Paul Graham: “Don't Talk to Corporate Development Specialists”
Perhaps every Paul Graham essay can be safely counted as a must read for an itnik. Especially for a startup or own business owner. We in Alconost have translated a new note of this famous entrepreneur, investor, programmer and writer.
Corporate development departments within companies are engaged in the purchase of other companies. And if you are talking to someone from there - that’s what this is about, whether you are aware of it or not.
As a rule, you make a mistake by entering into a conversation with corporate development specialists, unless you: a) intend to sell your company right now and b) are sure that you will receive an offer of a reasonable price. In practice, this means that startups should communicate with corporate development departments only when they are doing really well or very badly. If your company dies, calmly communicate, because you have nothing to lose. If everything is fine with you, you can also talk to them calmly: everyone understands that the price will be high, and if it seems to you that these guys are wasting your time, you have enough confidence to just kick them out.
')
Corporate development professionals are a danger to companies in the middle. Especially for young companies - fast growing, but still not mature enough. Communicating with them will be a mistake for a promising company that has not existed even for a year.
Transferred to Alconost
The founders of companies make this mistake again and again. When someone from the corporate development department tries to meet them, they think that it is worth at least finding out what he wants. In addition, the refusal to meet with a large company can be regarded as a manifestation of disrespect.
I will tell you what corporate development specialists want. They want to discuss the purchase of your company. This means "corporate development". So before agreeing to a meeting with someone from the corporate development department, ask yourself: “Do we want to sell the company right now?” And if your answer is “no,” tell corporate development specialists: “Sorry, but now we’ll focused on the development of the company. " It does not hurt them. And, of course, the owners of the Big Company won't offend this either. You can only grow in their eyes, reminding them of themselves. They also did not sell, and so now other companies are buying [1] .
Most of the founders of companies know why they are connected to the corporate development department. But even though they know what this department is doing, how they know that they don’t want to sell the company, they agree to a meeting. What for? This leads to the same mixture of denial and the habit of giving what is desired as real, which underlies most of the mistakes of the founders. Talking to someone who wants to buy you is always flattering. And who knows - what if their proposal turns out to be surprisingly high. It should be at least familiar with it, right?
Not. If they sent you the offer by email, you would, of course, have opened it. But communication with the corporate development department does not work that way. If you get an offer at all, it will arrive at the very end of a long and incredibly exhausting process. And if it surprises you with something, then only with the fact that it will be unexpectedly low.
Distracted - inappropriate luxury in a startup. And talking with representatives on corporate development is the worst thing that can distract you, because they not only absorb your attention , but also undermine the morale. If you want to go through this exhausting process, you should not stop to understand how tired you are. On the contrary: you need to join the stream. [2] Imagine what will happen to you if at the 32nd kilometer of the marathon someone runs up to you and says: “You must be very tired. Would you like to stop and rest? ”Communication with the corporate development department is just that, only worse, since their offer to stop is combined in your head with a high price, the offer of which you expect to receive from them.
And here you are in real trouble. If they succeed, corporate development specialists will turn your weapons against you. They love to bring you to the point where you make an effort to convince them to buy you, and they would not have to persuade you to sell. And they manage it surprisingly often.
This is a very slippery path, watered with powerful factors influencing the position of the founders. And experienced professionals bring you to it, whose job is directly to push you onto this path.
The methods with which they push you are usually quite cruel. All the work of people from corporate development departments is to buy companies, they do not even need to choose which ones. The only measure of their effectiveness is how cheap they can buy you, and the most ambitious of them will stop at nothing to achieve the lowest price. For example, they almost always start with a low sentence - just to check whether you agree to it. Even if you do not go for it, the low starting price demoralizes you, making it easier for them to further manipulate.
And this is the most innocent of their tactics. Sometimes they wait until you agree to the price and consider the transaction to be completed, after which they return and report that their boss canceled the transaction and does not agree to give more than half of the previously agreed price. It happens all the time. If you think that investors may behave badly, this is nothing compared to what corporate development specialists are capable of. Even from the corporate development departments of companies favorably disposed towards the rest. I remember how I once complained to a friend from Google about some dirty trick that their corporate development department applied to a YC startup. “But what about the motto“ Do not do evil ”?” I asked. “I don’t think the corporate development department knows about it,” he replied. [3]
The tactics used when discussing mergers and acquisitions can be completely against the rest of the relatively honest world of Silicon Valley. It is as if a fragment of the genetic material of an outdated gangster business was implanted into the world of startups.
The easiest way to protect yourself is to use the technique of John D. Rockefeller, who practiced it in order not to become an alcoholic (which his grandfather was). One day he asked a class in a Sunday school: “ Guys, do you know why I didn’t become an alcoholic? Because I did not drink the first glass . ” Want to sell a company right now? Not once, but now? If not, just do not go to the first meeting. They will not be offended. And your reward will be a guaranteed deliverance from experience, which is worse for a startup.
If you are really going to sell the company now, there is another set of techniques for this. But the biggest mistake that the founders of companies make when communicating with corporate development departments is not a bad conversation with corporate development specialists when they are ready to buy you, and an untimely conversation when they are not yet ready. In general, if you only remember the title of this article, you already know most of what you need to know about mergers and acquisitions throughout your first year.
[ 1] I do not say that you should never sell a company. I mean that you must clearly understand whether you want to sell it or not, and if not, you must stop any attempts to force you to sell before you planned, through manipulation or because of the substitution of the actual desired.
[ 2] In a startup, as in the most competitive sports, this task practically performs itself: you are too busy to tire. But as soon as you lose this defense, i.e. with the final whistle, exhaustion will hit you in a wave. Communication with corporate development departments is tantamount to such a wave in the middle of the game.
[ 3] To be completely honest, the obvious unacceptability of the actions of people from corporate development departments is reinforced by the fact that they represent large organizations that often do not know what they want. Buyers can be surprisingly hesitant about their purchases, and by the time it comes to you, their lack of obligation becomes indistinguishable from deception.
About the translator
The article is translated in Alconost.
Alconost is engaged in the localization of applications, games and websites in 60 languages. Language translators, linguistic testing, cloud platform with API, continuous localization, 24/7 project managers, any formats of string resources.
We also make advertising and training videos - for websites selling, image, advertising, training, teasers, expliners, trailers for Google Play and the App Store.
Read more: https://alconost.com
Corporate development departments within companies are engaged in the purchase of other companies. And if you are talking to someone from there - that’s what this is about, whether you are aware of it or not.
As a rule, you make a mistake by entering into a conversation with corporate development specialists, unless you: a) intend to sell your company right now and b) are sure that you will receive an offer of a reasonable price. In practice, this means that startups should communicate with corporate development departments only when they are doing really well or very badly. If your company dies, calmly communicate, because you have nothing to lose. If everything is fine with you, you can also talk to them calmly: everyone understands that the price will be high, and if it seems to you that these guys are wasting your time, you have enough confidence to just kick them out.
')
Corporate development professionals are a danger to companies in the middle. Especially for young companies - fast growing, but still not mature enough. Communicating with them will be a mistake for a promising company that has not existed even for a year.
Transferred to Alconost
The founders of companies make this mistake again and again. When someone from the corporate development department tries to meet them, they think that it is worth at least finding out what he wants. In addition, the refusal to meet with a large company can be regarded as a manifestation of disrespect.
“A mixture of denial and the habit of wishful thinking is the basis of most of the mistakes of the founders”
I will tell you what corporate development specialists want. They want to discuss the purchase of your company. This means "corporate development". So before agreeing to a meeting with someone from the corporate development department, ask yourself: “Do we want to sell the company right now?” And if your answer is “no,” tell corporate development specialists: “Sorry, but now we’ll focused on the development of the company. " It does not hurt them. And, of course, the owners of the Big Company won't offend this either. You can only grow in their eyes, reminding them of themselves. They also did not sell, and so now other companies are buying [1] .
Most of the founders of companies know why they are connected to the corporate development department. But even though they know what this department is doing, how they know that they don’t want to sell the company, they agree to a meeting. What for? This leads to the same mixture of denial and the habit of giving what is desired as real, which underlies most of the mistakes of the founders. Talking to someone who wants to buy you is always flattering. And who knows - what if their proposal turns out to be surprisingly high. It should be at least familiar with it, right?
Not. If they sent you the offer by email, you would, of course, have opened it. But communication with the corporate development department does not work that way. If you get an offer at all, it will arrive at the very end of a long and incredibly exhausting process. And if it surprises you with something, then only with the fact that it will be unexpectedly low.
“It looks like a piece of genetic material from an outdated gangster business was implanted into the world of startups”
Distracted - inappropriate luxury in a startup. And talking with representatives on corporate development is the worst thing that can distract you, because they not only absorb your attention , but also undermine the morale. If you want to go through this exhausting process, you should not stop to understand how tired you are. On the contrary: you need to join the stream. [2] Imagine what will happen to you if at the 32nd kilometer of the marathon someone runs up to you and says: “You must be very tired. Would you like to stop and rest? ”Communication with the corporate development department is just that, only worse, since their offer to stop is combined in your head with a high price, the offer of which you expect to receive from them.
And here you are in real trouble. If they succeed, corporate development specialists will turn your weapons against you. They love to bring you to the point where you make an effort to convince them to buy you, and they would not have to persuade you to sell. And they manage it surprisingly often.
This is a very slippery path, watered with powerful factors influencing the position of the founders. And experienced professionals bring you to it, whose job is directly to push you onto this path.
The methods with which they push you are usually quite cruel. All the work of people from corporate development departments is to buy companies, they do not even need to choose which ones. The only measure of their effectiveness is how cheap they can buy you, and the most ambitious of them will stop at nothing to achieve the lowest price. For example, they almost always start with a low sentence - just to check whether you agree to it. Even if you do not go for it, the low starting price demoralizes you, making it easier for them to further manipulate.
And this is the most innocent of their tactics. Sometimes they wait until you agree to the price and consider the transaction to be completed, after which they return and report that their boss canceled the transaction and does not agree to give more than half of the previously agreed price. It happens all the time. If you think that investors may behave badly, this is nothing compared to what corporate development specialists are capable of. Even from the corporate development departments of companies favorably disposed towards the rest. I remember how I once complained to a friend from Google about some dirty trick that their corporate development department applied to a YC startup. “But what about the motto“ Do not do evil ”?” I asked. “I don’t think the corporate development department knows about it,” he replied. [3]
The tactics used when discussing mergers and acquisitions can be completely against the rest of the relatively honest world of Silicon Valley. It is as if a fragment of the genetic material of an outdated gangster business was implanted into the world of startups.
“If you only remember the title of this article, you already know most of what you need to know about mergers and acquisitions during the first year”
The easiest way to protect yourself is to use the technique of John D. Rockefeller, who practiced it in order not to become an alcoholic (which his grandfather was). One day he asked a class in a Sunday school: “ Guys, do you know why I didn’t become an alcoholic? Because I did not drink the first glass . ” Want to sell a company right now? Not once, but now? If not, just do not go to the first meeting. They will not be offended. And your reward will be a guaranteed deliverance from experience, which is worse for a startup.
If you are really going to sell the company now, there is another set of techniques for this. But the biggest mistake that the founders of companies make when communicating with corporate development departments is not a bad conversation with corporate development specialists when they are ready to buy you, and an untimely conversation when they are not yet ready. In general, if you only remember the title of this article, you already know most of what you need to know about mergers and acquisitions throughout your first year.
Notes
[ 1] I do not say that you should never sell a company. I mean that you must clearly understand whether you want to sell it or not, and if not, you must stop any attempts to force you to sell before you planned, through manipulation or because of the substitution of the actual desired.
[ 2] In a startup, as in the most competitive sports, this task practically performs itself: you are too busy to tire. But as soon as you lose this defense, i.e. with the final whistle, exhaustion will hit you in a wave. Communication with corporate development departments is tantamount to such a wave in the middle of the game.
[ 3] To be completely honest, the obvious unacceptability of the actions of people from corporate development departments is reinforced by the fact that they represent large organizations that often do not know what they want. Buyers can be surprisingly hesitant about their purchases, and by the time it comes to you, their lack of obligation becomes indistinguishable from deception.
About the translator
The article is translated in Alconost.
Alconost is engaged in the localization of applications, games and websites in 60 languages. Language translators, linguistic testing, cloud platform with API, continuous localization, 24/7 project managers, any formats of string resources.
We also make advertising and training videos - for websites selling, image, advertising, training, teasers, expliners, trailers for Google Play and the App Store.
Read more: https://alconost.com
Source: https://habr.com/ru/post/287060/
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