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Published by: 18:32, 08 May 2021

The golden rule of negotiation is never accept the first offer

The golden rule of negotiation is never accept the first offer. This rule is golden because it applies to most situations in negotiations.


golden rule of negotiation

The golden rule of negotiation is never accept the first sentence:


  1. The likelihood that one of the parties knows how to negotiate professionally is very high. This means that she has about three options for the outcome of the negotiations that will suit her. And it is logical that the proposal of the other side will begin with the option that is optimal for it. This is a classic of the genre. This is where your losses and their gains are evident. Typical example: negotiating the price and conditions of buying something.
  2. If you accept the first offer in negotiations for a business partnership, then your value as a potential partner, in most cases, decreases, i.e.to. your interlocutor sees that you do not know basic negotiation techniques.


Of course, there are exceptions.


For example, you are offered an offer that exceeds your most optimistic expectations. For example, an investor offers big money for a smaller share of the capital than you expected. And also adds Take it or leave it!



Until a certain time, SoftBank Capital behaved in the Valley, literally flooding the startups it liked with money, offering conditions that were incredible compared to other funds. In many such cases, speaking the words classic, bargaining becomes inappropriate.


The better you know the values of your negotiating partners, the more chances for the successful negotiation. 


Founders when communicating with investors should be remembered that the main priorities of venture capitalists are (according to YC):

  1. Their personal reputation and brand.
  2. Reputation of their fund.
  3. Their personal earnings and earnings of their investors (LPS).
  4. The results of the startups in which they invest.

Recommendation for Investor Angels 


If you want to become a successful angel investor, then you need to look at how professional investors are working in the valley that have billion startups in their asset - Unicorn and Decavore.


And it is very important to remember about Power Law, which says that one successful investment will bring more profit than all the rest.



If you are lucky, then there may be two such investments, and if you are a very cool angel with an excellent reputation and the best teams themselves come to you, then more. Look at the portfolio of Ron Conway or Y Combinator. The latter has 29 unicorns in its portfolio and more than 125 companies valued at $ 150 + million. each one.


A lot of billion-dollar startups are created from scratch by young people who very often do not have not only the experience of creating successful businesses, but also no work experience at all (the best founders are unemployable). And if an angel investor ignores this fact, then his chances of finding his Unicorn are greatly reduced. Interestingly, Russian-speaking investors are very skeptical about investing in startups with founders without business experience and repeat like a spell the phrase about "survivor's mistake."This topic is probably popular in local business schools.


Very few successful startups after the sale of the first startup are ready to launch a new one. Since they, like no one else, know that this is hellish work with minimal chances of repeating success. And you need to have very good health and stress resistance to go all the way, and this does not increase over the years.


Paul Graham said so, start a startup while you are young, then your health will not be enough.



There are, of course, serial super-successful startups. For example, all the founders of PayPal who were very young people from 20 to 27 years old at the time of the launch of PayPal. Interestingly, after the sale of their company to eBay, they all launched new startups and all these startups became unicorns: Palantir, Tesla, SpaceX, LinkedIn, etc. But in this case, the members of PayPal mafia were not looking for angel investments, just as other successful startups who, after exits, launched new businesses, are not looking for them.


Text writer Valery Yalouskikh is a Silicon Valley startup consultant. Original text here



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