Reading Between the Lines
Transcript
All right, we've talked about communication in the past and how important it is.
And we've talked about cadence and expectation setting and all those things are great.
And what you say is so important. But people miss that sometimes what you don't say is important.
What gets read between the lines, what unintended consequences there are.
Be careful. I've seen two examples of this in the last week that I want to share with you.
The first is a CEO who's building his business for years.
and he had an inbound offer from a legitimate acquirer for a substantial amount of money.
It was great, but he had never been through this before.
So when he got the verbal offer, he had to take some time to think about it,
to go find mentors and people he could talk to and figure out how to negotiate this deal.
Well, an email came in from the CEO of the acquiring company that said,
Hey, it's Thursday morning. Do you have time to talk in the next few hours?
and he responded with I am slammed with meetings all day today and tomorrow how about we talk on
Monday what he really was trying to do is buy himself a little bit of time to understand the
negotiation what the CEO heard was I'm playing you I'm delaying and I'm playing you because I've got
another deal in the works that CEO picked up the phone and said we're taking the deal off the table
wow that was an unintended consequence think about it let me give you another one
so we're looking at a company we're looking at investing in them this week and as part of the
investment we have to play with the cap table and see what the pre-money and the post-money and all
that stuff is and how big the option pool is and we asked the entrepreneur for some feedback
the ceo came back saying i think a three percent option pool is sufficient for what i need to do
in the next 18 months now i understand that the ceo was trying to optimize to minimize dilution
the option pool comes out of the pre-money however what i heard as the investor was
wait a minute three percent industry standard is four times that much for this stage 10 to 12
12%. I don't think he's wanting to grow this business. I don't think he's wanting to hire
the high quality people and build the team to build a world class organization. So think about
the message he was trying to send and what he was trying to achieve and what I heard. So please,
especially when you're in situations of negotiating, think about not just the words you say,
but the information that is contained between the lines because sometimes that's even more
important.
What you say is important, but sometimes what you don’t say speaks louder. In today’s MATH 101, Troy Henikoff shares two scenarios like this, and the unintended consequences that followed.
Originally published on the MATH Venture Partners blog.