I was surprised to see the following tweet from Fred Wilson
“Replace the words “job offer” with “term sheet” in @spolsky’s post and the advice is still spot on http://t.co/2MNZUIKZ”
Out of curiosity, I took a look at the Spolsky post and I was surprised by the advice he gave regarding exploding offers.
For those who don’t know what they are, recruiters will often use a deadline to force a candidate to make a decision. Spolskly’s made the two first points, helping candidates navigate this process. But his third point, made my blood boil:
“3. In the rare case that they don’t accept that, accept the exploding offer at the last minute, but go to the other interviews anyway.”
Wow. Fight the unethical recruiter with unethical behavior. Accept the offer verbally, but be willing to go back on your word if you find a better offer.
And Fred seconded that for term sheets!!
How do Fred and Joel justify this behavior? If our word is not our bond, how do we interact with employees, board members and friends? Do we decide when our word is our bond based on who we are speaking with? Perhaps if our life is threatened would we lie or change our verbal commitments, but in every day business.
Having been on the receiving side of a candidate who verbally committed and then backed out, I would not wish that on anyone else.
There are risks in life. Risks in saying yes too soon, and risks in waiting too long. That’s life.
But there is no risk worth taking that damages your reputation. You only have 1. You can always get another job.
Pano, solid, practical advice. Some situations feel less clear cut, e.g. investor shaves x% off valuation, you have no alternatives so agree. Then the term-sheet arrives with the original valuation (without the x% reduction you agreed to). Do you stick to your word and point out the error, or sign and pocket the money left on the table? (After all, it’s a small %, they have lots of money, and the entrepreneur gives all their $ & life). If you point out their error, perhaps they will see that the x% reduction was unjustifiable, but probably not. Ethical dilemma. The great thing about making the ethically right decision is what you point out – relationships are strengthened not compromised. There is also peace of mind… after making the right decision, you’ll never wonder if you made the wrong decision. The reverse is not true.
Thanks, Andrew.
If the investor pulls the rug out from under you, then it would seem to me that there is no contract.
The reputation of the person you are dealing with becomes so important. A tiger does not change its stripes. If they are fast and loose with terms with you, then its likely they have been in the past and will be in the future.