Our new From the Vault series examines episodes from The Art of Charm’s past more deeply; we invite you to revisit them — or discover them for the first time — with us. Here, Alex Kouts gives us the edge we need to overcome our fear of negotiating and make deals that benefit both sides of any arrangement.
Episode 326: The Art of Negotiating with Alex Kouts was recorded in October 2014. It was a discussion between Alex and Jordan about the art of negotiation. The conversation ranged everywhere from the ins and outs of the mattress industry and how you can save thousands of dollars negotiating for one, to the best way to deal with job offers and performance reviews, to always remembering to have a BATNA (Best Alternative to Negotiated Agreement). Mindset is at the heart of almost everything we teach at AoC, and negotiating is no different. This episode gives practical hints and tips on how to navigate negotiations, the value of prework, and how to empower yourself to think creatively about solutions.
Why Negotiating is Always an Option
Alex managed to obtain seven raises in two years — and this wasn’t just because he was working in “startup world” (with all its peculiar and unusual patterns) — this was because he leveraged his wins into upping his salary; he didn’t wait to capitalize on them. Alex noted that one of the things we so often forget about in negotiation is how the other side feels. They don’t want to lose you. They don’t want to lose the negotiation. And they don’t want to restart the hiring process. Hiring is a long and expensive process. So that’s the first thing you should remember: this isn’t a situation of inequality, but rather one in which both sides want a positive outcome.
However, before you even get to the negotiations, you should realize the value of prework. Prework is in-depth research into the particular subject that you want to negotiate. Alex shared a story in which he was able to negotiate very favorable lease terms by identifying property liens his landlord was holding and then offering a price that was definitely aggressive, but not insulting. “I felt 80 feet tall going in there,” Alex told Jordan.
He did the same thing in buying a mattress for himself (and helping his girlfriend buy one). He found out that the mattress industry has massive margins and he even found out that some mattresses are white-labeled and priced differently for different brands and categories. A more “expensive” brand will be priced higher than the “budget” brand — but the mattresses are exactly the same! With knowledge like this, Alex then went to four successive stores, leveraging each lower price he negotiated into a lower “matching price” at the next store. Some lines he used in his negotiations included:
- “What’s your best out-the-door price?” (Now you’ll find out what the price is with tax, fees, etc.)
- Then follow up that previous question with “Can you do X% below that?“
- Then close with “If you can reach my price, I’ll buy today.”
This last line is crucial because it allows the person trying to sell you to taste the win — instead of the sale being an abstraction, it’s right there. Remember, the hiring manager needs to fill that position. The mattress salesman needs to sell that mattress. They need this too.
Alex says you can even create a worksheet for yourself by asking clear and direct questions like:
- What am I negotiating?
- What is my timeline? (This will affect your urgency.)
- Who are the parties involved? (Asking questions will ensure you are dealing with the decision-maker.)
- What are my interests in this particular case?
You’ll find an additional level of clarity once you’ve taken a few moments to clearly address these points.
Jordan really appreciated these lines that Alex was sharing and segued into a discussion about job offers by adapting the quote: “What’s your best in-the-door price?” to refer to salary. Alex has some strong opinions here. First, he says never, ever make a first offer. Second, never, ever give a salary expectation. There’s no advantage to doing either of these things. If pressed by the company to which you are potentially applying, Alex recommends replying:
“I’m looking at a few different offers and opportunities — what were you thinking?”
This puts it immediately back on them while giving them social indications that you are, indeed, a commodity, and may not be indefinitely available for them to recruit.
Unlike negotiating for a mattress, in which you may deal with a person who you may never see again, when negotiating a job offer, you may be speaking to someone with whom will be working closely in the years ahead, and as such, there’s a delicate alchemy that needs to be used in resolving this process rather quickly rather than drawing it out. When you do get an offer, Alex recommends not counteroffering immediately. “Say thank you for the offer and that you are grateful for the opportunity, and then ask if there is any flexibility on the base.” This puts the person who gave the offer to you on the defensive, and immediately gets them to both answer your question and reveal their negotiating open. They will almost always say “yes” to the question about flexibility on the base, which allows you to come back with a counter. Alex also emphasizes trying to focus on one thing rather than on a suite of things, and it’s better to focus on your salary than on your individual benefits, per se.
Jordan added that it might be nice to add a perk to the offer, like asking to be able to have a quarterly or semiannual lunch with the founder, or CEO, or some other valuable C-level executive of the company. In the beginning these individuals may simply be helping the company abide by a contract they signed with you, but if you prove yourself to be pleasant and friendly and worthwhile as a dining companion, not only will you have increased opportunities at your company via direct networking, but you’re going to get a bird’s eye view of the vision and the future of the company from someone directly involved in crafting it.
Alex agreed and noted that if you couldn’t get your higher base, a shadow way to get on an accelerated track for raises is to ask for semiannual performance reviews instead of annual ones. This means you’re getting feedback twice as often as everyone else, but it also means you’re eligible for raises twice as often too.
A great closing line that could easily have been used in Glengarry Glen Ross is: “Based on other opportunities, if you can match this (salary) I can give notice tomorrow.” This again implies social proof — the word “match” implies other competing offers in this range — and it allows them to, as in the example above, “taste” victory. Alex says — nine times out of ten — when this close is used by him or his clients, the offer is extended and accepted.
An additional strategy to use either before or after that closing line is strategic silence. Remember that when you are silent — either in person or virtually by email — the counterparty is filling that empty space with all their insecurities and it puts them back on the defensive.
But all these strategies and tips are pointless if you don’t have a Plan B, or a BATNA.
Best Alternative to Negotiated Agreement (BATNA)
Implied in every negotiation is the ability to walk away. If, for example, the first offer you are given is wildly off your needs or expectations, you can counter — but realize it’s probably pretty close to what they actually can offer. They are never going to offer you the top of the budget for the role, but figure they are offering at least 70-80% of that budget. In fact, Alex points out that he wouldn’t hire someone who would simply accept the first offer he gives. The person is simply acting like a sheep instead of the empowered individual he would like to hire.
Before you begin any negotiation, after you’ve done your prework, look at your end goal and figure out what your Plan B is. It will strengthen your negotiating position even more.
Also, when you’re in a job already, think about an “emergency chute.” This is your Plan B. What do you need to do if things go south or change within the company you are working in? Again, negotiating isn’t limited to the beginnings of things.
Jordan also shared an interesting story from his attorney days in which he negotiated a settlement amount and a very large gift certificate to Bed Bath & Beyond. This wasn’t just because Jordan was looking for proof that the counterparty was going as low as it said it could on the settlement (the representative claimed they didn’t have the authority to give any more), but because he was thinking creatively about how to get the additional funds. That’s something Alex really hammered home as part and parcel of the entire mindset of negotiating. By preparing (prework), using strategies, and being ready to walk away (BATNA), you activate a proactive, creative approach to negotiating that might not exactly make it fun, but certainly won’t let it be the terrifying thing that scares so many. Remember, as Alex says, we “don’t live in a world of rules; we live in a world of people who make decisions about where things should go and how much they should cost, and things are up for negotiating pretty much all the time.”
This is just an article highlighting a few of the things discussed and there’s much more of value in this episode, so take a full listen to it here. If you really enjoy Alex, you’ll find him in two other episodes — on public speaking and getting hired at a startup.
Do you have a great negotiating story to share? Send it to [email protected]
This From the Vault post was handpicked from our Best Of Series, which you can find here. If this article or episode helped you, please consider writing a review for us on iTunes, because the greatest compliment you can give us is a referral to someone you think would appreciate our content. Now get out there and apply some of these networking skills and lessons and leave everyone better than you found them.
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