Deal Guys

When I started my first company, I was NOT a deal guy. I actually understood nothing about sales. I think my conceptual vision of a sales person was this:

As it turns out, there are a lot of these people out there, but they are not the best deal guys. These guys create win-lose deals or deals with extremely high risk and asymmetric information (bad deals). The BEST deals though are very boring. The best deals are where both understand what they’re getting / giving, find mutual ground, and everyone wins. If someone loses, at least you can say that you both understood why and how.

I’ve been slowly learning this and turning it into an abstraction, but basically everything from your VC term sheet to your customer contracts to your relationships with cofounders and early employees are deals, just of varying sizes and magnitudes.

Man, if I would have understood that at the start of doing companies I would have saved myself a lot of heartache. When you’re doing sales and something is too easy, there’s a reason it’s too easy. If a VC gets on the phone with you, has only done 2 lifetime deals, and on the first call commits capital this seems great on the face of it, but it’s most likely a terrible deal (not because you don’t understand but because they don’t).

The components of a good deal are really simple:

• Everyone understands the terms

• Everyone understands the risks

• Everyone wins (which should be implicit if everyone understands the terms and risks)

This means the best sales people ALSO tell you what’s wrong with the deal. And in 20/20 hindsight, I’ve made a lot of shitty deals as a result (both selling and being sold).

Most things in life are deals, you’re just trading different kinds of value. Even your closest emotional relationships are deals that are constantly give / gets. They don’t show up in legal contracts, but it’s an exchange of value between two people. Seems transactional, but it’s reality, and unbalanced deals always collapse.