Exploding Offers Suck • Hacker News Board

Re: Exploding Offers Suck

#111

Post by jusben1369 » Mon, Sep 08, 2014, 10:14 PM UTC

I'm sure Sam's heart is in the right place but I'm not sure I agree with him here:

"Exploding offers suck. Founders should be able to choose the investor they want to work with, not have to make a decision based on time pressure."

and investors should be able to choose the founders they want to work with. And accelerators are the one's who make it all about the calendar. So they inject the notion of time and deadlines (YCSpring12 etc)

"where an accelerator tries to force a company to make a decision about a funding offer before the company has a chance to finish talking to other accelerators."

The risk here is that sounds like sour grapes.

"after we make you an offer, we’ll give you until the beginning of our program to decide (though most companies accept quickly, because you can’t start having office hours with us and participating in other ways until you accept). We ask companies to be transparent with us about needing more time--we won't rescind our offer. It’s usually about 45 days from interview to the start of the batch."

- We use "soft" deadlines. You don't get access to important resources until you say yes. And yes look we have 45 days from interview to the start of the batch (there's that pesky calendar coming into play)

"We encourage all other accelerators to join us on this. It should be an easy yes. Exploding offers are the wrong thing for founders, and an accelerator that does the wrong thing for founders will not last long."

- We're the pre-eminent accelerator and other accelerators should play by the same rules as that way we'll stay the pre-eminent accelerator!

"And founders should think very hard about joining an accelerator that puts forth a short-fuse offer."

Once again makes me feel like they're losing out to this tactic and it's hurting. And a bit of FUD?

Are you creating startups that have to go out and compete in a very competitive world? Seems like insulating them from making important business decisions is a little counter intuitive.

Again, I'm sure Sam's motives are pure. This is a little tin can ear to me and whiny.

Re: Exploding Offers Suck

#112

Post by 27182818284 » Mon, Sep 08, 2014, 10:15 PM UTC

nostrademons wrote: post #108

cynicalkane wrote: post #94

Earlier quoted context omitted.

It's difficult to imagine a situation where it's rational to offer another rational actor an exploding offer to buy a car. Jobs sometimes need to be filled quickly. But when is selling a car today so much worse than selling one tomorrow? It sounds like the "exploding offer" another scumbag car dealer pressure tactic. Car dealers will do anything, including lying, to prevent you from negotiating efficiently.

Car dealers have sales targets for each month. If they hit the target, they usually get a big bonus from the manufacturer. I've gotten a dealer to sell me a car under dealer price by e-mailing every car dealer in the area on the 29th of the month, saying I was looking to buy a (specific model of a) car immediately. All you have to do is find the one dealer who is 1-2 cars away from hitting their bonus target. It is r…

For those curious, This American Life did a whole podcast on the end-of-month car sales thing. It was quite fascinating and really does exist.

One of the more interesting points in the entire thing came in the first minute where they point out that things like the end-of-month sales impact the entire US economy because it has to do with auto sales, and GM and steel working and etc follow up the chain. Weird to think of it like that.

Re: Exploding Offers Suck

#113

Post by jfoutz » Mon, Sep 08, 2014, 10:20 PM UTC

bushido wrote: post #97

malgorithms wrote: post #9

A dear friend and excellent negotiator told me that when he gets any kind of short-term exploding offer, the first thing he does is verbally reject the deadline. And the second thing he does is ignore the deadline and offer feedback only after it has passed. I've seen him employ this many times in practice and it has always worked out. I don't want to be responsible for anyone losing a deal, but remember: when someon…

> the first thing he does is verbally reject the deadline Verbally reject the offer or the deadline? Can you give us some examples? I understand that it is most likely the deadline, but from the sounds of it the strategy should be a little more complex. Currently it sounds like: Someone: We would need an answer in 10 days? Your friend: I can't reply in 10 day. --- 12 days later --- Your friend: The answer is yes. Som…

It puts the pressure back on Someone.

Your friend has to do a bunch of stuff in 10 days to satisfy Someone. There's opportunity cost associated with that, and there's no guarantee of money yet.

Just saying no relieves a lot of that pressure. Someone has to decide if they're really interested. If you get No right away, you've saved yourself 10 days of pointless work. If they accept the new timeline, they're probably more interested than you realized.

It's kind of like poker. If you're not sure enough to make a tough decision, you can always make somebody else make a tough decision instead.

edit

Assuming no information about Someone, they're level of interest X might be .01, or .99 - they have at least a little interest, because they're meeting you.

Making a demand lets you calibrate your understanding of X a little bit. Outright rejection indicates X was really low to begin with.

Maybe they have some regulatory constraint, and the date is a huge hassle to change. Well, X is less than that cost of change. In that case, they'd tell you.

In the OK, state, you you're likely better than .01, but you don't get a ton of information about how much better. If they explain why the timeline is they way it is, it's Y effort to change those dates, you can adjust X to the new level proportional to how much extra work you've made them do by missing the deadline. - They're at least that interested.

Re: Exploding Offers Suck

#114

Post by wycats » Mon, Sep 08, 2014, 10:21 PM UTC

edmccard wrote: post #73

wycats wrote: post #37

Earlier quoted context omitted.

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…

>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. If you had several candidates of equal ability, would you still use an exploding offer? Otherwise, it seems to be less about "giving candidates an answer within a certain timeframe" and more about putting pressure on the candidate you really wan…

> If you had several candidates of equal ability, would you still use an exploding offer?

1) yes 2) I don't think I've ever been in a situation where I had multiple candidates without any preference.

Re: Exploding Offers Suck

#115

Post by VarunMKhona » Mon, Sep 08, 2014, 10:24 PM UTC

This is sensible and good for the entrepreneur. If its good for the entrepreneur, its good for the prospective accelerator, its good for the prospective investors and so on and so forth. The virtuous cycle is for real. The issue is the not-so-famous accelerators bear the brunt because almost all applicants are awaiting response from YC and not the other way around. If the conclusion of this is you give you short-term exploding offer, the accelerators have got it all wrong. Instead, the right perspective is that they need to make their value prop as strong as a YC. Glass half-full/half-empty, remember?

Re: Exploding Offers Suck

#116

Post by wclax04 » Mon, Sep 08, 2014, 10:25 PM UTC

mrfusion wrote: post #57

fecak wrote: post #45

Earlier quoted context omitted.

Employment offers tend to be exploding because a company has a single need and doesn't want to lose every candidate because they are waiting for their top choice. Almost every offer of every kind 'explodes' at some point. It's the duration until the explosion that varies. I'm sure YC will make you reapply for future consideration, just as companies can not be expected to honor your employment offer if you defer for a…

What's a normal period for exploding employment offers? Is 2 days a lot or a little?

In finance it was usually around 2 days.

Re: Exploding Offers Suck

#117

Post by morgante » Mon, Sep 08, 2014, 10:33 PM UTC

edmccard wrote: post #109

sliverstorm wrote: post #95

Earlier quoted context omitted.

If you had several candidates of equal ability, would you still use an exploding offer? I would think you would. If you have 10 candidates but only want to hire 1, you can only issue one offer at a time regardless the fact that all 10 are equally qualified. While the first candidate would love to have all the time in the world to contemplate the offer, the employer and the other 9 candidates who are waiting in line d…

>the other 9 candidates who are waiting in line don't want that [to wait for the first candidate to contemplate the offer] If any of them have other offers, they might appreciate _some_ extra time to decide between them. EDIT: Nevermind the previous bit--I was still thinking in the context of multiple simultaneous offers, which I guess is not a thing. And if not, then if the first choice turns it down, you make an ex…

> And if not, then if the first choice turns it down, you make an exploding offer to the second (to be fair to the next 8), and again to the third (to be fair to the next 7), etc. Is there ever a situation where an exploding offer is not in everyone's best interest?

The ideal scenario would be if it were socially acceptable to rescind offers—thus making the exploding offer unnecessary. An employer could make offers to everyone they're interested in, see who accepts, and then stay with them (essentially, allow parallel analysis on both sides). Instead, candidates can have multiple simultaneous offers while companies can only make offers sequentially. Hence the exploding offers.

Re: Exploding Offers Suck

#118

Post by bushido » Mon, Sep 08, 2014, 10:37 PM UTC

jfoutz wrote: post #113

bushido wrote: post #97

Earlier quoted context omitted.

> the first thing he does is verbally reject the deadline Verbally reject the offer or the deadline? Can you give us some examples? I understand that it is most likely the deadline, but from the sounds of it the strategy should be a little more complex. Currently it sounds like: Someone: We would need an answer in 10 days? Your friend: I can't reply in 10 day. --- 12 days later --- Your friend: The answer is yes. Som…

It puts the pressure back on Someone. Your friend has to do a bunch of stuff in 10 days to satisfy Someone. There's opportunity cost associated with that, and there's no guarantee of money yet. Just saying no relieves a lot of that pressure. Someone has to decide if they're really interested. If you get No right away, you've saved yourself 10 days of pointless work. If they accept the new timeline, they're probably m…

Good explanation.

I understand and agree with letting somebody else make a tough decision.

I was a little concerned with the OP's explanation as OP made it (almost) sound like a one size fits all strategy.

Re: Exploding Offers Suck

#119

Post by bcbrown » Mon, Sep 08, 2014, 10:50 PM UTC

fecak wrote: post #90

mrfusion wrote: post #66

Earlier quoted context omitted.

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…

> We often see candidates trying to expedite the offer process in order to receive offers around the same time.

As a candidate, what would be the best tactics to achieve that objective? Say I have 6-8 candidate employers, from mature startup to enterprise in size, and I'm moderately senior. My approach would be to do the phone screens with them all, and narrow it down to about 4 companies to interview with in person, then do that all in a single week, planning on accepting somewhere at the end of the next week.

Re: Exploding Offers Suck

#120

Post by donw » Mon, Sep 08, 2014, 11:05 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…

Depending on the timeframe, this sounds somewhat reasonable.

I'm assuming at the point where you make the offer, you and the candidate have established that you want to work with each other, and already agreed on compensation and terms.

Given that, you're already past the negotiation stage, and there is a time limit on when the deal can close. You need to hire one of your candidates, so it makes some sense to say "you have some-number-of days to accept this offer."

The key here is that you've already negotiated the agreement. In the past, I've had companies make me exploding offers with zero opportunities for negotiation.

Every time I've rejected such an offer, and every time it's been the right decision.