You’re most vulnerable right after you win a deal

Posted on Sep 10, 2009 | 20 comments


fencing winThis is part of my ongoing series, “Start-up Lessons.”

Recently I wrote a blog post about how I hated losing, but I embrace it.  My starting line with every entrepreneur is that everything I learned about being an entrepreneur I learned from F’ing it up on my first business.  I even put that in the the preamble to my Start-up Lessons outline.

As I pointed out in the above post, I feel like you learn the most from your failures as long as you’re willing to learn.  Fred Wilson wrote on his blog this week about learning from failures here and quoted Obama’s speech from tonight:

you can’t let your failures define you – you have to let them teach you. You have to let them show you what to do differently next time

Or as I picked up from Bruce Dunlevie at Benchmark Capital (who I’m told took the quote from elsewhere)

Good judgment comes from experience, but experience comes from bad judgment

I plan to write a whole separate blog post about this quote because it’s always stuck with me.  But for the rest of this post I want to talk about the specific lesson I learned about losing: you’re most vulnerable right after you’ve won the deal.

In my blog post about how I hate losing I told the story about how when I was running my first company in the UK I competed and won a major contract with the largest water company, Thames Water.  That is, until I lost.

An external consultant helping the procurement team overturned the decision and got the company to select a small software company owned by the consultancy.  5 years or so later I still revisit that sales campaign and relive many of the steps.

Here was my biggest take away from the loss.  I naively thought that when somebody told you that you had won the deal that it was so.  In fact, I think it was quite naive of me to think that every time it was announced that I had lost a deal I should just graciously accept defeat.  I have to admit to still having a weakness for calling it quits when I’m told that the game is over.

An example of how bitter things get was the contract awarded by the US Airforce to EADS / Northrup Grumann, which was overturned by the protest of Airbus and is now due for a new decision (see here).

I wanted to write a follow up post because it was such an important lesson for me and so eye opening.  In every sales campaign of any substance (e.g. you’re really competing for something big and therefore have fierce competitors) you have to assume that there are people inside that organization that are against you.  It’s probably nothing personal – they may have been using your competitors product at a previous company, they may think that using your competitors product is  better for their career, they may even be friends with a senior member of your competitors team.  Or frankly, maybe they just believe that your competitor has a better product.  Let’s call this person, for simplicity, “the enemy.”

crossed fingers at handshakeMany times the enemy just accepts their loss and it is smooth sailing toward your contract.  But some enemies live to fight another day.  They are hell bent on getting their way.  They believe that the fight is not lost.  They may question the decision making process.  They may solicit the support of people more senior in the buying organization.  Quite honestly they may even resort to feeding your competitor information about your proposal or your product to help them better fight.  I know it sounds ugly, but it happens.

When it’s announced that you’ve won internally sometimes these people feel that they have nothing to lose if they try to torpedo the decision.  They’re no longer on their best behavior because in their eyes their enemy won.  And if they’re friendly with your competitor they may solicit them to help wage the war.  If anybody has nothing to lose it’s your competitor.  They’ve just been told that they’re out.  If it involved a lot of money or a lot of prestige don’t assume that they’ll just walk away.  Especially if it’s their existing client and you’re unseating them.

You’re goal is to get to the finish line as quickly as you can.  So when you’ve been told that you’ve won make sure that you keep your sales campaign up.  In fact, ramp up your efforts.  Go into overdrive to get the contract completed.  Continue to meet with senior executives at the buying organization.  Don’t take anything for granted.  And make sure you spend as much time with your enemies as you do with your friends.

As I always tell my wife – we never celebrate until the ink is dry on the contract and the check is in the bank.

  • Sachin Jade

    Oh yeah – something I have learned as well. Never, I mean never, think that the deal has gone through based on someones verbal commitment. Wait till the contract has been created, and the ink is dry and until then, keep the sales going on. And no matter what people say about “merit” and “cost” and “quality” being the factors for being awarded the deal – the harsh truth is, there is so much politics involved, you have to be one step ahead of that game and sometimes become a part of the game. Sad but true!

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  • http://www.twitter.com/davidsmuts David Smuts

    Its a real beech when you lose a major contract like this. On the positive side- I can say I've won some public procurement tenders after having been told we “lost”. As long as the contract hadn't been signed- it just emboldened me like a mad-man to go out and fight for the business. Comparing that behaviour to that of a complacent winner makes a purchaser think twice before signing. I guess what you're saying is: DON'T BE COMPLACENT!

    I would add to this post that in my view, I think you're most vulnerable when you've been told “NO, YOU'VE LOST”. It's so hard not to take this rejection personally- its our human nature to do so. It's so easy to accept this rejection, withdraw, accept defeat and feel like sheet.

    Rejection makes you either acquiesce or fight and this is what moulds our greatest business leaders, politicians, artisans etc.., I have the greatest admiration for men and women who overcome rejection through perseverance and tenacity. These are the people I seek out, they are the ones who truly inspire me. And if you want to succeed in business- you gotta be one hell of a fighter!

    Best of luck to all you fighters out there

  • http://www.mashuparts.com/ Shaun MacDonald

    This is certainly a thought provoking article. Patten once said that “success is how high you bounce after you fail” but for the meal to turn out better next time, the chef must have learned a few lessons … the appetizer of your story serves up time tested lessons of sports and war … beware the enemy that is injured or down.

    The last two super bowls were defined by teams that were down in the last two minutes, and needed knockout touchdowns. The more one has vested in the outcome, the less likely one is to give up when it appears you are done.

    In business when a decision is handed down, it normally comes with an explanation for the losers, who in turn will try and turn it on its head — normally its economic noggin, and rather than complain to the jury, they will go immediately to the higher court. It's how the game is played.

    Shaun

  • http://bothsidesofthetable.com msuster

    Great points and admittedly has been some of my past failing. Too often I accepted defeat graciously and moved on. I tried to learn from it but not continue the fight. Sometimes it pays to continue the fight. I guess it's just not in my character.

  • http://bothsidesofthetable.com msuster

    The funny thing is that the “explanation for the losers” is rarely accurate. That's the hard bit – looking beyond what they tell you and doing the no-holds-barred, no blame, post-game analysis on why you really lost. It's more of an art than a science I think.

  • Sachin Jade

    Oh yeah – something I have learned as well. Never, I mean never, think that the deal has gone through based on someones verbal commitment. Wait till the contract has been created, and the ink is dry and until then, keep the sales going on. And no matter what people say about “merit” and “cost” and “quality” being the factors for being awarded the deal – the harsh truth is, there is so much politics involved, you have to be one step ahead of that game and sometimes become a part of the game. Sad but true!

  • http://twitter.com/davidsmuts David Smuts

    Its a real beech when you lose a major contract like this. On the positive side- I can say I've won some public procurement tenders after having been told we “lost”. As long as the contract hadn't been signed- it just emboldened me like a mad-man to go out and fight for the business. Comparing that behaviour to that of a complacent winner makes a purchaser think twice before signing. I guess what you're saying is: DON'T BE COMPLACENT!

    I would add to this post that in my view, I think you're most vulnerable when you've been told “NO, YOU'VE LOST”. It's so hard not to take this rejection personally- its our human nature to do so. It's so easy to accept this rejection, withdraw, accept defeat and feel like sheet.

    Rejection makes you either acquiesce or fight and this is what moulds our greatest business leaders, politicians, artisans etc.., I have the greatest admiration for men and women who overcome rejection through perseverance and tenacity. These are the people I seek out, they are the ones who truly inspire me. And if you want to succeed in business- you gotta be one hell of a fighter!

    Best of luck to all you fighters out there

  • http://www.mashuparts.com/ Shaun MacDonald

    This is certainly a thought provoking article. Patten once said that “success is how high you bounce after you fail” but for the meal to turn out better next time, the chef must have learned a few lessons … the appetizer of your story serves up time tested lessons of sports and war … beware the enemy that is injured or down.

    The last two super bowls were defined by teams that were down in the last two minutes, and needed knockout touchdowns. The more one has vested in the outcome, the less likely one is to give up when it appears you are done.

    In business when a decision is handed down, it normally comes with an explanation for the losers, who in turn will try and turn it on its head — normally its economic noggin, and rather than complain to the jury, they will go immediately to the higher court. It's how the game is played.

    Shaun

  • http://www.twitter.com/davidsmuts David Smuts

    Mark, you're being too modest now. You wouldn't be where are you are today without having had to fight along the way- life's just not that easy. So YES it is in your charachter because you're an acheiver- it's just you might have chosen your fights carefully and strategically. No point in fighting every battle- fight the ones that matter most.

  • http://bothsidesofthetable.com msuster

    Great points and admittedly has been some of my past failing. Too often I accepted defeat graciously and moved on. I tried to learn from it but not continue the fight. Sometimes it pays to continue the fight. I guess it's just not in my character.

  • http://bothsidesofthetable.com msuster

    The funny thing is that the “explanation for the losers” is rarely accurate. That's the hard bit – looking beyond what they tell you and doing the no-holds-barred, no blame, post-game analysis on why you really lost. It's more of an art than a science I think.

  • http://www.skmurphy.com/ Sean Murphy

    I think it's “You are most vulnerable when they tell you that you have won the deal but you don't yet have a signed contract and your first payment.” Early stage startups in particular are better served by measuring their progress by counting endorsements from paying customers than telephone calls announcing they have “won” the deal.

  • http://twitter.com/davidsmuts David Smuts

    Mark, you're being too modest now. You wouldn't be where are you are today without having had to fight along the way- life's just not that easy. So YES it is in your charachter because you're an acheiver- it's just you might have chosen your fights carefully and strategically. No point in fighting every battle- fight the ones that matter most.

  • http://www.skmurphy.com/ Sean Murphy

    I think it's “You are most vulnerable when they tell you that you have won the deal but you don't yet have a signed contract and your first payment.” Early stage startups in particular are better served by measuring their progress by counting endorsements from paying customers than telephone calls announcing they have “won” the deal.

  • adityavempaty

    Wow, eye opening post. I have always thought that the competition would not go away is the case. Even after you have “won”. But to what extent the “enemy” is willing to go depends on how well you gauge them right? Thus Its not over until the ink is dry and check is in the bank is accurate, but also making sure your end of the agreement to deliver services is done to the T and dotted with the I. How did you handle lossing out the contract after having won it? This prolly is the hardest part to recover from correct?

  • adityavempaty

    Wow, eye opening post. I have always thought that the competition would not go away is the case. Even after you have “won”. But to what extent the “enemy” is willing to go depends on how well you gauge them right? Thus Its not over until the ink is dry and check is in the bank is accurate, but also making sure your end of the agreement to deliver services is done to the T and dotted with the I. How did you handle lossing out the contract after having won it? This prolly is the hardest part to recover from correct?

  • http://bothsidesofthetable.com msuster

    Yes, if you click through and read the original post I go into more details about the loss. But we basically considered alerting the UK competition authorities because overturning the decision was so biased and egregious. In the end we decided to just move on.

  • http://bothsidesofthetable.com msuster

    Yes, if you click through and read the original post I go into more details about the loss. But we basically considered alerting the UK competition authorities because overturning the decision was so biased and egregious. In the end we decided to just move on.

  • max191

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  • http://bothsidesofthetable.com msuster

    Thank you for the feedback.