Developing Perspective

#108: Negotiating.


00:00:00   Hello and welcome to Developing Perspective.

00:00:03   Developing Perspective is a podcast discussing news of note and iOS development, Apple and

00:00:07   the like.

00:00:08   I'm your host, David Smith.

00:00:09   I'm an independent iOS and Mac developer based in Herndon, Virginia.

00:00:11   This is show number 108, and today is Friday, February 15th.

00:00:16   Developing Perspective is never longer than 15 minutes, so let's get started.

00:00:19   All right, before I get into the actual topic for today's show, I just wanted to mention

00:00:23   that the previous show in your RSS feed should be an interview I did with Brent Simmons,

00:00:29   I'm just trying to restart and get back

00:00:31   into the developer interview series

00:00:33   that I had started last year.

00:00:35   And I just mentioned that here because I

00:00:37   know a lot of podcatchers will only

00:00:38   download the most recent episodes.

00:00:40   So if this is the one you're getting

00:00:41   and you haven't heard that, you're missing out.

00:00:43   I thought it was a really good episode.

00:00:44   He has a lot of interesting insights

00:00:46   and a lot of experience that I think we can all learn from.

00:00:48   So definitely grab that.

00:00:49   And related to that, I also wanted

00:00:50   to mention that if there are people you want me to talk to,

00:00:53   if there are people you'd be interested in hearing about,

00:00:55   essentially when I'm interviewing someone,

00:00:57   I'm trying to get at how they work and why they work.

00:00:59   And if there are people, developers, designers,

00:01:01   people in the industry who you'd like to hear from, let me know.

00:01:04   And I try to reach out to them, try to make that work.

00:01:07   And I'll see where it goes.

00:01:08   It's a nice break, I think, from the 15-minute format.

00:01:11   You kind of get a little bit more diversity.

00:01:13   It's a little bit longer.

00:01:14   But I think it's worth it.

00:01:16   So the main topic I'm going to be talking about today

00:01:19   is related to an article that I wrote on my blog that

00:01:21   talks about negotiation.

00:01:24   And this is a topic that--

00:01:25   I'll see how many episodes it takes

00:01:27   to work through this all. But essentially, I found that in my experience, one of the

00:01:32   hardest parts of being coming coming at this kind of profession, being independent, doing

00:01:36   small business kind of stuff, if you're an engineer, is that you're often not trained

00:01:43   or experienced in some of the more, I don't even know, the more business sides of being

00:01:48   in business. And one of the most hardest and most significant parts of that is the role

00:01:53   that negotiation plays in that. So negotiation can take place in almost any context. I mean,

00:01:59   any essentially anytime you're going to sign something that it's, you know, a contract,

00:02:03   whether that be for your first consulting gig, hiring an employee, getting a lease for your

00:02:09   business, whatever it is, you're going to be involved in some form of negotiation. And this

00:02:14   is something that I found for myself, I was very bad at. It's something that I struggle with. It's

00:02:18   It's something that I don't really want to do,

00:02:21   and so I kind of avoid thinking about it.

00:02:24   And it's something that I think I neglected

00:02:27   to the detriment of my business early on in my career.

00:02:30   And so I kind of put together,

00:02:31   I try to put together kind of the lessons I've learned

00:02:33   over the last seven years of being independent

00:02:35   in the hopes that it'll help other people

00:02:37   to not make the same mistakes twice,

00:02:39   or not make my mistakes again.

00:02:42   And so I'm just gonna kind of walk through this.

00:02:44   I think it's about eight points, I think it is,

00:02:45   that I'll kind of work through.

00:02:47   But the first point, which is kind of a meta point, is to understand that your negotiation

00:02:52   is a technique and a conscious thing that you need to do.

00:02:57   The biggest mistake I made initially was that I would just treat it as though I could just

00:03:03   kind of wing it.

00:03:04   And I'm almost certain when I do that, I do a disservice to myself and to my work because

00:03:09   I'm not getting the best value for my time, for my skills, for my services.

00:03:15   So the first thing I want to do in talking about that is understanding that you need

00:03:18   to value your work intrinsically.

00:03:21   And that is to say, someone is coming to you and saying, "I want to hire your time, buy

00:03:25   your product," whatever it is, you need to have an intrinsic understanding of what that

00:03:30   is valued to you outside of what someone else is telling you.

00:03:36   And there's a concept in finance of something's value being determined by the highest price

00:03:41   someone is willing to pay for it, which may work in the housing market or something like

00:03:45   that to say what a house is worth.

00:03:47   But it's very dangerous to start in that place if it's your software, if it's your time,

00:03:53   if it's your energy, because its value to you is likely very different than what someone

00:03:59   else's would think.

00:04:00   And its value to you is the most important valuation of it.

00:04:03   Fair enough, you can't derive that value without somebody else giving it to you.

00:04:07   But if you can't start from a place that you think is fair and work to a price, you're

00:04:13   going to be in trouble.

00:04:14   If you kind of think about it as, if you're starting assuming that your work has no value

00:04:18   until someone tells you it has value, you're working up from zero, which is a very dangerous

00:04:23   thing.

00:04:24   You're almost certainly going to be undervaluing your work and being underpaid for it.

00:04:28   And the next area is to understand who you are interpersonally.

00:04:32   I'm a terrible person on the phone.

00:04:35   I hate talking on the phone.

00:04:37   a podcast sort of works because there's no one on the other side. But generally speaking,

00:04:40   I really don't like, you know, voice conversation. I like email, I like being able to be thoughtful

00:04:46   about what I'm saying, I like to be able to edit it, and go back and read it and read

00:04:50   it again and show it to my wife or show it to somebody and say, Hey, does this make sense?

00:04:54   What do you think? Let's try and make sure I'm communicating well. And so what I needed

00:04:59   to do, and what I've discovered is that I had to move my conversation when I'm negotiating

00:05:05   outside of that context. I needed to diminish the amount of

00:05:10   time I'm spending on the phone and spend an increased amount of

00:05:12   time I'm doing communicating in the written word. And that has

00:05:16   been very helpful to me to kind of move into that place because

00:05:19   it allows me to be coming from a position of strength of being

00:05:24   able to work where I'm most comfortable. And that's very

00:05:28   powerful in terms of me being effective. And it also helps me

00:05:31   just avoid weird situations where I say yes to something

00:05:34   because I feel awkward.

00:05:35   I say yes to something because I'm feeling nervous.

00:05:39   And that's a dangerous, horrible place to be.

00:05:41   It's something that I wouldn't have done if someone had sent me that email and said, "Hey,

00:05:45   could you do this?"

00:05:46   And I'd be like, "No, that doesn't make any sense for me."

00:05:49   But there's something different when it's a personal person doing that to you.

00:05:52   And of course, that's not for everybody.

00:05:54   If you're the other way around, if you love being on the phone, if that's what you do,

00:05:58   go for it.

00:05:59   The goal is for you to have a home field advantage, for you to be playing from where you're strong.

00:06:03   All right, next thing is to always, whenever you're working in a contract, and this is

00:06:08   slightly into the contracting side of negotiation rather than the actual negotiation part of

00:06:12   it, but it's understanding that you're often, you have to, whenever you go into a contract,

00:06:18   you have to understand that every term in a contract has an implication to your future.

00:06:25   And you need to be comfortable with the worst, most aggressive reading of every term in a

00:06:30   a contract for you to prefer to be ultimately something that you want to sign. And by that,

00:06:35   I mean, if you, you know, especially if you're coming from a background of a lot of open

00:06:40   source software, if you're coming from a background of this tremendous camaraderie and closeness

00:06:47   that I think we feel safe, you're working in the iOS community, there are a lot of people

00:06:50   that who I help out things that I do with expecting nothing in return other than just

00:06:55   being part of the community. And that sense of trust is fantastic. And I love it. It's

00:07:01   part of why I really enjoy my job and the people I work with. But when I'm entering

00:07:05   into a contract with somebody, I can't have those same assumptions. I have to assume that

00:07:10   that person has their own interests in mind, not mine. And I need to be comfortable with

00:07:15   every line of the contract to that degree. You don't want to get aggressive. You don't

00:07:18   want to get nuts about it. But you need to understand that if there's something in there

00:07:23   that's a cause that has this really bad implication, should something go wrong, you need to be

00:07:28   able to be comfortable and live with that because you're signing your name on the bottom

00:07:31   and saying, "Yes, if this happens, I will do that," or, "If this happens, that consequence

00:07:36   was something that'll happen to me."

00:07:37   And if that's the case, if you can't live with that, you need to change it.

00:07:41   You need to negotiate a change to that or not do the deal or whatever it is because

00:07:45   you have to be comfortable with the worst possible outcome of every term in a contract.

00:07:50   And as a meta point to that, understand that a contract's goal is to define the worst case

00:07:55   and to define what happens in that worst case.

00:07:58   The reason contracts are long and complicated is because it's not what you're usually worrying

00:08:03   about the best case.

00:08:04   They get a case where someone comes to you for a consulting contract, you sign a deal,

00:08:08   you're paid $150 an hour, you go in, you do the work, everybody's happy, you walk out.

00:08:14   Everyone's paid on time, all the work gets done perfectly, there's no delays, there's

00:08:17   no hiccups. That were the case, you need a very small contract. And I've done some contracts

00:08:23   like that. Usually it's with friends or people who I have tremendous trust for. But typically,

00:08:27   what you want to do is you want to have a contract that deals with all the worst cases.

00:08:30   All the project gets canceled, payment is late, the business goes out of business. What

00:08:34   happens if you're suddenly unavailable, if you're sick? All kinds of issues that could

00:08:38   come up that need to be dealt with in a way that you're far more capable of dealing with

00:08:43   an irrational way and with a clear-mindedness before the fact rather than after the fact,

00:08:47   when you have to kind of work this out after it happens and now you're invested.

00:08:52   Now there's all these other conflicting and confounding variables.

00:08:55   So you have to be going into a contract with that in mind and understanding that that is

00:08:59   useful and valuable and not something you need to shy away from.

00:09:03   The next thing that you need to do when you're doing negotiation is you really need a lawyer.

00:09:07   I know it's difficult when you're starting out.

00:09:09   I know it's difficult when you're small. And I think that I did probably, I got involved

00:09:15   with lawyers a bit too late, probably in a way that I really should have been doing and

00:09:18   involving them earlier. They don't need to spend a huge amount of time, a huge amount

00:09:21   of effort. But you really when you sign a contract that you're going to be binding yourself

00:09:25   with for any amount of time, it's good to have somebody who's a professional look at

00:09:29   it. You know, it's not, I would feel uncomfortable if I was, you know, building if I was right

00:09:34   a drawing out plans to build my house, I'd go to an architect for that somebody who's

00:09:37   trained and knows what they're doing, or at least can look at

00:09:40   what I'm doing and say, you know, that would be better if

00:09:42   that was this, have you thought about this. And also understand

00:09:45   that often if you're working with somebody who has a lawyer,

00:09:48   their lawyer is doing the exact same thing on the reverse. And

00:09:52   you're what you're what you're trying to do is avoid some

00:09:54   situation where they are putting terms in there, that the worst

00:09:59   thing that I've run into, or that the most dangerous part is

00:10:02   the power of sort of legalese, which is what they call, you

00:10:05   know, the kind of way that you write a contract often that has this very kind of high floaty

00:10:09   kind of sound to it. And the dangerous part is often there are implications to terms that

00:10:14   are have legal by have legal implications that don't look like that they're kind of

00:10:18   they look like innocuous lines of legalese, but they actually have lots of implications.

00:10:22   You know, equitable relief is something that I don't really know what that means. But it's

00:10:27   a term that comes up in a contract and it's like, what does that mean? A lawyer will be

00:10:30   able to tell you and a lawyer will be able to guide you through what that means in a

00:10:34   way that you may not, in the way that you may just pass over it. And it's like, I don't

00:10:37   know, that sounds so we are relieved equitably, maybe. But you know, you want to be careful.

00:10:43   You want to be understanding and you just want to, if you can't afford an expensive

00:10:46   lawyer, that's fine. You just want somebody, maybe you find a friend who's going to law

00:10:49   school. You just want somebody who has some training in the law to look at what you're

00:10:53   doing. And next, I wanted to talk about being careful about negotiating against yourself.

00:11:00   This is something that I often do.

00:11:03   If you're coming up with a contract, you're kind of thinking of your two sides to the

00:11:07   argument.

00:11:08   You're coming up with your side, your position, the places that you want to value.

00:11:11   And you want to say, "I want X."

00:11:14   And immediately, it's so easy, especially as an engineer, to think of what the other

00:11:19   person would say in response.

00:11:20   It's like, "If I want X, they're going to complain about X, Y, and Z."

00:11:23   Or I guess A, B, and C, because I already used X.

00:11:26   So what you want to say is you want to be very careful about doing that.

00:11:30   It's useful to understand the flaws and the problems of what you're asking for, but you

00:11:34   never want to weaken your position in response to these imagined objections.

00:11:39   If someone is actually going to object, then you can work through that in a framework of

00:11:43   negotiated compromise, but it's a very dangerous place to be weakening your own position without

00:11:49   someone giving something up in return.

00:11:51   So you don't want to weaken yourself to these imagined objections.

00:11:54   You want to come up with the strongest position you can come up with, and then you want to

00:11:57   fight for that.

00:11:58   Next, you want to be able to avoid the risk and the danger of rushing contract and negotiations.

00:12:06   And this is often a bigger problem if you're working with a larger organization.

00:12:10   And I say that because if you're working with an organization that has a team of people

00:12:15   involved who do this every day, who work through these kind of deals on a regular basis, they

00:12:24   have the ability to do things much more quickly than you may necessarily feel comfortable

00:12:30   with. But it's vitally important that you feel comfortable with it at all times with

00:12:35   what you're saying, with what you're doing. This isn't the kind of thing where if you

00:12:38   were going into a used car dealership and you sit down and the guy is like, "Well, if

00:12:43   you close today, I can knock $1,000 off the price. If you come in tomorrow, that deal

00:12:48   is not good." That kind of a high pressure sort of sell is not something that should

00:12:53   be a part of a professional transaction. This isn't that type of a thing. You need to feel

00:12:57   comfortable. If the pace is going too fast, you just say, "Yo, I'm going to need more

00:13:01   time." This is a great place that you can blame it on your lawyer. Say, "I need to have

00:13:04   my attorney look at it." If someone comes back at that and says, "No, no, no. We really

00:13:07   needed it done now," you really need to be careful about if that's a deal you want to

00:13:11   get into. If they're going to put that kind of pressure on you at the negotiation phase,

00:13:15   imagine what that's going to look like down the road when you're working with them and

00:13:19   you're delivering software or those kinds of things.

00:13:22   And lastly, I just wanted to talk about the sunk cost

00:13:25   fallacy.

00:13:25   And this is the hardest part for me of this whole process.

00:13:29   And that is going through the work of creating a contract

00:13:32   is arduous, tough, and takes a lot of energy out of me.

00:13:36   And as I get to the end, it's easy to then be like,

00:13:40   I can't walk away from this because of all the time

00:13:42   and energy I've put into it, which is the exact wrong way

00:13:45   to think.

00:13:46   Sunk costs, things that you've put into this, the time

00:13:49   and energy and so on, is not something

00:13:50   that you can get back.

00:13:52   So it's a sunk cost.

00:13:53   So at the time that you're making the decision,

00:13:55   make the decision based on what's

00:13:57   best for you at that moment, not what's best for you assuming

00:14:01   those sunk costs.

00:14:01   They're gone.

00:14:02   Just ignore them and make the best decision

00:14:04   for what's right now.

00:14:05   It's really hard.

00:14:06   And the best way that I've found to do that

00:14:08   is to make sure you have good advisors, whether that be

00:14:10   family, friends, colleagues, who can advise you who don't have

00:14:14   that same level of investment, because they're

00:14:16   able to keep much more level headed throughout the process.

00:14:19   All right.

00:14:19   That's it.

00:14:20   And kind of talking through that article,

00:14:21   I'll link to it in the show notes.

00:14:23   And that was largely just a recap of the article,

00:14:25   but I hope I gave it a bit more color and flavor,

00:14:27   which was my goal here.

00:14:28   And that's it for today's show.

00:14:30   As always, if you have questions, comments, or concerns,

00:14:32   I'm on Twitter @_davidsmith.

00:14:34   I'm on AppNet @davidsmith.

00:14:36   You can email me, david@developingperspective.com.

00:14:39   And otherwise, I hope you guys have a great weekend.

00:14:41   Do some happy coding.

00:14:42   And I will talk to you next week and hopefully

00:14:44   have another interview for you.