73: Alex Kouts | The Secrets You Don’t Know About Negotiation Part Two

Transcript for Alex Kouts | The Secrets You Don’t Know About Negotiation Part Two (Episode 73)

Jordan Harbinger: [00:00:00] Welcome to the show. I'm Jordan Harbinger. And as always, I'm here with my producer, Jason DeFillippo. In today's conversation, I've got Alex Kouts back again. This is part two of our Negotiation Series. There are three parts to this series and this stuff is awesome. We've got a ton of great feedback already from part one, and part two is just got even more goodness in goodies. Alex is a master negotiator. He's been teaching negotiation classes for years. He's one of the smartest guys I know. He's worked with really big companies, governmental organizations, entrepreneurs, companies, you've all heard, people we've all heard of, that I can't even mention here. And he's just been toe to toe with every, he loves it. It's like a sport for him, to just go and run a mattress salesman or a car salesman or some sort of senator for all I know through the ringer. And he's a master of it, and he's great, he's great at teaching it. So I'm happy to have him back here.

[00:00:54] So I want to make sure that you all are absorbing this. If you haven't heard part one, go back and listen to that. They are coming out in order, and next week, we're going to have part three as well. So don't forget, we'll have worksheets for today's episode so you can make sure you solidify your understanding of all the key takeaways here from Alex Kouts. That link is in the show notes at jordanharbinger.com/podcast.

[00:01:15] By the way, I've been teaching networking. It's been the number one lever in my life for personal and professional. When we had to rebuild a business, my network was there. It's the reason we're back at over five million downloads a month. It's a reason we were picked as Apple's Best of 2018. It's the team, it's the network, it's the people around you, and I created a free course to teach you how to consistently engage and reach out to people in your personal and professional network. It's free. I just look, this is not one of those things where it's like, enter your credit card number. This is free. I want it to change your life. That is what it's, that's the whole point, and it's called Six-Minute Networking. If you were in the old one LevelOne, it replaces that. It's new and improved Six-Minute Networking and it's at jordanharbinger.com/course. That's jordanharbinger.com/course. See you in there.

[00:02:04] All right, here's Alex Kouts. One of the concepts that I find so interesting about this is the concept of making or the idea that we should make the other side of reactive and not like provoke them per se, but what does this mean?

Alex Kouts: [00:02:17] So in a negotiation you want to, or endeavor to construct a dynamic where the other side is worried about taking actions that are going to piss you off or throw you off, and that they're going to lose the sale, let's just say not the other way around. So let's take a job offer scenario again because that's so common to many of us. Often when the company makes an offer and then we are reacting to that offer, we are constantly in the situation of them providing information and us reacting to it. And that puts us at a disadvantage from a leverage perspective, or a perceived leverage perspective because they're controlling the conversation. Now, this is happening right now in the media with Donald Trump, right? The media can't help itself but react to every little tweet, everything that the guy does. So as much as like the mainstream media is trying to like cover him, let's just say, let's give them the credit to say that they are, he's completely controlling the conversation because he's so wild with his responses that they can't do anything but controlling, and he has all the control in the situation.

[00:03:10] So it's a similar negotiation. So what we want to do is construct a dynamic where we're not constantly reacting to what other people are saying that they are also reacting to us. So in a job offer scenario, which we'll walk through in a moment, kind of an end to end thing. We want to construct that dynamic where they give us the offer, then we turn it around so that they are now reacting to us supposedly way around. So we'll walk through that in a minute. So keep this one in your mind, we'll come back to it.

Jordan Harbinger: [00:03:34] All right. A lot of people I notice also negotiate against themselves.

Alex Kouts: [00:03:38] Oh my God, yeah.

Jordan Harbinger: [00:03:38] And this is a lot of, a lot of this I think is born of social pressure and what this sort of sounds like is, “All right, well this is 300 dollars,” and the other person goes, “I don't know.” And you go, “All right, 250, how's that sound?”

Alex Kouts: [00:03:54] Yeah. You and are violating one of the inviolable rules of men that we were talking about this before, but like junior salespeople do this kind of shit all the time, right? They make an offer on the phone, and someone who's responding that offers just silent for a little bit and then they go, okay, well it's 300 dollars nothing on the other side, but you know, we're negotiable on that and okay, well we want to work with your budget and that kind of thing. Their side hasn't said anything. They're already beginning to counter themselves without the other side having to say a thing. So often, you don't want to give people a way out. Another way that this manifests is when we make offers, we add the little thing at the end to say, or I'm negotiable. Like I think this is what I would like, but I'm willing to negotiate on that. That's me negotiating against myself. Whereas the smart play, the powerful players, you say 300 dollars then wait and let the other side react to that comment as opposed to inviting them to give you a counter.

Jordan Harbinger: [00:04:44] Right. And it feels so good cause you release that pressure when you say, well you know, we're flexible on this. And even sometimes I have to catch myself, stop myself from doing that. I'm experienced with this, you know, I was in sales for a long time. I've run a business for over a decade. I still have to stop myself from going, well you know, to this much. But I'm also flexible on this. If there's other things that we can figure out and then you're just going, I catch myself and I go, damn it, what am I doing?

Alex Kouts: [00:05:14] So it's funny, I mean, that's one of the more overt ways people do it. They say, “But we're flexible,” or “Oh, but I'm interested to hear what you're saying.” A more kind of a discrete way is that people say things like, “But we're really excited to work with you guys.” Or like, “We'd love to have your business,” or something like that. When they do that, they're communicating that they're extremely eager to get your business to make it seem like they're going to bend over backwards or be more pliable.

Jordan Harbinger: [00:05:33] Ah, interesting. I never really thought about that as also being a subtle hint that they would negotiate against themselves, but it makes perfect sense.

Alex Kouts: [0 0:05:42] Yeah. It’s huge.

Jordan Harbinger: [00:05:43] In fact, I was negotiating something yesterday and the company did say a lot. “We really like working with you. We're definitely, we want to figure something out. We'll look at other options if we can't meet on the financial side.”

Alex Kouts: [00:05:57] Yeah, they're telegraphing weakness at that point. To put it a little bit less mean than that, they're telegraphing a willingness to listen to account, or that you're going to come back with. So, you know, it would always say it, negotiation, don't volunteer that, don't introduce weakness into your offer unless you absolutely have to. Now, if you're selling something, you may have to come back later and say, “Okay, well that doesn't work for you. What about this?” Or “Give me your budget, give me more information, and then I will give you a counter that makes sense to you.” But that should come later and they should ask for it as opposed to you volunteering it.

Jordan Harbinger: [00:06:27] Ah, that makes sense. Okay, great!

Alex Kouts: [00:06:29] So really closely tied to that as kind of the next one, which is strategic silence. So one of the things that I teach in my class is that we have this gigantic hole in the middle of all of us called the human condition. And we're constantly trying to fill that hole with all of the affectations and hobbies and all kinds of things that we do. We're trying to fulfill or kind of take care of our insecurities. So as a result, one of the ways in which that human insecurity comes out in negotiations is how painful silence can be. So like we just mentioned, someone makes an offer over the phone and there's some silence, and then a junior salesperson immediately starts negotiating against themselves. That's because they can't take the silence. They assume the silence, they feel this excruciating pain when there is silence.

[00:07:11] So let's make it a little bit more human. So let's say I'm at a bar and I meet the girl of my dreams and it's fantastic. And I see her from across the room. I hear wedding bells, the room, like parts, and it's just her and me and nobody else, and it's amazing. We start chatting it up, everything's fantastic. She gives me your number, I go home. She can't wait --

Jordan Harbinger: [00:07:28] In your apartment randomly. Three months later.

Alex Kouts: [00:07:31] I remember that story.

Jordan Harbinger: [00:07:31] Different story, different story.

Alex Kouts: [00:07:32] Different story, totally. Totally different story. But I'm glad I made out of that one with my life. But anyway, so we exchanged numbers and the next day we're immediately texting back and forth. Neither of us can wait to talk to each other. We can't play it cool. Every two seconds going back and forth jokes, memes, ha-ha, LOL. I'm going back and forth with my friends. Like, “Hey, what do you think ha-ha with five has mean? is that better than LOL or is that not as good as LOL? What do you guys think this means?” And I'm trying to like decode it with a damn Rosetta Stone to figure out what this person's intentions are. I'm stressing out over this text message conversation, but it's great. And then maybe back and forth. I use some joke that's like slightly riskier, like a Trump meme or something political in nature, and there's silence on the other end.

Jordan Harbinger: [00:08:12] Oh, this happened with me and my wife.

Alex Kouts: [0 0:08:15] Yeah.

Jordan Harbinger: [0 0:08:15] Yeah. Oh my gosh. I know where you're going with this. Yeah. What happened was we were talking on this app. This is obviously before we got married, before we even really were dating. In fact, I don't even know if we'd met up in person yet.

Alex Kouts: [00:08:28] Farmers Only, right?

Jordan Harbinger: [00:08:29] Farmers Only.

Alex Kouts: [00:08:30] It’s where you guys met.

Jordan Harbinger: [00:08:31] Where that's my secret weapon.

Alex Kouts: [00:08:32] Beautiful.

Jordan Harbinger: [00:08:33] And I can't remember exactly what I said. It sure doesn't matter. And I never, even if I did, I probably wouldn't repeat it. But I said something along the lines of, well, you know, it doesn't matter, but then it was dead silent. And I went, “Oh man.” And I resisted the urge to fill that in because I knew from experience that if you can, “Oh wait! Oh, I'm sorry, was that da, da, da.” I just left it, and then the next, I was like, so what happened? And she goes, “Oh, I fell asleep. ” And I was like, “Thank God.”

Alex Kouts: [00:09:02] Yeah, there could be a million reasons why that happens, right? Like maybe Jen fell asleep, maybe she like did something else. Like who knows, maybe like, you know, she had a soccer game or like a polo match or whatever the hell it is.

Jordan Harbinger: [00:09:11] Water polo for sure.

Alex Kouts: [00:09:12] Whatever she does, I'm sure she has weird hobbies. But the point is we assume the worst because of all of our insecurities, because of this human condition. So when a negotiation, when there's a moment of pause, even in conversation over the phone, it's excruciatingly loud to us. It's deafening silence. So that is used on us frequently, sometimes intentionally, sometimes unintentionally. We can also use it for our own purposes.

[00:09:35] So an example back to the job offer scenario, someone gives me an offer. That doesn't mean that I just don't respond for 15 days. That is not the right way to handle that situation. But creating some strategic silence for yourself in a way that is socially acceptable. Saying something like, “Okay, well when do you need to make it? What do you need to make the decision by?” Or “When do you need me to get back to you by?” That will create some time. They'll say, “Okay, by Friday, we'd like to have an answer back.” That will not only create distance for you, but it also creates the sense the person at their end of the phone, the HR representative is going to assume you're looking at other jobs. There's something else that you need to decide before you can make a decision on this. So it's all kind of both of those purposes. But the point is to understand when strategic silence is being used against you, understand why you have that reaction to it. It doesn't necessarily mean something bad is happening. It also could be just again, the human condition for us, and then learn how to use it strategically for your own purposes. Create it intentionally inside of conversations and negotiations to your benefit.

Jordan Harbinger: [00:10:32] How do we create it?

Alex Kouts: [00:10:33] So, in the job offer scenario, I'm creating distance by saying, “When do you need an answer by?” that creates that time for me to think about it. Let's say I am buying a car and the car salesman goes, “Okay, I'm going to give you a great deal. Let me talk to my manager, I'm going to come back, I'll give you the best price.” He comes back and he goes, “Okay, here's the best price, 24k out the door, here you go. Best price, you're really breaking my balls. It’s great.” And then I just sit there and stare at him. I'm like, “Hmm.” I'm not giving any back.

Jordan Harbinger: [00:11:00] Charlie Manson eyes!

Alex Kouts: [00:11:01] Exactly. If you like poker, Phil Ivey, the guy just like stands there like he's in the middle of having a seizure like eyes wide open, like mouth open, like giving absolutely nothing back. The person will eventually start talking. I've heard folks in kind of a sales training capacity because I've trained sales teams myself. Say things like the first person after an offer has been made. The first person to say something is the one who loses. Like that's some game in and of itself.

Jordan Harbinger: [00:11:24] Geez.

Alex Kouts: [00:11:25] So let the other person talk.

Jordan Harbinger: [00:11:27] I would imagine that has its limits. You don't just pick up your phone and check email until the other person decides to say something.

Alex Kouts: [00:11:33] Yeah, it's super weird. Yeah. You can't use it in a weird way. You need like a societally and socially acceptable way to create that distance for you.

Jordan Harbinger: [00:11:40] What about some of the gender differences in negotiating? I brought this up earlier in the first part of the show, which was that I've had female friends of mine bring me to car dealerships because they’ll know that I'll negotiate better, or that I'll do something that they might not do. And it's not just because I'm a guy in there, there are girls. It's because they trust me and I'm their friend, et cetera. And because my dad gets wicked Ford discounts. But also, there is some element of gender disparity when it comes to negotiation.

Alex Kouts: [00:12:11] Well, yeah, it's a real sensitive topic in 2018 and talk about this stuff. But I will say before I get into it that this is not a value judgment one way or the other. I fundamentally believe that women are better prepared to be negotiators than men, because empathy comes more naturally to them. And there's all kinds of things that happen that equalize the sexist in terms of like outcomes longitudinally. But this is not a value judgment. There are different patterns that we see consistently across different genders. So for instance, men, before they walk into a negotiation, are much more commonly will psych themselves up. They'll go into this kind of predator mentality. There's that joke in 30 Rock where before negotiation, Jack Donaghy played by Alec Baldwin. We'll look in the mirror and goes, "You're a lion. You're going to get in there and kill! You're mommy's little boy!" He's like psyching himself up like a maniac before he walks in and sits down at the negotiation table because it makes it easier for him to again advocate for his own self-interest.

[00:13:03] Now, men do that very commonly. They will psych themselves up. They will look at negotiations as a zero-sum game. Women tend to be on the inverse, where as opposed to looking at negotiations like a zero-sum game, they look at it as a relationship developing exercise. Where I'm focused on community and moving towards the right goal eventually as opposed to winning right now. Men tend to be very short term focused and outcomes and goals. Women tend to own long-term outcomes. So men will often in negotiation scenarios, and we see this a lot with business to business or sales roles outperform women in short term sales, whereas women will outperform men and long-term deal value. And another thing that we see a lot and how this kind of plays out in a really unfortunate way is that women often don't ask for the things they want. As we mentioned before earlier in the show, women, you know it's been estimated or somewhere in the neighborhood of 64 or 5 percent less likely to negotiate than men when it comes to job offers scenarios. That's a really big problem, and it also contributes very heavily to the paid gap between men and women.

Jordan Harbinger: [00:14:02] So how do we mitigate this? Do we just understand that this is the case that often if we're for a woman, we might not be asking for what we should be because of the way that we've been programmed socially or the way that we've been raised. And we should just be aware of that?

Alex Kouts: [00:14:14] Yeah, the first step is always being aware. Now, not everyone conforms neatly to the gender which they were assigned at birth, right? Some women are more masculine the way they approach negotiations. Some men are more feminine, so to speak. I know that may sound like a negative connotation, but it isn't in any way. Men may focus more on relationships and community, so not everyone is the same. These are general kind of archetypes. But I will say if you are, if you do conform it to one of these, know that, be aware of when you're doing it and figure out the weaknesses of it. So again, for men, if I'm really male focus and I'm super dominant and psyching myself up, that predator mentality, consider the community aspect of it. Consider the relationship long-term outcome side of it. If I'm a woman and you know I'm focusing too heavily on the relationship side, and this is very common for women, women will often deescalate their own needs in light of other people's needs.

[00:15:02] So imagine if there's a disparity. Other people's needs are at square one. I'm putting mine two squares down from them, because I don't want to rock the social fabric that much. That's one area where I work with a lot of women specifically to kind of fight that impulse because you need to bring your interests at least at par with other folks and don't feel guilty about that because at the end of the day, if you're not advocating for your own self-interest, no one's going to do it for you. You will consistently be taken advantage of, not just by individuals, but by situations.

Jordan Harbinger: [00:15:30] That makes sense. I guess a hack to this might be thinking, well, am I negotiating on behalf of myself, or am I negotiating on behalf of maybe my kids?

Alex Kouts: [00:15:39] Yeah.

Jordan Harbinger: [00:15:41] I think if you think about it that way, or my family, you know,

Alex Kouts: [00:15:43] Exactly.

Jordan Harbinger: [00:15:43] Are my needs less important now? Well, no. If I don't get this raise, I can't send my kid to the school that needs to go do to get educated and get a career that pays better than mine.

Alex Kouts: [00:15:52] Well, one thing that made it really easy for me is, you know, I start companies for a living. I have a fiduciary responsibility to my employees to protect them and their livelihood. And if I'm not maximizing my company's value in a deal, I'm putting them at a disadvantage. I'm hurting my ability to employ them. If you're family, same thing. Like I need to protect my family. I need this money because I can spend it on my kids. I can spend it on, you know, an unforeseen health issue that comes up, all kinds of things. So you again, have a fiduciary responsibility to yourself to maximize personal value. In negotiating scenarios because again, no one will do that for you.

Jordan Harbinger: [00:16:27] I think a lot of people are also in a hurry to get the negotiation over with. They don't want it to be over. They hate every second of it. If the quicker the sends, the better. Let's alleviate the social pressure and I think that causes problems.

Alex Kouts: [00:16:40] It does. Yeah. I mean, you keyed in on a really important issue. When you rush, you make bad decisions. And like we talked about before, everyone is generally terrified of negotiation. They just want it to end. Even people who do it on a daily basis. When you enter the realm of negotiations, people become sensitive and you can lose them. Even as a salesperson, I want it to end and I want it to end quickly for a favorable outcome for me. And so what I tell people in negotiations is be aware that we want the negotiation to end. And so we're going to over-optimize for getting it over with. So that situations where we say yes to things that we don't want, we don't want to say a no because we just want to get it over.

[00:17:14] One of my favorite examples of this is poker players go on tilt sometimes. You've heard that phrase before potentially, but I used to play tournament style poker and that may mean that I'm playing for 15 or 18 hours at a time, if I'm doing well in a tournament. But if you get a bad beat in a tournament, especially if you're like mentally taxed already, you can't let it go. And maybe it's one person of the table took my money and I want to get that money back. So I just go after blood. I go into that kind of bloodthirsty Viking. What's that thing they talk about when like Vikings go crazy?

Jordan Harbinger: [00:17:43] Berserker.

Alex Kouts: [00:17:44] Berserker mode. Exactly. You want into this like berserker mode. And so the way to fight that in poker is a slow it down. Just start auto-folding some hands, get up, walk around, take a breath, create some distance and just chill for a second. That is huge. And in negotiations do the same thing. You don't have to react immediately. One of the things that I teach my students heavily is if anyone gives you an offer of any kind, no matter what the situation, don't react immediately. Your first reaction should be no reaction. It should be okay. Got it. Thank you. I appreciate the offer. When you need an answer by, let me think about it. I'll get back to you. Even if the person is standing in front of you. Okay. Can I have a moment to think about it? I'll be right back. Create some distance. Slow it down, relax. Don't go on tilt and fight that impulse to immediately give an answer.

Jordan Harbinger: [00:18:26] Hm. Interesting. So don't pull the Phil Hellmuth get up and start yelling at the people at the table.

Alex Kouts: [00:18:32] The biggest baby, definitely don't, well for that guy, he's fully optimized his life around being the big baby and can throw other people off intentionally. But yeah, don't be that guy.

Jordan Harbinger: [00:18:42] He was on the show.

Alex Kouts: [00:18:43] Oh great.

Jordan Harbinger: [00:18:43] Yeah.

Alex Kouts: [00:18:44] I hope he's listening.

Jordan Harbinger: [00:18:46] Maybe not to this one, yeah. I hope not. He's great, he was really nice.

Alex Kouts: [00:18:49] Yeah, I know. He's supposedly a great guy. So the next one that's huge here, and you know, this is one we referenced the book before, Never Split the Difference by Chris Voss. But one of the things that he talks about a lot is the illusion of control. So before he could become an FBI hostage negotiator, he was asked to be a suicide hotline phone responder. So when someone calls in, they're looking to commit suicide or they're having suicidal thoughts. He's the person that you're talking to at the end of day because that prepared him to be able to negotiate for life and death scenarios on behalf of the FBI. And so one of the interesting things here is that when he was talking to people in those situations, he said he would use a late night FM DJ voice. It's kind of funny because we're sitting in a recording, but so I feel like I can do this very convincingly, but it would slow it down. You would deepen his voice. He would talk very calmly and he would put the other person at ease. Now, the reason that he wanted to do that as if I'm talking --

Jordan Harbinger: [00:19:41] He's so bad at that job.

Alex Kouts: [00:19:42] Yeah.

Jordan Harbinger: [00:19:45] Oh man.

Alex Kouts: [00:19:45] Yeah.

Jordan Harbinger: [00:19:46] Oh you’re going to pull the trigger. Oh yeah. You're a tough guy. Hook. Go ahead and do it. Do it. See if you have the balls.

Alex Kouts: [00:19:50] Do you have it in yet?

Jordan Harbinger: [00:19:50] Shoot. That did not work.

Alex Kouts: [00:19:53] Yeah, that'd be a rough one.

Jordan Harbinger: [00:19:53] Jordon, you’re fired.

Alex Kouts: [00:19:56] Yeah. Sometimes we're not. It's okay. You're going to be great at a lot of things. This may not be your time.

Jordan Harbinger: [00:20:01] The hostage negotiation definitely not one of those things.

Alex Kouts: [00:20:03] Yeah, but the whole point is like we want people to be calm, but we also want to give them a sense that they're in control. This illusion that they're in control. When people feel like they're out of control, they begin to shut down. There's another theory inside of behavioral psychology. If anybody on the listening is a big fan of Reddit or injury, you'll probably see this frequently on those platforms reference, but it's called the Terror Management Theory, that every decision that we make in our lives is in some way either directly or indirectly abstracted away from our fear of death. Now, the interesting thing there is that our fear of death is very closely tied to our feeling of control. If I feel like I'm out of control, things are going down a bad angle. You know, all kinds of bad things could happen. I could die in an extreme scenario.

[00:20:41] So because that's hardwired into us at this kind of deep operating system level, when we feel like out of control, we have this unreasonable level of anxiety that comes up as a result of it. So in negotiation, when people feel like they're out of control, it triggers an anxiety response from them can make them shut down. So if you're talking to someone in the other side of the table and you feel them beginning to shutdown using body language or inflection, and reading that which we'll talk about in a minute, take it back from them. Step back, maybe take yourself out of the context of that conversation and help them reestablish their sense of control so they don't immediately shut down. So it's possible for you to have a productive conversation.

Jordan Harbinger: [00:21:17] Yeah, because we don't want to push too hard and then people just check out.

Alex Kouts: [00:21:22] Yeah, exactly.

Jordan Harbinger: [00:21:22] That doesn't seem productive at all. And I can understand why people do that. And I can also understand the idea behind wanting to kind of dominate someone so much that you're like, I've got this, but it's going to blow up in your face, I think.

Alex Kouts: [00:21:35] Yeah. Yeah, I mean, I have this problem a lot. I am a taller guy. I have a deep voice. I make a lot of direct eye contact and direct body language, open body language. And I can be very intimidating in some cases. So in those situations where I can see that I'm upsetting someone else that I'm talking to or they're beginning to shut down, maybe they have some close body language, like they're beginning to touch their face or hands or neck. I will begin to modulate the conversation. I'll step back and I'll stop talking about that. I will maybe talk about something that will put them at ease. I will find a subject that we have in common, have a common interest. Maybe I'll talk about the fact that I'm Greek. Everybody loves Greek people. They see My Big Fat Greek Wedding; they love baklava And so I'll kind of step back and change the focus of the conversation again to put them at ease.

Jordan Harbinger: [00:22:18] Yeah, that's wise. Does it only modulate that tension or does it actually work against, is there any risk of this working against us? I think is what I'm trying to ask here.

Alex Kouts: [00:22:26] Yeah. So any one of the pieces of voice we're talking about here taken too far can be bad, right? So if we go too far and we give them all the control and they're calling all of the shots, that puts us at a disadvantage. We just want them to not shut down. We want them in a positive frame of mind so that they're still productive and willing to kind of discuss this and be at the table. We don't want a situation where they can't have a constructive conversation because they're getting too defensive. That shuts things down.

Jordan Harbinger: [00:22:51] So since most people want this to end , not the show, hopefully, but the negotiation in generally, but the negotiation in general, can we use that to our advantage? Like, if I know that you want to get out of here because you're not a great negotiator, but I'm experienced, can I use the fact that I know you are itching to get out of this and get this over with to my advantage?

Alex Kouts: [00:23:10] Oh! definitely 100 percent. That's so huge. My negotiating tactics when I negotiate with folks, one of the secret sauces that I have is that I work very heavily to take that empathy side of things, right? Learning about what they want, what their interests are, to effectively help the other side see a win. So I’ll give an example. So let's say I am going to buy a car and I go to a car dealership and I'm walking around a lot and I'm talking with a car dealer or the salesman and he thinks that I'm really going to make a deal today. Like I want to buy a car today. He's going to bend over backwards to get me what I'm looking for. If he thinks I'm shopping around, he's less likely to give me what I'm looking for because there's no point in it for him. There's no benefit. That's why a lot of car dealerships really resist giving you quotes over the phone because it makes it too easy to go somewhere else and get a better price, but they don't want that.

[00:23:57] So in a negotiation, I will go through great lengths to make the other side believe that there is a favorable outcome that is realistic for them. I will go so much just to describe it, or tell them that it's going to happen because if they know that, if they see the close of a deal and it's favorable to them, I can dip into that understanding. They're kind of thirst for getting a good outcome, and I can extract value. So to what you were saying, you never want to underestimate how much the other side wants it to be easy, wants the negotiation to end. Very few people enjoy the brawl of it. It's painful for them. So if I tell you I'm going to buy this thing today, if you give me the price I'm looking for, we can sign the papers right now, you're much more likely to negotiate with me. So I focus a lot of time figuring out exactly what the decide wants and then telling them it's right here on the other side of you just doing this one thing and then once I get that thing, it's over with.

Jordan Harbinger: [00:24:45] Great. Okay. I like that. So you're just sort of letting him taste the freedom of being done with it.

Alex Kouts: [00:24:53] Exactly.

Jordan Harbinger: [00:24:53] And then they got just sniffing their way through to the door.

Alex Kouts: [00:24:56] Exactly. Yeah. So you know, in a job offer scenario that we'll talk through in a minute, a kind of step by step, the real thing that we're trying to do there is make the other side see if they give me the offer that I want. If they give me the number that I want, the negotiations over right now. There's not even a question. I'm not asking you through some like vague sense that it may be over if you give me these things. But no, I'm saying if you give me this thing, it's over right now. They're much more willing to take that. It's a bird in the hand is worth two in the bush type thing. It's every old adage just applied to negotiation. So that's really what we're doing here. I'm saying I will give it to you right now. Just do this one thing.

Jordan Harbinger: [00:25:30] We're making this process seemingly more complex than most people normally would, right? They're going, “Okay, they said that is this salary? Can I have 5,000 dollars more?” “Yes.” “Okay, great.” The end. Or “No, how about half as much?” “Great.” The end. Is there any problem with the back and forth and the counters? Is there any risk to that causing more problems than it solves?

Alex Kouts: [00:25:50] Oh yeah, totally. So you know, it's really interesting one. In negotiations, we want to mitigate the back and forth, or stop of it as much as much as we can because too much going back and forth typically means that you're being jerked around. So very similar to what we talked about a moment ago with helping the side visualize the win. When you think a deal is possible, you're much more willing to bend over backwards. If you think someone is just fishing or they want a price, they can go and you know, communicate to somebody else. To leverage you a better deal with someone else, then you're likely to shut down. And it's the same in job offers scenarios. So if someone offers you a job and you come back with a counter and then they give you another counter and then you counter again, there's a point at which you have diminishing returns to scale.

[00:26:31] So I can continue to ask for other things but I'm beginning to cost the relationship a lot and I'm getting less and less every single time that I ask. So it behooves you to make the negotiation end quickly with a favorable outcome because again, every single time you go back there is a cost to that. Now that being said, with job offer negotiations, I say two counters max is a good zone to be in. Once you do more than two counters, someone gives you an offer, you counter, they come back, you counter again. More than those two counters, you’re beginning to cost the relationship and it's less and less likely you're going to come to a good place. Now with like business to business deals, sales deals that are more transactional. There can be a lot of back and forth and it's okay that that can take a lot longer.

Jordan Harbinger: [00:27:10] That makes sense. Yeah. Complex deals, people are ready for that. There are teams of lawyers or founders ready to sit down and hammer something out. They don't expect it to be over in 30 minutes. But yeah, the job offer two counters max rule makes sense. I even think in certain sales it makes sense because if you're, you're going to in theory work with that person, right? If it's a job offer. And if they counter, you give them something, they counter it again, you're starting to wonder, is this person just always going to be like this? Because I don't want to have all this friction all the time whenever I deal with this guy. It's going to be really irritating.

Alex Kouts: [00:27:46] Yeah. And really, the secret message that we interpret from that kind of situation, if I'm the person who's being negotiated with is that this person cares more about themselves than they do about me. Now that's okay in doses. But when taken too far, again, like you said, it burns through the relationship.

Jordan Harbinger: [00:28:00] Great. Okay. You mentioned earlier being ready to walk away. When do we deploy this? Because I think a lot of people, if we do this wrong, you just ruined, you ruined everything, right? If you're just hanging up the phone on people, it's not working out for you.

Alex Kouts: [00:28:14] Like get an offer walk away, get an offer walk away. Yeah. But you know, they say there's this kind of like trite, you know, saying with relationships with the person who cares less has all the leverage or something like that.

Jordan Harbinger: [00:28:24]Yeah, sure.

Alex Kouts: [00:28:25] I hate that saying.

Jordan Harbinger: [00:28:26] Yeah, me too.

Alex Kouts: [00:28:26] I think that’s really utilitarian way of looking at relationships, but let's just say that is kind of true in some situations, especially when it comes to negotiation. So if I'm not willing to walk away, then no matter what anyone offers me, I have to take that thing. And God forbid someone on the other side of the table finds that out and they're not going to negotiate with me, they're going to say take it or walk away. But then, I know you can't. So you're just going to take it, they have absolutely zero imperative to give you anything or negotiate with you at all. So unless you are ready to walk away or you're prepared to, not that you have to or realistically will, but unless you are prepared to, are able to, you can't negotiate. So you know, one of the reasons that I believe that women are, this is going to come back to it. I promise this will tie in. One of the reasons I believe women are naturally better negotiators than men because empathy comes more naturally to them is because I learned most of what I know about negotiation from my mom. My mom is an absolute animal. If you think like I'm a tough negotiator. She is like a hundred times worse than I am. She's an absolute animal. So when we were kids, she wanted a car called the new Isuzu Trooper, which I don't think they make anymore.

Jordan Harbinger: [00:29:29] It's like a little Jeep.

Alex Kouts: [00:29:30] Yeah, yeah, it's like a SUV. And she wanted one with this purple sparkly paint job and a six disc CD changer, which for the kids listening in was like what iTunes was or sorry, Spotify. They didn’t know iTunes anymore. It was Spotify was like way back in the day with physical CDs, which were these circular things that were shiny that had music on them that you put inside.

Jordan Harbinger: [00:29:50] And you had to open your trunk to change the CDs in the changer.

Alex Kouts: [00:29:52] Exactly. But that was like bawling outrageous in like the ‘90s that was like next level stuff. So my mom wanted this Isuzu Trooper, and because she knows what exactly what she's doing, she went to the dealership at like 5 p.m on a Friday, on like the 31st at like the end of the month. These guys are like about to close their quota. It's the end of the week. They want to get out of there and just as they're shutting the door and turning the lights off, she sticks her foot in the door and goes, I want to test drive that car. And then the salesman looks at me, goes, “Oh shit. Okay, fine.” Puts his head down, grabs the keys, walks out to the parking lot, and we start test driving the car. So she test drives the car for like an hour and a half. “Oh my gosh.” Yeah. It's like 4 o'clock in the morning at this point. The guy's like dying. He just wants to get home to his family. He's tired of this shit. And then my mom starts laying into this guy when he can't take it anymore, it's at the end of the day, he has zero ability to resist. So she starts going, all right, give me a good price. He goes, okay, I can do this. She's like, that's bullshit. That's not going to do it for me. Let's get serious.

Jordan Harbinger: [00:30:45] Did she talk like that?

Alex Kouts: [00:30:46] Oh my mom curses like a sailor. She makes me look like I'm, you know, Shakespearian.

Jordan Harbinger: [00:30:51] That's great.

Alex Kouts: [00:30:51] But she's starts laying into the sky just putting the screws to him. My brother and I, of course, little kids were in the backseat. Probably is some type of negotiating leverage, but I'm not willing to admit that to myself. So she's in there and she's putting the screws to this guy and just absolutely terrorizing this guy. Beating him down and down and down, over and over again. That’s not going to do it. What if I pay cash? What will you do this way? And going through all these things and she gets to within 100 dollars of her price, and the guy just can't do it. He's been beaten down so much that he has no ego left. She's like chewed all of it up and spit it out and left on the side of the road and he just can't do it. And so we get down with 100 dollars and he goes, I can't make it happen. She goes, all right, fuck you, and she leaves. And so this guy, I can't even imagine like the night he had after that. Probably the whole weekend he had after that, ruined his whole weekend.

[00:31:38] But anyways, so she leaves because she knows if he doesn't give her exactly what she wants, she will find it somewhere else and none of that. She'll probably find it pretty soon. So sure enough, she finds the exact same car. She's looking forward to another dealership the next week, she gets the car for the exact price she wants and then takes the car after getting the keys, drives it back to the first dealership, makes the guy come out with his boss and goes, you could've had this sale.

Jordan Harbinger: [00:32:02] Oh, that's so mean.

Alex Kouts: [00:32:03] Yeah. This woman is like next level stuff. She's not even walking on planet Earth.

Jordan Harbinger: [00:32:07] What?

Alex Kouts: [00:32:08] But she's an absolute mean. But she's right, and the reason that she won there was because she was willing to walk away. She has immense power and no one has power over because she knows if you don't give it to me, I will get it somewhere else. Imagine the power of internalizing that way of looking at life. She's unstoppable.

Jordan Harbinger: [00:32:23] How did you grow up a nice person as?

Alex Kouts: [00:32:26] Oh, I'm going to be unpacking the effects of these things for the next 50 years.

 

Jordan Harbinger: [00:32:30] That’s so terrible.

Alex Kouts: [00:32:30] No, but it's great though because she raised my brother and I to be very empowered because you know what? If we don't get it here, we will get it somewhere else. I love that.

Jordan Harbinger: [00:32:38] Wow. Wow. You definitely, yeah. Got to be ready to walk away. I don't know about that whole showing up the next week with the thing you got and rubbing it in their face.

I don't know. Is that optional?

0:32:49.5 [00:32:49] Well, she's like a huge adherent of street justice. She is like judge, jury, and executioner. She's the Judge Dredd of like negotiating. She's dispensing justice on the street wherever she goes, but she is, you know, some people would say life's too short, let it go. She's like, life's too short to let people get away with shit. So she makes everybody like pay the price for their transgressions because they need to be taught. I think it's a motherly thing. I think it's like, mom, I need to teach you.

Jordan Harbinger: [00:33:13] So there's some compassion involved in there.

Alex Kouts: [00:33:15] Pretty much so, yeah.

Jordan Harbinger: [00:33:16] I wouldn't be doing this if my kids weren't in the car. Right, right, right. Sure, Mom.

Alex Kouts: [00:33:19] This is for your own good.

Jordan Harbinger: [00:33:20]This is for your own good. It hurts me more than it hurts you.

Alex Kouts: [00:33:22] Exactly.

Jordan Harbinger: [00:33:23] What about keeping that positive frame of mind? What about staying collaborative? What about staying positive?

Alex Kouts: [00:33:29] Yeah, so we referenced this a little bit before with kind of the illusion of control and the late night FM DJ voice, the Chris Voss thing. But you know, another way to look at this is you want to keep people in a place where they're still willing to collaborate. So there's lots of ways in addition to keeping people's illusion of control to do this. So one way that my mom does it is she has kind of her Susie cutesy routine. She calls it, where she'll go in and she'll just kind of act like she doesn't know what's going on. Like, “Oh, what is that? Is this bad or is that good? Like I don't even know,” and she knows exactly what the hell she's doing, but she walks in and acts like she doesn't, so that it disarms people like, “Oh no, look, this is what you want ma'am.” She's like, “Oh, is that good?” And then she lays the screws, puts the screws into people.

[00:34:07] But you know, in a more practical sense, many people do this by being friendly with their body language, by seeming open and collaborative and smiling when they talk. Things like that. Body language can go a long way to keeping people disarmed. And you know, salesman like we talked about before, we'll do this in a way to increase social costs and negotiating with them, but also to keep me in a positive frame of mind by saying things like, you know, noticing areas where we may have something in common. I'm wearing a Giant shirt. He's a big fan of the Giants. That keeps me in a positive frame of mind by establishing a rapport.

Jordan Harbinger: [00:34:38] Okay, good. So we're smiling when we talk. We want to collaborate.

Alex Kouts: [00:34:41] Not in a creepy way because taken too far again.

Jordan Harbinger: [00:34:44] What are you trying to say?

Alex Kouts: [00:34:44] Looks like a serial killer, not you. Your beautiful smile.

Jordan Harbinger: [00:34:46] Appreciate it. All right. Okay. So is there a place for confrontational, nonverbal communication, or like how does, how do we calibrate our non-verbals other than our Susie cutesy routine and getting that locked in?

Alex Kouts: [00:35:01] So poker playing. I'm a huge fan of body language. Huge, huge fan, because you know, there's a rule in behavioral psychology and communication science called the 7-38-55 Rule and that rule states that seven percent of the meaning transmitted and the things we're communicating are the words that we choose. What I'm choosing to say to you, my vocabulary, the sentence structure, things like that. The 38 percent of it comes from my intonation in my inflection. So that's me. Am I ending every sentence with a question mark? Like I have no idea what I'm talking about or am I coming down forcefully?

Jordan Harbinger: [00:35:32] Yeah, you never talk like that.

Alex Kouts: [00:35:33] No, I don't. And not only that, I emphasize specific words inside a sentence that I want to, that I want to put focus on. I will emphasize action words. I will come down at the end of a sentence. I will draw out syllables to bring emphasis to things because I'm communicating conviction when I say these things. So I do it implicitly. I'm not necessarily doing an intentionally all the time, but you read that one.

Jordan Harbinger: [00:35:53] When did you learn that? You know, I'm curious.

Alex Kouts: [00:35:55] Well, you know, really interesting thing is if anyone's ever had the opportunity to do this, because I've been extensively media trained. So if you ever go on the road and you're raising money for a company or something like that often, or you start doing a lot of TV interviews, like you obviously do a lot of this stuff. You'll get media train where you have someone come in and it'll actually videotape you, and they'll ask you questions and they'll play back your responses. And like game tape watching NFL game, they'll like circle things and be like, see, we did this thing, this means this. Don't do that. And by forcing myself to look at what I'm saying on a regular basis, it makes you hyper aware when you're doing things that make it less likely for someone to believe you or betray the point that you're making, reduce the sense of communicated conviction. So that's a super helpful way of getting to some of that stuff.

Jordan Harbinger: [00:36:38] Yeah, that's great.

Alex Kouts: [00:36:39] So in a negotiation, your body is often communicating for you. So 7 percent of the meaning of the things that I'm communicating or the words I choose, 38 percent of it is my inflection and then 55 percent of it is your body language, the nonverbal communication cues that you were just mentioning. And so when I'm talking to you, am I closing my body language? Meaning am I crossing my arms? Am I protecting my vital organs? There's the fig leaf where sometimes people cross their hands and put it in their lap covering their genitals. That's one of the most frequent things a little kids do when they're in trouble. They kind of cover themselves up.

[00:37:10] There was a woman that I knew years ago who taught, who was a charisma coach, and she focused very heavily on teaching women how to take up more physical space in boardroom environments because how much physical space you take up communicates the level of confidence that you have implicitly. So women often when they're sitting, they will cross their legs up with their hands in their lap and they'll lean forward. That's making themselves as small as they can possibly make themselves. Whereas you look at like a male CEO of a company, his hands are behind his head, his feet are up on the desk, he's taking up a ludicrous amount of space. It's like, and I hate this term, but man spreading on like public transit. That's a dominance play in some sense.

Jordan Harbinger: [00:37:46] Right. Yeah. And then you can tell who read about it somewhere and is now doing a lot of it because they are taking up space in a way where they're clearly uncomfortable because they're stretched out so far. There's no way.

Alex Kouts: [00:37:56] Yeah, like this is too much.

Jordan Harbinger: [00:37:57] Yeah. It’s too much. And you know, interestingly, I actually back in the ‘90s when I lived in the former East Germany, a friend of mine and I were in West Germany on a trip and he goes, “You know, you can always tell East Germans from West Germans by the way they sit.” And I said, “What? What are you talking about?” I'd never heard of nonverbal communication at this point. You know, I was 17 years old. And he goes, yeah, look at these two guys. And they were like really spread out arm across the other chair. You know, they had their stuff on another chair. They had taken up this whole table of four chairs with two guys. And I said, “Oh, okay, whatever, maybe,” and then he goes, go ask where they're from. And I said, “Well, that's going to be weird. I can't start a conversation with a stranger.” And he goes, do it in English. They won't care. All you're right. “Hey, where are you guys from Germany?” “Yeah, we're from Munich. Have you been there?” You know, have you been there? And I'm like, “Okay, you are right.” But then he kept doing this and he would see a guy on a train, like a tram and the guy would be sitting there with his legs forward, his hands in his lap, his shoulders forward, and just looking straight forward. And he'd go, I bet that guy's from East Germany. And I went, no way. And he goes up and he asked him and he goes, “Sir, where are you from?” And he goes, “Oh, you know, I'm from [indiscernible] [00:39:06] in East Germany.” And he goes, “Yeah.” And he just kept doing that. And I thought this is so interesting because not only is it a gender thing, cultures will teach people to behave in a certain way. So Americans, manspreading is inherently a Western thing, not just a guy thing.

Alex Kouts: [00:39:22] Or Spurs or jangling when we walk in there.

Jordan Harbinger: [00:39:23] That's right. You go to you going to Asia, there's not a lot of manspreading going on there. There's maybe different things happening. Of course.

Alex Kouts: [00:39:30] Totally. Totally. And you know, often in body language it's less important what people are specifically doing. What we're mentioning here are broad based cues that are used. No, but in reality it's also deviation from the baseline. So people will tell you when you're either developing poker reads on people at a poker table, it's not specific things that they're doing, but it's what things they're doing that are deviations from the norm. Oh, you're doing this thing, but you've never done that before. What does that mean? Something must have changed for you. Paying attention to things like that can be very useful environment like that. But in negotiations day to day, or in conversations, people are constantly telegraphing their emotions to you and once you start paying attention to this stuff, people are screaming to tell you how they're feeling at any given moment through their eye contact or lack thereof, touching the face, the neck, putting your hands through your hair, close body language, like crossing your arms or covering your vital organs. All of these things communicate that I'm uncomfortable, that I am maybe lacking confidence in some sense that I am in a troubled state.

[00:40:25] Now some people are always like that because they're naturally very nervous. So again, you have to compare to the baseline, but a broad based average, good thing to pay attention to. Another thing that's really important to call out as a difference between men and women. So when men talk to each other, like when you and I talked to each other, let's say we're at a party, we're never facing each other directly. Men don't do that.

Jordan Harbinger: [00:40:43] That’s pretty rare, yeah.

Alex Kouts: [00:40:44] Because to a man that's like super confrontational, like squared shoulders, direct eye contact, I'm going to fight you. That's what that is.

Jordan Harbinger: [00:40:49] It's a little intense even if it's a friendly conversation. I think highly charismatic people do it a lot, but it's also kind of an intimidation thing.

Alex Kouts: [00:40:57] It’s a powerplay. Yeah, it's really hard to play. So men notice this next time you walk to a party or a networking event. When men are talking to each other like Jordan or I, we're sitting diagonal to each other at an angle both facing out towards the room. Typically our arms are crossed or we're holding a drink or something like that. That's position number one for men talking to each other in public. And not only that, men don't have physical contact between each other when we're talking, I don't talk to Jordan and like stroke him on the arm when I make an important point, but women who are friends who and will constantly talk to each other, they'll touch their each other's hair. They're friends that I've had dudes for like 30 years that I've never physically touched.

Jordan Harbinger: [00:41:34] It would not occur to me to touch any part of your above the neck line.

Alex Kouts: [00:41:38] Exactly.

Jordan Harbinger: [00:41:39] I like pat you on the arm of the back. That's probably the max. Oh, we hug when we see each other, but that's kind of it, right?

Alex Kouts: [00:41:45] And we're really uncomfortable doing it. We just know we have to. We care about each other.

Jordan Harbinger: [0 0:41:47] It’s just I'll go up and hug it. Give Alex a hug now. Go up and do it. You can do it, Jordan, it's okay.

Alex Kouts: [00:41:53] Exactly. But it's not something that men do for frequently. So often this causes friction between the sexist because men talk to women, like men talk to men. And that's a problem because women like direct contact. When they talk to each other, they commonly square shoulders. They get closer than men do when they're talking to each other. They will touch to each other. So when men are talking to women, you can't talk to women like you talk to a man. You should give her direct contact, the square shoulders. I wouldn’t necessarily recommend you touch people because especially in a work environment that's super dicey and really risking.

Jordan Harbinger: [00:42:22] #MeToo.

Alex Kouts: [00:42:23] Right. Well, specific hashtag like violation, don't do that.

Jordan Harbinger: [00:42:26] Yeah. Hashtag sexual harassment in pretty much any situation.

Alex Kouts: [00:42:30] Exactly. So don't necessarily do that, but do square shoulders. Another thing is that if a woman is talking to a man and you square shoulders, the man that can be seen as direct confrontation, if you volunteer that type of behavior. So for men, who many times women are a mirror for all of our insecurities, being judged by a woman is basically the sum total of our existence. Not to be too reductive, but in many ways it is. So when women are very confrontational to men, when they talk to men like they talk to other women, that can be extremely insecurity producing for men or bringing out, because again, it feels confrontational to us.

[00:43:02] So I see this commonly, there's a lot of disconnects between the genders. So in negotiations, in interpersonal communication, you need to pay very close attention to how other people are reacting to the things that you're saying. Are they shutting down? Are they touching their face or neck or hair when you're talking to them, and then modulate your approach accordingly. Step it back maybe.

Jordan Harbinger: [00:43:21] We've talked about a lot of poker mindsets, poker mentalities that come into play with negotiation. Is there anything else from that game that falls into the negotiation realm?

Alex Kouts: [00:43:30] Oh yeah, so many things, but you know, one of the most important things I learned from playing a lot of poker is that especially if you play tournament play, is that if you treat each hand as a life and death situation as a really important event in and of itself, you're going to burn yourself out in a matter of minutes and you're going to make a lot of shitty decisions because you're emotionally compromising yourself continuously as you play the game.

[00:43:50] In poker, you have to adopt the mindset that if I lose a hand, it doesn't really matter. Especially if you play the hand correctly, then you can't feel bad about it at all. Because in the long run, the better poker player will win more than they will lose. In like an average game between a very junior poker player and a professional. The junior poker player has almost a coin flip chance at winning any individual hand, but exploded out over thousands or tens of thousands of hand. The poker player has a very slight edge, but gets magnified to an extreme difference in outcomes between the amateur and the professional because they had adopt this mentality again that each hand doesn't kill me. Each hand is just another hand. There's another hand after it.

[00:44:28] So we have to make sure that we don't fall into quicksand and that's true with negotiations. if I negotiate for a job offer and I don't get exactly what I want and I don't know what I'm taking that job, don't feel bad that it didn't work out. Feel good that you negotiated, feel good that you took the shot and walk away into your next opportunity to negotiate feeling like you're doing the right thing as opposed to building up all these mental barriers for why I don't want to do this again. So again, adopt that poker mindset that no matter what the outcome of a negotiation is, the fact that I did it was the right thing.

Jordan Harbinger: [00:44:57] So let's focus for a minute on the job offer, right? We've done and yes, I am eating a banana. If you're watching this on YouTube, it's been a long show. It's been a long day.

Alex Kouts: [00:45:06] It's a prop banana.

Jordan Harbinger: [00:45:07] It’s a prop banana.

Alex Kouts: [00:45:08] It's intentional. It's all going to tie into the point where we're talking about in a minute.

Jordan Harbinger: [00:45:14] You killed it. You got the job. You're trying to negotiate your salary. You know, like you said, you shook hands, your kids, babies, doves are flying. People were crying. The offer comes.

Alex Kouts: [00:45:26] Yeah. So what we're about to walk through is very typical job offer scenario, job negotiation scenario. The truth is that there's very little variation in what happens with people's job offer negotiations. There's some things that happen, but from like a macro perspective, it's a pretty predictable series of things that happen. And so what you see here is kind of compendium or average view of a couple hundred different job negotiations that I've either directly done or helped advise on behalf of friends or students or things like that. So what I want to walk through here is kind of step by step what happens, what do you do in an optimal scenario? And then tie in a bunch of the things that we've talked through today. There's kind of more theory and functional specific acts that we brought up and see how they're applied in this situation.

Jordan Harbinger: [00:46:07] Okay.

Alex Kouts: [00:46:08] So the first offer comes in, which is always the what? Quiz time?

Jordan Harbinger: [00:46:11] The FU price.

Alex Kouts: [00:46:12] The FU price. Exactly.

Jordan Harbinger: [00:46:13] I'm so smart.

Alex Kouts: [00:46:14] So I have to agree.

Jordan Harbinger: [00:46:15] We did not take that twice just so that I would be right.

Alex Kouts: [00:46:17] Definitely not. It was incredibly smooth and seamless. So the first offer is always the FU price, right? So that's my personal rationalization for how to make myself feel comfortable negotiating for the things that I want, no matter what. So the first offer comes in and the important thing is before the first offer comes in, before I even see what I'm up against, I've already made the decision that no matter what comes in, I'm going to negotiate. I've accepted as a foregone conclusion that I'm going to negotiate this offer. Now that's really, really important because I get a lot of people to come to me and they're like, “Hey, should I negotiate this job offer? Can you take a look at it?” I'm like, I don't need to take a look at it. The answer is yes, you're going to negotiate this job offer. You always negotiate. It doesn't matter what it is. If anyone gives you an offer, just assume you will.

[00:46:56] So the one that point comes up, you don't have to make the call because again, like we talked about before, when you're under duress, when the spotlight is on you, you are going to make sub optimal decisions because of a million other factors. Maybe in the offer letter they say, “And we're offering you at the top of our range.” So you read that and you're like, well I don't know that's a top of their range. Maybe I'm not going to negotiate. No, that's a thing people say, you still negotiate. It doesn't matter. So the offer comes in too high, too low, just right. No matter what you negotiate.

[00:47:24] So once that negotiation begins, let's say the offer comes in, let's deconstruct that offer typically looks like. Typically the offer has a couple of key components. There's a lot of social nicety in there. Things like we're really excited, we really want you to join. This has been such an important position, blah, blah, blah, blah. But in like those CIA movies where they redact like classified information from a document, like the black marker, they go through in the cross, everything out except for like five words. We're going to do that here. So with your offer letter, cross a bunch of stuff out. The only things that matter are the position that you're getting offered, the title. The base salary plus any other material terms like the common stock you're being offered, the stock options or package. If your company does that. Start date, things like that. Nothing else matters. Everything else other than those key material terms are a distraction that are meant to make you less likely to negotiate. Like we talked about before, increase the social costs for you, asking for what you want.

Jordan Harbinger: [00:48:16] So all of that, we're excited to have you on board, looking forward to taking you around the campus. What size t-shirt do you wear?

Alex Kouts: [00:48:24] Right. We're going to order your laptop immediately. All that stuff.

Jordan Harbinger: [00:48:27] Is that always at real?

Alex Kouts: [00:48:28] Oh, sure. All the time. People do things like that constantly. We're going to just send you some documents even in advance of giving you an offer so you can review them to be ready for your first day. Again, it's not always malevolence. The cofounder, my company, he and I have famous arguments about this constantly. He always assumes incompetence before malevolence. He keeps saying things like, I just assume people are incompetent. I'm on the exact opposite side of the spectrum. I always assumed malevolence before in competence. Not that's necessarily the right thing, but it helps me plan for a worst case scenario.

Jordan Harbinger: [00:48:56] That's good. In fact, I wish I'd done that in previous dealings as well.

Alex Kouts: [00:48:59] Yeah, yeah, yeah. So anyway, the first offer comes in and after we redact all that social nicety, all that other bullshit out of it, really what the offer is, what it comes down to is it's what they think they can get you for. They’re pricing you, but it's not their best. It's not your best case scenario. In most cases, it's the best reasonable case scenario for them. And job offers scenarios, often the first offer is in the low to middle allowable budget. So imagine if there's a budget and you divided up into four quartiles.

[0:49:28] The first offer is almost always in the first or second quartile. It's always in the low to middle of the allowable budget. So there's almost always frets and flexibility. So the key thing to walk away with here is the first offer is almost never the only case scenario. It is just the best reasonable case scenario for them. Not for you.

Jordan Harbinger: [00:49:44] That makes sense. Okay. So it's in the low to middle of allowable budget. It's kind of what they are really hoping that you're going to take.

Alex Kouts: [00:49:54] Yeah. And in the hundreds of times that I've taught this, often some of my most frequent students are people who are HR managers, who are actually the folks that are extending offers to folks. And I always ask them, with everything in their stack, “Is that right? Is that how it is for you guys?” And every single time I'm like, “Yeah, that's pretty much what we do. It's in the low to middle of the allowable budget.”

Jordan Harbinger: [00:50:11] Wow.

Alex Kouts: [00:50:11] So there's a lot, again, this stuff has been smoke-tested quite heavily by the people that do this. So the first offer comes in, we kind of isolated out the parts that are important. We recognize what the first offer is. We've already decided we're going to negotiate no matter what.

Jordan Harbinger: [00:50:24] Even if they give you twice what you want, what you thought you wanted.

 

Alex Kouts: [0:50:28] Exactly.

Jordan Harbinger: [00:50:28] Negotiate anyway, otherwise, you're leaving money on the table.

Alex Kouts: [00:50:30] Exactly.

Jordan Harbinger: [00:50:31] Okay.

Alex Kouts: [00:50:32] And then remember how we said before, whenever you're given an offer, don't react to the offer immediately, creates some time so you can actually think about it. That's really what we're going to do here amongst some other things. So the first response that you send is not a direct response to the offer. It's a response to the notion of an offer. So let's walk through it.

[00:50:48] So I'm going to read a typical response. It's very short that I would give to a first job offer. Bob, I appreciate the consideration of the offers him. The guy's name is Bob. I truly enjoyed our conversation and feel great about the team and the company. I need to evaluate this based on other opportunities I'm looking at. I will get back to you shortly. As I'm doing that, it'd be helpful to know if there's any flexibility in the terms, or the base or whatever thing I wanted negotiate. And then I'd say, I look forward to your response, and then just sign with my name. So now what are we doing here? This is a very simple, quick email. It's like four sentences, but there's a lot of very complex machinery happening here.

[00:51:22] So first always start with the first name. I get a lot of kids that are straight out of college who've never been in a professional environment.

Jordan Harbinger: [00:51:28] Dear, Mr. Harbinger.

Alex Kouts: [00:51:29] Dear Mr. Harbinger. Exactly. But when you do that you are indicating a sense of value hierarchy. You're putting them at a different level than you are. So in these situations you want to talk to them as though you're their peer. I would say the only caveat to that should be if you are talking to someone that has a more senior title, like a doctorate or a legal title by which they go like a JT or whatever, something like that. I would address them by however they address themselves on LinkedIn. That's the rule that I typically use. I live in California, in San Francisco in particular, which is super hippy, egalitarian bullshit, and I've actually been bitten by that in the past. I met with a woman who had a doctorate in cryptography with a company I was starting years ago, and I addressed her by her first name and she got very upset.

Jordan Harbinger: [00:52:13] Really?

Alex Kouts: [00:52:17] She's like, I address me as Dr. so-and-so. I think I've earned that title, and I'm like, shit, you are 100 percent right. I'm sorry. I've living in California too long. So again, I use LinkedIn as a reference.

[00:52:24] So the first part of that email as we mentioned before, I appreciate the consideration, the offer. I'm really excited. I'm just reiterating my passion and I'm setting the tone. There's this guy that I met years ago, he was the head of retail consulting for this major strategy consulting company, and I asked him retail consulting, like selling shit, right?

Jordan Harbinger: [0 0:52:41] Yeah.

Alex Kouts: [00:52:42] Okay. Like what are your thoughts on retail? What's your overarching strategy? How do you look at it? How you evaluate a retail store? He goes, well, he's like, when you walk into a store, there's 10 things that you expect to see. When you see those 10 things you don't even notice. Like I expect there to be lighting and clothes and a place to pay and a place to change, someone asks questions for. I don't walk into a store and go, “Oh gee, isn't it nice they have lighting? How wonderful!” That shit doesn't happen.

Jordan Harbinger: [00:53:05] Yeah, that never happens.

Alex Kouts: [00:53:06] No. But when one of those things is missing, I get super pissed off. This reiterating the passion and setting the tone for the emails of one of those 10 things. When it's there, it's not going to determine the outcome of the negotiation, but when it isn't, it can piss people off. So make sure that you show them that respect. Have those 10 things there.

Jordan Harbinger: [00:53:23] So these examples with these highlights be in the worksheets. So if you're like, wait, what do we have to have in there? Well, you'll find that in the show notes.

Alex Kouts: [00:53:30] Exactly. So the next part of the email, and this is where the real meat of it comes in, it's really only two sentences. The whole strategy I have here is broken out of two sentences. The first is I need to evaluate this best on other opportunities I'm looking at, and I'll get back to you shortly. What am I doing there? I am creating or displaying social proof and market validation. Social proof is like Yelp. Yelp is an app built on this concept in behavioral psychology of social proofing that I look to other people to validate whether or not something is good. If you know 5,000 people said this Chinese food restaurant has great a General Tso's chicken. I believe they have great general Tso's chicken, and I'm going to go there and eat that food. So I'm doing that here.

Jordan Harbinger: [0 0:54:06] Tsao, by the way.

Alex Kouts: [00:54:07] Tsao. Oh, I'm so sorry.

Jordan Harbinger: [00:54:08] No, it’s okay.

Alex Kouts: [00:54:08] That's right. We're not way more worldly than that.

Jordan Harbinger: [00:54:10] It’s not a real Chinese dish so you can say it so. It's just --

Alex Kouts: [00:54:13] Wasn't invented for Americans like me that don't know how to pronounce things?

Jordan Harbinger: [00:54:15] It was. which is weird why they would put T-S-O, which something clearly no one knows how to actually say.

Alex Kouts: [00:54:21] Oh, you learn it here. If you take away nothing else from this podcast.

Jordan Harbinger: [00:54:24] It's general Tso’s chicken.

Alex Kouts: [00:54:25] Right. General tso’s.

Jordan Harbinger: [00:54:26] And it's not really Chinese. Yeah.

Alex Kouts: [00:54:29] Right. Exactly. So anyway. The point of saying, I'm evaluating this based on other opportunities I'm looking at is me to displaying that social proof. They will assume that there are other job opportunities that I'm considering. I'm using market validation as another way to say that. They will assume that there's other things that I'm looking at. That means I'm sought after by the market and I'm more valuable.

Jordan Harbinger: [00:54:47] And you have good Yelp reviews.

Alex Kouts: [00:54:48] And I have good Yelp reviews. Exactly. And I make great chicken. The second part of this email, the second sentence in this paragraph and the whole purpose of this email is as I'm doing that, it would be helpful to know if there's any flexibility in the terms. Now, what I'm doing here is asking a very simple question. I'm not actually asking for anything. I'm just asking if there's any flexibility. Now remember we talked before about making the other side reactive, that’s what I'm doing here. I'm changing the pace of the negotiation. I'm painting them into a corner, because what are their outcomes now? Let's game through the situation out. They can say yes or they can say no, or they can say some variant of each one of them.

[00:55:21] If they say yes, then they're inviting me and asking me for my counter, which is huge. Now they're making me reactive, so again, we've changed the perceived leverage in the conversation. They could say no, which very rarely happens because that's going to sound super unreasonable. What do you mean there's no flexibility at all? This is a job offer scenario. This is a conversation. Everybody negotiates jobs.

Jordan Harbinger: [00:55:41] I'm guessing that they would say something like, “Well, what did you have in mind?”

Alex Kouts: [00:55:45] Exactly.

Jordan Harbinger: [00:55:45] Right.

Alex Kouts: So typically the response is something to the effect of “We think this is a really fair offer, but what would you -- ?

Jordan Harbinger: “We’re open to ideas.”

Alex Kouts: [00:55:53] Exactly. So at that point they're asking you for your counter. And that's really the magic of this email, and the whole purpose for sending it, because then once you send it, you get their initial response like what we just said and you see who you're talking to. Typically it's some variant of we think this is a really fair offer but, and then you come back with your response. So this is a basic and other email here. Again, only a couple sentences. “Bob, I appreciate the consideration and the offer. I'm very excited about the team, the product, and the direction of the company. I know I can make a big impact on the organization based on other opportunities I'm looking at. I feel X is a fair number for what I can bring to this role. If you can match that, I'm ready to sign today and will give my notice tomorrow. Look forward to your response.” So what's happening here? So let's unpack it a little bit as well.

Jordan Harbinger: [00:56:34] Okay. We use the first name. Got it.

Alex Kouts: [00:56:35] First name.

Jordan Harbinger: [00:56:36] We have the nice little cultural courtesy. I appreciate the consideration of the offer.

Alex Kouts: [0 0:56:41] Exactly. The 10 things.

Jordan Harbinger: [00:56:41] Check. And then I'm very excited about the team, the product, the direction of the company. I know I can make a big impact on the organization. It sounds like you're saying not only that you're interested in it, but that you've realized you have some value to offer.

Alex Kouts: [00:56:54] Yep. Absolutely. It's just a powerful thing to say, and then comes the really important part and again these two sentences are the entire strategy behind this negotiation. First is based on other opportunities I'm looking at. I feel X is a fair number of what I can bring to the role. What we're doing here is we are displaying again, social proof and market validation, not based on other offers I have, based on other opportunities I'm looking at. You can also say based on the market rate, if you don't want to use opportunities, although I would say opportunities is the stronger play, I'm looking at. I feel X is a fair number. Now again, social proof and market validation. I'm not saying I would like this, I want this. This would make me happy. I'm saying based on other opportunities and I'm looking at X is a fair number of what I can bring to this position.

Jordan Harbinger: [00:57:36] Yeah, that difference, that subtle difference makes sense, right? Because it's not that you're unhappy with it. It's that, look, I have other evidence, concrete evidence that I'm worth more than what you’d offer.

Alex Kouts: [00:57:48] And real war of this, the battle this is fought in the subtlety. It's not big, wide ranging things that change the outcome of negotiations. It's small little things like this. Now, if this kind of stuff doesn't come naturally to you, use the script that we're providing you here. This is a great place to start, or write the email yourself and then have other people read it. Don't introduce it to them. Just say, how does this come off? What's the tone here? What do you expect? Some people, this kind of thing comes naturally too. Many of us, it doesn't. And if it doesn't, don't be afraid to ask other people what their opinion is.

Jordan Harbinger: [0 0:58:17] Very cool. So what is the X in this case? You said 12, was it 12 percent or something? Am I imagining that?

Alex Kouts: [00:58:23] Yeah, no, that's right. So typically, I recommend people counter with 12 to 15 percent when using this strategy because that's inside of that allowable budget. Remember again, if they're in the low to middle of their allowable range, 12 to 15 percent puts you right at the top of that range, almost all the time.

[00:58:38] Now I will say as a caveat, some of this changes if you're negotiating very senior position, like a C level or VP level or senior director position, and that situation, you may have more flexibility because those positions tend to be more harder to hire for.

Jordan Harbinger: [00:58:52] Sure. Yeah. You hear stories all the time like, well, I was working at MIT and then I had dinner with Mark Zuckerberg and he handed me an offer that was 10 times what I'm currently making. So I took the job and you're like, okay, well if you're going from government or academia to --

Alex Kouts: [00:59:09] Rocket ship startup.

Jordan Harbinger: [00:59:10] Yeah, rocket ship startup. This is going to be different. And also, if you're in that situation, what would you recommend? What if someone is negotiating C-suite stuff? Not how would they do it, but are there coaches they can hire for this? It seems like should be, that's a professional's job. “Hey, I need an executive compensation package negotiated with Oracle.”

Alex Kouts: [00:59:28] Yeah, I mean some people use employment lawyers, in some cases are personal lawyers can help them navigate the really complex agreements. But the truth is it ends up being, people that get to that level typically have been around the block enough to know generally what they're looking for, so they have a better sense of context. Again, if you're right out of college, it's harder to establish that context. So these rules of thumb are very useful for most situations. But for the very senior ones as well, often it's salary, but it's also stock or equity control terms, board seat, all kinds of things.

Jordan Harbinger: [00:59:58] Sure. Okay. And then last but not least, you said in the example, if you can match that, I'm ready to sign today and I will give my notice tomorrow. What do we, what's going on there?

Alex Kouts: [01:00:08] So that's such a power place. Remember we talked before about helping people visualize the win. If the car salesman knows that he's going to get a deal that day, he's more likely to give you what you want or what you're asking for. That's exactly what we're doing here. I am, and this is the most important part of this email, the social proofing and the number that you're giving. You just need to do that, that's got to be there. But the most important part tactically is this part. If you can match that, I'm ready to sign today and we'll get my notice tomorrow. This presents a slam dunk on a silver platter. If it's even possible to do those two things to the HR rep on the other side of the phone, that means, again, remember they want the negotiation to end. Put yourself in their position, right?

[01:00:46] So let's say you interviewed with five or six people on the team. At 180 or 200 dollar an hour, total costs for an employee’s time, not to mention the opportunity costs of them not working on other things that they'd be valuable to the company. They've invested a lot of money and giving you this offer. And the entire team signed off on you. The manager who probably outranks this HR person gave you the go ahead, and now they hand it off to this person to get you in the door. That's a high pressure situation for that HR rep, because now it's up to them to screw this up or bring you in the door. They're really in kind of almost like a no win scenario here. It's a really tough spot for them to be in, so this is where the empathy comes in again. Imagine yourself on their side of the table. So if you can say, you know what? I'm in the door tomorrow and happy for this number, if you do this thing. They will be willing to pay more because they see that end really close.

Jordan Harbinger: [01:01:34] Yeah, I think also just from my perspective, having done a bunch of negotiation with advertisers and things like that. Saying, if we can do this, I'll sign right now and we'll get going. That lets me know that or me letting them know I'm not going to then pull some other thing out of the sky that you then have to contend with. I'm not going to go, “Thanks. Good. Now that we're there, I want this other thing,” and Oh, now there's this, it's going to, it's done. I'm done. This is the thing that I want. There's not going to be 10 other things. This isn't going to take three more week. It could be over by 5 p.m, if you get back to me today.

Alex Kouts: [01:02:07] And again, bird in the ham worth two in the bush. That's exactly what's happening here. A lot of the things that we're talking about today, kind of in this go through here is that it's a lot of wisdom that your grandfather, your great-grandmother know that we're just applying here very tactically for a specific purpose. But these were not groundbreaking concepts. They're just applied to this situation.

Jordan Harbinger: [01:02:26] Right. Okay, great.

Alex Kouts: [01:02:27] Yeah. And then basically I look forward to response power. Close that email, send it off. Now, the vast majority of the time that I've seen this employed roughly 70 to 78 percent of the time, the job offers done at that point. They say yes, and it's over. There are rare situations kind of in that 20 to 30 percent or so where they'll come back and say, well, we can't do that but we can counter with this. It tends to be less than what you asked. Often when you asked, let's just say you asked for a 10k increase, they'll come back with 5k or set or 7k. They typically come back with half or in some cases less than half of what you requested, if they're going to counter. And be prepared for that, that's always very possible. It's unlikely in situations like this, again, if you are over optimizing for ending the negotiation quickly. But then you have the opportunity to counter one more time and then you enter what we talked about before, the danger zone where you're beginning to test the relationship. There are situations where you can negotiate multiple times past that. It's easier to do that at a senior level, but at most levels you're beginning to kind of test the social fabric a little bit too much. So then after your last counter, they give you a response and I would say you either accept it or you walk away in the vast majority of cases.

Jordan Harbinger: [01:03:31] Great. Okay. So to review some of these major points, and again, this will be in the worksheets for this episode in the show notes. Never make the first offer, always be thankful, gracious, et cetera. Setting a positive and passionate tone for the negotiation.

Alex Kouts: [01:03:46] Absolutely. That's right.

Jordan Harbinger: [01:03:47] Displaying the market validation, the social proof to make sure that they know you're in demand. You know, you're not just relying on them, set your ask, help them visualize the win, AKA happy Friday we hired them, and then reiterate interest, close, strong. Then you got rain.

Alex Kouts: [01:04:04] I couldn’t said better myself. Just a couple of things to qualify here. So there are different types of negotiations, but I use a job offer scenario because it's most common to all of us. But all the things that Jordan just mentioned, you can use in every single one of your negotiations, the social proof, the market validation, right? I mean the visualizing the win, the setting the ask, all these things are core concepts that again, work in every kind of negotiation applied to a job offer scenario.

[01:04:28] Now for more complex things like business to business deals basically go to negotiation, tenants and rules still apply, but there's a couple of key differences. The back and forth can be endless. The amount of pre-work that you have to do is significantly higher than it would be for a job offer scenario. BD or business development has very different metrics by which the people that you're talking to are being evaluated. In a job offer scenario. The HR rep, it's either gets you in the door or doesn't get you in the door at a rate that's inside budget or outside budget. It's a very small bounded number of things. And again, business development kind of business to business deal side of things. It's much more complex. There's a lot more back and forth. Deals can take eight months, years to close, depending on the complexity of the industry that you're in. And there's a lot more options, just way more things to negotiate. But again, same basic negotiation tenants still apply.

Jordan Harbinger: [01:05:13] I remember a while ago you told me that you negotiated a mattress. Sounds really exciting. I know you've bought cars, motorcycles, but the mattress was by far your favorite.

Alex Kouts: [01:05:22] Oh yes. Oh, mattresses are the best. In my opinion, that's like the in the day to day trenches, like the Olympics of negotiating because the deck is so stacked in your favor for negotiating situation. It's fantastic --

Jordan Harbinger: [01:05:36] Really? For mattresses?

Alex Kouts: [01:05:37] Yeah. For mattresses. So no one really knows this, but the entire mattress industry, and there's a reason it's being disrupted right now by companies like Casper and others, is an entire industry built to fuck you basically. You walk into these stores and they all sell basically the same products, in many cases, the exact same product, but they will call them different things, give them different serial numbers, different brand names, different tags, colors, everything. Just to make it harder for you to compare it and shop offers around. They also do a lot of kind of schlocky sales stuff. Like they'll always be balloons outside of a mattress store. Notice this when you're driving past one next. It's always like some crazy time in the month, but there's always a rebate. They try every trick in the book from a sales perspective to get you to buy. And the other best part about it is that the vast majority of people that I've talked to don't negotiate mattresses there. They don't even know that they can, but these are products that have, and I'm not exaggerating, hundreds of percent markup on top of the wholesale cost.

Jordan Harbinger: [01:06:28] I met a guy who was a mattress manufacturer, he was probably one of the richest guys I've ever met in my life.

Alex Kouts: [01:06:33] Yeah, it's absolutely insane. It is a pure margin business, which makes it super fun to negotiate. So I'll walk through an actual example of this. So I bought my girlfriend a mattress recently, and we went through and found an area and for some reason everything is always like this, but all the mattress stores cluster themselves around each other. So if you find like one mattress store, there's like six within, like in a five mile radius. But for some reason we're always in the same general place.

Jordan Harbinger: [01:06:59] It’s so strange.

Alex Kouts: [0 1:07:00] Yeah. I don't know why, but if you're in San Francisco, Van Ness street here, Van Ness Avenue is basically exactly that. There's about five mattress stores within like a couple blocks of each other. So anyway, she and I go to the first place and she lays down on a bed. We go around and look at different ones. She's like, okay, find the one you want. You find someone she likes. The mattress guy comes over, he leads into his whole schlocky sales routine. “Oh, what a beautiful couple.” “Oh my God, you guys are going to have the most beautiful kids.” I'm like, “Why don't you cut the bullshit?” He goes, “No -- “

Jordan Harbinger: [01:07:27] “We’re going to be doing it on this mattress if you play your cards right!”

Alex Kouts: [01:07:30] That’s right. He's like, “You look so beautiful.” He's like, “Oh, you guys like this?” He was trying to find shared interests. He tries and humanizes himself. “How long have you guys lived out here? You live together? No? Well, it’s going to happen! I can tell. I can feel real love!” Like, the whole just bullshit line. And so when she finds the one she likes and the first mattress she looks at, or that she seriously likes, is 1,800 dollars.

Jordan Harbinger: [01:07:50] Wow!

 

Alex Kouts: [01:07:50] I'm like, “Wow! That's expensive.”

Jordan Harbinger: [01:07:51] Those are some expensive kids.

Alex Kouts: [01:07:52] Yeah, some expensive materials there. So, okay, fine. The first thing I do immediately, and everybody should do this, go to Google. Go to Google and just Google the price of that mattress, because every mattress place for the most part, in addition to places like Best Buy, they all do price matching. So if you can find a publicly advertised price, they will immediately match that price.

[01:08:12] So if you're uncomfortable negotiating, you don't want to do it, just show them. Hold up the phone and be like, “It's 1,500 dollars over here.” And so they'll immediately match that price. So that's the first thing I do. So we started at 1,800 dollars, and I immediately find it online for 1,200, and I'm like, “Well, will you guys match this price?” He goes, “Oh, I don’t know; let me talk to my manager,” and goes through the whole schlocky thing. Goes in the back room. He's probably playing Galaga or like ping pong or smoking a cigarette or something like that. Drinking a beer. Comes back out after an appropriate amount of time, to like, make me believe that he really considered it. He goes, “Well, you know, my manager didn't like it, but okay, we're going to do it.” I'm like, “That's not even close. But if you reach our price, we're going to buy today, right?” Visualize the win. And he goes, “All right, all right.” Because I'm like, “What can you do?” And he goes, “All right. All right, break my balls, break my balls. Okay. All right, fine. 1,100!” and I'm like, “Not even close!” And I'm like, “Will you throw in a box spring with that?” “Okay, fine, we’ll throw one in.” “What about a bed frame?” “Okay, fine.” She doesn't need either of these things, but he'll throw it in.

[01:09:04] “All right. What about free delivery?” “Okay, fine. You're breaking my balls. Fine.” And I'm like, “Yeah, 1,100 is not going to do it. Will you do that minus 10 percent? Well, what if I pay cash? Well, I don't know, I don't know how I feel about this. I'm going to walk out and I'm going to find it somewhere else.” “Okay, hold on a second!” So after all this is beating this guy back, like my mom did with the Izuzu Trooper, I get him down to 1,050 dollars. So we started at 1,800, these are real numbers. Now we're at 1,050. and I go, “You know what? Fuck you. I'm out of here!” And I leave, and I go to --

Jordan Harbinger: [01:09:32] I hope you don't really say that when you leave!

Alex Kouts: [01:09:33] No, no, no. I was very polite. “Thank you, sir. I appreciate it!” But I mean, obviously in my mind, “fudge.” Right. So anyway, we go to the next place and I find the exact same mattress. I had to Google it because it's a different brand name and a different serial number. And we go over and it's 1,800 bucks, and I'm like, “Listen, I just came from a place and they're going to do this for 1,050. You’ve got to beat that.” And I go through the same rigmarole with the other guy. “Will you do that minus 10 percent? What if I pay cash? I'm going to buy this today. You’ve got to do better. Give us a deeper -- blah, blah, blah.” Get them all the way down to 850, and we started at 1,800 dollars.

Jordan Harbinger: [01:10:02] Geez.

Alex Kouts: [01:10:03] I get this guy down to 850.

Jordan Harbinger: [01:10:04] A thousand dollars plus a free box spring and delivery.

Alex Kouts: [01:10:07] Exactly. With that, it’s over a thousand bucks. But I'm 950 down from where I started, and I go, “You know what? That's not going to do it.” And I walk out and go to the next place. So I go to the third place and we find the same mattress, and I go, “Listen guys, I just got this exact same mattress down to 850 another place. If you're going to beat that price, I'll buy here today.” So we do the whole thing with them. We do that minus 10 percent, same thing. Now at this point, my girlfriend can’t even look at me. She's so embarrassed to be around me. She goes off in the bathroom and I'm like, putting the screws to this guy, just like my mom did, and eventually get this guy down to like 750, and then I call the place that I just came from before and I put them on speaker phone in front of this other guy, at which point my girlfriend completely disowns me and leaves.

Jordan Harbinger: [01:10:46] Right. She's like, “I'll pick you up after -- ”

Alex Kouts: [01:10:47] And she's driving down the 101, starting a life in a new city. And I'm like, “Listen, I'm over at this place now. You gave me the price, 850 before. I've already got this guy down to 750. Whoever, which one of you beats that right now, I'm going to buy the mattress right now, cash.”

Jordan Harbinger: [01:11:00] They're on speaker phone, going against each other?

Alex Kouts: [01:11:01] They're on speaker phone. These guys can't even believe it. And I actually kind of feel bad for them as well. I can’t escape it.

Jordan Harbinger: [01:11:05] Yeah, yeah. They’re like, “I never wanted to work here in the first place.”

Alex Kouts: [01:11:08] Yeah. So anyway, we get the exact mattress she wanted at that place for 700 bucks out the door. We're done. Including tax and everything.

Jordan Harbinger: [01:11:14] Wow.

Alex Kouts: [01:11:15] So we basically saved 1,100 dollars just by going through the same basic tactics at every single place. So when you're in these situations --

Jordan Harbinger: [01:11:22] What you do with the box spring and the bed frames you didn't need?

Alex Kouts: [01:11:25] Yeah, so we ended up using them, but in past I've sold them, like I've done it for myself, for my brother, we sell them, we don't need them.

Jordan Harbinger: [01:11:30] So you just knock it down even further.

Alex Kouts: [01:11:33] But, so we'll put these in in kind of show notes so you can put it up later. But you know, we say things like, there's a script of things you can read. And in my students in my class, you know, you don't have to love the brawl of this as much as I do. I'm taking like, sick pleasure when you're going through this.

Jordan Harbinger: [01:11:45] Yeah, you’re clearly -- the speaker phone thing was like, “Okay, all right, come on, buddy.”

Alex Kouts: [01:11:48] Yeah. They're dying and I'm loving it, and I'm like feeding on it. I'm like, “Ah, yes, more strength! This is fantastic!” But most people don't feel that way. Most people hate it.

Jordan Harbinger: [01:11:57] “Mom would be so proud!”

Alex Kouts: [01:11:58] She would, well, she'd be ashamed because she would've done it for 650. But yeah, my mom didn't raise any sissies. But anyway, the point is, in my class, I give people just a list of things to say, and this'll be in the show notes, but what's your best out the door price? Will you do that minus 10 percent if you reach my price, I'll buy today. I'm on the phone with X and I have it advertised at this. Will you match it? If I buy here, would you throw in this? Is a good guy discount, which is something I know I learned from you years ago.

Jordan Harbinger: [01:12:24] Really? The good guy discount. Yeah, that's right.

Alex Kouts: [01:12:27] I hadn't heard that one before you.

Jordan Harbinger: [01:12:29] The good guy discount.

Alex Kouts: [01:12:31] This is for like the local discounts.

Jordan Harbinger: [01:12:32] Yeah, that's right. That's right.

Alex Kouts: [01:12:34] But the whole point is you don't have to be tactically a genius in negotiations. Just try saying some of these things out. So print them out, put them on your phone and just try reading them off. And students of mine who've been really uncomfortable negotiating in the past have done this, and just gone in and said these things and then come back and go, I just saved 800 bucks. I'm like, I know. It's so easy. Just ask.

Jordan Harbinger: [01:12:53] Cut me a check. Yeah, that's great.

Alex Kouts: [01:12:56] I mean if again, all the way back to like that rationalization. If I can rationalize myself asking for the things I want. The tactics in cases like this are super, super simple. So just try them out, see what happens.

Jordan Harbinger: [01:13:07] Yeah. I guess that whole margin on something like a mattress, motorcycle belongs to in part the salesman and the rest probably to the dealership. So he's playing in part with house money, but also really wants to make the sale and knows that you have options and hopes that you don't realize that.

Alex Kouts: [01:13:21] Exactly. Yeah. And again, if these people, and this is one reason I never feel bad about situations like this, if they sell me a mattress or anything, they are making money on the deal. No matter what they say. They don't sell things in a loss. They're not doing things for a favor. If they sell it to you, they're making money off it. No matter what they say. So again, all the way back to what we talked about before, you have a fiduciary responsibility to maximize your personal value in situations like this. Either you're going to get taken or they are, you're going to get a good deal or they are, and you need to protect yourself and your own self-interests. So find your rationalization that helps you do that. Whether it's every prices of fudge you price, thinking about forgone revenue, thinking about what Beyoncé would do or somebody else. Get yourself over that hump. Then just try some of these things and you'll be amazed how it works.

Jordan Harbinger: [01:14:08] Thank you so much. This is truly a master in negotiation and we're going to do some advance stuff soon enough.

Alex Kouts: [01:14:15]Yeah. We're going to get into the deep psychology of things, because what we talked about today are all the tactics that specifically how you negotiate. But the truth is most people don't even get to a place where they can adequately employ these tactics because there's so many things that stop them from getting to a place where they can try that. So, in another show, whole new conversation, we’ll deeply examine kind of the psychological aspects of negotiations and how we can fight those impulses that stop us for from asking for the things that we want.

Jordan Harbinger: [01:14:39] Perfect. Thank you very much, Alex.

Alex Kouts: [01:14:42] Thanks, man.

Jordan Harbinger: [01:14:44] Great big thank you to Alex Kouts. If you enjoyed this one, don't forget to thank him on Twitter. Tweet at me your number one takeaway as well. I'm @jordanharbinger on both Twitter and Instagram. Part three coming next week. Part one already aired. Hopefully you heard that before you heard this one. If not, go back and listen to that one as well. Don't forget, if you want to learn how to apply everything you just heard from Alex, make sure you go grab the worksheets also in the show notes at jordanharbinger.com/podcast. And of course, check out Six-Minute Networking. It is replacing LevelOne if you are in that. This is the course that will change your life. It is free. There's no credit card up front, there's no upsell. All I want to do is teach people how I've created an amazing network in my personal life and in my business life. This has been a game changer for the business. It's been a game changer for me personally. Jim Rohn said he only go as high as your five closest friends and you're the average of the people you spend the most time with. The way you level that up is through your network and I'm teaching you that for free at Six-Minute Networking, and you can find that at jordanharbinger.com/course. That's jordanharbinger.com/course.

[01:15:49] This episode was produced and edited by Jason DeFillippo. Show notes are by Robert Fogarty. Booking back office and last minute miracles by Jen Harbinger. and I'm your host Jordan Harbinger. The fee for this show is that you share it with friends when you find something useful, which should be in every episode. So please share the show with those you love and even those you don't. We've got a lot more in the pipeline and we are very excited to bring it to you. In the meantime, do your best to apply what you hear on the show so you can live what you listen and we'll see you next time.