Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then AirBnb backed out. If an investor pulled that on a YC company I'm sure they would be blackballed rather quickly.
I make deals and negotiate all the time and I've negotiated thousands of times.
It's a very good sign when you have a verbal agreement but you're a fool if you think that's a finished deal.
It's the quick and the dead - if people are serious about a deal then they need to move quickly, wrap it up and sign it.
If you are selling something (yourself, your company, shares in your company), you should ALWAYS continue negotiations and keep talking to interested parties until one of them signs.
The tardy buyers/investors/employers who think they can stretch it out and take their time miss out, that's all - and it's important to understand that the mistake is theirs for not signing, it is not the seller being unethical. And if you are the sort of person who says "I made a verbal deal and my word is my bond.", then you might get played by people who will take advantage of that and not sign, perhaps hoping for more information, more favorable conditions, a better deal to come along. They won't hesitate to drop the verbal deal if it suits them.
Every negotiation has a number of properties and variables. One of the absolutely key properties is the time profile. If you do any negotiating then you need to understand how to play the time profile. You can say to buyers "I'm offering something good here but only for X period of time." Or "I'm happy to agree to these terms but only for two weeks and everything is back on the table after that." Or "Great that we have a verbal deal, you need to understand I'll be talking to others until I have a signature so if you are interested then you'd better move quick." Or "If you pay the agreed amount on time then I'll give you a guarantee on our services, pay it late, no guarantee", or "OK happy to go with this investment deal, but I want the cash to hit the account by the 8th August and the deal is off if it's late."
Time profile is one of the most interesting and valuable aspects of any negotiation and can completely change the true value of the deal.
If you like it then you'd better put a ring on it.
A verbal contract is just as legally binding as a written contract. It's just that most people don't have authorized audio/video recordings of these kinds of interactions.
>> if people are serious about a deal then they need to move quickly, wrap it up and sign it.
exactly, you see this with recruitment.. when a company meets the right candidate they move very fast...
Anytime I did interviews, I had a 24 hr deadline for me to mentally strike out a option. Everytime I got a job, I was contacted almost within an 1-2 hr of doing the interview.
Any delays means they other party has other good options, same applies IMO here as well..
So in this case unless they sign on the dotted line pronto and give a cheque, things are still up in the air
I sense the founders used the VC as leverage. They had a closing dinner the night before and shook on it. The VC was reasonable to expect the paperwork to be finalised the next day.
YC changing their mind at the very next day sounds very convenient...
sjtgraham|10 years ago
harryjo|10 years ago
You don't do handshake deals with people whose fundamental business model is "cutting corners wherever you can sneak away with it"
HappyTypist|10 years ago
andrewstuart|10 years ago
"Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then the investor didn't sign"
andrewstuart|10 years ago
I make deals and negotiate all the time and I've negotiated thousands of times.
It's a very good sign when you have a verbal agreement but you're a fool if you think that's a finished deal.
It's the quick and the dead - if people are serious about a deal then they need to move quickly, wrap it up and sign it.
If you are selling something (yourself, your company, shares in your company), you should ALWAYS continue negotiations and keep talking to interested parties until one of them signs.
The tardy buyers/investors/employers who think they can stretch it out and take their time miss out, that's all - and it's important to understand that the mistake is theirs for not signing, it is not the seller being unethical. And if you are the sort of person who says "I made a verbal deal and my word is my bond.", then you might get played by people who will take advantage of that and not sign, perhaps hoping for more information, more favorable conditions, a better deal to come along. They won't hesitate to drop the verbal deal if it suits them.
Every negotiation has a number of properties and variables. One of the absolutely key properties is the time profile. If you do any negotiating then you need to understand how to play the time profile. You can say to buyers "I'm offering something good here but only for X period of time." Or "I'm happy to agree to these terms but only for two weeks and everything is back on the table after that." Or "Great that we have a verbal deal, you need to understand I'll be talking to others until I have a signature so if you are interested then you'd better move quick." Or "If you pay the agreed amount on time then I'll give you a guarantee on our services, pay it late, no guarantee", or "OK happy to go with this investment deal, but I want the cash to hit the account by the 8th August and the deal is off if it's late."
Time profile is one of the most interesting and valuable aspects of any negotiation and can completely change the true value of the deal.
If you like it then you'd better put a ring on it.
mangeletti|10 years ago
carrotleads|10 years ago
exactly, you see this with recruitment.. when a company meets the right candidate they move very fast...
Anytime I did interviews, I had a 24 hr deadline for me to mentally strike out a option. Everytime I got a job, I was contacted almost within an 1-2 hr of doing the interview.
Any delays means they other party has other good options, same applies IMO here as well..
So in this case unless they sign on the dotted line pronto and give a cheque, things are still up in the air
jacques_chester|10 years ago
He concluded that he needs to move faster on the big picture, rather than haggling the correct protocol for picking of nits.
hhandoko|10 years ago
I sense the founders used the VC as leverage. They had a closing dinner the night before and shook on it. The VC was reasonable to expect the paperwork to be finalised the next day.
YC changing their mind at the very next day sounds very convenient...
unknown|10 years ago
[deleted]
swimfar|10 years ago
(Note: I'm not being facetious. I'm genuinely curious)
hhandoko|10 years ago
I get that a deal isn't final until it's in writing (i.e. signed), but whatever happened to integrity?
andrewstuart|10 years ago
My basic understanding is that deals are complete when signed off. Where's the lack of integrity in that?
tdicola|10 years ago
dang|10 years ago
https://news.ycombinator.com/newsguidelines.html