Exploding Offers Suck • Hacker News Board

Re: Exploding Offers Suck

#81

Post by jacquesm » Mon, Sep 08, 2014, 8:26 PM UTC

tptacek wrote: post #54

larrys wrote: post #48

Earlier quoted context omitted.

"A dear friend and excellent negotiator told me that when he gets any kind of short-term exploding offer, the first thing he does" As someone who considers himself an excellent negotiator (and gets paid to do negotiating) [1] I'd really caution someone from employing a technique that someone else uses that you don't have experience with. Negotiating is all nuance it's not engineering or an exact science. Go try and r…

Deliberately waiting until the offer ostensibly expires seems like an advanced technique, but simply disregarding the time frame seems pretty safe. Exploding offers are incredibly weak; they're a way of slapping your negotiating floor on the table before your counterparty says a word. There's something to be said for the idea that losing a seed funding deal to term explosion is a dodged bullet, too.

> There's something to be said for the idea that losing a seed funding deal to term explosion is a dodged bullet, too.

Exactly. It sets the tone for how the relationship is going to develop and relationships like that you can miss like a toothache. Better to take your time and see what it is that they're afraid you'll figure out if you think about the offer a bit longer.

Re: Exploding Offers Suck

#82

Post by [deleted] » Mon, Sep 08, 2014, 8:28 PM UTC

mathattack wrote: post #70

davemel37 wrote: post #63

Earlier quoted context omitted.

This reminds me of SharkTank where Mark Cuban would make a shot-clock offer and give 30 seconds for someone to accept the offer. Here's the thing. Mark Cuban can walk away from any deal, at anytime and not feel like he is missing out. So, while you are certainly getting the shorter end of the stick with an exploding offer...It's usually coming from a place where the person making the offer has enough leverage to be o…

Also about how many options you have for yourself. You never want to put yourself in a situation where you might get an exploding offer without something else in hand. Unfortunately I didn't follow this advice when recently buying a car.

[deleted]

Re: Exploding Offers Suck

#83

Post by nihaar » Mon, Sep 08, 2014, 8:29 PM UTC

When my co-founders and I were applying to accelerators in 2008, we had been accepted into a Philadelphia based accelerator called DreamIt shortly before our YC interviews. Not knowing if we would get into YC, we accepted with DreamIt as it was an exploding offer. A few weeks later we found that we got accepted by YC. After deliberating it for sometime, we went back to the DreamIt team and told them that we wished to rescind our acceptance. This started a shitstorm with the DreamIt team as they seemed to take this very personally. It was the first year of doing the accelerator and they went as far as threatening to take legal action. Not knowing what to do, we turned to PG and Jessica for help, a bit hesitantly, as we were afraid of what they would say. PG expressed his extreme disappointment with how DreamIt had reacted to this and was supportive of our situation. He send them an email telling them to back off and that this was not an acceptable way to be treating founders.

Just one anecdote out of many of how YC has gone to many lengths to protect founders.

Since that experience, I've realized that it really doesn't do accelerators any good to introduce these conditions in their funding offers. It creates a bad reputation amongst founders in the increasingly competitive field of accelerators. And founders ultimately need to pick based on what they think will have the most impact to their business. Compete on benefits you can offer to founders, not legalese.

Re: Exploding Offers Suck

#84

Post by jacquesm » Mon, Sep 08, 2014, 8:29 PM UTC

diminish wrote: post #79

sama wrote: post #3

Earlier quoted context omitted.

only in the early years of YC did we require an answer right away. as much time as the founders want has been the unofficial policy for awhile, but i thought it was time to share it.

I think it's a good opportunity for YC to improve the acceptance process. Why don't you review the applications in a FIFO basis and give an immediate green light to invitations? If they are ready for an interview why not have weekly interviews till the deadline? Clearly the waiting isn't founder-friendly neither..

At a guess because that would eliminate the largest advantage the classes system gives: batch acceptance gives YC the opportunity to evaluate all the potentials against the backdrop of every other entry. If they start accepting along the line then they're going to disadvantage themselves because there is only a limited number of slots for interviews. So by sorting them in decreasing order they operate more efficiently.

Re: Exploding Offers Suck

#85

Post by fecak » Mon, Sep 08, 2014, 8:30 PM UTC

dmourati wrote: post #75

fecak wrote: post #61

Earlier quoted context omitted.

In my experience two days is low. 5-10 days is more common, and most companies are fairly willing to negotiate beyond that given some circumstances. It's not common to see candidates rejected if they try to accept an offer after it explodes.

Mine was two days (Friday-Sunday). First last and only time I'd seen that hence my reaction.

There could be some highly specific situations where a two day exploding offer could be necessary for the business. That in itself doesn't make the offer unacceptable, and that also doesn't necessarily warrant a 'steer clear' warning for readers without more context. I wouldn't judge this company based on a single known two day exploding offer without further details.

Re: Exploding Offers Suck

#86

Post by larrys » Mon, Sep 08, 2014, 8:34 PM UTC

tptacek wrote: post #72

larrys wrote: post #62

Earlier quoted context omitted.

"but simply disregarding the time frame seems pretty safe" All depends. Once again you could be right but I could also argue under the theory that "once you make a sale you close and get your ass out of dodge". Because things can and do change. Keep in mind that an open offer not taken can be withdrawn. Or new information can come up which makes it less attractive or gives someone a reason to change their mind. I off…

When a deal dies like that, it's sometimes hard to tell whether it died because of how you negotiated, or whether it died because it started out dead, and your negotiating tactics just qualified it quickly.

A great observation and one of the ways that I rationalized the loss was by saying to myself exactly the same thing.

Re: Exploding Offers Suck

#87

Post by danshapiro » Mon, Sep 08, 2014, 8:34 PM UTC

jacquesm wrote: post #80

It's simple: if you're being pressured just say 'no'. There is no upside to negotiations under pressure, only downsides. Likely the pressure is there because if you thought about it long enough you'd refuse the deal anyway, so you might as well refuse it right off the bat and tell the counterparty the time-limit is what caused you to refuse. If you have no other options then likely you already made a series of mistak…

Actually, if you're being pressured, a better response is, "If you need an answer now, it's going to have to be 'no', so I hope you can adjust your schedule so we can consider your offer more fully."

Exploding offers are unfortunate and a significant negative data point about the behavior of the organization but they are not the only data point. The above answer will defuse the threat and give you the upper hand in the negotiation so you can make the right decision for your team, whether it's 'yes' or 'no'. This is helpful for exploding offers in any circumstance - jobs, M&A, etc.

As a side note, while short-horizon offers are terrible, it is reasonable to have some expiration date. Techstars Seattle, for example, has 10 slots and while they might be able to add an extra one or two, logistics don't allow for the kind of flexibility that YC has[1]. I believe there's a good way for an accelerator to handle this ethically:

1) Tell applicants when the decision date is when they apply (so they can plan accordingly) rather than surprising it on them as a negotiating tactic

2) Provide all relevant information when they apply, so they can consider the possibilities in advance, versus (for example) springing restrictions, valuations, or fees on them when they get the offer

3) Allowing enough time between the acceptance and the notification for the team to make a good decision - a week seems reasonable.

YC's behavior is exemplary here; their model and position in the industry lets them be super-flexible. Other programs may not have the ability to be quite as flexible but that doesn't mean they're unethical if they're thoughtful about their implementation.

[1] My understanding as a mentor for the program - I don't have inside knowledge

Re: Exploding Offers Suck

#88

Post by jacquesm » Mon, Sep 08, 2014, 8:37 PM UTC

danshapiro wrote: post #87

jacquesm wrote: post #80

It's simple: if you're being pressured just say 'no'. There is no upside to negotiations under pressure, only downsides. Likely the pressure is there because if you thought about it long enough you'd refuse the deal anyway, so you might as well refuse it right off the bat and tell the counterparty the time-limit is what caused you to refuse. If you have no other options then likely you already made a series of mistak…

Actually, if you're being pressured, a better response is, "If you need an answer now, it's going to have to be 'no', so I hope you can adjust your schedule so we can consider your offer more fully." Exploding offers are unfortunate and a significant negative data point about the behavior of the organization but they are not the only data point. The above answer will defuse the threat and give you the upper hand in t…

Good one, yes, that's even better.

Re: Exploding Offers Suck

#89

Post by mchusma » Mon, Sep 08, 2014, 8:40 PM UTC

wycats wrote: post #37

tieTYT wrote: post #24

Earlier quoted context omitted.

> when someone offers you an exploding offer, it's because they really, really want you to take it. Couldn't it be because they've got a lot on their plate and after a certain period of time they want to free up their brain cycles and stop wondering if you're going to accept that deal? Couldn't it be that you're barely preferred and making the deadline shows them that you're excited about the offer? Missing the deadl…

Whenever I've offered an exploding offer in the past, it's because I had several candidates: an extremely strong candidate and several strong but somewhat weaker candidates. In general, all of the candidates have a limited timeframe to make a decision, and there's a risk of losing all candidates if I waited for an indefinite time on the strongest candidate. In other words, candidates sometimes also need an answer wit…

Thanks for this. I was looking for someone to come in with basically this point. Sam's point seems to be that if you are trying to hire/fund within a ballpark range of candidates/companies, then exploding offers aren't good practice. If you were trying to hire exactly one candidate, or fund exactly one company this quarter, than exploding offers make more sense. Because companies are often hiring only one person for a role, I don't expect he would extrapolate what he says to hiring.

Re: Exploding Offers Suck

#90

Post by fecak » Mon, Sep 08, 2014, 8:41 PM UTC

mrfusion wrote: post #66

fecak wrote: post #61

Earlier quoted context omitted.

In my experience two days is low. 5-10 days is more common, and most companies are fairly willing to negotiate beyond that given some circumstances. It's not common to see candidates rejected if they try to accept an offer after it explodes.

Thanks. Also wondering: should more senior people be offended by exploding offers. Architects, team leads, etc?

I'm not sure anyone 'should' be offended by an exploding offer. There are lots of potential factors at play. You only see people talking about exploding offers of employment when the window is relatively small - no one bats an eye when given 45 days to accept a job offer, as that should give plenty of time to find other competitive offers. It's those 3-5 day figures where candidates tend to think they smell a rat.

No one wants to be forced into a decision at gunpoint, which is essentially what a short notice exploding offer becomes. Part of this is also dependent upon the length of the interview process and how much detail is given. If you interview with a company 10 times over a 6 week period, I don't think a short window for acceptance is overly limiting for most candidates.

We often see candidates trying to expedite the offer process in order to receive offers around the same time. Candidates are at their most advantageous position when they hold multiple active job offers, and they have the opportunity to leverage them off each other (I'm not suggesting this tactic). Yet when companies try to expedite the acceptance process, suddenly we feel that there is something dubious at play. Candidates want companies to make quick (and positive) hiring decisions, yet want to take their time to maximize their ability to shop for offers.

More senior talent is less of a commodity than an entry-level candidate, so you might expect more junior level candidates will see exploding offers more often than senior candidates. Senior talent can also leverage their experience a bit more in order to get windows increased if necessary.

I don't think they should be offended as much as they should be curious as to why the company employs such tactics (assuming again that the window is short).