John Greathouse is a General Partner at Rincon Venture Partners (infoChachkie.com). In this video he uses the show "Pawn Stars" as a primer in how entrepreneurs should not negotiate.
- Entrepreneurs negotiate relationships, not transactions
- Pawn Stars uses a unilateral negotiating style
- Apply the appropriate negotiating style to each situation
So actually I was watching Pawn Stars with my son, my 11 years old son, and I was overhearing what he was listening to. And I got a little concerned because although it’s an entertaining reality TV show, I want him to be a great entrepreneur when he grows and I didn’t want him to feel like this was the way you should negotiate.
So I sat down and watch an episode with him and we talked about it afterwards and I made it clear to him that although it’s reality TV, and so let’s put that in quotes, some of the techniques that they do use could be actually detrimental to an entrepreneur.
So there’s a right place and a right time for many different styles of negotiating. And I think in general, entrepreneurs are seeking to negotiate relationships as opposed to transactions. And so when you take a Pawn Star’s approach to negotiating, often times that’s going to be fine if you never see that person again, but it’s not going to be fine if you are looking for a mutually advantageous long-term relationship which I think is more common.
So if you think about some of the things they do on that show, they hide the ball. They often don’t tell the person what their product is worth. They take a very aggressive stance in their negotiating strategy. They use a lot of silence. They use a lot of intimidation. Again, for the show’s purposes it works fine, but for an entrepreneur that’s watching that and thinking, “Wow, that’s a professional negotiator. Maybe those are tactics I should emulate,” I have to caution them that probably not.
The thing of this analogy, if you are selling your house the Pawn Star’s approach of, “Wham Bam, thank you, ma’am. I’m never going to see you again,” That might be okay but you should probably not going to see that person that you sold your house to. But, if you’re renting your house to someone I think that’s more akin to the types of negotiations entrepreneurs perform.
If I’m renting my house to you, I want you to be happy. I want you to have a good relationship with me or else I might suffer negative consequences. So again, as an entrepreneur I think be smart about each situation and make sure you’re applying the appropriate tactic to the right negotiation.