Editor’s note: Richard Boyd is CEO of 3Dsolve, a Cary-based company focused on game-based simulation learning. Boyd will discuss “How to Structure, Negotiate and Close the Deal” at the Council for Entrepreneurial Development’s (CED) Entrepreneurs Only Workshop on Feb. 22 at 12pm at CED’s RTP office. This column is the latest in a series for LTW from the membership of CED.
_______________________________________________________________________________________Young entrepreneurs today have been weaned on movies like Wall Street and books by Donald Trump that successful business people are sports-minded individuals intent upon winning. Winning, by definition, means prevailing over one’s adversary, getting one’s way. Two will enter, one will leave.

Most would-be entrepreneurs devour business books. Look on the shelf behind the intense furrowed gaze of a brooding entrepreneur intent upon realizing their dream and you will find books like Inside the Tornado and Engineering Your Startup. And perhaps more ignobly, books with titles like The Art of the Deal and Out-negotiate the Competition, books that fairly drip with testosterone.

And these books set the rules, right? You can’t keep score without knowing what game you are playing and by what rules. If you are an entrepreneur with a great idea and the moxy to chase your dreams you go and buy one of these rule books, write a business plan and go out there and start out-negotiating everyone within earshot until you get your way. That is how it is done, right?


But maybe there are a few simple guidelines that just might work without requiring you to make Faustian, Gordon Gecko-esque bargains just to get your new wireless software or biotech or service business off the ground. Just maybe, you can make your own rules. Wouldn’t that be interesting? It’s your idea. Why not make your own rules, therefore your own game, then go out and win it.

Since the best selling business books all try to break down their advice into nice bulleted lists, I will try to do the same to bridge the gap. But let’s not call them rules, just things to think about. Agreed? Great. Here we go.

You Aren’t Gordon Gecko

And who wants to be? (Okay, some of us. Just a little. And just for a little while, until Darryl Hannah leaves for Charlie Sheen). If you go into every deal with a Donald Trump swagger intent upon defeating the VC/supplier/service firm/customer across from you instead of seeking a quickly closed deal of mutual benefit

  • Your chances of getting the deal done will go way down,

  • The time to do the deal will extend way past Christmas and you will forget to buy your spouse a present because you are plagued by lawyers and caffeine and an eighty page red-lined contract,

  • You potentially risk future deals if you manage to get a reputation for being a difficult person to deal with and

  • Even if you succeed you may only end up with an unnatural relationship on your hands that will haunt you until you or your company die.
  • Most healthy companies got there by creating ongoing relational contracts with suppliers, financiers and customers where the deal structure is beneficial to everyone involved. I hate to borrow from the self help business books and really hope I’m not infringing on someone’s trademark by saying — Win-win deals make you sleep better. More importantly, they make for healthier, more productive companies that build more shareholder value.

    A few more helpful tips:

    Explore Alternative Currencies

    Just because the business schools and books say go write a business plan and start knocking on VC doors doesn’t mean that is what you have to do. They tell you this because they say you can’t get anywhere without money. And they are right, you do need money, but you need it under the right terms. The entire secret of building a successful, healthy start-up is to get your company to that breathtaking point in its development where you aren’t so needy any more. (I’ll come back to that in a later bullet).

    By alternative currencies I mean sweat equity and real equity. Try recruiting some of the people in your network to come spend a little time with you in between their own VC pitches. Ask them to bring their own computers and software. (Most people are surprised to learn that there is no rule that the company has to provide these tools. Remember, your company, your rules) Give them some equity in your company.

    Work with a lawyer who believes in your idea and will take equity to make sure you are following all of the SEC and IRS rules in the game you are inventing. (Your game needs certain rules that you don’t get to change. Like rules from the SEC, FCC , IRS and gravity) Trade services with suppliers.

    I once had negotiated a deal to have my company logo emblazoned on a car at the Long Beach Grand Prix transmitted to forty million viewers by Fox. And I never wrote a check. (Attend the CED lunch on February 22nd and I’ll tell you how.) And attract sales people in your industry with incentive based compensation plans.

    When it comes to financing, don’t rely on the self-help books or your own drive to succeed. Bring in the big guns. But guard your cash and lure them with your alternative currency: equity.

    Bring in the Pros

    In the increasingly complex contractual mazes we weave today it is extremely helpful to have someone who knows the ropes; someone who lives and breathes the arcane language and choreography of mergers and acquisitions; of investments and IPOs and convertible debt instruments. I am speaking of course of the entrepreneur’s friends: bankers, lawyers and accountants. Cultivate these relationships and invite them to the party early and often, always being mindful of the last bullet point. Pay in in-kind services, warrants and stock options when possible. It is your best currency at this stage. These professionals also tend to have useful networks of people who can help you.

    Don’t be Needy

    There. I’ve just given away the most closely held secret in business. Go to the bank or venture capitalists when you don’t need the money. Negotiate that end of the quarter customer deal when you have already met your goals for the quarter. In short, always do deals in an environment where the other party is more motivated to do the deal than you. Only then can you be reasonably assured of a deal with all of your demands or very few concessions.

    Even when you do find yourself in this rarest and most revered of deal-making situations, remember that the investor, supplier or customer with whom you are dealing will be around for a long time and you may encounter them again. Be gentle but firm and go for that win-win deal; even if you are sitting across from Gordon Gecko.

    Richard Boyd is CEO of 3Dsolve Inc. (www.3dsolve.com ), a Cary-based company focused on game-based simulation learning. His life mission is to create software solutions that help businesses take full advantage of existing and future hardware technologies. Richard has formed several startup companies employing computer gaming and 3D technologies and is co-author of a 1995 book on 3D Internet technologies (The Virtus VRML Toolkit, Hayden books) that was translated into three foreign languages. He is a graduate of the University of North Carolina at Chapel Hill and serves on the board of the 3D industry forum.

    For more information on CED’s Feb. 22 Entrepreneurs Only Workshop (in which Boyd will be speaking), visit www.cednc.org/calendar .