April 24, 2013
9 Negotiation Tactics From Famous CEOs

Everything is negotiable. It’s one of those trade secrets every businessperson knows but won’t divulge. Because at the end of the day, those who bargain the best are the ones who come out on top. Learning to play the game to your advantage, to disagree without being disagreeable, is more than just a valuable skill—it’s key to survival.

To demonstrate several ways to broker a deal, we’ve rounded up nine stories from famous CEOs at the negotiation table. While we don’t recommend every tactic, you have to admit these moguls know how to wheel and deal their way through business.

1. Make everyone else look lousy.

Apple CEO Steve Jobs’ main closer strategy was to offer an insane amount of money compared to other contenders. By making bids that were so irresistible, Jobs perfected the take-it-or-leave-it approach and effectively rendered his subjects blind to any other offer. As a result, he landed basically every deal he wanted.

One such negotiation happened to a music startup called Lala that caught Jobs’ eye for its potential to become Apple iTunes. The startup also intrigued Nokia, which offered $11 million, and Google, Jobs’ arch nemesis. According to a designer who worked for Lala CEO Bill Nguyen, Jobs wrote down a figure on a piece of paper, passed it to Nguyen and after some nodding, the deal was done. The number? $80 million.

2. Channel your frustration into a well-meaning threat.

After months of public hinting that Microsoft was very, very interested in buying Yahoo!, a frustrated Steve Ballmer wrote a threatening letter to Yahoo!’s board directors, blaming them for a sinking business and offering just three weeks to complete the deal before he would go directly to shareholders—an action he claimed would have an “undesirable impact on the value of your company.”

While the letter managed to start discussions between the companies, Yahoo! demanded more than Ballmer could handle and the deal fell flat.

3. Play mind games with everyone.

When Donald Trump decides he wants to take someone’s business, he apparently stuffs a few tricks up his sleeve before negotiation time.

First, he’ll have his staffers warn you that he’s very busy, probably won’t be able to stay long and won’t shake your hand (he just doesn’t do that). Then when Trump enters the room—you know, the one from The Apprentice—you’re instantly charmed over by his warm handshake, extensive 40-minute chat about business and glossed-over terms of sale.

You walk out feeling quite good about yourself, says a CBS source. In reality, you were duped into thinking completely normal negotiation courtesies were really flattering, undeniably giving Trump the upper hand.

4. Refuse to compromise.

Poor Larry Ellison can’t seem to get an NBA team, but that might be because compromise isn’t a strong part of his negotiation strategy. While the Oracle CEO has been itching to move a team to San Jose, California, his top picks have spurned him on the basis that they don’t actually want to move.

Ellison has been denied the Golden State Warriors, the New Orleans Hornets and, especially, the Grizzlies—on his third attempt, Grizzlies owner Michael Heisley reported, “We’re not even considering Ellison. This team cannot be moved.” Since Ellison already knew this, maybe he’s hoping persistence will pay off.

5. Use prestige as one of your main assets.

Amid the struggling economy and bailouts of 2008, Warren Buffett demonstrated he could negotiate a better deal than the United States Treasury. From a $10 billion investment into Goldman Sachs, Buffett was promised a return that was triple the percentage that the Treasury hoped to get from the nine banks it gave $125 billion taxpayer dollars.

Granted, Buffett was out to make extra cash while the government hoped to save the economy. But really, who would you rather have as an investor? Buffett’s name holds prestige none other can match—while his endorsement means impending success, government handouts arguably declare you’re on your last leg and no one else would help.

6. Schmoozing pays off.

If you didn’t see the Disney-Lucasfilm deal coming, that’s because it was kept extremely under the radar. While George Lucas and Disney CEO Bob Iger have been friends and business partners since the 1990s, only recently did Lucas warm up to the idea of selling his beloved company.

Only after Iger challenged Lucas to a mock lightsaber battle in front of hundreds of cheering Star Wars fans at the opening of a new Disneyland ride did Lucas agree to call him when he was interested in selling. In praise of Lucas’s skills, Iger said, “He just has this way of carrying that light saber.” After patiently waiting through a year of secret meetings and negotiations, Lucas signed over the Star Wars franchise. Ecstatic, Iger dressed up as Darth Vader for Halloween the next day.

7. Leave lawyers and investors at the door.

When Facebook CEO Mark Zuckerburg acquires a startup, he doesn’t seem to like consulting his advisors first. “Mark will convince companies he is going to acquire that they should accept a deal on a projected valuation,” one CEO who has negotiated with Zuckerberg told The New York Times. “Then, he’ll go back to investors who want to put money into Facebook and say, look, this start-up was going to join us at this valuation, so you should invest at that number.”

Then there was last year’s $1 billion deal with Instagram, for which Zuckerberg made his lawyers stay inside his home watching Game of Thrones while he ate steak and ice cream on the back patio with Instagram CEO Kevin Systrom. Facebook’s board of directors was also kept in the dark, only hearing about the transaction a few days before the company’s announcement.

8. If cooperation isn’t on the table, overthrow the whole thing.

When Dick Costolo became CEO of Twitter, the board of directors was one of many dysfunctional things he inherited. Boardroom leaks were rampant, attendees were openly texting from meetings and there were simply too many people trying to be directors.

Costolo finally got so fed up that he did something not many CEOs have been able to do—he leveraged his authority and kicked all the investors off the board. In doing so, he proved Twitter was his company and if you weren’t going to play by his rules, he was going to send you home.

9. Remember you have something they want.

Yelp founder and CEO Jeremey Stoppelman held his ground when Google and Yahoo! approached him about buying his online review business. “The negotiation went from looking out and envisioning faster growth, a stronger brand, and more or less local invincibility to a conversation about what the company is worth,” he told Fast Company. “That wasn’t why I engaged the process in the first place, so I just shut it down.”

Good thing, too, or he may have made an enemy of one of the most powerful men on the planet. While on the phone with an investor and $25 million on the line, Stoppelman was passed a sticky note with the words, “STEVE JOBS IS ON THE LINE.” Stoppelman excused himself and switched to his cell phone. “Don’t sell,” Jobs told him. “Google is evil.”

  • Moses

    No, what’s he is saying is offer something the other party cannot refuse. Of course, know the value of the product you are buying first. If you think 80 million is something that can make you billions in a few years time, why not, go for it.