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Exploding Offers Suck

blog.ycombinator.com

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Re: Exploding Offers Suck

#131

Post by dmoney »

geebee wrote: post #104
sanjayparekh wrote: post #77

Earlier quoted context omitted.

When I was reading this I thought to myself "wait, didn't YC have exploding offers before"? Glad you dug this up. It was widely known back then that PG viewed it as a "intelligence test" if you didn't accept on the spot. If you didn't, he didn't want you. So I guess now the tide has turned. That all said, I'm very much against exploding offers. The person offering the deal may have a reason to do so but you should re…

Here's the write up from the pg's essay site. http://www.paulgraham.com/frinterview.html

The relevant bit:

F|R: I read that when you call Y Combinator winners, the founders have only five minutes to accept. ("If people turn us down," he says, "as far as we're concerned they've failed an IQ test.") Have startups turned you down? Are there any that have turned Y Combinator down and still gone on to succeed with a liquidity event?

Graham: You're confusing two separate things. The reason people are supposed to decide quickly whether or not to accept is that they already know everything except the percent we'll ask for. They've already seen the deal terms, and they already know as much as they're going to know about YC before actually working with us. So they should already know when we call what percentage they'd be ok with. Since all they have to do is subtract one integer from another, five minutes should be enough.

The "IQ test" quote refers not to how fast they have to decide, but the amount of equity we usually ask for. In the median case it's 6%. If we take 6%, we have to improve a startup's outcome by 6.4% for them to end up net ahead. That's a ridiculously low bar. So the IQ test is whether they grasp that.

There was one startup that turned us down because they received an acquisition offer during the weekend when we did interviews. It was a pretty good offer. I'd have taken it in their position, and they did. But other than that I don't know of anyone who turned us down and went on to succeed. There have only been about three others who turned us down.

Re: Exploding Offers Suck

#133

Post by morgante »

mrfusion wrote: post #129
morgante wrote: post #102

Earlier quoted context omitted.

> Thanks. Also wondering: should more senior people be offended by exploding offers. Architects, team leads, etc? If anything, they should be less offended. Companies are often simultaneously hiring multiple junior developers, so it's less necessary to make purely sequential offers. Technical leads, on the other hand, are typically hired for a specific need. Given their cost, companies rarely are hiring multiple lead…

I don't see a CEO or even vp being given two days to decide. I think senior programmers have earned at least a little professional courtesy, no?

> I don't see a CEO or even vp being given two days to decide.

In an early-stage company, even two days is a lot for a high-level executive hire. At the point that an offer is made, the interview process should have been so thorough that it can be accepted within hours.

Re: Exploding Offers Suck

#134

Post by vvimal »

negotiation is all about context. Knowing your BATNA is the first step. That will give you a baseline for your negotiation. Like in trading, you only hear about the success stories about top notch negotiators. The reality is much more nuanced than that.

Re: Exploding Offers Suck

#135

Post by zaidf »

seats wrote: post #53

I'm an MD for Techstars and I completely agree. This is the approach we've always taken for the programs that I've run, (Techstars Cloud and the Austin TS program). In several cases, just as a consequence of the calendar, the timing of when we've given offers out can create tension for a company, particularly if it lands in between the YC interview notification and the actual YC interview. When it's come up in the pa…

I went through YC in '07. But prior to getting into YC, I got into Techstars' very first class. David was a total class act in letting me go through the YC interview process before making a decision and completely understanding when I decided to go with YC. Although I went with YC(and would do so again), that one experience left a positive impression in my mind of TS.

Re: Exploding Offers Suck

#136

Post by pmarca »

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…

That is precisely the right thing to do.

Re: Exploding Offers Suck

#137

Post by pmarca »

tieTYT wrote: post #24
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…

> 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…

Good VCs and good employers only make offers when they really want the candidate.

Re: Exploding Offers Suck

#138

Post by pmarca »

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…

All correct.

High quality investors and hiring managers don't make offers to people they're not highly interested in.

Odds are much higher that interest is close to 0.99 than 0.1.

Re: Exploding Offers Suck

#139

Post by pmarca »

davemel37 wrote: post #63
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…

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…

Mark is performing for television. The only appropriate response to a 30 second offer is "f--- off".

Re: Exploding Offers Suck

#140

Post by pmarca »

haliax wrote: post #78
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…

How would you advise someone to learn how to negotiate and get better at negotiation?

The best book is "No":

http://www.amazon.com/No-Only-Negotiating-System-Need/dp/030...

And there's a reason that's the title :-).

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