Find more resources at http://www.99robots.com Rhett L. Weiss, Executive Director of Cornell University’s Entrepreneurship and Innovation Institute, will discuss creating and negotiating entrepreneurial deals with players that have more resources and leverage. About the presenter: Rhett Weiss is the executive director of the Entrepreneurship and Innovation Institute at the Samuel Curtis Johnson Graduate School of Management at Cornell University. In addition, he serves on its faculty, teaching or advising graduate business students in entrepreneurship, negotiations, and venture capital, including BR Venture Fund, Johnson’s evergreen venture capital fund. He also serves on the faculty of Cornell Tech, Cornell’s new campus in New York City. Before joining Cornell, Weiss had over 25 years of successful leadership and management roles. He has served as a bank COO, directed a consulting practice at a Big 4 firm, practiced law at a major international law firm, and holds a software and business method patent. During his career, he has been involved in over $35 Billion of transactions and in dozens of entrepreneurial ventures and innovation initiatives including XM Satellite Radio, Motorola, Orbital Sciences, AOL, and an Oracle joint venture, among others. From 2005 to 2010, Weiss served as senior team leader - strategic development for Google Inc. He was chief designer and negotiator of several large strategic acquisition and development projects for Google’s global infrastructure, typically involving its legendary data centers. Weiss holds a BS in management with honors (finance major) from Tulane University, a doctorate of jurisprudence from the College of William & Mary, and an MBA-level executive certificate in international business from Georgetown University. He also has held board chairman and other leadership positions at professional, educational, and civic organizations.

1. NJ Startups – Meetup #2
New Brunswick, NJ
27 February 2014
Entrepreneurial Negotiations and Deals:
A Really, Really, Really Short Primer
Rhett L. Weiss, J.D.
Executive Director, Entrepreneurship & Innovation Institute
Senior Lecturer of Management, Johnson Grad. School of Mgt.
Visiting Senior Lecturer, Cornell Tech
Cornell University
© 2014 Rhett L. Weiss. All rights reserved.

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Introduction: Presentation Overview
• Goals
1. Help you – as an entrepreneur -- negotiate well, including with “big players”
-- Think and act like a strong, conscientious negotiator without being big
2. Learn some negotiation similarities/differences between startups and big players
3. Warning: very high and quick orbit; short presentation (there is much more)
• Content
1. Introduction; My Background; Some Questions
2. Typical Entrepreneur’s View of Negotiation
3. Negotiation Defined; 3 Dynamic Parts; Sources of Negotiation Power
4. Deal Types
5. Process
6. Suggested Strategy Framework; Two Examples
7. Tactics Overview
8. Best Practices
9. Take Aways; Q&A

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Introduction: RLW at a Glance
• At Cornell
– EII Executive Director; BR Suite, fellows program, events, other programming
– Johnson Faculty: entrepreneurship, venture capital, & negotiations
– Cornell Tech in NYC: Tech Enterprises (entrepreneurship); Innovation; Pitch Lab
• At Google
– Strategic acquisition & dev. projects; negotiated deals with heads of state, CEOs
– Conducted negotiation training worldwide
• Pre- and Post-Google
– Serial and parallel entrepreneur, innovator, “dealaholic”
– Founded, co-founded: bulk mailing (Jr HS through HS); DEALS® software (patent
holder) & DEALTEK consulting, data center, commercial bank, RE dev., aquaculture
– XM Satellite Radio, Orbital Sciences, Motorola, AOL, Oracle JV, & other deals
– Boards of Directors; C-level positions; bank COO; boards of advisors; mentor
– Consultant; former Big 4 director and national mgt. team; now, global consulting
– “Recovering attorney”; corporate, business, finance, and real estate transactions
– Presenter, author

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Hey Entrepreneur, does this look familiar?

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Q: How do you negotiate with big players?
A: The same way you eat an elephant!

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One bite at a time.

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“Negotiation”
• Multilateral
• Interactive
• Usually iterative
• Sometimes repetitive
• Process
• To accomplish goals
• At least 2 parties

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David vs. Goliath
Time
PowerInformation
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Negotiation’s 3 Dynamic Parts: Time, Power, & Info
Time
 Available time to each parties;
time constraints
 Timing strategy and tactics
Information - 4 Types:
 Known to all sides:
Internet/public -- industry,
market, or company info
 Known only to your side
(YS) & can be disclosed to
other side (OS); vice versa
 Known only to YS but
cannot be disclosed to
OS; vice versa
 Needed but not yet
possessed by one or
more sides
Power - 7 Types:
 Title
 Reward/Punishment
 Consistency
 Charisma
 Expertise
 Situation
 Information

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Where does negotiating power comes from?
Perception,
Anticipation
Knowing Process,
Facts, & Strategy
Confidence,
Ability to Act

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Negotiating Power

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Common Startup Deal Types
• Contracts – from Ordinary Course of Business to Infrastructure to Strategic
• Goods (supplies, materials), Services/Outsourcing (project-specific and functional), Utilities
• Company-Level Buy/Sell (M&A); Asset vs. Stock Deal
• Founders Agreements; Investment Agreements
• Stock Option Agreements; Profit Sharing Agreements
• Employment Agreements
• IT Agreements: Data Center Hosting, Cloud, Storage, Service Level Agreements; Others
• Intellectual Property
• NDAs – Nondisclosure or Confidentiality Agreements
• License Agreements
• Development Agreements; Professional Services Agreements; “Work for Hire”
• Plans, Specs, Drawings, Designs, Trademark, Copyright
• Patent Assignments
• Leases
• Equipment
• Real Estate

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Four-Stage Negotiation Process
Prepare Set the Stage Close the DealMake the Deal

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Prepare
• Prepare. Then, prepare some more.
• Develop Game Plan; goal setting; values
• Strategy and Tactics: links, de-links, and concessions
• Assess 3 Components: time, “leverage,” and information
Set the Stage
Make the Deal
Close the Deal
• Contact w/ OS starts; building relationship; questioning
• Likelihood of agreement/no agreement
• Determine each other’s goals, values (2 meanings:
valuations & standards), parameters, constraints, upsides,
and downsides
• Determine opportunities: one-time deal, piece of action,
future deals
• Start framing interests, positions, and issues
• Reassess time, leverage, information
• Set ground rules; protocols; agendas
• Decision making authority vs. responsibility

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Close the Deal
• Proposals: if . . ., then . . .; tentative/conditional
• Communication; watch for changes; question; listen
• Rapport or ‘chemistry’
• Roles in communications and at meetings; watch for changes
• Separating interests and positions; solving Issues
• Start compromising (make/trade interim concessions and
agreements)
• Going from tentative to firm agreements, iteratively
• Conflicting pressures to close
• Retrading
• Common types of closes
• Walkaway power (real ability vs. theatrical)
• Getting through slow times, breaking deadlocks/impasses
• Going to war; how to fight in tough situations
• Confirming/memorializing the deal
Make the Deal
Prepare

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Negotiation Process Iceberg
Preparation
Closing the Deal
Making the Deal
Setting the Stage

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Suggested Negotiation Strategy Framework
1. Process
• 1. Preparation; 2. Setting the Stage; 3. Making the Deal; & 4. Closing the Deal
2. Parties
• Identify Your Side (YS) & Other Side or Sides (OS).
• Key team members for each side.
• Roles: Buyer, customer, seller, developer, strategic partner, acquisition target,
technology licensor, principal, agent, advertiser, etc.
• Any additional players calling shots in or influencing the negotiation?
3. Deal Fundamentals
• Subject or Object. What is the deal or negotiation about?
• Only a one-time deal, or future opportunities? Transactional or relational?
• Desired deal structure? Alternative structures?

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Negotiation Strategy Framework, continued
4. Necessary Deal Points
• Examples: subject/object, structure, price, quantities, duration/term, frequency,
scope, IP ownership, due diligence/inspection rights, reps & warranties
5. Each Side’s Key Goals or Interests
• Shared, complementary, and competing.
• What does each side really need vs. want? Separate positions from interests.
6. Each Side’s Issues
• Problems, obstacles, or challenges that need solutions
7. Values, Principles, or Standards
• What values (principles or standards) are important to each side?
• Compare: What is a deal point’s value (valuation or worth) to each side?
• Affect on each side’s framing of interests, positions, issues?

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Negotiation Strategy Framework, continued
8. Time, Power (or Leverage or Influence), and Information
9. Impasse(s) or Sticking Point(s)
• What may prevent or is preventing an agreement?
• Where and why might the parties become stuck? Where/why are they stuck?
• What are the alternatives and substitutes for all sides?
10. Desired vs. Actual Results; Reality Check and Debrief
• What is YS’s desired agreement? What is OS’s desired agreement?
• Must a complete agreement be reached by either side?
• At end of process, was a complete agreement reached?
• If so, what are its key provisions? Detailed resolution of each difficult issue?
• What exactly, if anything, is left unresolved or set aside? Only a partial deal?
• Or, if no deal at all, why not? Unresolved issue? One side walk away? Other?

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David’s Perceived
Disadvantages …
… Goliath’s Opportunities
 Limited Capital
 Lack of Experience
 No Sales
 Ready for Investment
 Open to New Ideas
 Can Adapt/Modify Prototype
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Entrepreneur’s framing can shape larger party’s strategy and
behavior for the negotiation’s duration.
Two Entrepreneurial Strategy Examples --
Example 1: Frame Disadvantages as Opportunities
Framed as

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Strategy Example 2: Pit Big Players Against Each Other
SoBe
• Rivals can work against each other to their detriment and Entrepreneur’s benefit.
• Entrepreneur with strong “Plan B” pressures rivals to make concessions.

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Common Tactics: Tools, Moves, Tricks of the Trade
• Viability, Likely Success
• May seem counterintuitive
• Often are used incorrectly, like “splitting the difference”
• Generally work when used correctly; never work all the time
• Each has a counter-tactic
• Recognize OS's tactics
• Let OS know: decreases OS’s game playing, increases your power
• Recognize the Difference Among Smart Plays, Bluffs, and Lies
• Tactics reveal each side’s negotiation ethics, good or bad

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Closing the Deal
Making the Deal
Set the Stage
 Reluctant
buyer/seller
 The list
 Feel, felt, found
 Flinching
 Uproar (we want
it all)
 First offer
 Best offer
 Flinch; Grimace
 Play dumb, act
smart
 Trade-off
 Good cop, bad cop
 Higher authority
 Squeeze
 Funny money
 Splitting the
difference
 Printed word
 Set aside
 Decoy
 Red herring
 Nibble
 Fait accompli
 Set aside
 Turn down, walk
away
 Withdrawn offer
 Hot potato
 Throw away
concession; So
what?

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Best Practices: 5 Traits of an Effective Negotiator
1. Understands and conducts negotiations as a process
• A multilateral, interactive, and often iterative process to accomplish the
goals of two or more parties
2. Does the homework on a regular basis
• Masters the issues & their interrelationships
• Masters information and adapts to changes in it
3. Maintains sensitivity and tolerance for interpersonal differences
• Personality types
• Nationalities, Cultures
• Communication styles, methods, and content; notice the changes
4. Emphasizes areas of agreement, not disagreement
• Explains and substantiates own points
5. Instills strong belief in OS that YS will uphold the deal
• Shows integrity, reliability, and credibility

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Best Practices: 5 Do’s
1. Know your stuff – be on top of all sides’ facts, interests, and issues
2. Be a great communicator ( = listener, not just talker)
• Keep your side informed of all key negotiation communications
• Communicate regularly but carefully with OS
3. Consider own enthusiasm’s affect on concessions, agreements
4. Be alert to pressure
• All sides are under pressure to deal, settle, compromise
• Generally, the side under the most real or perceived pressure "loses”
5. “Keep your eye on the ball”: focus on movement, measure progress
• Concessions and interim agreements
• Statements, sometimes silence
• Action, sometimes inaction

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• Best Practices: 5 Don’ts
1. Don't assume money or price is the all-important deal point
• After all, it probably isn’t
2. Don't unnecessarily narrow your negotiating range or flexibility
• When possible, don’t be the first side to make an offer or name a price
3. Don't narrow the negotiation down to only one issue
• Negotiations are so much easier with at least two issues in play
4. Don't disclose your side's time constraints, deadlines, or pressures
• . . . unless there is a compelling reason to do so
5. Don't become emotionally involved or egotistical
• Don’t get personal
• It’s typically counterproductive, and it’s a lonely place

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 Time/Timing
 Power: 7 types
 Information: 4 types
 Process: 4 stages
 Strategies & Tactics
 Best Practices: 5+ traits,
5+ dos, & 5+ don’ts
 Thoughts & Actions:
Know how Goliath thinks
but don’t act like Goliath

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Question or Comments? Please contact me!
Rhett Weiss: rweiss@cornell.edu