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Indecent Proposal

A short while ago I was having a conversation with the co-founder of a startup that had been invited to an exploratory meeting with a big, global brand in their industry. She was excited and perhaps a bit flattered that their startup had hit the radar of this company and she was eager to explore opportunities for collaboration.

But she got a bit nervous when she heard that the meeting would include members of the M&A team as while they were in the throws of a Series A round, they certainly weren't looking to be bought out at this early stage.

I broadly come across 2 archetype founders :-

  1. Ones that are passionate about solving a problem and building a lasting legacy
  2. Those who want to make lots of money, fast

Of course the dream for many is to found a startup that is a combination of both of the above - but those are rare unicorns indeed.

This particular co-founder firmly stated that she fell in the first category - they had identified a pain point in their industry and had set about building a solution. Their reputation within their community had grown specifically because they were not (just) "in it for the money" and they had so far managed to evade overtures from both VC's and big, global brands that might sully the purity of their ambition and turn them into a pure money making machine, thereby forsaking those that they had built their foundation on.

She had come to me asking for advice on how to approach the meeting and traps she might encounter.

Meetings with VC's, big brands, potential collaborators and the like are often very one sided - the people on one side of the table have money, the people on the other side need money and/or access to markets and networks (which ultimately equate to money in the long run). The ones with the money will be calculating how much time, money and resources it would take them (or a competitor) to replicate what you have already built and whether or not the risks stack up. While you might be going into the room with a particular outcome in mind, you can never be sure what their intentions are and what kind of an outcome they are looking for.

You will often be asked questions that you really don't want to answer at that stage as you don't want to give too much away. This Harvard Business review article on "How to deflect difficult questions in an interview or negotiation" has some great preparation tips on the art of deflection. You need to think very seriously about the worst possible questions you could be asked and how you would deal with them and get yourself in a better position.

One of the questions I asked her was "have you considered your response to an Indecent Proposal"?

I was referring to the plot of the 1993 movie starring Demi Moore, Woody Harrelson and Robert Redford (the movie received terrible reviews by the way and earned a number of "worst" awards ....) which was based on the book of the same name written by Jack Engelhard. For those not familiar with the plot, here is a key bit of dialogue :-

- David Murphy: I guess there's limits to what money can buy.
- John Gage: Not many.
- Diana Murphy: Well, some things aren't for sale.
- John Gage: Such as?
- Diana Murphy: You can't buy people
- John Gage: That's naive, Diana. I buy people every day.

John later offers David and Diana one million dollars for a night alone with Diana to test the theory that "some things aren't for sale" (the "Indecent Proposal" of the title) ....... which of course it turns out that pretty much everything is ultimately for sale, at a price.

So - while my passionate and exuberant co-founder was adamant that their startup was NOT for sale .......... I asked her if she was really sure about her answer - and "what if" the big, global brand was so taken with their concept that they slapped down an offer of a million to buy them out? What about five million? Was there actually a number where she and her co-founder would be prepared to turn their back on their principals and walk away in return for all the trimmings that come with a fat bank balance?

Well, just like in the movie - it turns out that there was a number ............ in my experience, there usually is!

Indecent Proposals are uncommon, but not unheard of. My advice to founders is always "know that number before you walk in the room".

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Header Image by Vitabello from Pixabay