tag:blog.maxniederhofer.com,2013:/posts Max Niederhofer 2018-12-08T15:26:03Z tag:blog.maxniederhofer.com,2013:Post/1351439 2018-12-08T15:20:59Z 2018-12-08T15:26:03Z 2019: tough times for Europe?
2019 is starting to look like it might be the perfect storm for Europe. 

The ECB has pulled back on and will completely cease its massive asset purchase scheme in early 2019. Markets expect Draghi to raise rates in the last months of his term. We’re at -0.40%, so not a lot of wiggle room in any case. 

Brexit is looming. We’ll know more after December 11, but whatever happens it’ll be a massive disruption. Except for an about-turn to continued membership, all alternatives look fairly poor. Including the prospect of a “democratic socialist” government under Corbyn. 

Italy’s debt crisis is accelerating. The country is probably already in recession and banks and companies are having trouble refinancing themselves. 

German lenders (and tax payers) will be left holding the bag. Deutsche Bank, which never recovered from 2008, is looking particularly vulnerable. A money-laundering raid of its HQ this month didn’t help. 

Populist discontent is growing. It has spilled onto French streets and is changing politics in multiple other countries. Expect more unrest. This is a key theme in European politics, pitting elites against the middle classes. Dissatisfaction stemming from inequality of economic opportunity, but with a particular focus on failed immigration policies and multiculturalism, will be a defining factor of European politics for the next decade. 

The electoral win of AKK as the conservative party’s chairman to replace Merkel communicates clearly: the elites don’t get it (yet). Germany’s politics will fragment further - expect Greens and AfD to become the largest parties, leading to a similar polarization as in the US. 

The schism between Western and Eastern Europe is widening. The EU is one to two more Brexit type events from total stasis, if not (informal) dissolution. And it doesn’t look like Merkel/Macron will be able to heal that divide. There needs to be a policy alternative to “ever closer union” and centralization. 

Trump has declared a temporary truce with China (markets have caught on that it really may be temporary). But he’s not a politician who operates without an enemy. 2019 is looking like it will be tough for him domestically. Look for the rhetoric to switch to Europe - Germany’s car industry leadership has already bent the knee. But I expect him to push on further on trade and NATO and dial up the rhetoric. 

And then there’s the wildcard of Russia. Ukraine is volatile to the point where both parties may find it beneficial to escalate the conflict. 

None of this matters for startups per se. Europe’s travails will be a rounding error in the narrative of successful founders. But economic volatility spooks capital and the contagion is psychological above all. Europe may well be the crucible for global recession in 2019. 

It’s not quite RIP Good Times 2.0. 

But raise your next round while you can and bunker down to keep building the future. 
tag:blog.maxniederhofer.com,2013:Post/1350912 2018-12-06T18:32:28Z 2018-12-06T18:32:28Z Spotify Top Songs 2018

It's amazing how much music reveals about you. I've known this at least since my first angel investment, Last.fm

I wish Spotify made it easier to see other people's top lists. 

Here's mine. The one thing it clearly shows is that I'm getting older...

tag:blog.maxniederhofer.com,2013:Post/1350527 2018-12-05T11:54:09Z 2018-12-05T11:54:09Z Password management

There's an assumption of security in technology that has never been true. 

More and more of how we live, work, and play is intermediated by online services. Every time you get in your car. Every time you buy a coffee. Every time you pick up your phone. Book a flight. Wire some money. Watch a movie.

From unauthorized access to social engineering, the core fabric of online services is not secure. And that won't change for the foreseeable future. If anything, breaches will be bigger, more impactful, more costly.

The fact that one of the largest hotel chains in the world didn't find out that its guest database was leaking passport and credit card numbers is mind-boggling in its implications. 

And so I want to encourage you to take one annoying but necessary step to protect yourself: use a password manager.

Most people use a primary password, or some tiered level of "more secure" passwords that are nevertheless the same between services. 

You only need one breach for it to become a real problem.

I personally use 1Password, but I've heard good things about LastPass and maybe Dashlane. 

Do it today. 

tag:blog.maxniederhofer.com,2013:Post/1350031 2018-12-03T19:25:45Z 2018-12-03T19:29:09Z The supremacy of Mind in human affairs

Kapil Gupta MD, coach to athletes, CEOs, and perhaps most notably (in our world) reviewed very favorably by Naval Ravikant, tweeted this in response to my previous post and comment "Not everything is political": 

Doesn't that feel right? It does to me. 

And reminds me reflexively, media-addled mind that I am an owner/a slave of, of this somewhat less beautiful Simpsons quote:

Image result for beer the problem solution simpsons


It is an addiction of mind, this obsession with news and politics and media. The ingestion, processing (labeling, judging), regurgitation of information, data, the attempt to accumulate, to hoard "knowledge", to better and lecture and prescribe. And the belief that through this same process we can relieve the symptoms of the pain... 

The process is the pain in the first place.

We forget that we give permission to being disturbed by meaningless things. But once you're in the mind-world, it is much harder to stop. Just like an addiction.

I have days that I live without. Where I am with the world. Where I see, touch, smell, taste, am more. 

Interestingly it is those days that my connection to others is strong. Where I am fully there and others - strangers, too - unfailingly notice. 

On days like these I seem to be able to live more smoothly. There can be no wrong. Mind is my tool, rather than I a tool of it. 

These are not fleeting times, a few minutes, here or there. It goes a while if I don't hit... a bump. It feels less like a different "state" than what the mystics write, and more "hyper-real." 

Oddly it is not practice that makes it better. It's just awareness. There is no tension in it. 

But then I wake up another day and it is gone, disturbed by... I am not sure what. A "bump." Some event, some anxiety, some future plan the outcome of which matters so much. And then we're back on the merry-go-round.

I think it is a form of self-sabotage. Surely I am overthinking this. :)  

Go follow Kapil Gupta in any case + check out his books (free with Kindle Unlimited).

tag:blog.maxniederhofer.com,2013:Post/1349242 2018-12-01T07:18:24Z 2018-12-01T07:22:11Z The supremacy of politics in human affairs
I try not to write about politics on this blog. I fail all the time. 

How can you not be political when everything today is political? What you wear is political. What you eat is political. What God you believe in and what you like on Twitter is political. 

“Everything is political” is a win for the authoritarian radicals. It forces you to evaluate your behaviors through the lens of politics. 

Should you be vegan? Should you fight against oppression? Should you combat climate change? Can you do business with Russia? Should you hire more minorities? Are you perpetuating the white supremacy of the patriarchy? 

Even if you believe in personal liberty and that not every single simple preference you have means you believe it should be a policy prescription for everybody, the effects of everything being political are pernicious. 

Because the respect and tolerance of that perspective will not be accorded to you by those who believe they are your moral superiors. 

And so we develop subtle self-corrections. Many people now lie - they falsify their preferences - to align socially and morally with their respective in-group. Since it is the most pure (and extreme) of the individuals in those groups that set their new moral standards, we drift further and further into polarization. 

Along the way, all nuance is lost. Are you for liberty or are you against school shootings? Are you a baby killer or do you believe in women’s rights? And so we start to normalize the policing of others, the only remit being a shaky moral authority I had assumed we had left behind with the enlightenment. 

I seem to remember a time where it was perfectly valid to have reasonable policy answers between those extreme poles. Or to perhaps not have a well-informed view at all, because frankly who cares? Some people might but I choose not to. That’s a perfectly sensible ethical position. 

The entrenchment into polarized groups and the loss of nuance fosters an increasingly wary citizenry that is afraid to be themselves. Some become reactionary. Others retrench. What results, in a convoluted and highly ironic causal chain, is less diversity and less tolerance in our dealings with one another. 

How did we let this happen? How were things so good for us that we let politics become supreme in human affairs? 

What happened to putting individual initiative, inventing things, building our lives, making our communities better ourselves first? Ask not what your country can do for you, and so on? 

What happened to understanding that government and laws won’t fix everything (and maybe shouldn’t)? 

And what happened to having different opinions and being friends? Because the human is not political. 
tag:blog.maxniederhofer.com,2013:Post/1349065 2018-11-30T18:33:19Z 2018-11-30T18:33:19Z Transparency in the entrepreneur-to-LP tech ecosystem #OpenLP

Venture capital used to be a highly opaque industry. Very few firms, accessible only through network, intransparent decision-making processes. From the outside it looked slightly mystical and certainly very glamorous (it is not).  

Thankfully much has changed. The first generation of VC bloggers, like Fred Wilson, Brad Feld, Fred Destin, and others, have contributed to making the industry much more transparent and approachable. And so much capital has flowed in that you can't really move for new firms.*

Venture is now universally discussed - almost overly so. If you're in tech, it's hard to escape "VC Twitter", which is its own little ecosystem. Some of it is content marketing (a lot of it is content marketing), but there are so many smart, well-intentioned, insightful people that are very open that founders can now follow and reach out easily.

A similar openness has been coming to the Limited Partner ecosystem. LPs are the capital behind the venture funds, which are turn managed by General Partners, the VCs themselves. 

Sapphire Ventures launched OpenLP in 2016 to foster more transparency in the tech (LP) community. The site aggregates blog posts and other writings by a very diverse set of LPs. It also has a Twitter hashtag #openlp that lets you follow the conversation.

I love the opportunity of learning more about the motivations and decision-making processes in a part of our industry that used to be similarly opaque. 

If you're in venture, or an interested founder or investor, check out OpenLP. I've found it fascinating. Much props to Sapphire for running it.  

* In numbers, the amount of capital available has certainly grown faster than the amount of good companies to invest in. Not dissimilarly, the amount of founders now outstrips the availability of good engineers. 

tag:blog.maxniederhofer.com,2013:Post/1348745 2018-11-29T21:11:22Z 2018-11-29T21:11:22Z Distracted

We are all so distracted. You glance at the phone during our meeting. 

When was the last time you gave something your full attention? 

By that I don't mean focusing your mind. That just means pushing your distraction to the edges. It is still there. But now also there's tension.

It's hard to live while stealing glances to the side.

Step one might be to undo the labels. 

Just to look, without naming the thing. To just be with the thing. To grok it.

tag:blog.maxniederhofer.com,2013:Post/1348414 2018-11-28T20:47:10Z 2018-11-28T20:47:10Z Old mistakes

Fred has a great post about track record today. 

It got me thinking about my (much shorter) venture career and what some of my most valuable mistakes have been.

The top one is probably getting seduced by traction. Early metrics are good - we all like them. But they de-risk an investment less than commonly presumed. Particularly when customer acquisition is paid marketing and it skews the "true" data you could be getting.

I'd much rather see something grow organically in the beginning, even if that growth is slower than what's possible using paid. 

Traction also shouldn't supplant other considerations, like what the market's true prospects are. It's easy to believe that because one company is making this new thing work for a small group of early and passionate customers, it has the potential to be a category-defining innovation. Sometimes novelty is just novelty. 

Traction also shouldn't outweigh the team's overall potential. I've compromised on team a few times in my career. Particularly when there was a ton of traction and the idea was really big. Compromising on team has always turned out to be a mistake. 

I love audacious people, but there's a fine line that separates it from slightly delusional. Where the vision supplants the details, I am much more careful than previously. A great founder can find the right balance between keeping the big vision and sweating the small stuff. 

And finally on team, personality matters a lot. Low agreeability is a trait of a lot of successful founders, but low emotional stability is pretty harmful. 

The other lesson is that a geo focus sucks. I invested very widely early in my career - hardware, B2B, marketplaces, travel, mobile apps, commerce... I believed that Europe as a geography had too little depth to really select on anything but people (see above).

I think that is still largely true for the market as a whole. But as an individual or even a firm, there's now enough capital that the huge benefits of thesis-driven specialization outweigh the missed opportunities. 

That's why I've been 100% focused on consumer/user-only investing for the past year and a half, and I think that's what I'll want to do for the rest of my career.

I'm sure I've made many other mistakes in the last five years of active venture investing (and ten as an angel). But these are the ones that immediately come to mind as the biggest lessons learned.

tag:blog.maxniederhofer.com,2013:Post/1348117 2018-11-27T22:22:05Z 2018-11-27T22:22:05Z Better writing
So I’m getting more into the swing of blogging. But my audience varies wildly post by post. 

Partly it’s because the stuff I write about may not be interesting to my audience. I’ve never much thought about what it is that you want to read about. I might do more of that. 

I’m also thinking about moving to Wordpress for better integrations. I want to write more on mobile. And get Disqus comments. It would also allow me to make email a primary distribution channel, rather than relying on social. I want to automate social as much as possible. As fun as Twitter is (and Facebook isn’t), I don’t feel like it’s a great use of time. 

And then I want to simplify my writing. This post from Scott Adams points the way: https://dilbertblog.typepad.com/the_dilbert_blog/2007/06/the_day_you_bec.html
tag:blog.maxniederhofer.com,2013:Post/1347278 2018-11-25T19:26:17Z 2018-11-27T22:10:35Z The Broken Earth trilogy (The Fifth Season, The Obelisk Gate, The Stone Sky)

I finished the final volume of the Broken Earth trilogy today, The Stone Sky. It is my favorite book of the three, not least because it feels more raw, complex, and has an incredible narrative crescendo culminating in one of the most dramatic fantasy scenes I have ever read.

I have to admit that I was skeptical initially - the three consecutive Hugo wins to the same author? But I am wrong. N.K. Jemisin is a fabulous storyteller and these are more than deserved.

While never overtly political, it is a story of allegory set in a world after climate change, touching on slavery, inequality, prejudice, revolution, redemption. The two female protagonists are mother and daughter, with all the complexities that entails. The plot is driven by a race to save the world and to uncover the mystery of the planet's ailments and its heritage of dead civilizations.

If you enjoy good fantasy/sci-fi and haven't heard of the books, they're worth your time. Or you can just wait for the TV show - TNT is making at least the first volume. 

tag:blog.maxniederhofer.com,2013:Post/1347137 2018-11-25T02:14:22Z 2018-11-25T15:01:17Z October, a new social platform

I’ve been trying out October, a new invite-only social media platform, for a few hours today. 

I like it - certainly well built and some of the product choices are intriguing. 

You can dislike posts. You always have a choice of being yourself or being anonymous. And conversations are organized in #topic channels. 

It’s an intriguing mix of Twitter and Reddit, with some of the UX from Facebook. 

You can try it out using my invite link here: https://october.app/qr/FMZHT 

tag:blog.maxniederhofer.com,2013:Post/1346818 2018-11-23T17:52:22Z 2018-11-23T17:56:53Z Gratitude

This post is a day late. We had a dozen guests over for Thanksgiving and with the little kids it was a long but fun day for everyone. 

Much of our focus in the modern world is on what we lack. The source of ambition for many founders and VCs is discontent. Getting overly caught up in that leads to self-doubt, fear, and anger.

And so as a holiday Thanksgiving is a good place to remind ourselves of the gifts and grace bestowed upon us. From nature, family, friends, luck, God... the labelled source is secondary. 

The key is humility. Gratitude is not indebtedness, it is not appreciation, it is not mere thankfulness. It pays honor to something outside of us, greater than us, and so it moves the spirit from ego to the heart, and the focus from the self to the mystery of all life.

Cicero called gratitude "the queen of the virtues", a subtle moral disposition. And science is catching up - just look at all of the mindfulness/positive psychology writings on gratitude.

Originally Thanksgiving was a pagan holiday, a harvest festival at the end of the bountiful season, to develop the gratitude that helps steel us for the dark and scarce months ahead. The Catholic church has celebrated Thanksgiving since the third century. Eucharist is Greek for "giving of thanks."

The Wikipedia list of harvest festivals around the world gives you some idea of the pervasiveness of the tradition in human history, from the Jewish Sukkot (Chag HaAsifto the Chinese Mid-Autumn Festival

Isn't it wonderful to see all of us connected in this way, beyond borders and cultures? That, for one, is something to be grateful for. 

Happy belated Thanksgiving from all of us! 

tag:blog.maxniederhofer.com,2013:Post/1346174 2018-11-21T17:12:31Z 2018-11-21T18:55:15Z Video of the week: Simby

Simby, the artificially intelligent guardian angel that lives on your phone, has released its full video trailer. It's 15 minutes and well worth your time: the story of our lives since the ubiquity of mobile devices - and how to regain control. 

Check it out below. You can find out more about Simby here: https://simby.com/about/

Disclosure: Simby is a Sunstone portfolio company (yes, we invest pre-product sometimes!). 

tag:blog.maxniederhofer.com,2013:Post/1345799 2018-11-20T16:00:18Z 2018-11-27T22:09:54Z Churn, retention, dark UX: welcome to unsubscription hell

I cancelled two subscriptions last week. 

The first was for a major weekly newspaper with 1.5 million subscribers. It's one of those subscriptions you can't cancel online (how is this OK?). 

I had called a few months earlier and told them I wanted to cancel. They said they had made a note of it and the subscription would run out in August and not renew. 

Come September, sure enough there was a new charge on my card and they kept delivering the paper. I cancelled again and was now refunded the pro-rated (!) annual amount they had initially taken. Fine.

This morning I get an email from them asking for my reasons for cancelling. 

Fair enough, I think. They want to know how to get better. 

So I go through an automated funnel that, after every option I could have cancelled for tries to counter the argument. In the end I select "Other" (which was true, I cancelled because of their editorial stance) and the funnel culminates in: "Sorry to see you go, you can send an email to feedback@newspaper.com." 

Oh. They didn't really want feedback. What they wanted was to get a last shot at keeping me from churning. Bastards.

The other subscription I cancelled (or tried to!) was for a big online subscription startup. 15 million users. I had started the free trial a few days ago, but wasn't using it. So I wanted to cancel before it charged me an annual fee.

I went to their site. Under "Account" there was "Subscription Management." Great, I thought.

But it turned out that under "Subscription Management" there was really no way to manage my subscription. Instead it sent me to a Zendesk flow that had me answer multiple questions about wanting to cancel. Fine, I thought, maybe they haven't gotten around to building it yet (after 15 million users? Man I'm naïve sometimes). 

At the end of the Zendesk flow it told me to write a message to customer support (seriously?).

So I emailed customer support. They were fairly responsive (~12 hours) and very friendly and said they couldn't find my trial in the system. Instead they sent me a long email about all the benefits I got from their product. 

I emailed from the same email I had signed up with, so... seriously? That's like dark UX social engineering (aka "lying"). 

I ended up forwarding them my confirmation email to prove that there was a trial and asked them to cancel. So that's the end of that, I thought. Sure enough I get a Zendesk email asking for feedback (nope, not making that mistake again). 

Deliberate misdirection, invisible unsubscribes, forced subscription continuity... these are just some of the dark UX patterns we can see subscription startups employing to rope people into something they don't want anymore.

In my case it's just a nuisance. Just thirty minutes of my life I won't get back, but the $100 wasted doesn't matter. But for other people, it could really matter. So how is this ok? 

Of course this stuff goes beyond subscription: check out @DarkPatterns on Twitter for some prime examples. 

In the end, it always comes down to how ethical management is. And that mostly comes down to culture, how they were raised, and the source of their ambition. It's hard to see this type of greedy behavior from companies that I respect in an industry that I love. 

But some of it may also be driven by competition: if my competitors can pay higher acquisition cost because their lifetime values are higher because they've managed to reduce churn through dark UX, then I may have a real problem. 

I'm a limited government guy, so I'm not sure whether regulation is the best answer here. Perhaps the market will self-regulate through public shaming. In any case here are some best practices in my view:

- if I can sign up online, I should be able to cancel online 

- let me know when my renewal comes up, so I have the choice

- if I accidentally renew (you can see I'm not using the product), refund me (at least pro-rated)

- allow people to transfer/sell their subscription to others at any time during the life of the subscription

- don't mislead, trick, shame, or otherwise goad people into buying something they don't really want

I've always been reluctant to subscribe to stuff via Apple because I find the 30% tax (reduced over time, I know) egregious. But if it gives me better control over my subscriptions, I might just start doing that in the future.

tag:blog.maxniederhofer.com,2013:Post/1345474 2018-11-19T16:05:41Z 2018-11-19T16:05:41Z Data collection and privacy, a rant on facial recognition software

The first time I walked through automated passport scan and facial recognition gates at an airport, I felt a bit uneasy. 

Eric Schmidt said "if you've done nothing wrong, you've got nothing to worry about." And if you know anything about privacy, you know that this "nothing to hide argument" is common but poor. 

The best snarky counter I've heard: it's like saying the right to free speech is only important if you have something to say. The whole point of individual liberty (aka Western civilization!) is that the government's intrusions into your life need to be justified. 

The more sophisticated argument runs: the point is not that there's something to hide, but that the person has the power to hide something. The discovery of this ability - to shield the self from others - is the wellspring of individuality. 

Facial recognition software is being rapidly embedded into camera sensors everywhere. The price of surveillance, hardware and software, is falling further and further. Tracking is ubiquitous and inevitable. 

The only cogent regulation I can come up with, given how pervasive this tech will become and the power of the companies and governments deploying it, is to regulate its use cases: 

- You cannot use emotions derived from facial expression to deny insurance cover, but you can use them to prompt secondary screening at immigration. 

- You cannot use mobile phone patterns as probable cause, but you can use them to surveil an already suspicious suspect. 

- You cannot use browsing history to construct an ad targeting profile, but you can use sites where the user is logged in. Etc.

This is certainly a partial answer. The better solution would be to stipulate that all devices and software must remain fully transparent to the end user any time it communicates - expanding the inspection principle of free software to proprietary code. It's hard and costly, but it could work. 

The introduction of the GDPR shows how difficult this stuff is. Whereas parts of the directive are well-intentioned, the implementation is that very little has changed. It's just more paperwork and a weak demonstration of the illusion of power in the EU. Oh yeah, and governments are largely exempt (wtf?). 

In the meantime, we've increased our collective anxiety a bit further. We've lost a bit more about what it means to be human. And we've inched more towards the dystopian totalitarian future that science fiction seems so hell-bent on prescribing for us.

Seriously, what was the last future-positive AI literature you've read? Star Trek? My point exactly.  

tag:blog.maxniederhofer.com,2013:Post/1345216 2018-11-19T02:43:37Z 2018-11-20T21:09:23Z When to pivot, when to fail

Fred Wilson has a good post about a frequently encountered scenario today: Pivot or Fail? The gist is that, while the pivot seems universally celebrated in our industry (think Twitter, Slack), there are great reasons for failing gracefully.

To summarize (though you should read his original post), a hard pivot means potentially taking the wrong team, the wrong investor base, and too much dilution into your "next" thing, when what might be best is to just start again from scratch. 

I can empathize with that position. I've been involved in companies post-pivot which where just less interesting than what the founders and we had originally set out to do. But thankfully my "interest" isn't the only thing that matters. As Fred rightly says: "...the harder path is often the best path. And the easy path is often the harder one."

A hard pivot can be incredibly messy. You may have to replace much of your team. You may have to rebalance the cap table. You may have to re-sell your shareholders on what you want to do next. How tempting, especially for very talented founders, to accept failure, shut the business down, and hand back the cash. 

And yet, I do think there are circumstances under which the hard pivot is justified and can work.

Anecdotally, one of the best teams in my portfolio, by little fault of their own, had navigated themselves into just that kind of position. Their original business had worked pretty well. The company had scaled to millions of mobile users and a few million in revenue. We were profitable and pretty unhappy. 

The market had turned out to be much less attractive than we had assumed. New competition - substitutes and direct competitors - was emerging all the time. Paid marketing was no longer viable. 

We had strategic concerns about the long-term value of what we were building. But most importantly there was one thing we were certain of: we couldn't scale this thing to anything approaching a "significant" outcome. 

In economic parlance the "opportunity cost" for everyone around the table was high, but most of all for the founders. 

Having come to the conclusion above, we discussed the "graceful failure" scenario: if we put the company up for sale now, the acquirer would want to hire the team for at least 12-24 months. Including mandating an advisor, running the process, the founders taking some leave after the earn-out, and coming up with a new idea, it would be three to four years before they'd be back with another company. 

But they were raring to go. And most importantly, we had backed primarily them, the team, first at Seed and then at Series A. What they were doing was always a secondary consideration to us.

So around two years ago, we pivoted - hard. They pitched each VC partnership their new idea and we jointly gave them the go-ahead. All investor-shareholders took a significant haircut (15-20% I believe) to re-up the founders and reset the option pool. The founders restructured the team, keeping only those employees who were motivated by the new venture and could contribute. 

We then made the existing profitable business a subsidiary with its own Managing Director in order to run it for cash while exploring a sale. We ended up selling it around a year after that, netting several million which went straight into the founders' new business.

Sound messy? It certainly had the potential to be. But because we all made sacrifices to align ourselves it worked. It's a testament to the strong bond the founders had built with each investor, the investors' belief that this was a very talented team worth backing through thick and thin, and the collegiate, cooperative nature of the syndicate itself.

Today we are happy we pivoted. The new business is thriving, having added hundreds of customers and generating more revenue than the old business ever could have. The future looks 10x bright and the sky is the limit - as it should be. And yes, we had a few more soft pivots along the way.

If I look at the timeline, the founders would be nearing the end of their earn-out at some corporate around now. For two years they would have worked on a business they had long stopped believing in, in a setting they never really chose for themselves. 

While they could have walked away from it all, I'm glad they didn't. At the key juncture, we demonstrated loyalty to them and their journey. And they in turn have been very loyal to us. There's nothing misguided in that.

The venture business has high failure rates baked into its business model. But it's also flexible enough to allow for things that aren't in the playbook. Things that support long-term relationships that look beyond what is profitable for each party or makes economic sense in the near-term.

So is this type of hard pivot the exception to the rule of failing fast and gracefully? I'm not so sure. There's a lot to be said for clean endings. But when all parties are excited about continuing to work together and they have a shot at greatness? Then failure isn't really an option. 

tag:blog.maxniederhofer.com,2013:Post/1344623 2018-11-16T19:30:03Z 2018-11-16T19:30:04Z "No/But" vs "Yes/And" kind of pitch meetings

I had a candid discussion with one of our founders the other day about what makes for a good VC interaction in a fundraising process. 

There were a lot more detailed points but what it came down to was this:

"As a founder, you're constantly doubted by everyone. And you need to sell to everyone. So when a VC comes along and says: you don't have to sell to me, I understand what you do, and I will help you make this great - that's the person you want on your side." 

This is interesting because I have "first pitch" meetings that can go both ways. Ones in which I'm very critical because I see weaknesses in the model very quickly and I feel like the founder doesn't really address them. And so they stay at a "No/But" kind of level, where the founder insists on one thing and I don't quite agree and bring up lots of stuff that contradicts or challenges them.

And then there's the second type of meeting, where I get to "Yes/And" very quickly. Those meetings are great because the mental models the founders and I work from are similar. And we ping off each other in a good way and I can see how we could help. 

I never get to the point where I invest if the first meeting is a "No/But" interaction. And I don't by any means invest in all the founders I have "Yes/And" meetings with. 

But it did get me thinking about how I show up. As a former entrepreneur turned VC, of course you want every single company you meet with to succeed. And one of the big challenges in venture, for me, is sitting in judgement of people, having to assess models, when what you really want to do most of the time is just appreciate the great thing that they're trying to do.

I'd like to have more "Yes/And" meetings even if that means suspending disbelief for half an hour to get the energy/mindset/attitude into that place. I will work on that.
tag:blog.maxniederhofer.com,2013:Post/1343735 2018-11-14T14:00:03Z 2018-11-14T14:51:01Z Operationalizing product-market fit at Superhuman

Rahul Vohra of Superhuman has a great post on First Round's excellent Review platform: How Superhuman Built an Engine to Find Product/Market Fit

It's about operationalizing the product-market fit construct using Sean Ellis' (he of LogMeIn, Dropbox, and Eventbrite fame) customer development survey. The approach centers on the question: how would you feel if you could no longer use the product? And digging down on the further responses of "Very Disappointed" and "Somewhat Disappointed" users. 

Sean's heuristic is that you need to get the "Very Disappointed" number to 40% of users to be at product-market fit.

A lot has been said that's critical about the customer development process. And I agree with some of it (it's moderately unhelpful on the Thiel path of 0 to 1 rather than 1 to n).

But Rahul's implementation is one of the best narratives about it that I've seen. A lot of Sunstone's seed stage startups use a similar process and we encourage any seed-stage company to consider using it. It makes progress measurable while you're still in prototype stage.

Measure what matters - this does. 

tag:blog.maxniederhofer.com,2013:Post/1343731 2018-11-14T03:51:30Z 2018-11-14T03:52:11Z Ryan Sweeney's Ode to Qualtrics

Sometimes the best love stories are those that you only catch a glimpse of from afar.

I had the pleasure of meeting Ryan Smith, the co-founder and CEO of Qualtrics, in 2013 at Founders (thanks, Paddy!). And I met Ryan Sweeney briefly when I worked at Accel in 2012. Exceptional people.

Now Qualtrics has been acquired by SAP for $8 billion (21x LTM revs!) and it has defined a new category: experience management. 

But what struck the deepest chord in me is Sweeney's poetic post about the acquisition. It's unlike anything I've seen a VC write about an exit. A founder relationship with soul indeed. 

The full post is here on Accel's website

tag:blog.maxniederhofer.com,2013:Post/1343355 2018-11-12T23:29:51Z 2018-11-13T14:34:44Z Defending the indefensible & the state of the media

Hussein Kanji is a prolific social media link poster. Next to his side gig as perhaps Europe's most underrated unicorn maker at seed stage with Hoxton Ventures (Deliveroo, Darktrace, Babylon), his main endeavour day in and day out is the curation of my Facebook feed. I have no idea how he does it - I'd usually wager some sort of combination of Zapier and Buffer, but perhaps he actually does read all of the stuff. In which case he's the most well-informed person I know. This post is not about him.

Sometimes something so egregious slips through the cracks of my Facebook newsfeed that it bears mentioning. This post is about that. It is on the border of not wanting to comment on politics (I did last week and it went poorly). 

The once venerable Newsweek has a piece on the Acting AG of the US, Matthew Whitaker, with the salacious title ACTING ATTORNEY GENERAL MATTHEW WHITAKER ONCE SAID JEWS, MUSLIMS AND ATHEISTS SHOULD NOT BE FEDERAL JUDGES. Yes, all caps. 

Wow, I think, and take the clickbait. The article, written by Nicole Goodkind, starts off promising:

New acting Attorney General Matthew Whitaker said in 2014 that judges without a New Testament “biblical view of justice,” should not serve on the federal bench and suggested that he would block the appointment of non-Christian judges if given the chance.

While Whitaker singled out atheists in particular as being unfit to serve, his comments also extended to Jewish and Muslim Americans.

Woah, I think. Really? That a man of such blatant bias would make it so far in the Justice Department is unfathomable. But these are strange times, aren't they? I read on.

Whittaker's two competitors [ed.: in the Republican primary for Iowa Senator], Sam Clovis and Joni Ernst, said that they would use faith-based criteria and make sure they acknowledged “natural law.”

Natural law is the belief that legal rights and systems of morals were given to humans by God and were not derived from the rules of society. The concept is often used in religious communities to deem certain acts immoral and “unnatural” like the use of contraception or same-sex relationships.

Oof. Dear Newsweek, that's not actually the definition of "natural law" at all. I mean, Wikipedia knows more about it than you. The point of natural law is that it derives from, well, nature. It does not comment per se on the metaphysics of that nature, if any. And atheist derivations of ethics from natural law abound, from Plato and Aristoteles onwards. Jewish and Islamic and Catholic philosophies of natural law exist. 

And - dare we say it - much of common law jurisprudence is founded on natural law. The Declaration of Independence bases its validity, the entitlement of the "separate and equal station", on the "Laws of Nature" (and to be fair, "of Nature's God").

Take "Thou Shalt Not Kill." A common view in theology is that this is a natural law, God-given perhaps not so much via a miraculous event involving stone tablets but because it was discovered as a central natural rule without which humans could not live together. Every fiber in our being knows it's wrong to kill another person. If we permit it to happen, "society" fractures (also, you get Horcruxes). That is the meaning of "natural law."

Reading on, we learn about Matthew Whitaker's criteria for selecting judges to the federal bench:

"What I’d like to see is things like their worldview.… Are they people of faith? Do they have a biblical view of justice? I think that is very important.”

The moderator interrupted Whitaker and asked “Levitical or New Testament?” which is an indirect way of asking whether people of the Jewish faith should be banned from serving as federal judges.

“I’m a New Testament,” responded Whitaker to laughter. “And what I know is as long as they have that [New Testament] worldview that they’ll be a good judge.”

One wishes Newsweek had expanded that first elipsis. We would know more about what Whitaker actually said. But by substituting [New Testament] in brackets, the journalist Nicole Goodkind is putting words into his mouth and then determines that those words are anti-semitic. 

As an aside: the interjection of "Levitican or New Testament" is a reference to the (wrong-headed) view that the God of the Old Testament is a vengeful deity and the God of the New Testament is forgiving and loving. It's a frequent Christian trope, hence the laughter. 

But back to the main event. Yes, Whitaker seems to have said that he wants to understand a potential judge's worldview. Clearly a person of faith is something he likes because he believes they understand the concept of natural law. But his framing it as "person of faith" sounds quite inclusive of other religions, to me at least.

But then he drops the big one - do they have a "biblical view of justice"? Obviously that's something that plays quite well with the conservative base in how it sounds (remember, these are Republican primaries). But Newsweek uses it to suggest that this excludes in Matthew Whitaker's view anyone from serving as a federal judge who is not Christian. 

Let's take a step back. First of all, nowhere does he say that people without a biblical view of justice won't make good judges - it seems to him a shortcut to determine a worldview that would make for a good judge. But more importantly, the journalist is once again confused about what is actual a technical term.

"Biblical justice" is a well-defined concept and has a rich tradition, something that Nicole Goodkind apparently does not realize. It starts with the Judaic concept of mishpat, to treat people equitably regardless of social status, class, race, or gender. Biblical justice is in fact directly opposed to the bias that Newsweek's headline wants to attribute to Whitaker.

But biblical justice goes further by extending mishpat to tzadeqah, perhaps best translated as "righteousness." This means a justice not limited to righting wrongs, but extended to preventative and restorative acts like generosity and charity. 

The reference to the New Testament means Whitaker personally believes that a charitable, generous, equitable justice should apply especially to those who have broken laws. But a biblical view of justice does not require the belief in God. And it certainly does not require a person to be Christian.

Oh wow, someone who wants unbiased judges that are charitable? Get out the pitchforks! 

This article is everything that is wrong with the media today. It oversimplifies. It tries to identify prejudice where there is none. It demonizes a possibly good person. It does not do its research. It simply assumes that someone is not "on the right team" and declares them fair game. 

And so I find myself defending the indefensible. I do not know whether Matthew Whitaker is a good person or the right pick for AG. But for the purposes above, it does not matter, because he did not actually say what Newsweek heard or pretended to hear. 

I do care when media tries to fan unnecessary racial and religious and political divides. Newsweek would do well to practice a bit of biblical justice. Whether it calls it that or, you know, "humanist." Because they are exactly the same damn thing.

tag:blog.maxniederhofer.com,2013:Post/1343283 2018-11-12T20:15:46Z 2018-11-12T20:15:46Z Ex Machina (2015)

I had never watched Ex Machina, a 2015 film about the development of AGI, so I did last night. 

It's a good movie. Visually polished, engaging, sparse but well executed. I was a bit disappointed it co-mingled AGI with robotics so quickly, and except for the Turing test reference there wasn't any depth to the science behind the story. But that's expecting too much of a cinema feature.

What the film did do well was raise questions of power, creation, human frailty, gender, and manipulation. And the score was great. I think I'll watch more Alex Garland going forward. 

tag:blog.maxniederhofer.com,2013:Post/1342704 2018-11-11T04:10:25Z 2018-11-11T04:10:25Z Arts & Letters Daily

For a very long time, Arts & Letters Daily (aldaily.com) was my favorite website. I think I discovered it around 2000, two years after it had launched.

It was founded and edited by Dennis Dutton, a philosopher at Christchurch (NZ) and one of the great thinkers on aesthetics. 

Its genius is simplicity: three links a day - an article, a book review, and an essay, unceasingly with a great short caption. And then a short Nota Bene section, with some current news or events, and a long list of links to other sites which, for a while, was the best blog roll out there. 

When Dutton passed away in 2010, the quality of the posts declined and it felt like ALDaily was no longer at the forefront of the more interesting debates of our time: Pinker, Hitchens, Chomsky, Singer, et al.

Over the past few weeks I feel the quality has noticeably improved, though nothing has changed (the editor, Evan Goldstein, has been in the post since 2011). 

Nevertheless, it is worth a visit especially on a weekend.

Much love,


tag:blog.maxniederhofer.com,2013:Post/1342028 2018-11-09T15:18:00Z 2018-11-09T15:18:00Z An introduction to our framework for assessing consumer companies

My colleague Yacine has a short post on Medium about our current framework for assessing consumer internet companies

It's based on Clayton Christensen's 2016 thesis of consumers using products to get a certain job done

While that's a great starting point, we added to this four major functional differentiators: price, time, quality, and user experience. And six emotional aspirations: the desire to be special, to improve, to escape, to belong, to be safe, and to be free. 

In conjunction, these dimensions of a consumer product represent the consumer surplus derived from purchasing and using it: the delta between its cost to the consumer (not just the price!) and its benefits (not just the functional ones!). 

We'd love to know what you think about our framework. It's definitely work-in-progress. 

Please read the post and discuss with Yacine and me on Twitter. 

tag:blog.maxniederhofer.com,2013:Post/1341297 2018-11-07T19:11:07Z 2018-11-07T22:43:46Z Ana Luisa - Jewelry for Womankind

Hot on the heels of a record female congress, I wanted to talk about a seed investment we quietly made earlier this year. It's the first investment I've ever led that's the result of a cold inbound email in response to a blog post. In this case a post about our digitally-native vertical brand (DNVB) thesis.

Ana Luisa makes direct-to-consumer jewelry that is purposefully inclusive, empowering, and accessible. 

From the same designers that previously designed fashion jewelry for brands like Kenzo, Tory Burch, Alexander Wang, and Ralph Lauren, Ana Luisa uses the same materials, manufacturing processes and suppliers as the large brands. The only difference is that they cut the brand and retail mark-up and, yes, "pass those savings on to you" :)  

High-quality pieces like these mini 14K solid gold hoop earrings start at just $65. 

I'm a sucker for value, but even more so for brands that are starting to have equitable, conversational relationships with their customers. And that are using their business to promote a particular view of the world. Ana Luisa encapsulates this in their tagline: jewelry for womankind.

From their commitment to responsible production, exceptional craftsmanship, commitment to quality, and transparent pricing (read more here), they're on to something big. Did you know that high-fashion jewelry is marked up 10-15x on production cost?

But even more than that I'm looking forward to the customer stories, the non-profit partnerships helping a diverse set of incredible women, and more product that explores the many facets of femininity and its modern interpretations.

From a venture perspective, backing a narrow vertical brand in a single market can be a tough proposition. What really excited us here was that customers are buying for themselves (most jewelry is gifting), they're returning in record numbers after a short period of time, and are telling their friends about the brand. Retention and referral are the key hallmarks of building a passionate community of customers that can be the basis for a very large company.

It doesn't hurt that jewelry, while intensely competitive, is massive global market. Fashion jewelry alone is $9.4 billion, while adding bridge jewelry makes it $20 billion in annual value. And it is growing at >10% per annum. 

So check Ana Luisa out - the discount code WELCOME15 gives you 15% off orders over $80 and the company ships globally. 

P.S. This is our first co-investment with Eutopia, the former consumer brand investment team of Otium. Really thrilled to be partnering with them. 

tag:blog.maxniederhofer.com,2013:Post/1340662 2018-11-06T12:00:00Z 2018-11-06T12:00:03Z Decentralized software to power uncensorable free media

If you haven't, A Declaration of the Independence of Cyberspace by John Perry Barlow in 1996 is one of those early internet documents that you should read. 

From today's vantage point, JPB's words almost seem naive. The internet is increasingly regulated, monitored, censored, adulterated. Commentary of the effects of internet media on the "real" world is nearly always some lament about its pernicious influence.

I believe social media will eventually reveal itself as an overwhelmingly beneficial invention. But for that to happen, it must free itself from the shackles of political and commercial control. 

Attempts like Gab replace a flawed centralized network with another. Tools like Diaspora turned out to be incredibly difficult to use. The jury is out on Mastodon (I have not used it extensively yet). 

A new network should take some cues from WhatsApp. End-to-end encryption. Mobile first. Low, low bandwidth. No ads, with an option to subscribe. 

And then it should be open source, do all its computing at the edges, and devolve all power to the end user. 

There are some promising beginnings out there, things like Mind, Sola, Memo, Steemit. I'm going to spend time using all of them over the next few weeks and report back. If you have one that you like in particular, let me know.

tag:blog.maxniederhofer.com,2013:Post/1340125 2018-11-04T22:26:03Z 2018-11-19T20:53:58Z Why are contacts still such a mess

I’m not a particularly organized person. I’m organized where it matters and the rest sort of… decays slowly. Especially physical documents are a mess. I forgot who said it, but someone called it the “first unused surface method of filing.”

The same is true for my computer file systems. Squeaky clean where it matters, total mess where it doesn’t. 

I’m in awe of those people who have everything squared away in an orderly folder structure. I’ve always relied on search. When Spotlight didn’t cut it, grep was my friend. It has saved my butt a number of times. 

One area of my life that reflects this organizational pattern is my address book. It’s perfect for the 100 or so people in my life that I actually reach out to. The rest are emails, randomly scanned business cards, stuff entered by an EA ten years ago, sync’d Facebook contacts, LinkedIn imports, what have you. Over 10,000 contacts.

Back when we were doing Qwerly (now a part of LinkedIn), we thought a lot about contacts sync as a v2. We ended up doing a B2B play that, if we were still doing it, would look a bit like FullContact in Colorado (they’re the ones that bought Mattermark). 

It’s crazy to me that 7 years later, contacts isn’t a solved consumer software problem. Everyone is running around with these partial, out-of-date, redundant databases in their pocket. And they’re the original social network.

vCard is a horrible format for a whole number of reasons. Contacts sync doesn’t work well (ever had the duplicate problems?). Facebook and others don’t really seem to sync down to device well for me (maybe it’s a permissioning issue); everyone is more interested in sucking up contacts and doing God-knows-what on the backend. 

When I think of building contacts consumer software, I think it should be fully decentralized. Everyone should have their own record and permission who gets to see what (name, email, phone number, postal address in increasing level of sensitivity). An app sounds like the right way to do that. 

Then scale it via OAuth to other apps: if you’re in contact with a person in Gmail, call them on the phone, meet them in person as tracked by calendar, prompt a data access permission flow. 

And don’t even think about replacing the address book. Just build it alongside it, without touching the old world. 

The nice thing about contacts, of course, is that you can grow virally (carefully, without spamming the world). 

For some reason every company we have ever seen try to build something like this has failed. I’m not sure why. 

If you are thinking about taking a crack at the problem, talk to the folks who did Bump, Brewster, Plaxo, who are now doing FullContact. I’m sure there’s a wealth of knowledge there.

And then if you are still crazy enough to try this, come talk to me. 

tag:blog.maxniederhofer.com,2013:Post/1339332 2018-11-02T16:40:06Z 2018-11-02T18:20:22Z We're hiring an intern in our Paris office

A few months ago our colleague Yacine Ghalim moved to Paris to open a new Sunstone office there.

We love working remotely in venture as it's a great way to get full coverage of the European market. But the volume can be overwhelming and so Yacine is looking to add to the team in Paris by hiring an intern for 6-12 months. 

Clear track to a full-time analyst position with us, an apprenticeship model of development, and a chance to look at a high volume of French and European Series Seed and A stage companies. We're working out of Station F in the heart of the Paris ecosystem. 

You can read more here and apply via this Typeform

tag:blog.maxniederhofer.com,2013:Post/1338804 2018-11-01T14:44:49Z 2018-11-01T14:44:49Z Reality as a series of connected graphs - Neo4j, the graph database, raises $80 million

Emil Eifrem and his team at Neo4j, the world's leading graph database company, today announced a Series E of $80 million, co-led by One Peak Partners and Morgan Stanley. You can read Emil's blog post here.  

Sunstone first invested in Emil and his company in 2009 in a $2.5 million seed round and has since supported the company in every financing, totaling $160 million in overall funds raised. 

We have believed in Emil's mission for a long time. Graphs are often a better way of modeling reality and certainly computationally cheaper when it comes to e.g. deeper level join operations. This advantage grows significantly with the complexity of queries. 

But graphs are more important than that. The relationships between people and between people and things are often a much better predictor of behavior than a lot of data points about a single object. 

This is not just true when you want to manipulate elections (ha!), but when you want to make purchasing recommendations, prevent fraud, analyze complicated networks in terrorist financing or money laundering, or simply power social networking applications.

For instance, Neo4j was instrumental in analyzing the Panama Papers, but it is also used by Walmart to drive personal recommendations or by eBay to speed ecommerce delivery routing

We're thrilled that Neo4j now has the funds to help power applications that go well beyond its original vision. Graph databases are a key component of predictive computing and we're excited for what the company will announce next.

tag:blog.maxniederhofer.com,2013:Post/1338369 2018-10-31T16:40:50Z 2018-10-31T21:58:25Z Our migrant background

My wife's parents fled Romania under Ceaușescu in the early 1980s and came to the United States. It sounds so straightforward, but it was a journey racked with uncertainty and dangers.

The Ceaușescu regime was the most totalitarian and repressive behind the Iron Curtain. It caused massive famines, economic ruin, despair and death. My father-in-law went first, purportedly on a family visit to Houston, Texas. He left behind his wife and his two-year-old daughter. 

Once he had claimed political asylum in the US, the Romanian Embassy was notified. As a consequence, my mother-in-law was fired from her job as a teacher and repeatedly imprisoned and interrogated by the security services. For four years, they tracked her every move, ensuring she and her daughter had no income and no rights. In Texas, my father-in-law worked three jobs and tirelessly petitioned every government service and politician to reunite his family. 

Finally, in 1988 his wife and daughter were able to get on a plane to New York. My wife was six years old when she saw her father again. 

America for them was and remains the promised land. They're some of them most freedom-loving people I know. There's no room for "socialism" in this household - they suffered enough under it. They've worked hard here, building a life for themselves and their daughter. My wife went to an Ivy League college on a scholarship and then worked in NYC and London, where we met. 

My background is less dramatic, but I did spend most of my life in countries in which I was a foreigner. Always legal, mostly tolerated, but I know the desire to chase opportunity across borders. I grew up in Germany, the US, and Canada. Since then I've studied, lived, and worked in the US, the UK, France, India, Denmark, and Germany. 

Migration is a significant challenge for the world in the coming decades. We're starting to see the downsides of mass unregulated immigration in Europe. My heart is torn here, but it's a debate that's worth having between the extremes of fear and open borders. 

I'm writing this because my eldest daughter received her US citizenship today, on the basis of jus sanguinis (not the jus soli that's being debated). She's too young for the full-on ceremony, but it's an emotional day for us. America still holds the promise of freedom and exceptionalism in this family. It's still the shining city upon a hill. 

May it return to its senses and prosper. 

tag:blog.maxniederhofer.com,2013:Post/1337945 2018-10-30T19:34:38Z 2018-10-30T20:54:07Z The Ackerman Bargaining Framework

I'm not a great negotiator when it comes to venture deals. 

The consensus seems to be that the VC has the power in negotiating venture deals, but I don't think that's true. We invest in less than 1% of the companies we see. So when I'm sitting across from founders that I want to back, I really, really want to make a deal work. 

My costs of walking away are very high. That's a terrible bargaining position to be in.

What's worse is that I'm an accommodator. I like to please people. My expectation of reciprocity is very high. I tend to give before I get, expecting the other side to improve my deal in return. And often that doesn't happen. 

So I've been reading a bit lately about how to be a better negotiator. The book I liked the most is Never Split the Difference, by Chris Voss. Chris is a former FBI agent who led international hostage negotiating. The book is simple but fun, with lots of interesting tidbits, and it has paid for itself a hundred times over by getting me an unexpected 30% off a recent shopping trip.

While you have to read the book to truly appreciate it, the part that really stuck with me is the haggling framework he calls Ackerman Bargaining. It avoids the predictable result of meeting in the middle and has some counter-intuitive bits that stuck with me. Most negotiations will include some haggling, and it's the part that most people would rather put behind them.

As Voss never tires to point out, however, "you fall to your highest level of preparation."

The framework has four steps, all fairly simple to remember:

1. Set a target price (the goal you want to get to).

2. Set your first offer at 65% of the target price.

3. Calculate three raises of decreasing increments (to 85%, 95%, and 100%). 

4. Use lots of empathy and different ways of saying no ("how do you expect me to do that?") to get the other side to counter before you increase your offer.

5. When calculating the final amount, use precise, non-round numbers. $15,630,200 pre is better than than $15 million pre. It gives the number credibility and weight.

6. On your final number/offer, throw in a non-monetary item (that the other side probably doesn't want) to show that you're at your limit.

So let's dig into this a little bit. The first offer is an extreme anchor. It rattles the other side because it's way outside the usually rational ZOPA range of what they expected. It pushes them into action.

You give the next offers sparingly, asking well targeted questions to see if you can get them to bid against themselves. I recognize that well because I do it to myself all the time. 

The next offers are staggered to signal that your opponent is squeezing you to the point of where they've gotten all they can. That makes them feel great about themselves - even after the negotiation is complete.

The non-round number is just human psychology. The more exact the number, the more we believe it has some basis in concrete reality. 

Finally it's key not to lose sight of the person on the other side of the table. You're negotiating a thing, not each other's value. 

Every bit of negotiating advice I've read makes it clear that empathy and respect is key. 

You're playing a game, but the objective is not to destroy each other. It's to come to a workable deal.