Long ago in that pre-internet era when a handful of seminal business texts achieved a kind of virality and ubiquity that now seems impossible, business school students and students of business were steered towards the now classic tome “Getting To YES: Negotiating Agreement Without Giving In.” It is perhaps still regarded as the most important framework for pursuing ‘positive negotiated outcomes.’ Negotiation is an art form, a language, and a mixture of diplomacy and manipulation. It involves such age-old tactics as game theory, avoiding the winners curse by faking a “Win-Win” and other broadly employed techniques. But in the tech business, getting a firm “No” is often as hard a getting an even firmer “Yes.”

When I first arrived in Silicon Valley in 1999 as a Corporate VC for WPP group, after many years in New York, it took a while to acclimate to the softer, less definitive nature of West Coast business. The bluntness of East Coasters, and the more transactional nature of Wall Street, made it considerably easier to understand where you stood: A deal would be rejected on the spot, and often coarsely, by an old school master of the universe. But in tech, both venture investing and technology deal making, responses seemed much more ambiguous. Whether they were hedging bets under the thin guise of politeness, or genuinely uncertain, I remember thinking wouldn’t it be easier just to get a firm answer and move on?

I have now been in tech in the Bay Area for seventeen years. I have raised numerous rounds of financing and sold companies — my own and those that I have been involved with as a board member or advisor. But the song remains the same, it is often still much harder to get a “No” than a “Yes.”

In fact “getting to no” is very much the key to getting to ‘Yes.’

But as much as a quick and favorable “Yes” is always the desired outcome, a fast “No” is often the next best thing. In fact “getting to no” is very much the key to getting to ‘Yes.’ While this is a phenomenon that doesn’t only exist in the world of early stage technology startups, it’s particularly rampant in this sector. This is because technology and tech investing require individuals to invest (time and money) in an unproven big idea that may or may not turn out to be a reality.

Why is “No” so hard?

1. Blind Faith: Unlike retail or manufacturing ideas, when you raise money to open a Fried Chicken restaurant or to make a hip new backpack, you don’t have to prove that the market exists, you just have prove you can build the brand and execute. In technology, there is usually a massive leap of faith required by investors and the entrepreneurs who are running on sweat equity, that, for example, consumers will adopt a mobile application that will allow customer to flag a taxi from their phone is viable. Hindsight is 20/20, but ultimately market timing, execution and the right team are everything but this is never crystal clear.
2. It’s a Very Long Game: The venture business is a long game. It involves building a large personal network of potential founders, co-investors and corporate partners that will at some point all come together to create the perfect storm of success. This attribute has fostered an environment where quick and terminal ‘No’s’ are not the norm. You never know when lame business idea A pitched by a young inexperienced CEO, will, years later, beget epic business idea B pitched by the now polished and experienced CEO whose idea you chuckled at years before. As such, ‘getting to no’ quickly and candidly is a very hard road to navigate. Everybody is hedging, because you never know when a failed location-based start up is going to become, the most dominant photo-sharing application of all time. That said, I would argue that a thoughtful and direct initial pass, might open the door in the future. The entrepreneur that gets strung along is more likely to resent the ambiguity than the directness. The same holds true for deal making. The technology is a very fluid sector with executives moving through companies every few years. For dealmakers, there is high likelihood that you will bump into the same people numerous times throughout a career, and the great deals are most often consummated by close networks of people. You’d hate to be the person who let a partner hanging to the long-term detriment of a business.
3. False Hope Hurts: Time is easily the scarcest resource you have. Wasting time wishing on maybes becoming “yes’s” is both debilitating emotionally and also costly because spending precious time that could be allocated to another aspect of the business is expensive. To the extent that you get enough trips to the plate raising money, the market will give you a pretty clear indication of the potential size of the business idea, and also your viability as both the leader but also as the pitchman. The market is fairly efficient, so with rare exception, endless “No’s” help you understand that either the timing is off, your idea doesn’t resonate, or you’re not the right person. Further when the money is running out, there is nothing more dangerous than the ambiguous possibility of raising money. You need clarity, otherwise you can find yourself taking on debt, bridge loans, and other measures when if you knew funding wasn’t in the cards because you partial to the false hope of a yes than the finality of a no. Again the same holds true for doing deals. There is nothing more punitive than gambling resources on a specific idea for a specific company or industry vertical, only to see it not come to fruition while missing other more immediate opportunities.
4. Saying ‘No” Is Hard: If your job is to see 400 companies a year only to make 2 investments, your main job is really saying no. Again, dealmakers face the same kinds of odds. If you’re an optimist, fueled by the passion and commitment of people, it is easy to forget that quashing those dreams comes with considerable psychic pain. It is much easier to say “keep me in the loop as things progress” than is to say “I think we are going to pass.” Watching a dream deflate is actually much harder than making someone’s day.

Saying “no” in an environment fine-tuned to feed on and inspire infinite optimism, despite formidably bad odds, can be hard, but is necessary. There are countless stories about successful technology founders who were rejected literally hundreds of times before finally raising a seed round (i.e. Pandora) only to become successful as a business a decade later. For some of these CEO’s, the relentless and unsuccessful pursuit of a ‘Yes,’ resulted in bootstrapping the business, retaining a considerably higher ownership position, and forcing the ‘company’ to become a ‘business’ right out of the gate instead of kicking the revenue can down the road for longer than was healthy.

Wouldn’t it nice to be able to have a clear and direct conversations all of the time? Perhaps this is quality that comes with age — once cynicism and experience overtake the exuberance and irrationality of youth. But then again, it is exactly this energetic will that enables some companies to succeed. My word of advice, embrace the ‘no’ and move on. There is no time to live in the middle, on either side of the table.

‍