I blew off the Tampa Bay Fastlane meetup for this...

[EE7]

I was pumped for the Tampa Bay Fastlane meet up this weekend. So much so I could barely sleep the night before. Late Saturday afternoon I received a phone call from someone who I thought was unreachable.

The man on the other side of the line was someone who I have been hounding to get a meeting with for a while now. He said he only had a bit of time and if this meeting was going to happen it would be now.

I drove over to his office where we talked about my SAAS project for a couple of hours - the pros, cons, and obstacles standing in the way. One of the biggest obstacles of this project was that of capital (hence the meeting). This man is one of the lead players in the industry and I was trying to woo him into investing in my project.

He told me that he wanted to discuss numbers. I was squirming in my seat (not literally.. I hope) with the raw excitement and anticipation of an all in deal. He seemed thrilled by the project and ready to go. Nothing could go wrong.

I gave him my numbers ... There was a long awkward silence and then a confused look appeared on his face. This look transformed into a look that would appear on the face of any man who had just taken a sip of a sweat and toenail cocktail from the boot of an old janitor.

He closed his notes and said straight up "We are done here. Thanks for stopping in!"

Thinking this was some kind of negotiation tactic I kept pushing and giving more and more away just trying to get him to latch on to something. The man was legitimately furious with me and would not accept any type of deal at all (looking back on it this was a good thing considering I had just folded like a piece of tissue paper and may have given the whole thing away). I tried to ask what he thought was a fair deal and re engage him into negotiation but he wouldn't have any of it. So, I left.

On the drive home I began to reflect on what the hell had just happened. How did something that seemed so great and a done deal turn into the shit storm that it did?

Obviously he did not like my opening numbers, but they were flexible - I guess I didn't portray this to him. Multiple sources said that the numbers were quite reasonable so I was confident in them. I wonder if being a leader in the industry made him want to have significantly more control. I am not sure.

What did I learn from all of this?

Just because something is running smoothly and seems like a guarantee does not mean that it is a done deal. I wonder if my comfort and expectations of a done deal throughout the meeting threw me off when he expressed his distaste. I wonder if I had been expecting a 180 flip I would have been able to keep my composure and work something out. I also learned that giving away more and more in a pathetic attempt to regain traction was incredibly stupid. I realize that it made me seem unsure of myself and the project. Who wants to put money into something if the originator doesn't seem confident about it?

I am not going to dwell on this experience in a negative way, but learn from it. I will be far more prepared for the next one.

If any of you master negotiators out there have any tips to regaining control of a meeting when it gets to this level or what you would have done differently in this situation I would love to hear them.

 

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[Guest34764]

You pushed too far, then while you were ahead you decided to change your numbers.I doubt believe this is salvageable, unfortunately.

If you had perhaps left the meeting on a good note and just left it there,he may have given you a call to talk further about investing.

Let them come to you,especially if it's the first meeting.You wouldn't want to push to a possibility of such an investment so early on.

Now why he was obviously pissed off about the numbers could be a number of reasons.One like I stated,you pushed too far.Two, the number was too big for his taste.Three, you skewered the value of the SAAS project and he thought now that It wasn't worth as much.Or four,something I wouldn't be able to explain.

I am by no means an expert on negotiations so this is just my two cents.I really think the underlying cause was you pushing for an investment a little too early.

 

[EE7]

You pushed too far, then while you were ahead you decided to change your numbers.I doubt believe this is salvageable, unfortunately.

If you had perhaps left the meeting on a good note and just left it there,he may have given you a call to talk further about investing.

Let them come to you,especially if it's the first meeting.You wouldn't want to push to a possibility of such an investment so early on.

Now why he was obviously pissed off about the numbers could be a number of reasons.One like I stated,you pushed too far.Two, the number was too big for his taste.Three, you skewered the value of the SAAS project and he thought now that It wasn't worth as much.Or four,something I wouldn't be able to explain.

I am by no means an expert on negotiations so this is just my two cents.I really think the underlying cause was you pushing for an investment a little too early.

Thank you for your input. He was the one that wanted to talk numbers - another reason I was so shocked when he tore me a new one. I may contact him in the near future and see if I can open talks again. As you said though I am expecting it to be not - salvageable.

 

[Guest34764]

Thank you for your input. He was the one that wanted to talk numbers - another reason I was so shocked when he tore me a new one. I may contact him in the near future and see if I can open talks again. As you said though I am expecting it to be salvageable.

Did he only want to talk numbers because you implied you wanted too?

 

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[EE7]

Did he only want to talk numbers because you implied you wanted too?

It was more of him coming out and saying that he wanted in on it and he thought that we could help each other out.

 

[Guest34764]

It was more of him coming out and saying that he wanted in on it and he thought that we could help each other out.

So how did this get screwed up?...

 

[wade1mil]

I can think of four scenarios for an abrupt reaction like that.

1. He thought the product was garbage and was pissed you wasted his time.
2. He thought your terms were insulting.
   
3. He wanted to see how much you would fight for your business.
4. He wanted to steal the idea from you.

My hunch is one of the first two, but that's coming from someone who knows nothing about you, your product, that guy or the meeting other that what you said.

 

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[EE7]

I can think of four scenarios for an abrupt reaction like that.

1. He thought the product was garbage and was pissed you wasted his time.
2. He thought your terms were insulting.
   
3. He wanted to see how much you would fight for your business.
4. He wanted to steal the idea from you.

My hunch is one of the first two, but that's coming from someone who knows nothing about you, your product, that guy or the meeting other that what you said.

1. He loved the product. Most people I show this too (industry specific) do.
2. I think this may be the culprit - everything was running beautifully until I gave numbers.
3. I caved like a fool.
4. He signed an NDA

So how did this get screwed up?...

My terms were probably ridiculous to him.

 

[jon.a]

At this point what is there to lose by asking him where you screwed up?
I would use those words.

 

[Vigilante]

Here are my thoughts.

1. Always ALWAYS blow off informal social events for business. The rest of the shit can wait or be rescheduled, and if it can't, the people on the other end are not worth it. Business comes before pleasure when the iron is hot. There will be a few Tampa meetups per year.

2. I would not have likely done the negotiation much differently. I always want to get the first number out there to calibrate the scale. If you let HIM put the first number out there, you might find yourself in an absurd discussion where YOU would have been the insulted one. SO, I would have put the number out there anyway.

3. I have a friend (on the forum) who just built, and then sold, a business in well less than a year. The buyer bought the business based on what the business was WORTH, not based on how hard the buyer perceived the seller had to work to get it there. Some times, these deals fall apart because the buyer underestimates what the business is worth.

4. He maybe thought he could take advantage of the situation, and you. Thought he could steal this.

5. Nobody is unreachable. I have literally never found someone that was unreachable. Remove the word unreachable from your vocabulary.

There are a myriad of reasons, but the one that is at the top of my mind is that he's an a**hole. In any discussion/negotiation, he owes you more than closing his books, giving you an a**hole remark, and showing you to the door.

The possibility also exists that you might have missed a chance to hook your horse on to his wagon. Think back to shark tank. Some times, opportunities are thrown out there where a nobody has a chance to sell a controlling interest to a real business driver, and they miss it. We sit back screaming at the TV TAKE THE DEAL and they leave with no deal. There might have been a chance here, if this guy was a PLAYER, for you to recognize it and sculpt your response to slide into his organization under his umbrella.

Listen, I have had deals go GREAT, and deals go catastrophically nightmare bad. You can learn from ALL of them. In the few hours you spent with him, you might have learned a lot about things you can refine.

Send him a quick thank you note. Nothing more than "thanks... I enjoyed meeting you. Thanks for the time and the insight!" with your name and cell phone number at the bottom.

To me, the guy sounds like a jackass. Regardless of his impression of your numbers, he owed you a more professional wrap up than that.

 

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[EE7]

The other investors did not react this way. In fact they welcomed the terms. It was such a wild tangent from what I was used to. The situation was horribly uncomfortable but as bad as it was I can honestly say I am glad that it happened. When I encounter too much of the same I tend to let my guard down and I need to be ready for anything. I feel that the initial terms were too off from what he wanted but I think that had I not back peddled I would be in a much better position. By offering continuous increases in equity to get him to bite I looked like a complete fool and a rookie. I believe this will be the nail in the coffin.

 

[EE7]

At this point what is there to lose by asking him where you screwed up?
I would use those words.

I will contact him in a week. I will thank him for his time and if he wants to give feedback I will gladly accept it even if it comes in the form of a few choice words.

 

[biophase]

I hope your number wasn't something like $200k for 5%.

 

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[EE7]

I hope your number wasn't something like $200k for 5%.

Of course not. It was 200k for 2%.

 

[ApparentHorizon]

...I kept pushing and giving more and more away just trying to get him to latch on to something.... I realize that it made me seem unsure of myself and the project.

What if the way you generally present yourself comes off as insecure, and this guy thought you would undervalue yourself?

On the flip side, you now know about this "industry leader's" arrogance.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
― Sun Tzu

 

[ZCP]

My guess based on a similar reaction: Your valuation was too high and in his experience it is a waste of time getting the investee to see that.

Thank him for his time. Ask him for one sentence of feedback so that if you have a future opportunity, you know whether to run it by him.

 

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[Vigilante]

What ever it was, he thought it was so far off it wasn't even worth discussing.

Now, make the business prove otherwise. You get the last laugh.

 

[Get Right]

I bet he calls you back.