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Don't Talk to Corp Dev

paulgraham.com

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Re: Don't Talk to Corp Dev

#61

Post by cpncrunch »

gaius wrote: post #40
cpncrunch wrote: post #35

I think if anyone pulls the "my boss won't do the deal for the price we've already agreed on" I'd just tell them to politely fuck off. If they really want to buy you, they'll pay the agreed price. Or you might decide you don't want to do business with immoral fuckers :) Although given that this was google, I would probably just contact one of the higher-ups and tell them "I'm still interested in discussion the acquis…

Their boss didn't say this - it's purely a negotiating tactic.

That's even more reason to go directly to the boss (or someone even higher up). Lowballing is one thing, but outright lying should be unacceptable for any kind of business deal.

I did catch one of my customers lying to me - he claimed he couldn't afford the normal fee (which was only a few hundred bucks, or $1000 at most), and I later discovered he had millions of dollars in funding for this project. We had a big blow up about it, and the project died. Later, he came begging to me, as his clients really, really wanted my product. He paid the full price (and I would have charged him more if I could have gotten away with it).

Overall, lying to get business is a very bad idea. It will backfire and you'll end up spending more, and perhaps losing your job (at least, it will if you deal with someone who has morals and ethics, like me :)

Re: Don't Talk to Corp Dev

#62

Post by oxryly1 »

djb_hackernews wrote: post #8

I think anyones answer to "Do I want to sell my company right now?" is mostly going to be "It depends, what's the offer?" There are of course circumstances where people absolutely do not want to sell their company, but for the rest of us... it depends.

Maybe it's more like wandering onto the used car lot in the hopes that they'll surprise you with a deal you can't pass up. Maybe they will, but the process of getting there is not one you will enjoy.

Re: Don't Talk to Corp Dev

#63

Post by jonnathanson »

api wrote: post #20
programminggeek wrote: post #16

I think this is good advice, especially considered that corp dev could also be seen as a kind of corporate espionage program.

I had the same thought when I started reading, but didn't see any overt references to this. I am quite curious: has anyone around here experienced a case where it seemed like the objective wasn't to acquire/hire at all but to derail, tar-pit, or gather intel? I can imagine this happening if the approaching company is a direct competitor or is thinking of entering the space.

Intel gathering happens all the time. Corp dev people go on lots of fishing expeditions under the ostensible guise of acquisition talks. Sometimes they don't even need to mention an acquisition; they know that most startups will hear "BigCo wants to talk to you," and will leap at the chance to take the meeting. Bingo bango, they get free market intelligence, and all it cost them was a few hours of their time.

Things get messier when you talk about intentionally "derailing" companies. I'm sure this has happened before, but this is legally murky water. BigCo doesn't want to be perceived as anticompetitive, or as acting in bad faith. (Of course, it's very hard to show that they are acting in bad faith. Keep that in mind if you smell anything fishy.)

Re: Don't Talk to Corp Dev

#64

Post by rokhayakebe »

YC should have someone in staff to handle these requests. For others there should be a company that exists for the sole purpose of handling these types of conversations, letting you focus on your product while they do the do.

If a buying founder has their biz dev, corp dev, contact a founder then it is safe for the receiving founder to forward that request to his corp dev, inside or outside their company.

Re: Don't Talk to Corp Dev

#65

Post by Todd »

ph0rque wrote: post #10

Imagine what it would do to you if at mile 20 of a marathon, someone ran up beside you and said "You must feel really tired. Would you like to stop and take a rest?" I wonder if PG knows about The Wall that occurs at ~mile 20 in a marathon, or if it was a lucky coincidence? http://adventure.howstuffworks.com/outdoor-activities/runnin...

YC was founded in the Boston area.

Re: Don't Talk to Corp Dev

#66

Post by etjossem »

dethstar wrote: post #23
api wrote: post #15

Earlier quoted context omitted.

He gloated like this with you in the room? I'm only a little shocked... not that he'd gloat, but that he wouldn't think about the effect this might have on the morale of his new hires.

Maybe in their head they thought of it like "oh you all are great I can't believe I just had to paid X for this/you, it was totally a steal!"

Even when you rephrase it charitably, it still sounds like the acquirer's CEO is talking trash about someone these employees have followed for years.

At best, it's a "you guys are great, but your ex-boss is a terrible negotiator and didn't know what you were worth." There's no reason to say that aloud.

Re: Don't Talk to Corp Dev

#67

Post by droopyEyelids »

emmett wrote: post #56
gaius wrote: post #32

Remember a VC doesn't want a company to have a 10% chance at a million dollars, they want a 1% chance of a billion, because that's how it works. But if you are a founder, a million dollars is probably the best deal for you , and your people, and you should grab it with both hands. Numbers made up but you get the idea.

This is completely, 100%, wrong about how YC thinks about things. If you've not advised a large number of fledgling startups, you wouldn't know, but really truly talking to corpdev is demoralizing and dangerous. If they really want you they'll reach out with an dollar figure (albiet probably a low one). If they haven't done that, they aren't serious. Don't waste your time. If actually you've raised from a VC, a small…

Do you think YC represents the general VC industry?

Re: Don't Talk to Corp Dev

#68

Post by akanet »

gaius wrote: post #32

Remember a VC doesn't want a company to have a 10% chance at a million dollars, they want a 1% chance of a billion, because that's how it works. But if you are a founder, a million dollars is probably the best deal for you , and your people, and you should grab it with both hands. Numbers made up but you get the idea.

Having done the corp-dev dance a bit, I can promise you that grabbing a million dollars with both hands realistically looks way more like "selling your product to people to make money" than it does "sell your company to corp-dev".

PG's quote about the offers only being surprisingly low is correct, from what I can tell.

Re: Don't Talk to Corp Dev

#69

Post by peterjancelis »

I think the more important advice is: If you do talk to corp dev, insist on a breakup fee upfront, payable if no minimum price has been offered:

"We can talk but I am looking for at least $xxx million and will need $xxxK / $x million if you walk away during or after due diligence, to compensate for my time."

It's only without a breakup fee that Corp Dev can smoke you out...

Re: Don't Talk to Corp Dev

#70

Post by neilk »

ph0rque wrote: post #10

Imagine what it would do to you if at mile 20 of a marathon, someone ran up beside you and said "You must feel really tired. Would you like to stop and take a rest?" I wonder if PG knows about The Wall that occurs at ~mile 20 in a marathon, or if it was a lucky coincidence? http://adventure.howstuffworks.com/outdoor-activities/runnin...

pg has talked about how his main exercise is running.
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