Published in the San Diego Union-Tribune, December 14, 2020
Today I am going to share some advice I have gotten from really smart people. As my readers know, I spend a lot of time negotiating, teaching it as well as doing it. More than 50 current business books contain a title explaining how to negotiate better. I couldn’t read them all, so I turned to Jamie Dimon, the billionaire CEO of banking giant JP Morgan Chase.
Recently, Dimon was on a Zoom call discussing the state of the stimulus talks in Washington, D.C., and why they broke down. “I know we are now having this big debate on the stimulus,” he said. “But come on, is it $2.2 trillion or $1.5 trillion? You’ve got to be kidding me. I mean, just split the baby and move on.” After all, what’s a couple of hundred million one way or the other? I love when smart people make it easy for me.
Then I turned to Elad Gil, a very successful angel investor (he has invested in multiple unicorns, Airbnb, Instacart, Stripe, etc.). He was asked how to determine if a company could be a billion-dollar business. He said, “Each startup needs to have a single miracle.” To win really big, your company needs to overcome one giant obstacle or pull off one miracle, but if you need more than one, you are most likely to fail. He says, “If your startup needs zero miracles to work, it probably isn’t a defensible startup. And if your startup needs multiple miracles, it probably isn’t going to work either.” He likens getting miracles to having heads come up multiple times when you flip a coin. If you need it to come up five times in a row to win, the odds for that are 3 percent. But if you only need to get heads once, well, that is 50-50.
Next, I turned to James Currier, managing partner at NFX, a Silicon Valley venture fund. He has some advice for startup founders that does not depend on acts of God (see miracles above). He makes the rules for pitching your deal simple and elegant.
“Don’t say sentences that don’t have numbers in them.” And preferably he suggests two numbers, like “23 percent increase in 4th quarter revenue.” My own personal failing is a willingness to optimistically skate to where I hope to hell the puck is going to be, while equally afraid that I may get there only to find the ice has melted. Accurate numbers are very nice.
“Pitching is a full-body experience.” That is code for don’t sit for the entire duration of the pitch, get up and physically move around. I am a big fan of this suggestion. Pitching is theatrical. And Currier is not a big fan of just waving your arms. He argues for diagrams. My personal model is to use the whiteboard and draw a lot of lines that intersect and demonstrate brilliance (or a heavy supply of dry-erase markers). I actually write the words as I am talking them. At times it is illegible, but it does make for a good pace.
In my earlier life, I spent a few months with Billy Wilder, the famous movie director. When he wanted passion from his actors, he would say, “Give me both knees.” I finally learned where that came from when Billy explained to me that it was a warning to not be timid. “You have to use both knees to kick them in the balls.” Currier wants passion and belief.
Another cause for failure is “bad bedfellows.” This is a very tough one. I have a client now where my painful advice is that he needs to sell the company, because given the cap table and the co-founder relationship, he is never going to be able to build a big company. Too much baggage. But there is a conundrum here. I believe strongly in co-founders, yet the studies show that single dominant leaders are more likely to hit significant home runs. Currier explains that “people confuse equal equity with equal input.” Cap table be damned, one voice needs to pick the direction. He says a startup has to “have the fingerprints of somebody on it.” That way you can identify the murder weapon.
Rule No. 147
If it were easy, everyone would do it.