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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

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 someone offers you an exploding offer, it's because they really, really want you to take it. If anything, it should be a sign there's (a) more time to be had, and (b) plenty of room on the terms. Any deadline claim has to be concrete and believable. The start of the YC program is a good example.

tieTYT 12y ago
> 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 deadline shows that you're not excited and they'll know to go with the second best candidate? FWIW, I'm relating this to exploding job offers as I have no direct VC experience.
- wisty 12y ago
  If they don't really want you, they'll tend to give vague and noncommittal timeframes so they can check out other options. A job offer might be time limited if there's a planned start date though.
- eli 12y ago
  It seems unlikely that someone would instantly flip from wanting to do a deal to refusing to do a deal just because it drags on a little longer than they wanted. But anything's possible. If you're happy with the offer and don't want to risk losing it, take it!
- malgorithms 12y ago
  It's imaginable that there's a very short-term deadline affecting a deal. But remember: that puts the side with the deadline at a disadvantage, not an advantage. Consider these examples: really needing to sell something for the money, desperately needing someone to fill a job, needing to use a scarce item in the short term, etc. If one of these is happening for real, then the offer they make will have to be compellingly high and convincing, demonstrating their position of weakness. If someone offered you 5X your normal rate and explained they needed a job done this weekend, that's not a negotiation strategy on their part. But feigning indifference and giving you a short-term deadline for an offer you're unsure you can beat -- that's just a negotiation move, and personally, I would call them on it. Again, I don't want to be responsible for failed application of this :-)
- nostrademons 12y ago
  The key insight is that there's an emotion inside people's heads that's driving their decision-making. You can't see it, and if they're good negotiators they don't want you to see it, but it's there and it'll remain there even if you don't accept the offer. If they gave you an exploding offer, then that signals that the emotion is "We really, really want you, and we're afraid someone else will snap you up." If it looks like someone else snaps you up and then you suddenly, miraculously become available a month later - what's the emotion? It's usually elation that you happen to still be available. The one exception is people who are susceptible to sour grapes. "Well, we can't get you, therefore we didn't really want you in the first place." These offers disappear, but you often don't want to work for companies like this anyway, as it shows that management can't get over personal feelings of rejection to do what they'd judged rational a month earlier. BTW, this is why it's usually not a problem to return to a past job that you've done well at and left on good terms. They liked you then, there's no reason why they wouldn't like you now.
- wycats 12y ago
  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 within a certain timeframe (often for very legitimate reasons; a job change can often be a life-changing event) and that means that there are some real time-limits across all of the candidates (in both directions).
  - edmccard 12y ago
    >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 want. >there's a risk of losing all candidates if I waited for an indefinite time on the strongest candidate. Is there nothing in between an exploding short-term offer and an indefinite open-ended offer?
    - sliverstorm 12y ago
      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 don't want that.
      - edmccard 12y ago
        >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 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?
- joshu 12y ago
  Just from the context of term sheets, exploding offers are usually because the firm wants the deal to close before other people are able to negotiate.
- pmarca 12y ago
  Good VCs and good employers only make offers when they really want the candidate.
larrys 12y ago
"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 read a book on it if you want. (I can always tell someone who is fresh from reading a book.) Actually exactly for this reasons: "I don't want to be responsible for anyone losing a deal" Of course, it's easy when someone else is taking all the risk. "when someone offers you an exploding offer, it's because they really, really want you to take it." Could be. But there are cases where this is not true. How lucky do you feel in interpreting all the signals based on a limited time as a negotiator? And getting back to what Sam has said: "Sometimes they say they have a fixed amount of desk space, but in practice, if a good company wants to join late, they always make room." Things are never always clear cut. Very possible your company is borderline and you don't fall into a "must have" category. By even YC's own thoughts there are many more qualified companies than they can accept. Not everyone is a superstar that can write their own terms. "Any deadline claim has to be concrete and believable." How so? You ask them? You investigate? You poke around? General advice the specifics are much harder. In any case the last thing you want to do (according to at least my method which might differ from another negotiators method) when you are negotiating is tip your hand. And if someone is bluffing the last thing you want to do is let them know or that you think that they are bluffing. As such saying anything that sounds like "prove it" is certainly a way to do that. In negotiating often people claim something that isn't true and bluff. It's part of the game. The idea is not to make them prove it. The idea is to figure it out on your own and use it to your advantage. [1] It's a game.
- tptacek 12y ago
  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.
davemel37 12y ago
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 ok with losing the deal. In this case, waiting will make you lose the deal. Sometimes, a good enough offer is better than a slightly better offer. More importantly, as Robert Ringer says, "The results you get out of a negotiation is inversely proportionate to how intimidated you are when negotiating."
- mathattack 12y ago
  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 12y ago
    [deleted]
  - cynicalkane 12y ago
    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.
    - chrsstrm 12y ago
      You assume it was a dealership. A perfectly legit example of an exploding offer would be a used car with an attractive price where the deal goes to the first person to show up and claim it.
blazespin 12y ago
While I applaud Sam and his statement: "an accelerator that does the wrong thing for founders will not last long.", your advice is wrong. An offer is basically giving an option to sell for free. The longer the option is available, the more you're giving away. Exploding offers are just limits on how much people want to give away for free.
bushido 12y ago
> 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. Someone: We'll give you the money. The success rate of this exchange seems questionable.
- jfoutz 12y ago
  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.
  - bushido 12y ago
    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.
  - pmarca 12y ago
pmarca 12y ago
That is precisely the right thing to do.

tieTYT 12y ago

> 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 deadline shows that you're not excited and they'll know to go with the second best candidate? FWIW, I'm relating this to exploding job offers as I have no direct VC experience.

wisty 12y ago
If they don't really want you, they'll tend to give vague and noncommittal timeframes so they can check out other options. A job offer might be time limited if there's a planned start date though.
eli 12y ago
It seems unlikely that someone would instantly flip from wanting to do a deal to refusing to do a deal just because it drags on a little longer than they wanted. But anything's possible. If you're happy with the offer and don't want to risk losing it, take it!
malgorithms 12y ago
It's imaginable that there's a very short-term deadline affecting a deal. But remember: that puts the side with the deadline at a disadvantage, not an advantage. Consider these examples: really needing to sell something for the money, desperately needing someone to fill a job, needing to use a scarce item in the short term, etc. If one of these is happening for real, then the offer they make will have to be compellingly high and convincing, demonstrating their position of weakness. If someone offered you 5X your normal rate and explained they needed a job done this weekend, that's not a negotiation strategy on their part. But feigning indifference and giving you a short-term deadline for an offer you're unsure you can beat -- that's just a negotiation move, and personally, I would call them on it. Again, I don't want to be responsible for failed application of this :-)
nostrademons 12y ago
The key insight is that there's an emotion inside people's heads that's driving their decision-making. You can't see it, and if they're good negotiators they don't want you to see it, but it's there and it'll remain there even if you don't accept the offer. If they gave you an exploding offer, then that signals that the emotion is "We really, really want you, and we're afraid someone else will snap you up." If it looks like someone else snaps you up and then you suddenly, miraculously become available a month later - what's the emotion? It's usually elation that you happen to still be available. The one exception is people who are susceptible to sour grapes. "Well, we can't get you, therefore we didn't really want you in the first place." These offers disappear, but you often don't want to work for companies like this anyway, as it shows that management can't get over personal feelings of rejection to do what they'd judged rational a month earlier. BTW, this is why it's usually not a problem to return to a past job that you've done well at and left on good terms. They liked you then, there's no reason why they wouldn't like you now.
wycats 12y ago
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 within a certain timeframe (often for very legitimate reasons; a job change can often be a life-changing event) and that means that there are some real time-limits across all of the candidates (in both directions).
- edmccard 12y ago
  >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 want. >there's a risk of losing all candidates if I waited for an indefinite time on the strongest candidate. Is there nothing in between an exploding short-term offer and an indefinite open-ended offer?
  - sliverstorm 12y ago
    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 don't want that.
    - edmccard 12y ago
      >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 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?
joshu 12y ago
Just from the context of term sheets, exploding offers are usually because the firm wants the deal to close before other people are able to negotiate.
pmarca 12y ago
Good VCs and good employers only make offers when they really want the candidate.

larrys 12y ago

"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 read a book on it if you want. (I can always tell someone who is fresh from reading a book.) Actually exactly for this reasons: "I don't want to be responsible for anyone losing a deal" Of course, it's easy when someone else is taking all the risk. "when someone offers you an exploding offer, it's because they really, really want you to take it." Could be. But there are cases where this is not true. How lucky do you feel in interpreting all the signals based on a limited time as a negotiator? And getting back to what Sam has said: "Sometimes they say they have a fixed amount of desk space, but in practice, if a good company wants to join late, they always make room." Things are never always clear cut. Very possible your company is borderline and you don't fall into a "must have" category. By even YC's own thoughts there are many more qualified companies than they can accept. Not everyone is a superstar that can write their own terms. "Any deadline claim has to be concrete and believable." How so? You ask them? You investigate? You poke around? General advice the specifics are much harder. In any case the last thing you want to do (according to at least my method which might differ from another negotiators method) when you are negotiating is tip your hand. And if someone is bluffing the last thing you want to do is let them know or that you think that they are bluffing. As such saying anything that sounds like "prove it" is certainly a way to do that. In negotiating often people claim something that isn't true and bluff. It's part of the game. The idea is not to make them prove it. The idea is to figure it out on your own and use it to your advantage. [1] It's a game.

tptacek 12y ago
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.

davemel37 12y ago

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 ok with losing the deal. In this case, waiting will make you lose the deal. Sometimes, a good enough offer is better than a slightly better offer. More importantly, as Robert Ringer says, "The results you get out of a negotiation is inversely proportionate to how intimidated you are when negotiating."

mathattack 12y ago
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 12y ago
  [deleted]
- cynicalkane 12y ago
  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.
  - chrsstrm 12y ago
    You assume it was a dealership. A perfectly legit example of an exploding offer would be a used car with an attractive price where the deal goes to the first person to show up and claim it.

blazespin 12y ago

While I applaud Sam and his statement: "an accelerator that does the wrong thing for founders will not last long.", your advice is wrong. An offer is basically giving an option to sell for free. The longer the option is available, the more you're giving away. Exploding offers are just limits on how much people want to give away for free.

bushido 12y ago

> 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. Someone: We'll give you the money. The success rate of this exchange seems questionable.

jfoutz 12y ago
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.
- bushido 12y ago
  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.
- pmarca 12y ago

pmarca 12y ago

That is precisely the right thing to do.