3 ms·

The thing that unstuck the negotiation was conceding to the disputed term (agreeing to pay the credit card fees). The "steak dinner" trick seems to have little

by erdevs 10y ago

The thing that unstuck the negotiation was conceding to the disputed term (agreeing to pay the credit card fees). The "steak dinner" trick seems to have little to do with it. Basically this boils down to "if you're stuck in negotiations but really want to wrap up the deal, consider just conceding on the final, minor points in contention. Maybe try to get something small in exchange for your larger concession(s)." Not exactly earth-shattering and the hubris in even glancingly comparing this to the brilliance of Nash's work is astounding. On top of that, this counter-concession doesn't even scale up with increasing revenue. But Hootsuite's fees do increase as revenue increases. I think it'd be more interesting to read a negotiation tip from the vendor in this situation. Something like "if you've already worked out the major terms in a deal and you are fairly confident the counterparty wants the deal done, but you are stuck on a final point that affects you more than them... consider standing firm, even to the point of obstinance. Test the limits and see if you can get them to concede. If they're holding out, see if you can offer something trivial in exchange for their concession or if you can get them to make an offer to concede in exchange for some trivial ancillary benefit. Sometimes this works as people are irrational and just want to feel they 'gotcha', even if what they're conceding is of greater value -- and has the potential to be of far greater value-- than the exchange. All the better if you can make them feel like they're oh-so-clever in the proposal. We once had a partner we were negotiating with agree to cover credit card fees which would've hurt our net revenue share substantially, simply in exchange for agreeing to buy them a steak dinner once a quarter, which we likely would've done anyway to keep this important partner relationship moving forward and growing over time. Ha! We made sure to cap the price of the steak dinner and merrily signed, having won the business concession we needed." Besides not even being a great or meaningful technique in practice and certainly not defining any new theoretical work of import (unlike Nash), this is also mildly unethical and would reflect poorly and/or get the practitioner in trouble in many, if not most, situations. It is sad to see the comments on Medium cheering "brilliant, man!" and "love this."

mathattack 10y ago
And the vendor is the one who benefits more from the steak dinner. Most vendors love taking out clients to expensive meals. It grows the business as a result. I'm a big fan of creative outs in negotiations (figure out what you value and the other party doesn't value and ask for it as a concession, or change the deal to create more value) but this was more like "in return for giving a concession to the vendor, we are giving another one."
oxryly1 10y ago
> The thing that unstuck the negotiation was conceding to the disputed term (agreeing to pay the credit card fees). The "steak dinner" trick seems to have little to do with it. No, a concession would be if they just ate the credit card fees. The "steak dinner" was the fair value trade for the credit card fees.
- erdevs 10y ago
  It is enjoyable to negotiate with people who view "concession" in this sense. You can get them to agree to terms of greater business value in exchange for terms of smaller business value, and they don't even think they "conceded" a thing! It's a concession. Hootsuite didn't want to cover the credit card fees. But they ended up doing so. There wasn't even a proportional split (eg "let's each cover our portion of the credit card fees, according to our revenue share split") or a split of any kind. There was a separate concession by the vendor to cover steak dinners (of lesser value, and only a fixed cost) in exchange for Hootsuite's credit card fee concession... but that does not somehow make Hootsuite's concession a non-concession. In any case, no point in debating terminology. Hootsuite gave up more value than they gained, but both parties got the deal done and are happy with it, so they made the right call in the end (conceding vs blowing the deal up). It's just not an amazing or widely applicable negotiation technique and, if anything, the vendor likely employed the better technique here.
  - gregmac 10y ago
    Maybe in a couple months we'll see the reciprocal article: "How we saved thousands of dollars of credit card fees by paying for a couple steaks"
  - bisby 10y ago
    If credit card fees are $2,000 for every $100,000 of revenue (assuming 2% and all revenue through CCs), how is that different than 450$ for every $100,000 of revenue. This was not a 1 time dinner, it was "up to 0.45% of revenue will be spent on steak dinners" In the end it's still a concession, 0.45% is less than 2%, and a vendor might spend that much for schmoozing and maintaining business relationships anyway, but I would say its the same kind of cost as credit card fees.

by erdevs 10y ago

mathattack 10y ago

And the vendor is the one who benefits more from the steak dinner. Most vendors love taking out clients to expensive meals. It grows the business as a result. I'm a big fan of creative outs in negotiations (figure out what you value and the other party doesn't value and ask for it as a concession, or change the deal to create more value) but this was more like "in return for giving a concession to the vendor, we are giving another one."

oxryly1 10y ago

> The thing that unstuck the negotiation was conceding to the disputed term (agreeing to pay the credit card fees). The "steak dinner" trick seems to have little to do with it. No, a concession would be if they just ate the credit card fees. The "steak dinner" was the fair value trade for the credit card fees.

erdevs 10y ago
It is enjoyable to negotiate with people who view "concession" in this sense. You can get them to agree to terms of greater business value in exchange for terms of smaller business value, and they don't even think they "conceded" a thing! It's a concession. Hootsuite didn't want to cover the credit card fees. But they ended up doing so. There wasn't even a proportional split (eg "let's each cover our portion of the credit card fees, according to our revenue share split") or a split of any kind. There was a separate concession by the vendor to cover steak dinners (of lesser value, and only a fixed cost) in exchange for Hootsuite's credit card fee concession... but that does not somehow make Hootsuite's concession a non-concession. In any case, no point in debating terminology. Hootsuite gave up more value than they gained, but both parties got the deal done and are happy with it, so they made the right call in the end (conceding vs blowing the deal up). It's just not an amazing or widely applicable negotiation technique and, if anything, the vendor likely employed the better technique here.
- gregmac 10y ago
  Maybe in a couple months we'll see the reciprocal article: "How we saved thousands of dollars of credit card fees by paying for a couple steaks"
- bisby 10y ago
  If credit card fees are $2,000 for every $100,000 of revenue (assuming 2% and all revenue through CCs), how is that different than 450$ for every $100,000 of revenue. This was not a 1 time dinner, it was "up to 0.45% of revenue will be spent on steak dinners" In the end it's still a concession, 0.45% is less than 2%, and a vendor might spend that much for schmoozing and maintaining business relationships anyway, but I would say its the same kind of cost as credit card fees.