VC Cliche of the Week

Well yesterday it happened.  I got a VC Cliche of the Week post used as an argument against our position in a negotiation.  I knew it was going to happen at some point and so when it did, I wasn’t surprised.

In this instance, there was a small misunderstanding of a point I had made in a specific post, about the quick flip.  I think we cleared it up. At least I sure hope we did.

But these are the hazards of blogging on the job. Your words can and will be used against you. It’s like a politician’s votes I suppose.  Once they are out there, you can’t take them back.

And negotiations are like carefully choreagraphed productions. There are no right and wrong positions in a negotiation.  Each side comes to the table with a list of things they want out of a deal.  You put all of them on the table and start discussing them.  Each side argues its point on the issues they care most about.  Sometimes people will argue every point. That can be very tiring.

Typically you then take a break and each side thinks about the arguments.  Before coming back to the table, each side decides what it can give up and what it cannot.

Then the dance starts all over again.

The role of counsel is really critical in these negotiations. We urge every party that we negotiate with to get really good counsel that is very experienced in venture deals.  We find that well advised parties make for better negotiations.

In most negotiations, there comes a time when the lawyers, who often are not at the table for the early back and forth, have to show up.

This process where each party argues its points often features the lawyers as the "bad guys".  People say something like, "we’ve been advised by our counsel that we can’t accept that provision".  It’s really hard to argue against that position.

So the final knock down drag out negotiation often features the lawyers in the room. Each side can no longer hide behind its counsel because they are now party to the discussion.

And in my experience, once they show up at the table, most lawyers are very constructive.  They do have strong points of view about certain issues. But when both sides lay out the problems, the good lawyers, and there are many of them, will figure out a way to make both sides happy.

I know there isn’t a cliche of the week in this post.  I promise I’ll have one for next week, but honestly I wasn’t inspired to come up with one this week.  I hope you enjoyed this post instead.