Friday, September 30, 2005

Dealing with Google

Love this post from Chris Sacca with advice on how to pitch business proposals to Google. With the attention Google gets, I'm sure Chris needed to vent about the volume of crap he sees every day!

Two points resonate for me, particularly in the world of larger deals where you have to keep working together after messing up like this: Don't go over the head of the person you're dealing with (unless you ABSOLUTELY have to), and don't think that threats are going to get you taken more seriously.

At best, these tactics will sour the relationship with the person you need to be your advocate in the company. Your deal may proceed, but in a hobbled state where it is hard to get anything done based on rapport with your counterpart. And trust me - that person will be looking for an opportunity to have their vengeance . . .

Thursday, September 29, 2005

M&A as E.R.

I was having drinks with a good friend and former corp dev colleague who is disgruntled with managerial expectations that he put in "face time" in the office. It's probably not a big deal, but it seems like dissatisfaction that should be easily cured. I've always told my direct reports that I consider them professionals - I don't care what hours they spend in the office, as long as they get their work done in a high-quality fashion. Sometimes that means a lot of time in the office anyway, but usually if you give a good employee that kind of flexibility you will get very good results.

In any event, after a few more drinks we concluded that a corp dev department could go one step further than my approach: Treat the group similar to the way emergency room doctors work:

Like an ER, corp dev staff are expected to work as hard and as long as necessary when a trauma case/big deal presents.

Like ER docs, corp dev staff can expect to be "on call" for emergencies.

Unlike many ER docs and surgeons, corp dev staff in most companies are also expected to work regular office hours.

Now, there are certainly those who relish their hours in the workplace and enjoy the company of their co-workers. And, of course, those who lead the organization can't expect to escape a good deal of office time. But what about those talented analysts who want more flexibility and work-life balance? They're already committed to being there for any emergency; why not free them up the rest of the time if they want it?

Ground rules would include always being accessible by wireless phone and e-mail, keeping on top of industry reading and being in the office whenever deal work demanded it. There could be months where this wouldn't look any different than regular work, but corp dev work is notoriously cyclical. I'm also not sure it would work at a smaller, high-growth company like mine. But in a larger, mature company, having an explicit policy that staff could be "on call" and away from the office when deal work doesn't demand it could create a great deal of good will and staff loyalty.

Monday, September 26, 2005

Other People's Deals

Like many, I don't have any hesitation in questioning (judging?) the wisdom of other people's deals (see, e.g., my comments on Skype). However, as I was reminded the other day, it's a temptation too easy to fall into when you're managing other corporate development professionals.

When you look at someone else's deals on paper, the less-than-ideal terms glare back at you. You want to pick it apart, point out the problems and limitations, but you've got to take into consideration the compromise and negotiation that got the deal where it is. By all means, you don't settle for less than the best deal you can get in the time available. But I know that when I was starting out I didn't like getting second-guessed on terms I'd considered and settled on, and I'm going to work harder to do the same when I'm peering over someone else's shoulder.

Friday, September 16, 2005


Brief post from Heather's "Marketing and Finance at Microsoft" blog about the value of altruism ("the more you give, the more you get"). This struck a chord, as it echoes a debate I've had with colleagues over the years - what role does altruism play in doing corp dev work? My view is that altruism can be a powerful factor in both business and career success.

By "altruism" in this sense I mean doing things that you technically don't have to that benefit others. While I don't think there's any debate about the value of doing this internally in your company (you should absolutely help out your colleagues), the controversy arises over being altruistic with your trading partners - who are often your competitors. At AT&T Wireless, I dealt with other wireless carriers, large and small. At Clearwire, the cast of trading partners is even larger. At a certain level of abstraction, these trading partners are all competitors, and the instinct can be to do nothing that advantages one's competitors.

I think this attitude is tremendously short-sighted. While you are obviously not going to transfer material shareholder value to your competitors, there are opportunities every day to do things for your trading partners that cost your company little or nothing. For example, in wireless there are always requests to coordinate frequencies at the edges of licenses, do minor frequency swaps, or even just expedite a request for information. While these "favors" may theoretically benefit your competitor, they are firmly in the margins - things that make life easier for your counterparts on the other side; little wins they can establish internally. It's a quid without the pro quo, but it pays off in a major way over time as you establish relationships with your trading partners.

Besides establishing trust and greatly increasing the chances that you will be graced with return altruism when you need it, you get something that can prove even more valuable: A reputation as someone who is practical-minded and can reliably get things done. That can easily be the deciding factor in getting huge deals done down the road. Case in point: Several years ago I did a large deal to acquire cellular operations. Another large carrier was also bidding for these assets. I learned after the fact that the seller had gone with our offer - despite it having a value 5-10% lower than the other carrier - because of our good relations.

Why should good relations matter? We're in a cold-blooded business; shouldn't it just be about the money? Well, in a way it is. If you have good relations with your trading partners and a reputation for reliability, your proposals will be valued more highly than those of your competitors because of the perceived greater likelihood that the deal will actually get done. A lot can happen between initial proposal and closing a deal. If you are perceived as difficult, slow or unreliable, your offers will be discounted accordingly. Altruism (along with being cordial and keeping your word) is a great way to make yourself - and your company - someone your trading partners look forward to dealing with.

Monday, September 12, 2005


EBay's acquisition of Skype for up to $4.1 billion is a great illustration of my point on build vs. buy. How much would it cost eBay to build its own P2P voice platform? (hint: WAAAAAAYY less than $4.1B). Meg Whitman's comments are telling - in referring to Skype's tremendous user growth (for a free service) and name recognition, it seems EBay is afraid of losing out on the first-mover advantage or missing out on what could be a tremendous brand. But EBay's got such an embedded - and loyal - base they could roll out a home-grown solution out very quickly. And while Skype's got a bunch of (non-paying) users and flavor-of-the-month hype, they face deep-pocketed competitors and a rapidly-changing technological and regulatory environment. Smells like a bad case of deal fever over at EBay.

Thursday, September 08, 2005

On Not Keeping Your Head Down

Interesting article from Wharton Business School on gaining competitive advantage by working "performatively" with colleagues (and yes, "performatively" is a word deserving of summary execution). The idea is sound, however, and probably even more meaningful when applied to one's individual workplace success: Benefits abound when you tap the knowledge of your colleagues. Furthermore, in any healthy organization the vast majority of workers "get it" and freely engage in this dialogue with no expectation of "payback."

That seems like a very basic observation, but in many corporate cultures - and for many smart people - interacting with others and asking for help is anathema. I've seen so many people who focus just on getting their heads down and doing the work. What suffers is not only their enjoyment of work, but also their ability to leverage the input of colleagues. Maybe you can avoid drafting a lengthy document from scratch. Perhaps someone else has great tips for dealing with a party you are about to face in negotiations.

Even more importantly, in corporate development you are a bit of an outsider to work that makes the company go. You aren't writing code, manufacturing products or designing networks. However, to do your job at the highest level you need to know as much as possible about how the business works. The more you know, the more informed your recommendations and decisions will be - you'll build better models, negotiate better deals and avoid costly mistakes. The only way to do this is by communicating with your colleagues throughout the business and at every level of the organization.

Tuesday, September 06, 2005


I don't know what I can add to the discussion on Katrina in what has been a pretty business-oriented blog to date. I'm willing to wait to assign blame (although blame most assuredly will assigned) or conclude that the looting and other bad behavior was a widespread as depicted.

That said, there's no question that it was a horrible human tragedy on par with what we're used to seeing in the Third World. What's so shocking is the fact that our response to it seemed, for nearly a week, to also be on par with what we'd see from a Third World government.

The media incessently talks about the need to focus on the living, but look at the repeated details of bodies floating in the flood water, or left lying on sidewalks. Inherent in these repeated details? The horror that our organized and clinical culture could break down to the point where corpses are left in the street for a week. It's hard to imagine a more vivid image of how civic order collapsed in New Orleans. It took a foreign paper (The Independent) to do it, but I finally saw a piece today deal with this issue directly. It's worth a read.

Thursday, September 01, 2005

Build versus Buy

The other day some events at work reminded of the age-old build-versus-buy debate – it’s a topic of always bubbling below the surface in corporate development.  I’ve seen some scholarly papers on the topic (see, e,g, here), but in my view it’s pretty simple:  

  • You build whatever you can

  • You buy only that which:

  • You can’t build (e.g., certain patents, compelling brand names, scarce electromagnetic spectrum)

  • You can’t build fast enough to meet your strategic needs (e.g., big chunks of customers, smaller competitors in a growing segment)

  • You can get cheaper than building (bankruptcy!)

What this means for negotiating deals and valuing companies is that you always have to know whether the acquisition target is something you could (realistically) build.  If you can build it in an acceptable time frame, you will likely have a value gap with the seller.  Why?  For the simple reason that it probably cost the seller about the same to build it, and people who build businesses usually do so to make money.  The seller will want a cash flow multiple, or a certain return on what they’ve invested, or some other magic number.  You’ll be focused on creating NPV compared with what it costs to build.  Outcome – unless the seller is very motivated, you won’t have a deal.  

To my point of quickly eliminating “loser” deals before you waste too much time on them – unless it’s on the discount rack, don’t get bogged down with stuff that your company can just as well build.