there you make sure it's collaborative by verbalizing the common objective you've studied your counterpart you know what they want you know what they need you connect that with yours then the next step is you're gonna lead the negotiation how do you lead a negotiation imagine you see two people negotiate but you don't speak their language or you see people negotiate but you don't hear what they're saying how do you know who's leading the negotiation body language yeah who leads a negotiation because you want to lead the negotiation right sound volume listen yes who listens exactly so who's leading a negotiation you think the one who's talking a lot or the one who's listening a lot listening exactly exactly because when you listen you get new intel when you talk you only say what you already know and we want intel we want to understand what matters to them we want to understand how can we get this deal done we want to understand how can i speak your language and that only happens through the listening to truly listening to what somebody is saying because they will indicate to you what matters to them they will indicate it with words they will indicate it with body language they will indicate it with pauses they will indicate it with attention they were indicated by writing things down those are all elements that you can listen if you observe and you listen in 3d what is being said how is it being said what is not being said what is actually being meant and you're looking for these things for the need okay because that's what we connected so listening is one of the most important elements in negotiations are you listening to the silence that's another element don't be afraid of silences silence is golden once you've said what you had to say zip it most people are afraid of silences so they will fill it up and that will give you intel all right so listen listen if you walk away from this and you only listen slightly better than you did before coming in it's already gonna have a massive difference then the second element that is super important that the fbi uses so again if they're doing it we can do it too and that is e for empathy don't underestimate the power of empathy the power of wanting and being willing to understand the needs of the others to try to see what matters to them but also try to see how is somebody feeling and then verbalize it if you feel there is an elephant in the room put it on the table empathy requires you to be so attentive to the other person that you can connect with them on a deeper human level and then verbalize it if you see that somebody is really having difficulties doesn't really believe in your business or has some other forms of concern say it it seems to me that you're not fully convinced yet what is it that's bothering you it seems to me that you still have some questions unanswered what is it that is empathy empathy is connecting with another human being to truly understand what matters to them and when you see something you put a label on it you put it out there even if you're wrong you know it seems to me that i haven't fully earned your trust yet no that's not what i think boom you have new intel and you know more than before labeling it okay so empathy and putting words into what you believe you're observing now how can you gain intel then how can you know what they really believe they're not going to tell it unless you ask ask good questions stop being focused on yourself on your pitch on your story on your presentation but ask what matters to you so once you've done your beautiful pitch that you worked on for months the slides are perfect put it there and then ask what is it that you like about what you saw what is your number one concern make it about them let them talk people have an inner need for recognition people want to talk if you create a safe space for people to talk they will tell you more than you think okay so listen listen listen i believe there was a reason why god or the creator made us with two ears and one mouth maybe if he would listen twice as much as we speak we would have a better world and that's me saying that as a speaker yeah now the last part on how you can lead a negotiation this might sound counter intuitive as well once you know exactly what they need once you know what you need then the the intuitive response is to say okay this is what i propose right sounds perfect you just knock the ball in because this is the right time and that's where again i'm inviting you to do something counter intuitive and that's to take a blank sheet and say what type of solution do you see how can we find a solution having said a b c and d draft the solutions together not this is my id not this is what i propose not let's do this what do you think is the best way to move forward and draw it together now if you really become good at this and you know all the influence techniques you will know how to let somebody have your way but before we all get there it's important to draft the solutions together to give the impression at least that the other party decided with you you see when we're called in to do a suicide negotiation for example we go on the roof of a company somebody standing there wanting to commit suicide as expert negotiators we have the skills to convince them not to do it and i would say would take us about 15-20 minutes however we stay there for at least an hour hour and a half sometimes two hours or longer why we're not paid by the hour that's not the reason so that they don't do it again exactly negotiation ladies and gentlemen is not about convincing negotiation is not about being right a good negotiator tries to influence you want somebody to believe that they came up with the solution because this is what's best for them you want to make this about them a successful negotiation is where everybody leaves thinking it was a success if you believe it was a success your counterpart thinks you're an you're not gonna go very far okay and then the last part i can give you a thousand skills and techniques and tools that we all use but the main part is self-control this is going to be a negotiation where you are going to be personally involved this is going to be about your company this is going to be about your money and you're going to invest your time your energy your livelihood so whether you want it or not you're going to be emotionally involved you're going to be personally involved and that is a very difficult situation to negotiate in and with all the tools that you have the number one skill you'll also need is self-control controlling yourself controlling your ego that comes with you wherever you go keep your ego in check okay as i always say great negotiators know how to know ego shade now how can you recognize your ego start start recognizing it and start talking to it oh ego there you are i can handle this oh that's an ego response calm down nobody wants to work with somebody who's arrogant nobody wants to work with somebody who has an ego like this do you nobody does so don't be that person check your ego check yourself now where are we with this fear for negotiation right now i hope what i've shared with you today helps you to shine another light on negotiation a negotiation is a simple tool well there's nothing simple about it but it's only a tool to go from a disagreement to an agreement negotiation is a way to resolve conflict we don't agree on something we're going to work together to move towards an agreement where we do agree okay now having said that and having shared some skills that we all use in the professional negotiation world has this helped you look at negotiations slightly differently yes or no if it's yes raise your hand oh look at that has that lowered the fear for negotiations yes okay as i said in the beginning i truly truly believe that the world becomes a better place when we negotiate better just think about it for a second how many wars could have been prevented if our world leaders negotiated better how many wars could we end faster if we negotiated better how many day-to-day conflicts that we all have can be resolved faster and better if we negotiate better with more collaboration and less competitiveness with more integrity and less ego now this all boils down to finding this balance of confidence and humility you want to have confidence in yourself and your team and your story in your product in your service in your startup we need confidence and we want you to show that not one investor will invest in you if you don't have confidence in yourself and in your story but at the same time you want the humility the humility of knowing we don't know it all we do need money we do need mentorship we do need a network and therefore i believe this beautiful balance of confidence and humility will get you far in life now if you had a fear of negotiations before and if you don't now or at least it's less can you please stand up can you please stand up if you're joining me on this mission of making the world a better place through negotiation if you think you know what this makes sense i will do my best to negotiate better beautiful i love to see this this is wonderful i want to leave you with this a beautiful quote from john f kennedy who said let us never negotiate out of fear but let us never fear to negotiate you've been a great audience thank you very much [Applause] ladies and gentlemen please say a big round of applause for lucid we do have a very short amount of time for questions so again my whatsapp number if you've already got it zero five eight one seven five nine six zero four and the phone is already buzzing you talk about need but what about greed how do you counter that good question yeah great question i love that thank you janae so greed is of course part of human nature and greed is going to be part of the negotiation table and you can't control the greed of your counterpart what you can control is your own greed so have a look at it just like everything else you're preparing is this my ego talking is this greed talking or is this a real need a successful negotiation is where you can satisfy your need not your ego if you can satisfy your need that is when you have a successful negotiation and that is time to say thank you let's agree let's sign the contract let's move forward negotiation is not a game we've been taught that win lose more or less negotiation is to come to an agreement and if your focus is on the agreement if your focus is on the long term and if you want to understand your counterpart you need to understand what they need and then together go and satisfy that need question from kevin uh which is what cultural differences have you seen in negotiations does that matter cultural differences yes very good question as well there are of course some cultural differences but that is made into how you approach somebody so when you look at different cultures there are different codes that of course we need to respect like how close do you come some to somebody when do you start talking about negotiations you know that do you have the scandinavian cultures and europe who's more direct and goes you know get to business faster and then you have cultures where first we're going to talk about family and other stuff you have cultures where first you have to drink a lot of alcohol before you have the right to talk about business that's important to know and that's all part of homework but when it boils down to pure negotiations when it boils down to how am i gonna understand what you want when it boils down to how am i gonna go from a disagreement to an agreement you would be surprised that it's internationally the same thing it's international everybody on earth doesn't matter where you were born wants to be listened to everybody on earth wants to be treated with respect everybody on earth has some level of need for recognition so if you connect from human to human you get rid of the titles and a beautiful background and the beautiful look at me you connect from human to human and you have this vision of going in the same direction that's when you make magic happen a kind of connected question here from david thanks david um how important is it to be likable oh likeable it's extremely important that's also a beautiful question thank you for asking david um i i did a podcast episode on live negotiations with gary nesner gary lesner is an amazing former fbi hostage negotiator he was the boss of chris vos they collaborated together and these two gentlemen have shared so much on the fbi method and he talked about likability as one of the key elements you want to make the other person want to talk to you now it doesn't mean you're going to be best friends remember again they're negotiating with hostage takers but you want to be likable because that's what will allow you to gain intel and to let somebody talk to you and something beautiful that he said is we need to earn the right to influence we need to earn the right to influence and that starts by being likable so question from me if you're sat across the table from the party you're negotiating with and the response you're getting back is no no no i'm thinking mrs armstrong when i'm asking for a boy's night out how do i get past that yeah so how do you get past the no no no again lead first of all don't be impressed by the no it's just doesn't matter and then lead listen what is it that you're saying no to really what matters to you in this moment what makes you say no now what is missing to get to yes ask so the same thing listen ask questions draft solutions together etc make them comfortable to talk to you lucin thank you very much i can see that time is against us unfortunately but one last round of applause i think that's been an excellent morning session both for jenny and marwan thank you and solution thank you very much [Music] you

Channel: Lousin Mehrabi

Views: 25,276

Keywords: negotiation, training, speaker, leadership, motivational speaker, inspirational speaker, negotiation expert, negotiation tips

Id: PKVKHc_InOA

Length: 44min 30sec (2670 seconds)

Published: Thu Jun 09 2022