Money Leads to Chaos, a Story for the Modern Entrepreneur

In this article, we are continuing in our series about comparing history to modern business lessons, the practice of correlative learning using the greatest stories of our ancestors. This series will be an ongoing focus by Arthur Shulsky, we hope that you follow and enjoy the articles to come.

"For of itself does the iron draw a man to it." Homer, The Odyssey

Homer’s quote from the legendary tale after the fall of Troy still holds water today in many forms.  Today we are discussing 100% business within its context. Let’s first get an idea as to what Homer meant by this saying.

This quote derives from the later chapters of The Odyssey, when Odysseus was dressed as a beggar attempting to win back his home and family from an army of greedy suitors. As a beggar Odysseus understands that his journey has left his wife and son in a dire situation, being accosted by suitors in hearth and home. Being the ever-clever master of all, Odysseus schemes a plan in order to prevent the suitors from becoming violently belligerent.

Convincing his son to remove all the estate's weapons from access by the suitors is crucial to his scheme. As the suitors are sleeping, Odysseus tells his son to hide the weapons. In the morning when anyone asks where the weapons have gone, to block with a smile. The proper response would then be to blame the fire and smoke for ruining weapon quality. As a tactic of diversion with professional etiquette, it is a most effective scheme. 

For the final passage in this scene has Odysseus expressing the words “For of itself does the iron draw a man to it." The meaning behind this quote begins with the concern that drunken men can fall victim to rash acts of violence, dishonoring the home. When wits are dim, the mere sight of a blade can cause a man to go into a rage of aggression. The removal of these instruments is enough of a variable change to ensure that the glutinous suitors will sure to behave.

For those that have never read the Iliad and the Odyssey, it is one of the greatest tales ever told. Full of dashing heroism, deprave lunacy, and epic scale warfare and adventure. I will not ruin the end.

So, what could a story about iron and drunken suitors have anything to do with my business today? As is the premise of this series of articles, there is a lot of lessons to be learned from this one passage from the Odyssey. It starts with the application of the phrase into the fact that we as people have changed very little since the age of Homer. We have our instruments of rash decision making, often it can spill over into dire consequences for the involved parties.

Let’s talk about a direct experience I had in this past week, it is an all too common problem that we in the negotiating business run into. We had been pursuing a letter of intent from an investor, for many months, to join in on a very cool and promising project. The relationships had been made, parties vetted and emotional investments secured. The investor was going to be a part of a pool of already established investors and would also be providing professional services as a part of their investment offer. All of the talk and deliberation around participation was complete, now the blade shows itself in the room and hell breaks loose.

The letter of intent was required in order to move forward with some pitches to other players in the game, this is a crucial moment when all of that work can come crumbling down. We had requested that the investor be the first to display their terms for the deal, this is a common tactic deployed when the feeling of reasonability between parties has been earned. The terms were appalling at best, the principal on the project side was personally offended, the directors on the project end set off a chain of fireworks that would cause the entire internal team to pound fists on tables and hiss like ill-tempered cats.

The blade in our story is an analogy to money in our modern world, the first glimpse at a monetary figure caused reverberations when before there was none. Everyone on the team was content with throwing the relationship out the window with rash action. While we live in a civilized world, the violence of the business world today shows itself in the destruction of relationships. Eventually, we had calmed down the top executives on the project side, explained some simple game theory plays and went about drafting a counterterm. As this was the logical approach, most people that have very little experience with money find themselves embrace self-destructive chaos when dollar signs hit the conversation.

Let’s use another example, employee agreements. I cannot tell you how many times I have seen a truly fruitful employee/employer relationship go south when the compensation conversation happens. This is truly potent for small and personable organizations. Usually, a team of 2 to 20 people will invest a significant amount of tangible and intangible resources into building a working relationship with a potential new hire. It tends to go beyond just a few interviews typical of large corporations. After a month of vetting and when emotions are high, the dreaded compensation talk happens.

At this moment, the employer pitches a number that the employee must chew on and respond to. I have had employees get up and leave, never to be heard from again. I have had eyes rolled, mouths drop, and feelings always hurt. This isn’t just on the employee side either, I have seen proper responses from employees which in turn garner a literal laugh from an employer. This is the worst thing an employer can do, laugh in the face of a reasonable request for another 2k on the salary. One thing can be for sure, as soon as money hits the conversation, all of those friendships that were made during the vetting period now don’t matter at all. If one party is bombastic and stubborn, kiss the positive relationship goodbye.

Our final example of the day is going to hit home for any and all entrepreneurs out there. The dreaded discussion of the price of a client proposal. Weeks of relationship building, project vetting and emotion investing can come crashing down faster than it takes blood to pour from an open wound. The wound in this story is not from a blade, the wound was caused by the size of the hourly fee or the apprehension of the client to honor an entrepreneur’s need to earn money. This loss of empathy is all too common today, two like-minded individuals planning to achieve something great together and the bridge crumbles at the mere sight of an hourly rate.

What can we do as businessmen and women today to avoid such catastrophic outbursts of rash behavior? Won't money always lead to violence and chaos? Is there anything that can be done to 100% avoid these destructive events? The short answer is never 100%, the long answer is yes there is.

Let’s avoid this problem, “For of itself does the money draw a man and women to it.”

Initial Open Dialogue

One thing I like to ensure that I do when discussing a new project with a client is to explain my range of hourly rates and the logic behind them. I use a tiered structure to encompass most of my client sizes and service requests. If a potential client runs in the other direction, congratulations you avoided a month worth of wasted pitching and proposal time. Your client relationships need to be built on open dialogue from day one, if this cannot be established at the onset than a red flag has been signaled, it was probably not worth the time investment anyway.

Transparency before decision making

If there is a large sum of money being discussed and this is the first time that an actual dollar amount is being brought into the light, be sure to state that you expect to be transparent with each other’s feelings before making any final decisions. This is extremely important to a large investor, make them feel secure in their knowledge that you are willing to explain your emotions prior to giving them an answer. Make it known that you believe in expressing concerns before agreeing to a deal. As someone who works personally with investors and people who need investing, this is one of the best steps you can take in saving a relationship before letting emotions get the best of either party.

Put the offer in writing

Always put the offer in writing, formalize the offer and make it known that it matters to you. One of the things I hate the most in this world is an informal monetary offer. It shows that you as the provider of the offer don’t take that amount of money seriously. There is no better way to tell someone that their work is meaningful and important than when you put a formal offer in writing and deliver it to them face to face.

State times for rebuttal

This is a great trick when negotiating an employee salary or a contractor hourly rate. Once the offer is in writing, always follow it up immediately with, I want you to take 24-hours and get back to me with a response. Don’t ever demand an answer on the spot. What if the offer is too low and the employee feels pressured to take the offer on the spot? Is that conducive to a strong working relationship right out the gate? The employee will feel cheated and lied to. Give that person time to think about it, make it known that you expect a response and ensure the employee that you expect a rebuttal.

Keep the offer safe and secure

There comes a time when the internal team should be communicated the happenings of an investor pitch. That time is not directly after the first terms have been dished out. This should be the time when a strong executive can carry the weight of emotion on his or her shoulders. Draft the counter in private, with only the key players involved. One of the worst things that an executive can do is to bring in the people strictly reliant upon that funding into the equation too early. The emotions are too high and the chance for chaotic retribution too common.

Respect the other person's value

It seems like an obvious statement to make but this comment is always at the center of a failing relationship. One party comes across as not valuing the other persons time or effort. When you offer a salary to a new employee, do so with honor and voice how positive the working relationship is destined to be. When you counter on a proposal from a vendor, don’t ignore the value that vendor will provide. If you are discussing terms with an investor, relate to that investor's position, they do not and will not believe in a product as much as you do. If an investor believed in a product as much as you, they would stop being just an investor and would go and do the task themselves.