How to get over a standoff with your biz partner.

Being a part of a small team at a startup can have a multitude of benefits. You get to bounce ideas off of one another, delegate tasks, move fast, and just generally share the collective burden of launching a company- which is a herculean task. However, as the saying goes “reasonable minds can disagree,” and while it’s often good to have a difference of opinion, some disagreements can really threaten to get in the way of the partnership itself. These disputes can often involve critical decisions that can have tremendous impact. In conflict resolution circles, this is know as “impasse” and, when/if you get there, it’s important to be more intentional about how you approach getting to a successful resolution.

Situations like this don’t come up very often, but you will know it when they do and, if the problem is not handled well, things can quickly get toxic……. in most cases not only impeding the leadership, but often trickling down to the rest of the team- impacting motivation and performance; not to mention the overall trajectory of the company. The good news is that there usually is a practical solution to most of these disagreements, the bad news is that a practical solution is usually not enough on its own to resolve the disagreement. The way in which a resolution is proposed is critical. Pride (or some version of it) can often get in the way of achieving any practical solution and it can be a difficult emotion to acknowledge successfully when negotiating your way through a standoff. Let’s get a little more specific here so that you can see what I mean.

I’ve worked closely with teams who are in a standoff throughout my career, (initially in courtrooms but more recently in boardrooms) and one thing that I have consistently noticed is that incorporating empathy tends to substantially increase the likelihood of reaching a mutually beneficial outcome. More specifically, when the person offering a proposal can demonstrate that they understand the situation of the person receiving the offer, then they are much more likely to be able to get to a resolution on their own and not need to rely on anybody else to intervene to help them out.

This happened when I was consulting with a founding team of a SaaS company. While they were able to get their first few sales without any outside funding, the initial success led to a disagreement between the two co-founders about how quickly to scale. One (let’s call him “Fast Founder”) wanted to fundraise in order to scale quickly, while the other (“Slow Founder”) expressed hesitation with this approach- claiming instead that he wanted to grow more “organically” at a slower pace. The company was young and small, so this disagreement threatened to damper the enthusiasm of the team because the short term priorities of the company were unclear.

Through working with the founders, it became evident that both of them actually did want to scale quickly in order to beat out any potential competition. In fact, although Slow Founder initially expressed hesitation about fundraising, he was actually worried about losing control of the company to outside investors. Fast Founder shared this concern with his business partner and, when he was able to convey this understanding by acknowledging this concern openly and proposing that they seek out angel investors (who he knew to be more “founder-friendly”)- they were able to agree to move forward with a successful seed round of funding and scale the company at a more competitive pace. The key here was ensuring that any proposal empathized with the shared desire between the two founders to not only beat out the competition but also that demonstrated a mutual concern about not wanting to give up control of the company.

Let’s take another example from a popular television drama.

Matsson (left) proposing a buyout to Logan (right) during the Season 3 Finale of HBO’s “Succession”

Breaking down a negotiation on HBO’s “Succession

*Spoiler alert- Stop reading now if you’re a fan and are not caught up ;-)

I happen to be a big fan of Succession and, if you haven’t watched it, I highly recommend that you do. Regardless, if you haven’t watch it- all you need to know for the purposes of this article is that the last season ends in an incredibly high stakes negotiation between CEO’s of two very large corporations (Matsson of “Gojo” and Logan of “Waystar Royco”), who need to form a partnership in order for both of their businesses to continue to thrive.

Let’s get more granular here and take a look at some of the key dialogue for the scenes where one the characters proposes a solution (a takeover) to their standoff. Below is an edited excerpt where Matsson starts with his proposal:

  • Matsson- “I think we fit, you’re company and mine. [pause] But, you know, the street loves us…we’re a strong buy. We’re up and we’re staying there. And you, you have this (lawsuit) and all this other bulls#&t. You’re hurt and maybe you’re tired. So I make sense as the person to take over. [pause] Now, if that’s an option, if that is something that you would consider. Then, let’s talk.”
  • Logan- “You’re not f#%&ing serious?”
  • Matsson- “I would make everything nice for you [discusses specific details]. I would want you to maintain prestige. I’m not about making you small. [discusses more details]. [pause] I notice that you are not punching me in the nose.”
  • Logan- “I don’t know.”

Matsson is very direct but also demonstrates empathy by acknowledging that Logan’s company is struggling and that he is tired and wants to move on (all common knowledge to both at this point in the show). When Logan initially reacts to the surprising offer by defensively “asking” whether Logan is serious Mattson quickly recognizes Logan’s pride by mentioning “prestige” and also by implicitly acknowledging the feelings of shock and rage that Logan is experiencing in reaction to an audacious and bold proposal- by mentioning that Logan’s initial reaction to his bold proposal is probably that he’d want to punch him in the face.

The scene proceeds with Logan initially leaving a little room for accepting Matsson’s proposal and then signaling a need to pause the discussion:

  • Logan- “I’m not sure I can swallow it.”
  • Matsson- [discusses specific details of how the deal would work and how he would honor Logan’s family heritage].
  • Logan- “It’s not gonna happen.”
  • Matsson- “Right. [pause]. I can see that. [pause]. Well, it was worth asking.”

After some chit chat about related matters, the two then go on to later start drafting up the terms of the takeover that Matsson proposed. Of course, since it’s entertainment, there is a lot of other background drama- but that shouldn’t take away from the main takeaway here; which is that they both would have never gotten passed their initial stalemate had it not been for Matsson’s skillful acknowledgment of Logan’s pride, and complicated family and financial situation, which ultimately created the opportunity for them to create the “win/win” arrangement wherein the junior CEO (Matsson) convinces his senior (Logan) that he should let him take over his company.

I realize that very few of us need help with how to propose a takeover of another company, but the point of highlighting this scene is that by being empathic to the other’s situation and incorporating that into how you make your proposals- you may be able to get some movement in a situation that otherwise seems stuck.

When approaching a standoff between between yourself and a business partner, it is important to have a clear understanding of your partner’s situation so that you can demonstrate this understanding in any proposal that you make. This requires spending time and energy trying to “walk in the shoes” of your business partner and being careful to craft any proposal(s) in a way that demonstrates the knowledge that you’ve gained about their perspective. While this does require putting in some extra effort, I hope that these examples show that you will find that it is time well spent. Good luck!

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Sandro Tuzzo

Sandro Tuzzo

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I’m a recovering attorney, current entrepreneur and consultant to startups and early stage teams. www.sandrotuzzo.com