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The 3 types of negotiation skills startup founders need

Thanks to aspiring entrepreneur Christoph von Herrath for posing these questions in our mentoring session last week. Christoph and I were matched by the mentoring programme of Student Incubator Vali Berlin.

Fellow Enpact Mentor, Sebastian Siebzehnruebl, advises Paddi Tetteh. Photo © enpact e.V.

Thanks to aspiring entrepreneur Christoph von Herrath for posing these questions to me in our mentoring session (made possible thanks to student incubator Vali Berlin) last week, and his feedback on this text.

The world is set against start-ups on every level except one: creativity and the innovation it produces. Established firms enjoy superior resources, branding, information, capital, and talent. Startups are driven by the new.

By their nature, new things lack norms, procedures, and expectations. In other words, they lack an established structure. The less structure which two parties bring to a negotiation, the greater the range for possible divergence in expectations: there’s more to lose or gain when two people negotiate from wildly differing starting points, with fewer references in common.

This is true of evaluating the value of startups themselves during investment negotiations. In recognition of this fact, entrepreneurs frequently avoid negotiating a particular value, and instead use ’convertible’ agreements which defer setting share price value until a later investment round.

Everything is negotiable

Compared to roles in established organisations, startup leaders also have a broader scope of things to negotiate. For starters: hiring, pricing, compliance, organisational culture, and their own compensation. Later on, you’ll have dedicated staff for different functions who specialise in knowing and applying industry norms and best practices. But in the first few years negotiation of most everything falls within the purview of the founding team. Serious negotiation missteps could make or break the venture.

As well as bartering everything from catering to legal fees, entrepreneurs must often fall back on negotiation skills to obtain critical items with reduced or waived payment. Take building an MVP as an example: top expertise usually costs money which unfunded firms do not have. Negotiating influence, status, equity, or delayed payment is often necessary to assemble and motivate the initial team. Hosting, accommodation, marketing, logistics: these are all areas ripe for creative negotiation in lieu of adequate cash for payment.

Every touchpoint with customers, suppliers, and partners (to name a few) is an opportunity to creatively identify, request, and negotiate something the business needs. If you’re selling something they’re not buying, could they refer other leads to you? Could you do the same for them? What about sharing marketing costs at an industry event? Syndicate your blog? Promote their service? Exchange market research? Refer you to industry experts? With an open mind, overlapping interests and resources can often be found. Semi-structured brainstorming is a valuable technique for exposing such opportunities.

Pricing negotiation

Pricing, in particular, presents a high stakes challenge: the more innovative a product is, the more difficult it is to estimate its value, and what percentage of that value can be captured by its creators. This is especially true of market-makers, where no direct references exist. Academic research provides little practical advice. One-to-one negotiations with early adopters and Industry insiders is typically required to discover the range of plausible prices, and pick a point from which to begin experimentation.

Push too little and you leave much-needed Capital on the table, and likely set a precedent resulting in compound losses. Push too hard, and risk alienating that critical support base upon which you rely for initial revenue. The pressure on good pricing, and discomfort around researching it, leads many startups to avoid early price negotiation, which increases their risk of failure and deprives them of resources – “leaving money on the table”.

Types of negotiation skills

Rational

For many people, the concept of negotiation involves manipulation or dishonesty, and is therefore awkward and avoided. MBA programmes often teach students rational models for achieving the best outcome for both negotiating parties, which validates and justifies negotiation as a mutually beneficial activity to those with negative preconceptions. Understanding the difference between distributive negotiation, where a fixed amount of value is divided up between parties, and integrative negotiation, where different sources of value are creatively combined, is useful and important.

Combined with a briefing on biases which affect negotiation details, and practical ways to structure negotiation starting and final bids, this is where negotiation classes typically end. These rational negotiation skills are very valuable, however there are at least two other critical components to negotiating something new.

Personal

Your relationship with yourself is one of the most important and overlooked components of negotiation. Your internal identity, self-control, and self-confidence affect all communication with other people before a single word is spoken. It is well established that many unconscious human behaviours signal our state of mind, including stress, interest, and confidence, such as pupil dilation, breathing depth and frequency, and facial micro-expressions. It is virtually impossible to fake these parts of our inner life.

In addition your ethics determine how creative you are prepared to get, and how comfortable you will be with the other parties behaviour – what you expect of them, and of yourself.

Interpersonal

Interpersonal skills include broader emotional intelligence skills like empathy and conflict management, as well as learned awareness of particular cultures and their norms. This is also the territory which gives negotiation a bad name: influence is part of this group of skills and plays a major role in negotiation outcomes, irrespective of hard facts and rational engagement.

Sales training books abound, offering everything from rhetorical argumentation, to emotional role play, to hypnotism. Understanding techniques of influence is important, at least for defending yourself against effective tactics used by your negotiating partners. Beyond defense, building rapport during negotiations through more and less subtle means of influence is viable and common practice – a skill you can develop and use when you feel appropriate.

These skills combined

Self-confidence determines speed of rationalisation, and ease of rapport. Cultural awareness informs you of opportunities for integrative negotiating. Past success, for any reason, should boost your self-confidence to succeed again. As such the different types of negotiation skills which I have outlined feed into each other and are combined fluently and usually subconsciously in successful negotiations.

For a rounded education on entrepreneurial negotiation combine academic research and popular business literature. Figure out the parts you’re comfortable with and push yourself to try them. Good luck!

Further reading

Rational negotiation

Self-confidence

Influence


Rules for successful remote working: habits and hardware for happiness

Today as millions of people begin full time remote working for the first time I have collected parts of talks and mentoring sessions from the last 12 years of my remote and home office work, including the full time remote management my previous company: phpList, for over four years.

These rules form the foundation of productive team working — they are the basics, upon which you can build rituals and apply your own organisation’s culture. It takes discipline to stick to them: with freedom comes responsibility. Don’t frustrate your colleagues by ignoring them.

I hope they prove useful. Please share your own experiences and opinions in the comments. Other advice specifically for managers of remote teams (including rituals for structure, and tips on supervision) will follow this post at a later date.

Computer hardware

  1. You are responsible for the the good functioning of your laptop and associated devices. Time spent solving technical problems does count towards your working hours. However you will be expected to always have working devices, and they are your priority when problems arise. Communication is the Foundation of all productive work, and without a working computer, there can be no efficient communication.

Calling and conference calling

  1. Always use a headset for calls, eg wired headphones with a built-in microphone. These come free with older smartphones, and can be purchased for 5 to 15 Euros online. Never use the built-in microphone from your laptop, as this is likely to create feedback and Echo problems with various telephony software.
  2. For co-located meetings, where there is more than one person in the same physical space connecting remotely to other people, consider buying a professional conference calling microphone, which is designed for this setup. Such microphones typically have built-in Echo cancellation, and multi directional microphones. having more than two people on the same internet connection connecting to a remote meeting can cause bandwidth problems and connectivity issues.
  3. Test your conference calling ability regularly. Time spent at the beginning of a remote meeting getting connectivity up and running for all participants, is critical wasted time from your team, and decreases the teams motivation for such meetings in future. Find ways to make sure your microphone and camera are working ahead of time so that you’re ready when the meeting is due to start. Ensure that large file downloads and video streaming are not taking place on your home network as this could slow down your connection and disrupt the meeting.
  4. In conference calls with more than 2 participants, only two people should remain unmuted at one time. Lag and connectivity problems make it difficult to have a real-time conversation with more than three participants simultaneously. Additionally, bandwidth problems tend To Be exacerbated when when many participants communicate simultaneously. Get in the habit of muting when you’re not speaking. If possible, map the mute function to a button on your headset, or consider enabling “press to speak” (everyone is then muted by default).
  5. Do not use the built-in text chat of the conference calling software that you are using. Several conference calling applications delete this chat as soon as the call ends and it is irretrievable (eg Hangouts). Additionally support for the chat may not be extended to all versions of the application, or all devices, or be easily accessible on mobile platforms. Instead, use your regular organisational chat channel, whatever that may be.
  6. Take regular meeting breaks during the long meetings. If the chairperson doesn’t offer one, demand it. One break at least every 90 minutes is necessary for people to remain comfortable and focused. Just because you don’t need the bathroom or snack doesn’t mean that nobody else does.

Email communication

  1. If a message is urgent, label it as such with “Urgent: “. Don’t assume anyone else realises it is time sensitive.
  2. Use clear, long, descriptive email subject lines, including multiple keywords, to make the emails findable in future. Your email inbox is a database of your actions and decisions – make it easy to search.
  3. Separate different topics into different emails with different subjects
  4. Split long email thread discussions into separate new email threads when necessary, to keep each distinct, easy to find, and on-topic (addend this to the subject line of newly split threads, including square braces: [Was: Old email thread subject], eg: “New email subject [Was: Old email thread subject]”)
  5. When adding people to CC of an existing email conversation, start the new email with: [Added Jane Doe in CC]. This avoids misunderstandings and upset or embarrassment
  6. Don’t read your email outside of working hours. If you use a device for personal as well as professional communications (eg laptop or smartphone), then disable polling and notifications for your work accounts, so you will not be alerted to work messages outside of work. In the long term, keeping clear mental boundaries like this and protecting your personal time is critical for sustainable productivity.

Other communications

  1. Report to your team proactively. Try starting your message ‘FYI:’ (For your information) at least 4 times each day. If you wait to be asked what you’re doing then you can expect frustration and suspicion to build among your colleagues over time. Provide and demand frequent updates from your colleagues whatever their rank.
  2. Call people more often (or book more calls). Verbal communication is more efficient, builds stronger relationships, and avoids confusion. If people are too busy they will say so – don’t be afraid to ask more senior colleagues; they should be grateful for your instigation.
  3. Don’t ask to ask. Waiting for permission to ask can waste hours or days, during which time you could have got the answer to the question you had. Roll two questions into one if necessary.
  4. Configure the notifications of any shared chat system like Rocketchat or Slack very carefully. Disable push (smartphone) and desktop notifications if you keep the chat software running on shared devices. Many such applications have modes which will disable all notifications outside of working hours. Investigate and if possible enable this.
  5. When setting up new services / registering accounts on behalf of the company eg new web accounts, share the credentials (if the account is shared) and / or use a shared mailbox, so the team doesn’t get locked out in future (eg invoices@company.com). Consider using a secure password sharing service like Bitwarden.
  6. Avoid using personal telephone numbers or personal data (eg date of birth) when creating accounts for company use. Else your colleagues will be locked out in future.

Documentation

  1. Document solutions to problems which are likely to reoccur, whatever your role or rank. Create new, simple processes wherever possible, as quickly as possible. This protects you next time you need to apply the solution (reduce mistakes), makes it easier to delegate tasks in future (don’t you want reduced workload?), and provides a starting point for improvement and iteration by your colleagues in future. If your team doesn’t have a good shared place to document such things, demand one.

Sharing files

  1. Set your computer to share all your work by default via a secure file sync and and share platform like Nextcloud. When you save, it is synced. This avoids endless access issues, ‘bus factors’, and also provides a free personal back and remote access option for you
  2. For private / semi confidential work, setup restricted group access but still share it (so it’s shared to authorised colleagues)
  3. For genuinely confidential work save it locally and routinely back up files to two devices in different physical locations (you’re still responsible for being able to access it in exceptional circumstances)
  4. Always share all source files in the same way, not just rendered (artwork) or compiled (code) versions. No exceptions!
  5. Use the simplest format / application possible for collaborative documents. A traditional word processor is rarely required – plain text (markdown, rst) is easier to search for, search inside, convert to other formats, translate, attach, compress, and automate in future. Where complex layouts or embedded calculations are unavoidable, try Google Docs, Only Office, or LibreOffice Online. Remember the sacrifices you’re making whenever you choose this option.
  6. Use open standard file formats by default and have good justifications for not doing so. Everyone has their favourite applications to use, and open standards are the only guarantee that the files will remain editable in future, and increase the choice of available access and editing options.
  7. Include the date of file creation as the first part of all filenames, like 2020-01-31-marketing-plan.md. This makes them sortable by date in all file managers and operating systems, and makes the farm names themselves compatible with all operating systems (capitals cause problems).
  8. Use descriptive file names, be biased towards more words not less, including multiple relevant keywords. This makes the files findable during name-based searches. Eg 2020-01-31-client-sales-call-boris-construction-bulgaria.md
  9. Never use punctuation in filenames or any non-alpha-numeric characters. Never use spaces.
  10. Always replace spaces with dashes, not underscores or camelCase or anything else. Spaces in filenames make them unreadable on major operating systems without using special quoting when scripting or opening from the command line.
  11. Be proactive in organising shared files. When you see a mess, clean it up. Create new directory structure when necessary. Fix filename or date issues, or bring them to the attention of the author.
  12. When using urls pointers for work, eg to shared files, collaborative docs, designs, label them where possible (clues to contents in the name), keep a list reference of them to avoid confusion, duplication, diverging work trees etc, and delete old links as soon as they’re superseded (eg avoid multiple copies of the same file)

Health and environment

  1. You are responsible for your working environment and the impact it has on your health. Your colleagues cannot see or warn you of problems with air, noise, or other environmental factors. Consider getting a thermometer with integrated hygrometer (around 15 euros online) to ensure that temperature and humidity remain healthy. Musculoskeletal problems develop more often in low temperatures, and respiratory problems in higher humidities. Ensure sufficient oxygen enters your workspace during the day.
  2. Good working posture is critical to your long term health, and should be checked regularly. This is harder than it sounds, and worthwhile to protect your eyes, spine, arms, and hands. Follow a good guide, buy new equipment if necessary (especially an external keyboard and laptop stand if you don’t have an external monitor). Sitting on a hard flat surface like a wooden stool or upturned plastic storage box are often better for you than a cheap or poorly configured office chair. Everyone’s back is different – seating must be adapted accordingly. Consider placing a tall mirror beside you so can observe your posture as you work. Alternatively ask someone nearby to photograph you in profile from time to time so you can see yourself. While sitting, your hips and head should be aligned so the weight of your head is supported by your spine and not muscle groups in your chest and shoulders.
  3. Take regular short breaks (shorter duration, higher frequency). If you have trouble remembering, consider using software like Workrave or RSI Break (both ugly but effective).

Eye health

  1. Adjust your screen brightness to suit the ambient light of your environment. Enable automatic backlight adjustment if your screen supports it.
  2. Avoid having bright sources of light behind your screen or monitor; for example if your screen is positioned in front of a window so natural light enters your eyes. This will strain your eyes and may cause headaches. If such positioning is unavoidable, try using a visor or baseball cap to block the light from above your screen.
  3. Ideally your screen will have space behind it (not be positioned directly in front of a wall) so that your eyes can easily switch focus from the near to the far while you work. Varying the focal depth of your eyes frequently reduces the chance of eye strain.
  4. If you work in the evenings, consider using bluelight filter software and blue light filter glasses (available for 5-10 EUR online) to protect your sleep.

Linux Audio interview in Ubuntu User

It was months in the making, finally reached news stands last month, and now it’s free to read online. That’s right, you can read my five page interview with Harry van Haaren on the Ubuntu User website. The printed copy looks much prettier however, and also includes a three page guide to using Harry’s suite of audio tools, branded Open Audio Productions.

5 page Ubuntu User article by Sam Tuke

The article printed in Ubuntu User

If you’re into making music on Linux, Harry’s work is really exciting. His apps, like the Luppp looping workstation for live performance, produce quality results regardless of musical genre. They fill an important gap for electronic music fans however, with a wide range of plugins for manipulating sounds for things like side-chain compression (present in most dance and electro tracks), and drum sample playback. Sorcer, his wavetable LV2 synth, is also pretty much the best there is.

You can get your hands on the magazine at your local newsagent for £8 in England, about €10 in Europe, or €13 online (either digital or print).


What Heartbleed means for Free Software

The bug in OpenSSL nicknamed “heartbleed” that was discovered this week has been labelled “catastrophic“, “11 out of 10” for seriousness, and credited with “undoing web encryption“. It reached the height of mainstream press yesterday with dedicated front page articles on The Guardian and and The New York Times. This Free Software bug is now known worldwide and is set to remain infamous for years to come. So what does all this mean for the reputation of Free Software? Continue Reading