In any negotiation where parties must continue to interact and maintain a relationship, there is a hard cost to being overly competitive.
When you squeeze out every bit of potential value for yourself and leave as little as possible on the table for the other party, as Facebook did with the public, you shoot yourself in the foot.
Measured in reputational costs, brand value, and now, actual legal costs, the “smartest-guys-in-the-room” approach of the FB team backfired.
This is not a question of perfect hindsight: More than enough pixels and ink have been spilled over the FB IPO already. There are probably books and documentaries currently in the making about it. I only include it here in this blog (where I try to avoid being yet-another-armchair-quarterback on current events), because this is a worthwhile lesson to consider for a topic that I facilitate training in: Negotiation Skills.
Bottom line: $38/share and a boost in the initial offering size, done at the last moment, was a greedy move.
As the old saying goes,
“Pigs get fatter, hogs get slaughtered.”
Yes, I think FB could become the next Amazon rebound-and-quadruple story, from a stock pricing perspective, once the revenue generating potential of its platform is unleashed (FB Travel? FB Banking? FB Healthcare? FB University?)… and yes, there is a ton of liquidity out there searching for even a modest return on capital. Nevertheless, the FB guys outsmarted themselves. Some of the lead investors made out like bandits, but now the company as a whole has to deal with the costs… and that’s a double whammy for the holder of FB shares.
So another point to be gleaned from this:
Be aware of any misalignment between the people who are DOING the negotiating, and the people FOR WHOM they are negotiating.
As with anything, only time will tell for sure how things work out, but for now, there’s blood in the water.
Built to Last
There’s an old business parable about The Time Teller vs. The Clock Builder that influenced me early on in my career as an entrepreneur and business owner, and it’s had a big impact as well on my work as a consultant. Recently I had the pleasure of working with a long-standing client and living that parable at a whole new level.
Jim Collins included the Time Teller / Clock Builder parable in the book he co-authored with Jerry Porras in 1994, Built to Last… I have a later edition, dog-eared paperback copy of that somewhere… here’s a short summary from an article Collins wrote for Inc. magazine :
Imagine that you met a remarkable person who could look at the sun or the stars and, amazingly, state the exact time and date.
Wouldn’t it be even more amazing still if, instead of telling the time, that person built a clock that could tell the time forever, even after he or she were dead and gone?
Having a great idea or being a charismatic visionary leader is “time telling;” building a company that can prosper far beyond the tenure of any single leader and through multiple product life cycles is “clock building.”
Those who build visionary companies tend to be clock builders. Their primary accomplishment is not the implementation of a great idea, the expression of a charismatic personality, or the accumulation of wealth. It is the company itself and what it stands for.
Generally speaking, as a “business architect,” I lean much more heavily towards Clock Building than Time Telling… although where I’m at on that spectrum does vary by situation, by project and by client.
This client, since day one, has treated me like a member of their family. These are folks for whom I’m always willing and happy to go the extra mile as a consultant; they don’t see me an “just another vendor” and I don’t see them as “just another customer.” It’s a lucky thing when things align like that.
Over the past four years I’ve gotten to know the members of their leadership team, group managers and individual team members across multiple functional areas, with special emphasis on sales and service support… and I’ve watched them all – every single one of them – develop as professionals, as managers, and as leaders.
One of the most satisfying aspects of our relationship, though, isn’t just the mutual respect, warm fuzzies and the raucous good times: From a professional standpoint – as a learning and business performance consultant – I’ve been fortunate enough to be a part of this client’s talent development process and have my role as their Clock Builder (as opposed to mere Time Teller) evolve to the point of being the Builder-of-Clock-Builders… aka, an instructor of instructors.
Although I believe very strongly that all adult learners ultimately teach themselves – my job is simply to facilitate that process – it’s particularly dramatic when I can start handing over the keys of facilitation to participants, step back, and get more “meta” is my job as consultant.
What Happens in Vegas Doesn’t Always Stay in Vegas
This month completed a really fun and effective sales training day in Las Vegas where my job at the event itself was less as a trainer and more as the emcee / circus ringleader. All the specific training content sessions were facilitated by participants themselves. Feedback from this event ranged from “Woo-hoo!” to “Best training ever.”
One guy joked, “So Dan, now all you do is sit back and point at the light bulbs that need to be changed?”
At the beginning of the relationship, four years ago, my colleagues and I were helping this client identify their talent development goals and then execute on those goals through direct interventions (training, business performance processes). Now at this stage of the relationship, we’re helping them execute their goals through the creation of a self-sustaining learning organization – an environment that is more conducive for the team members to build themselves and each other.
So – *ahem* – yes, perhaps I’m now just sitting back and pointing out which light bulbs need to be changed… metaphorically. But if we’re going to say that, then we should at least include the rest of the electrical plan. That is to say, I’m working with them on their wiring plan, switches, sockets, ballasts… and maybe even helping install some timers and clocks around the room, too.