My surprising negotiating strategy


When I first broke off from my job in investment banking and went into business for myself, I negotiated like a jerk.  I was convinced that winning the early rounds of negotiations about setting things up was incredibly important, because doing so would set a precedent for how things would be in the future. I still have a long letter James Palumbo, the owner of Ministry of Sound, wrote me, which explained, at great length and in painful detail, how my aggression and short-sightedness were going to ruin my career.

Obviously at the time, I thought James was a dick. Now, I realize he was 100% right and looking out for me. Why? Because if you insist on always winning battles, what happens is that you end up only working with the type of people who are willing to allow you to bully them into accepting bad terms for themselves. Seems pretty obvious that these are not the type of people you want to be in business with!

So I have a new policy with potential partners. You can think of it as “Yes, and…”. Here’s how it works:

  • If a potential partner with whom I want to work offers me terms, my default setting is to accept them if at all possible. I figure either the terms will work for me or, if they don’t, we can re-negotiate after I’ve demonstrated the value I bring to my partner;
  • If I really can’t accept the terms as offered, then I try to figure out how to accept them but add something that makes the deal work for me. That’s the “Yes, and…” part.

Now, obviously there are times when a deal can’t be reached. No, I’m not selling your property for 2%, or giving you half of my buy-side commission.

But most of the time, and particularly when I’m dealing with experienced, successful people, my strategy works really well. Why? Because you have to be a real idiot to strike a partnership arrangement where your partner is getting screwed. Successful people know this, so they bend over backwards to create situations where they prosper when their partners prosper.

As between (1) entering into win-wins with successful people, or (2) brow-beating inferior people into accepting bad terms, I’ll take Option 1 every single time. You get further in life swimming with the current, rather than against it.

P.S.: Thanks, James.