Every deal I’ve done with investors, strategic partners and new hires have one thing in common. At one point or another, they were on the verge of collapse. Or at least it felt that way.
Some were big distribution deals that my team and I had been working on for months. These deals had game-changing potential that would unequivocally demonstrate a new level of momentum.
Other deals were more tactical but no less critical to longer-term success, like convincing new graduates in a cutting edge field to join our company.
The punchline of this post is that communication and how incentives were aligned (or misaligned) was as at the centre of these deals ending up on the verge of collapse.
It’s also the reason they were recovered.
I’m going to share the strategies I use to recover and, where possible, fast-track a deal because if there is one lesson I’ve learned from all the deals I’ve won, lost or been involved in, it’s this: A startup’s intent will almost certainly get lost amongst its desire to be taken seriously.
Founders send countless emails and LinkedIn connection requests. They attempt extreme brevity, hoping that well crafted, minimalist elevator pitches will capture the recipient’s intention.
This behaviour, be it grounded in a lack of confidence or some other belief, can lead to founders investing a disproportionately low amount of their time in face to face conversations with potential partners, investors and hires, when compared to written communications.
And this habit can become a real problem.
Because written communication sucks the intent out of a message. Think about the last time you tried to pitch an idea or sell a product via email.
It is nearly impossible to communicate the excitement, energy and focus of a venture in the written form.
Deal intent and speed to close
The only reason two parties enter a deal is that value will be exchanged in one form or another. When one of the two parties is a startup, it’s fair to assume that they need the deal to survive.
One way to communicate that intent is to ‘play the startup card’. There have been many times when being transparent about how much the deal will mean to my team and company seemed like the most forthright tactic to use.
I tend to play the startup card when the relationship has progressed to a mature stage, and I can have a conversation to deliver that message.
But there is a second way to communicate intent, which reduces the risk of being seen as the ‘needy founder’.
This second approach comes from a deep desire to not waste the time of others, or that of my team or me.
‘We are excited to work with your team, and we’re interested to understand what our company needs to do to make that happen’.
I have used this statement countless times early in a relationship and when, for whatever reason, the negation phase of a deal has stalled.
While this statement is a catalyst to achieve a fast ‘Yes’ or a quicker ‘No’, it also serves two more tactical purposes.
First, it helps to refocus both parties on the steps that need to be taken to close a deal. This can also help founders open an avenue to play the startup card. Because for the most part, people in larger organisations won’t have the context to understand that timing is everything to the survival and growth of a startup.
Second, it helps surface why a deal may not progress or has slowed. This intelligence helps adjust strategy, and ultimately course-correcting to find other deals if the one at hand is less likely to proceed.
Regardless of which method you choose, the point is this: When an intent is delivered authentically and at the right time in the conversation (and not in writing), good things generally tend to happen. And at the very least, your rate of learning increases.
Signs that a deal is tanking
While there are others, the primary signal that a deal is unlikely to proceed is no signal at all. In other words, communications stall.
There might be several reasons for the radio silence, and it’s essential to understand each of them.
- Competing priorities – the other party is busy (or on leave) and might not appreciate how important this deal is to the founder
- Change in people – there has been a change in personnel or leadership at the other party which is causing delays
- Change in interest – the excitement to engage has dulled as a result of a change in strategy or risk appetite to work with early-stage companies
A lack of communication about any of these circumstances is likely to stoke paranoia in the founder’s mind, especially when the relationship to date has been productive.
It’s important to realise that radio silence doesn’t necessarily mean a deal is tanking. However, the tactics to recover a deal or re-establish communications and the tempo with the other party are the same.
Tactics to recover a deal
I go back to first principles when I think about tactics to salvage a deal: What value can we add to the partner and what value do we aim to derive from the partnership.
With clarity on this value equation, I focus on three tactics.
First, pick up the phone. Talking to the person who is your opposite number at the company you want to work with, the investor you want to engage or the person you want to hire is the quickest way to understand their status and any changes that might have taken place.
This might be daunting to some founders. It’s easier to send an email because it delays the receipt of any potential bad news. But the point is to learn as quickly as possible.
I have found that planning and rehearsing each call goes a long way to reducing any pre-call angst. The good news is that in nearly every call I have made to recover a deal, the relationship between the other company and me, investor or potential hire has strengthened as a result.
Second, look for influencers. People influence people. Identify those incentives (try this tool) and look for people you know on LinkedIn who can provide insight into the situation or act as an evangelist for you and your company.
Third, always deliver 51% of the value. This means looking outside the deal and finding ways to add value to the other persons professional or personal life. This can include sharing articles and events of interest to engaging on topics that are more personal and less work-related, like parenting, sport or hobbies, to name a few.
One last thing…
Speaking more and writing less to the people you are trying to convince and build a relationship with throughout a deal cycle is the only way to establish and maintain intent.
The secret weapon founders have, in addition to their domain expertise, is their rate of learning. The higher the rate, the faster they understand how to create momentum. When it comes to closing deals, focus on understanding the intent and incentives of partners, investors and potential hires as quickly and consistently as possible. And remember it’s a two-way street. Because they need to understand your intentions as well.
So pick up the phone and develop a habit for navigating deals through conversation. It will short circuit angst and even help recover the deal that will change the trajectory of your business.