One of the most challenging (and least discussed) aspects of business is the resentment that comes from deal-making. Whether an investor, founder or employee entering into a new relationship the friction of aligning two divergent perspectives to do a deal affects people emotionally. Blood pressure rises, people can get angry and in the worst case scenario they take that baggage with them after the negotiation, giving way to resentment.
A wise man once said, “if both parties don’t feel cheated you didn’t do a fair deal.”
Resentment is fairly common after a deal is done. While reaching an agreement often requires some work, simply reaching an agreement is typically easier than arriving at an outcome that makes everyone happy. Without very thoughtful communication from both parties and a great deal of effort, achieving perceived “fairness” often represents a narrow version of the mutually acceptable outcomes.
Resentment can also emerge after time passes. What is fair today might not seem fair tomorrow. Context can change perceptions. While hindsight is closer to 20/20, looking into the future can be quite blurry leading to arrangements that some folks might later regret.
Perceptions of unfairness can become a big deal. When people feel cheated they can become resentful, breeding negative interactions and bad blood…the most caustic input into a company’s operation.
Having known my fair share of employees, investors and founders, it seems that founders are the parties that are most often caught in the cross-hairs of negative feelings. There’s good reason for that. First, they often hold some of the largest individual stakes in a given company. Second, they’re the counterparty in almost every relationship. Founders negotiate with employees, investors and each other.
There are three types of founder resentment that seem somewhat common.
- Investors resenting non-operating founders for owning a slug of the company’s equity without operating day-to-day.
- Employees resenting founders for owing a larger slug of the business but only putting in as many hours as they are.
- Founders resenting co-founders for their relative contributions to the business.
There is no perfect solution to the resentment issue simply because there is no truly fair arrangement. There are a number of reasons for this.
- Counter parties often define “fair” entirely differently,
- Contexts change and what was once fair may now seem out of balance to some, and
- Other interpersonal conflicts can often motivate us to look for excuses to resent others.
- And…the list goes on.
If you’re a founder, investor or employee and you’re feeling some resentment – you’re probably not alone – it’s the most human thing in startupland. Unfortunately, it’s often a total waste of time.
So what can we do?
From my viewpoint we should throw out the word “fair.” That’s not the goal of these negotiations. And, it’s certainly not the goal of business.
The goal is to advance the business in as *reasonable* a way as possible. That often means doing the most reasonable deal that you can at each juncture. Close the deal, move on to the next and don’t look back.
Inevitably, your rearview mirror will frame a windy road of business decisions that seem inefficient in hindsight. We all wish we could have driven in a straight line – the fastest road to the promise land. In the game of business it’s hard enough to make it to your destination, however, so don’t bother beating yourself or others up over how you could have done it better. We should all focus on just making it to the end of the road…getting there is hard enough. And, if all of your partners (investors, founders, employees) can enjoy the fruits of the promise land when you arrive – that should only make you happier.