I Closed 57 Deals for $600 million and Learned Only One Lesson

There? I was, in position to make a lot of money. It was November 1997 when I got a job in a real venture capital firm, NewLight Capital of San Diego.  My task was to find new investors.

One day, I was stealthing down the hallway minding my own business and out of nowhere appeared the Managing Partner, Rob Johnson, and it was like that familiar scene in a horror movie — I saw him 100 feet down the hall (which I consider a safe distance) then I blinked and he was just 25 feet away. Weird.

I blinked again and he was right in front of me. Like a supernatural being from The Omen, he had moved hundreds of feet in 2-blinks of an eye.

Ahhh!! PANIC!

ROB: “How’re your numbers looking Oren?”

I wasn’t prepared to go over my investor pipeline. So I said, “GREAT ROB! We’re doing SO good this month.”

ROB: “Super. Who do you have locked-in?”

ME:: <panicking> “Looks like Microsoft and Intel are on board, probably a few others”

ROB: “Excellent. Happy to hear it Oren. What are your numbers going to be this month?

ME:: “well, probably $3,585,000 from GE Capital alone!!”

WHAT THE HELL? WHY did my mouth just say that? And it was a weirdly specific number. Why did I say any number at all … I didn’t have GE “locked-up” in any way.

I felt oddly like an actor in a play. That’s not me, I don’t just make up random numbers and blurt them out. I was scared, and trying cover up my emotions with bravado.

Anyway, Rob the Managing Partner and part-time demon nodded approvingly, stopped grilling me, smiled warmly and moved on. Thank god that was over.

What a ninja move I pulled there, I thought to myself. Double ninja!

I scurried to my desk in time to hear an email ping.

But something was off, this wasn’t the ping I was looking for:

*****************************************
TO: “Everybody”

SUBJECT: “Congrats to Oren”

BODY:

Hello All:

I just wanted to give a big shout out to Oren who is closing the GE Capital account for $3.58 million and breaking company records for November.

Keep up the good work Big O! And I think you all should take a page from Oren’s playbook and start putting some big points on the board.

Sincerely,

Rob Johnson
Managing Director

P.S. Seriously, though. Everybody needs to be in the game like Oren. He represents the future of the company.
*****************************************

I didn’t have Microsoft or GE “locked-up”  and of course they never appeared. Although I wasn’t fired, it was a year before they trusted any of my numbers again.

I never intended to LIE to Rob. He used his high status to put me on the spot, I was youthful and inexperienced, I messed up royally and in the end, dug myself into a 1-year pothole, time I’ll never get back.

Have you done this, are you a liar?

You would probably answer “no”. Let’s ask it another way. How many times in the past month did you say something that was not completely true? For many reasons, the answer is probably quite a lot –

… you said the financial projections were conservative

… you gave high revenue projections to make your project attractive

… used the best-case-possible assumptions to make the numbers work

… classified accounts that are dormant as being in the pipeline

Hey Oren, I would NEVER do that.

C’mon, give me a break.

We all overreach at some point along the way.

We do it because we –

Need to be liked.
Need to be heard.
Need to be believed.

We are all driven by two needs:

1. The desire to get ahead
2. The desire to think of ourselves as a good person

Our survive-and-thrive instincts tell us to cheat, lie and steal to be on top of the food chain. But our communal instincts tell us to be an honest, kind and authentic.

However, there are times when the reward for lying or cheating is higher than our desire to be a good person. At those times, there’s a high risk our brain will figure out a creative way to get the benefits of lying without the shame of feeling like a liar.

THAT’s where the danger is.

There will be times when your brain figures out a reasonable rationalization that allows you to

  • Get ahead by promoting big numbers you aren’t sure of
  • AND thinking of yourself as a good person.

Why even bring this up?

Because I have seen hundreds of deals die unnecessarily when someone used big juicy numbers to make a deal look good, eg.

… the deal will get a 20% ROI
… the equipment has a 10 year life cycle
… the company will produce $10 million of revenue next year.

But eventually the buyer found these were the best case results, or highly optimistic numbers. Trust was eroded, and the deal changed.

Most sellers overreach and overpromote.

This is why Buyers will pay you a lot for trust and certainty.

Is there any way to know if you’re pushing the numbers too hard and “overreaching” in a way that could blow-up a buyer’s trust?

People ask me every day, “look at my spreadsheet … what numbers should I use that the buyer will believe?”

Sure, I can give you the answer to that. I can give you trustworthy, credible numbers that buyers will love now AND later.

But I can’t always be there to help. Let me suggest a system to keep you from overreaching and over-promoting your product, service or deal.

Step 1: pitch your deal to a friend or colleague:

Step 2: check in with yourself

1. Does it feel like you’re acting and playing a part, that the person talking is a character, but not quite yourself? Good actors make good liars; and a receptive audience can encourage you to keep performing a role.
2. Are you using emotional camouflage to prevent people from seeing your feelings? Liars usually mask the emotional expressions they truly feel by feigning the opposite affect.
3. Are you speaking with eloquence, more like a preacher than a regular person. Eloquent speakers confound listeners with word play and buy extra time to ponder plausible answers by giving long-winded responses to questions.
4. Are you feeling loose and comfortable or are you taxing your intelligence to make the pitch? Using the full breadth of your intelligence can mean you are using it to shoulder the “cognitive load” imposed by lying, since there are many complex, simultaneously occurring demands associated with monitoring one’s own deceptiveness.
5. Are you actively using “decoding”, or using the ability to detect suspicion in the listener which allows a liar to make the necessary micro-adjustments to a story.

Step 3: If you feel yourself doing a few of the behaviors above when giving a presentation or working a deal, it’s likely you’re pushing the numbers too hard.

Truth is, we’re all going to give revenue projections and project plans that we aren’t certain of, and of course we can’t control the future so we’re going to be wrong from time-to-time.

But there’s a huge difference between being wrong and selling numbers you don’t actually believe in.

In my case, I’ve done a lot of deals and in the past few years helped $600 million change hands

There’s only one lesson I have learned that applies to every deal, every situation, every dollar:

Soft lies the head on the pillow of a clear conscience

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