Big Red Car here. Bit cloudy for a Saturday. Better check with Mother Nature.
The forces of nature at work.
Therein lies our topic for today — the natural processes that cannot hope to be concluded in less than 5-7 “touches.” The 5-7 touch process that drives real life.
There are a lot of them — sales, hiring, forming an effective board, throwing a co-founder overboard, replacing a CEO.
One of the secrets that engineers learn about is something called calculus. Calculus is all about rabbits.
Say you have a rabbit and you have a head of lettuce. The rabbit, being a rabbit, wants some of that lettuce. You can substitute kale for lettuce. Many folks are doing just that.
You say to the rabbit, “You may jump halfway from your position to the lettuce until you reach and eat the lettuce.”
The rabbit protests, “If I can only jump halfway, then I NEVER get to the lettuce.”
To which you reply, “If you knew calculus, you stupid rabbit, you would realize that you finally get close enough that you just lean over, when nobody is looking, and eat the lettuce. It is called calculus, you stupid rabbit.”
The rabbit bites you, pisses on the carpet, leaves droppings in the pantry but learns how calculus works. When the rabbit masters those infinite slices, she finally gets to eat the lettuce. [Note the gender bending attempt at diversity. Even Big Red Cars are into diversity these days. Pandering, mind you.]
The Multi-touch Process
Much like calculus, there are many things that are done by CEOs (founders, entrepreneurs, CEOs) which cannot be done in a single bold stroke and can only be done in multiple strokes. Inexperienced CEOs learn this lesson on the way to becoming journeyman like CEOs but it requires a bit of pain to really learn it well. Pay attention today and you can save some of that pain.
When you know that something will take multiple touches, you can make informed decisions. You plan the individual actions knowing that, like calculus and the rabbit, you will jump halfway to the solution until finally you just lean over and solve the problem.
It cannot be done by trying to either reduce the number of contacts or by appealing to the wisdom of speed (which others may call impatience).
You must touch all the touchstones in turn and earn the goodwill to proceed to the next step.
Real World It, Big Red Car
Recently, the Big Red Car assisted a CEO in extricating himself from a bad situation — meaning he either had to resign or be fired. Stuff happens.
[Pro tip: About 80% of all VC funded companies change out their founding CEO in the first four years of the company’s existence. When one considers that in the same time frame a similar cross section of VC funded enterprises fail, you can only say — WOW! The Big Red Car bringing you the truth.]
The Big Red Car told the soon to be former CEO — “Going to be a seven touch process before it gets resolved.”
The Big Red Car gave the CEO an exemplar of a term sheet and said, “Let’s start here. What do you want to do? Write it down.”
The CEO wanted to sell back some stock, collect some money owed to him by the company, and be relieved of any going forward obligations. In return for this, he was willing to hand over the CEO title and the leadership and management duties of the company.
Term Sheet as Initial Touch, Y’all
It often starts with a term sheet. If you need a good one, ping The Boss and he’ll send you a battle tested exemplar.
The CEO worked up a term sheet, delivered it, and it was game on.
What did the company (the VCs were the power behind the throne here) say? What was there response?
“You’re nuts. We don’t have to pay you anything and if we did, we sure wouldn’t pay you that much.”
But, the CEO had gotten some good advice and had thrown out a number, terms and conditions that had enough wiggle room and fat to provide a range of possible outcomes that would satisfy him. Not maximize but optimize.
Long story short, they used that term sheet, a lot of pissing on each other’s legs, and a continuous small movement negotiation to get to a final solution which irritated and satisfied both of them. It took exactly seven touches to get there and there were no grand strokes until they were about five thousand dollars apart at which time the VCs said, “We’ll pay you the extra five thousand dollars if we can close by Friday.”
They finalized the deal entering into a definitive agreement, a non-compete, a mutual non-disparagement agreement, a no-hire agreement, a prohibition on using confidential/proprietary/trade secret information, and a mutual indemnity agreement. Once the term sheet was agreed the docs appeared as if by Divine Inspiration.
[Pro tip: Use a good term sheet to negotiate anything. Keep the lawyers in the background — not disregard them, background them — until the term sheet is executed and only then turn them and their time clocks loose. It will prevent the injection of theatrics and it will save you money on legal bills.]
Proving once again, that you do not get what you deserve in life, YOU GET WHAT YOU NEGOTIATE.
The corollary of which is that it’s going to take 5-7 touches to negotiate almost anything of consequence and it often gets started with one side throwing out a term sheet.