Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at firstname.lastname@example.org.
Q. I’m pretty sure that I want to buy something from a particular source. How do I make sure I get a fair deal on it?
-Operating executive in a Fortune 500 Company
Dear Operating exec,
Whenever you are going to hire somebody—whether that’s an employee for your company, a banker for your IPO, or a vendor for a software solution, you have to do the work upfront so that you are clear on what you want. This is the first step in getting to a great deal. Here’s my best advice:
Be clear about what you want and need—and articulate it.
Attract the attention of the best people or companies. The best people and the best companies have choices about who to work with. You want to work with those who are in high demand—and you have to offer an opportunity they will chose over others. The very best thing you can do is build a place that people want to be associated with—a company people want to join, a place with a logo people want to showcase. That will always make the process easier and go more in your favor.
If you don’t have a trusted source or you don’t know market pricing, you need to run a competitive process. I’ll never forget when I was at Quantum and was told by vendors that our deadline was “impossible.” No one agreed to what we needed—until one person did and then everyone else piled on and said it was doable. Most of the time, competition makes everyone sharpen their pencils and yields a finer result. This probably points to a human behavior. People get a better time when running in a formal competition than jogging when no one is watching. This is why world records are set at the biggest events.
Keep everyone engaged throughout. You can’t just focus on your top choice. Even if you think you are clear on who you want, you need to keep other people in the running to maintain a competitive process and get the best terms. You may also learn more about the options, which can convince you to reconsider your thinking. Or it may convince you further on your first choice. Both are great outcomes.
Communicate often and treat everyone fairly in that communication. Everyone should be operating with the same information. Provide credible and instructive feedback so people hear what they need to do to win your business. If someone is missing the mark, give them advice to help get on track.
Get alignment around timelines. Make clear that this will be used to help you assess your options. You will be considering how easy was it to do business with them. Were they on time? Did you have to chase them? Make sure that everyone knows that how they manage the process will be informative in your selection.
Very big companies and government agencies have formal and standard processes that follow strict guidelines. For example, all bids have to be in at a certain time and be opened together. As a startup you are not bound to this kind of rigidity but having a standard approach will help you run a fair process that will yield the best results and also be scalable.