In this throwback episode of Negotiations Ninja, we hop back to episode #142 with Dr. Jennifer Goldman-Wetzler. This episode is ALL about resolving conflict. From dealing with conflict avoidance to tactical advice on how to resolve conflict in the workplace—we’ve got it covered. Don’t miss this replay!
Resolving Conflict with Dr. Jennifer Goldman-Wetzler, Ep #142
How does the venture capital industry work? What do investors think about when they decide who and what to invest in? What is the framework they use? Tim Schigel—the founding and managing partner of Refinery Ventures—is all about investing in fast-growth companies. If you want to get inside the head of someone who runs a venture capitalist fund, this is the episode you need to listen to.
Tim notes that the venture industry has changed a lot. It used to be fairly secretive. It was hard to anticipate what was coming your way. How could you prepare? Now, you can Google nearly anything and get an answer. Plus, the National Venture Capital Association (NVCA) publishes a term sheet. It’s a lot easier to be educated now.
Tim shares that most investors have a specific stage or specialty they invest in. Tim and his partner invest in post-seed rounds in companies that have raised less than $3 million but are approaching $1 million in revenue. They need to be able to scale to $10 million in revenue in 24 months or less. It can be referred to as “Series A” or “Seed Plus.”
Tim calls it “Early Scale.” The entrepreneur has a product-market fit and is trying to figure out the metrics needed to scale. They’re familiar with what the companies look like, the benchmarks, and what the valuation might be.
Every fund likely has a portfolio construction. They have a fund of a specific size that invests in a certain number of funds (i.e., 20). There is target ownership that they aim for. If they get 15–20% of a company on average, and it does well, it has the potential to return the capital/investment of the entire fund.
Another rule of thumb is that you’re looking at a 20–30% dilution in a funding round. If that goes well, there should be another funding round 12-18 months after the first and an increase in value of 2–3x. None of this should come as a surprise.
Why is the track record of the investor an important metric? Listen to learn more!
Tim looks for educated entrepreneurs that understand the market. But it’s even better if they’ve worked in a company that has experienced hyper-growth. The key difference between Silicon Valley and the Midwest is that most of the midwest doesn’t have that experience.
Tim emphasizes that high growth is managed chaos. It’s disruptive. You don’t have to be the founder to have experienced it. The head of product, engineering, or marketing is the next founder. You probably learned a ton—and delivered a ton—in the process.
Roughly 35% of venture-backed founders in Silicon Valley have prior hyper-growth experience. In Cincinnati, it’s about 5%. It’s a big disadvantage—but it doesn’t mean you can’t do it. Leaders are refined by their growth experience and overcoming adversity. They recruit people that grew up in the Midwest, left, and want to move back. They add a lot of experience.
The misconception is that when entrepreneurs are raising money, they’re making money. That’s not the case—you make money on the exit. The idea is to help the company grow as much as possible as fast as possible to get to that exit. There’s the idea that the money being raised is “profit.” It’s not true.
The average venture-invested company has 6–7 years to go before an exit—and that’s a good one. There’s no guarantee that you’ll even get an exit. If you don’t generate enough growth, you may not have any buyers.
The overall venture market follows the power law: If you invest in 100, only one has to make it to get a big return (and it accounts for 99 losses). The chances for success are low. Raising money is a major milestone and validation—but it isn’t the end result. You must celebrate—then grow. There is a cost to that money. It isn’t free.
38–40 companies that are well-known are “unicorns” that didn’t raise any outside money. One example Tim can think of is Mailchimp. The more capital-efficient you are, the better.
Often, entrepreneurs think they can raise money because other companies did. But people raise money because they could—not because they had to. Tim’s “law” is that capital follows growth. People are looking for metrics. If you had good metrics and are capital-efficient, it’s easy to raise money.
Tim could call an investor and walk them through the metrics of a company, and they’d be on the plane the next day not knowing what the company does. When you see thousands of business plans a year, pattern recognition begins to form. You recognize good numbers quickly. If you want to have a conversation with an investor, they don’t want to hear anything you say until you quantify yourself by talking about your numbers. If you can show a steady acceleration of sales, that gets you in the game. You can’t convince them you’re a genius without the numbers.
Execution and growth have to support the return the investors expect. If you fall behind, they have to explain to their investors why your company is underperforming. It’s not a situation you want to be in. You have to think in a hyper-growth mindset from the start. You need to understand the risks and the unknowns. A good investor can help you overcome those risks before the next round.
What does the negotiation process look like? What should entrepreneurs keep in mind as they approach the negotiation table? Listen to the episode to learn more about the inner workings of the process!
Welcome to the Negotiations Ninja version of Throwback Thursday! In this episode, we replay episode #97 with Roger Dooley. Roger explains how to practically apply neuroscience, behavior technology, and behavior research—i.e. neuromarketing—to negotiation. How can we use science to get better deals with our negotiations? How can procurement professionals use neuromarketing? How do we influence to help someone make decisions that are advantageous for us and helpful for them? Listen to learn more!
The Science Of Influence For Negotiation & Procurement with Roger Dooley, Ep #97
How do you improve your social experiences? How do you improve your communication? How do you win friends, influence people, and leave them better off for having met you? In this episode of Negotiations Ninja, Chris Hadnagy—a professional social engineer—shares the framework he created to do just that. If you’re striving to use your influence for the good of others, this is a can’t-miss episode.
Chris started his career as an adversarial simulator. He got paid to hack companies and break into places. From that experience, he wrote a framework for social engineering. He looked at psychology, nonverbal communication, and influence and figured out how they applied to what he was doing for his job. Shortly after that, Kevin Mitnick’s publisher reached out to Chris to write a book. That book launched the company he runs today.
Twelve years later, he’s written five books. Over that time, he saw people from all industries attending his classes. He always asked why they were there. Everyone was told by friends and family that going to his classes would change their life. The nature of his latest book stemmed from that concept. Everyone benefits from this knowledge.
Chris points out that even pre-COVID, we communicated more with a digital presence. The internet has empowered us. There are things that people would say over the internet that they’d never say to your face. Chris had the opportunity to do a TEDx Talk, and someone commented on his video that he was a fat slob. No one would say that in person. People aren’t rude like that in normal life. Someone came to Chris’s defense and pointed out the comment was quite rude. But this man felt empowered to argue his point.
People that are racist, misogynistic, or homophobic feel empowered to say whatever they want on the internet. Why? The internet affords them anonymity, and they don’t worry about the consequences of their actions. That thought process has made communication and interaction self-centered.
COVID kicked in, and now everyone is doing everything on the internet. Chris points out that we’ve lost the ability for compassionate, empathetic in-person communication. We’ve lost the ability to think about what others want.
The book, How to Win Friends and Influence People is pivotal for many people and why Chris alluded to it in his book. It was written in 1936. He sought to answer the question, how can we bring lessons from that book to 2021? What do we need today that wasn’t available in 1936?
For me, the pivotal part of the title of Chris’s book is “…and leave them better off for having met you.” We are living in a “me, me, me” world that isn’t beneficial for creating additional value. This mindset is an extraction. It’s all about what you can get—not give.
Chris emphasizes that we need to learn how to apply these skills on social media or in a video conversation. In video communication, you can’t see people’s hips or hands. But someone’s hips can tell you if they’re interested in you. Their hands can tell you if they’re feeling nervous. People have to learn how to communicate without all of the feedback they’d normally have if they were sitting in the same physical space.
Chris was in school the day the Challenger took off and blew up. He remembers they paused schools and made everyone take a moment of silence for the people who were lost. They took it off TV because they didn’t want kids to see it. Now, when you turn on the news, you see dead bodies. You see live footage of carnage. You’re seeing it happen. The way that our brains take input is different.
When was the first time you heard about a school shooting on the news? Chris felt sick to his stomach. Now, when you hear it, you go, “Wow, that’s terrible,” and move on with your day. Not because we don’t care, but because we hear these stories so much we’ve become calloused.
We need to be reminded that there is a person on the other end of your interaction. You don’t know what they’ve been through. You need to be aware of what’s happening in the world and how it may have impacted the person you’re interacting with. You can’t be self-centered.
Chris shares a story about how he put his framework into practice—getting free upgrades on his flight. Listen to hear his fascinating story!
For Chris, in the beginning, it was a constant battle to remind himself to not be manipulative. When you first learn these skills, it feels like a superpower. You feel like a superhero. You have to see someone and know how they’re feeling and not call them out on their emotions. You need to leave them feeling better. How would you want to be treated?
If you notice that someone is sad—instead of calling them out—you can do something to make them feel better. He can lower the pitch of his voice and slow down his conversation. By using those nonverbal cues, you build rapport and communicate on a different level. Keep that motto in mind, and you won’t use your skills in a manipulative way.
It’s easy to use the superpower to extract something out of the relationship. But you have to focus on helping the other person and driving additional value. What if you feel like you’re being manipulated? How do you learn to protect yourself? What is the amygdala’s role in your emotional responses? Chris’s unique view of the human psyche is fascinating—don’t miss this episode.
In this throwback edition of the Negotiations Ninja podcast, we jump back to episode #132 with Paul Watts. Paul believes that planning in negotiation is an element that is often forgotten—yet utterly important. He notes that 80% of success comes from extensive planning. In this episode, we talk about negotiation through the lens of a salesperson, weigh the cost of inaction, and he shares techniques to improve your negotiation skills. Check it out!
The Importance of Negotiation Preparation with Paul Watts, Ep #132
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