Monday, December 17, 2018
Richard Wolpert Talks About The Soul Of A Deal, And How To Get That Deal Done
Richard Wolpert is a well known investor in the Los Angeles technology community, through his own fund, Chance Technologies; as a Venture Partner at Amplify.LA and Venture Advisor at Accel Partners; and has a long history in the tech community, having been Chief Strategy Officer at RealNetworks and President of Disney Online. Richard recently published a new book, The Soul Of A Deal, talking about his experience with deal making and interviewing such others as J.J.Abrams, Deepak Chopra, Peter Guber, Reid Hoffman, Penn Jillette and many others on their own experiences. We caught up with Richard to learn more about the book and deal making.
What's the book all about?
Richard Wolpert: The book is all about deal making, and about all of the things I learned doing this for about 33 years. I have sold companies of my own, companies I have invested in, and helped companies I've run or invested in with corporate development partnerships to help their business. I've just learned a lot of good lessons in doing those deals. One of the interesting things about the book, is it has about 32 chapters, and although there are a dozen of chapter on deals I have done myself, with people such as Steve Jobs and Bill Gates, and people of that caliber, I also took an honest and realistic assessment of those stories, and didn't think 12 chapters would make a book. So, what I did is I sat down and interviewed people like J.J. Abrams, Deepak Chopra, Reid Hoffman, and all these other people. One of the nice things about this book, is each chapter is only four to eight pages, so you don't have to sit around for hours to read it from start to finish. You can pop into the book, and read it for 10 minutes and get something out of its. So, when I found I only had a dozen or so stories myself, people told me, I should ask my friends, and see if people were willing to let me interview them for this book about deal making and how they've done deal making. I was very pleased and a little surprised that every single person, except for one, was happy to do it. It was not just driving and flying across the country for an in person interview, but then I would have to convert that into a chapter, and turn that interview into something that I thought would be interesting and keep it with the themes in the book. I then had to send it back to them to review the chapter, see if I appropriately converted their interview into the chapters and appropriately characterized the story they told me, and usually some back and forth beyond that. The book itself is broken into nine different categories, like when to say no, understanding the personalities you're dealing with, understanding yourself and issues you have, and one is how to take control of the deal. I won't go through all ten, but each chapter is one of these ten themes, and at the end of each chapter, there are two to four bullet points that are the main things you should have taken away from this story.
What inspired you to turn all of this into a book?
Richard Wolpert: I have several friends and colleagues who have told me that I've done some really interesting stuff. I have dealt with some of the biggest personalities in our industry, the tech industry. I had told a number of people the story about the Microsoft settlement, where we were able to get $761M in cash out of Microsoft in what we thought were antitrust violations. It's a very interesting story for people to read about. A, it's a large number, but B., there's a lot of interesting data around how Microsoft was a monopoly, and because of that that didn't allow them to do certain things—but the ended up doing them anyhow. It's a story of how we were able to negotiate a deal to get that settlement. I call it the Soul of the Deal, because I don't believe with deal making you can give someone a list of steps, from one through ten, and follow one through ten and you'll close the deal. What I find, is you take one or two steps every day, and it has many nuances, and it's a living process. You have to be able to navigate through those things as they occur, and figure out what's the next best step to move the deal forwards. It's not just steps one through ten, there are different things you do, and tactics you use depending on how a deal is going, how important that deal is to you, and who you are dealing with. That's why I call it the Soul of the Deal. Not to be confused with that other book, The Art Of The Deal, written by that other guy. Some people have suggested I should tell him my book would be better, so that he'd sue me, which would be the best publicity in the world and sell lots of copies. But, like I said, I had people suggest I should write the book, and even though I had a dozen really interesting stories, it was not enough to make the book meaty enough to be meaningful, which is where the idea to have other people participate came up.
Is there any one big issues people run into trying to get deals done?
Richard Wolpert: There are many. That's why I organized it into these 10 sections. For example, some entrepreneurs might now know that sometimes it's better to say no to a deal, for many reasons that make sense, and it's the right thing to do. For an entrepreneur who is heads-down, trying to move forward, any deal might seem like a good deal, but that might not be the case. One section is “not now”, which means that deal doesn't make sense now, but it may in the future. So, it's important to lave the deal on good terms, because it makes better sense to not consummate the deal at the time, but to exit the process on good terms is really important, because it might mean a much bigger deal in the future. I think one of the things entrepreneurs need to understand, is yourself. What are you trying to achieve? What are your issues? How do you react to certain people? Also, how not be swayed by a big personality or a big name. That was my big story for me with Steve Jobs, and having to tell him no. That was an extremely hard thing to do. We had a one-on-one meeting, and he was requesting something of me related to Disney Online, which I was running. Unfortunately, the right answer was no. He was asking us to standardize the NEXT Computer for all Disney employees, and it would have been a disaster. No was the right answer, but it ultimately ended up fine because I did it respectfully. Only six to nine months later, Apple was coming out with the iMac, and Disney was about to release a subscription service. Steve agreed to give us some pre-released iMacs and engineering help, and we said we'd release our new subscription service on Windows and Mac at the same time. Not only did he bite and say yes, he sent people to Disney to help us, but he actually invited me to do the Macworld keynote address in 1998, where he announced the five iMacs with 5 colors. We also announced the release of Disney Daily Blast, and that it was available on the Mac. It was a big deal. Steve was trying to show that the Mac was just as much or better software than Windows.
With all the deals you have worked on, was there anyone you thought was particularly good at deal making?
Richard Wolpert: I would say, there is a guy I worked with on the Microsoft antitrust lawsuit, Hank Vigil, when I was at a Realnetworks when we filed the lawsuit against Microsoft. There were four people predominately managing and trying to get that deal done. Me, our general counsel at the time, Bob Kimball, and Brad Smith, who was General Counsel over at Microsoft, and now is President of Microsoft. Hank was there fifteen years later, and he was great to work with. He really knew the internal issues he had to overcome to get the deal done, and he understood what was important to us, and that it was not an easy deal. It took over a year and a half from our first conversation to the settlement. He was a great negotiator, and basically, his job was to do deals of that magnitude. He made the investment in Facebook early on at Microsoft,. He really had a great understanding of what was critical for Microsoft, and where there was flexibility, with the goal of getting things done. He was willing to listen and understand what was important to us, and where we had to draw the line, and how to go through that complicated process of negotiation. He always did that on good, friendly terms, and we're friends to this day. We forged a great friendship working together for a year and a half.
Is is easier or harder to get a deal done with a large company like Disney or Realnetorks than the startup deals you have done?
Richard Wolpert: Startups, especially in their first years or two, are usually easier. If a company is growing fast, it can move into a field with big companies, that starts requiring a lot of expertise and maybe legal assistance. That's why at HelloTech, where I am one of three co-founders, we hired Greg Steiner back in July. I'm now Executive Chairman. Depending on what kind of startup you have, even early on you might have some big companies trying to get deals done. In our second year, we were already negotiating with Walmart, Lowe's, Samsung. When you're dealing with those companies, there' all this work to get the deal signed, and that can take months to get those done. Understanding that is important. For a young entrepreneur, it can feel like something is broken or impossible, but you need to understand that just getting to a signature can take months. Beyond that, it can take months to truly implement what was contemplated in the deal. I've been at this for 33 years, and after signing the Walmart.com deal, we didn't expect it to go live for about a year. That was pretty close to spot on, we just went live but first signed that deal last November. We did some trials between June and now, and now it's really started to get integrated into the Walmart.com experience, and will be more and more so over the next few months and become an integrated part of checkout. You'll buy a product and be able to select HelloTech for home installation, training, etc. Some deals just take a long time. The bigger it is, the longer it takes, not just to get it signed and implemented, but actually getting things established between the companies.
Last, was there any interview that you particularly thought interesting?
Richard Wolpert: Penn Gillette, of Penn and Teller, is quite a character, and he is extremely smart. I've known him since the late 90's, for the last 20 years. He's really an entertaining, charismatic force to be reckoned with, with his voice, and his mannerisms. It was a fun, interesting interview. We did it in Vegas at the Rio, where they apparently have the longest residency of any act in Vegas. I also enjoyed talking to Sean Rad about Tinder. He was at Adly before that. I also talked to John Tien, who was a Colonel in the Army for 30 years, and served several tour of duty in Iran, Iraq, and Afghanistan, where he was responsible for thousands of troops. He told me the story of how, prior to going to Iraq, they essentially set up a movie-set style copy of the city they were going to Iraq, so they could be familiar with the neighborhood and things like that. They trained them not only on how to protect themselves when they went into the cities, but also at the same time on educating and training leaders of those cities to take control of the county on their own. The plan was, they were not supposed to be there forever. He said, they were instructed to wear certain military clothing, carry certain weapons, and so on. As he went there, and started trying to negotiate with mayors of those cities, he was getting nowhere. He had an epiphany, which he referred to as “being dressed up like the Terminator”. He would go into the home or offices of these mayors, who were not military, and not dressed this way, and try to negotiate. Even though he spent months training in Germany in that faux city, once he actually got to the country to negotiate and gain their trust, he basically up not following that training, and took away all that terminator gear and wore civilian clothes. He ended up getting a completely different reception, and started to make a lot of process on negotiations. So, the lesson is, they ended up putting all this time to build this faux city to get their people educated, but once they got there, they had to adapt in real time, in order to accomplish their goals and get his deal done. That was one of my favorite interviews. I didn't want this just to be a tech deal book, but me more available, and which would have deals that go well beyond the tech industry.
Thanks!