The Negotiation Two-step

When he was an engineering student at the University of Pennsylvania, entrepreneur Tal Raviv helped to found a company called Dropcard near the Penn campus. Two of his co-founders stayed with the startup — which changed its name to Ecquire — for several years, but eventually reduced their shares in the company “out of recognition that Ecquire was getting further and further conceptually (and technologically) from Dropcard,” as Raviv explains on the Ecquire site.

Raviv, who is currently Ecquire’s CTO, recently decided to ask the two original co-founders if they would give up their shares — which now amounted to just 0.5% of the company — “in order to keep our corporate structure simpler [and] cleaner, and [to] reserve the stock for future employees we want to attract.” Ecquire, whose software helps companies with lead and contact management, describes itself as a company that “uses contextual information, or data that you already have and own from different places, to automate annoying tasks that you have each day.”  

But how to work out a deal that would accomplish this? Raviv notes that while at Penn, he took a negotiations class offered by Richard Shell, Wharton professor of legal studies and business ethics, in which he learned that “the best negotiators question what the demands are really about. They don’t see negotiation as a zero-sum haggle; instead, they look for opportunities to be creative.”

In that spirit, Raviv decided that “money would be nowhere near as valuable to his two co-founders as the opportunity to have Raviv act “like a … clown in public.” His co-founders, he added, had always been “transparent about what they thought was fair, given the time elapsed since their contributions.”

So he gave his colleagues/friends a choice: “We could haggle over a valuation for the stock and buy it in cash,” or they could choose a song and Raviv would dance to it in the middle of Tel Aviv’s busiest intersection at the busiest time of the week.

His colleagues went for the beat. (see video below)

Regarding Raviv’s description of the best negotiators as those who look for opportunities to be creative, Shell notes that “this is what we try to teach. It’s gratifying to see that students pick it up. But you can never teach the kind of creativity that Tal showed. You can only teach people to rely on their imaginations…. What I found fabulous about Tal’s example is just how far outside the box he was willing to go to apply the concepts that he learned in the course.”

And Raviv is right, Shell adds. “If you can avoid a zero-sum situation — in which there is a conflict over a resource, or ownership, or power, you can make it something where everybody does better. If Tal and his two co-founders had tried to value those shares, it could have been difficult and/or contentious.”

Shell describes Raviv’s deal as “a YouTube generation example of negotiating skills. Not only did he come up with this idea and let his counterparts pick the songs, but he created a video that proved he had held up his end of the deal.”

Entrepreneurs, Shell notes, often make the best negotiators because “they don’t have much money and therefore they have to be creative. They are also the biggest risk takers. So they are people who are going to push negotiating to the limit — they will prefer creativity to compromise — more often than conventional executives might. And they themselves have all the authority. It’s their business. They can figure out how to use the negotiation process to achieve what they want.”

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"The Negotiation Two-step" Knowledge@Wharton, [June 11, 2012].
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