Below is the ninth chapter of entrepreneur and VC Bo Peabody’s book, LUCKY OR SMART: Secrets For An Entrepreneurial Life.
Before you read this chapter, you might want to read a quick overview of Bo’s experience of founding his first company, Tripod: How To Start A Company In Your Dorm Room And Make $580 Million.
I was in a bar one night with my friend Anthony, who happens to be of Italian heritage. A jovial fellow sitting next to us asked Anthony, “Will you be offended if I tell you a good Italian joke?”
Anthony answered, “No, I won’t be offended, but I get to tell you one first.”
A little taken aback, the guy responded, “OK, sure.”
“What’s black and blue and floats down rivers?” Anthony asked, the bartender and everyone sitting at the bar now listening in.
“I don’t know,” the guy replied.
“Guys who tell Italian jokes.”
Everyone laughed, and the would-be comedian, who now found himself the butt of a good joke, bought us a round of drinks.
Obviously it’s not polite to tell ethnic jokes. And Anthony was certainly within his rights to be defensive, which would have made the whole situation awkward. Instead, Anthony devised a gracious offence, and turned the situation into an opportunity to both make his point and make a friend. And, not insignificantly, to get us both a free drink.
No matter what, above all else, remember that in business it never pays to get indignant in any way. In every meeting, in every situation, you must always, always, always be gracious. The business world is a small place; what goes around comes around. Your ability to remain gracious will be tested often, and you will constantly be tempted to become defensive.
In 1993, I had breakfast with Steve Case, the founder of America Online, which at the time was one of only a handful of online services. Steve is also a Williams College alumnus, and it was on that basis that he agreed to have breakfast with me, which was pretty gracious of him in the first place.
Over omelets and orange juice, which he graciously paid for, Steve graciously told me that Tripod would never work. He explained that AOL, CompuServe, and Prodigy had the online services game locked up and that there was no room for newcomers, much less a kid, his economics professor, and a handful of crazy computer programmers. I argued, graciously, that the market for online services would be huge and that there would be room for companies like Tripod, Which had a more focused approach, segmenting the market both demographically, and psycho-graphically. Steve graciously disagreed. It was an extremely gracious breakfast during which nothing got done.
Five years later, Steve graciously offered to buy Tripod for 60 million gracious dollars.
We did not end up accepting that offer from AOL, and instead sold Tripod to Lycos for reasons unrelated to our breakfast or the way I felt about Steve or AOL. But it was a good example of why always being gracious, and never being indignant, is critical for entrepreneurs. When you leave a meeting or telephone conversation, no matter the outcome, the other person should always, at the very least, like you. Perhaps the best example of graciousness I have encountered took place when I was on the receiving end. After a restaurant has had a fire, and certainly after it has had a “total loss” fire like Mezze Bistro + Bar did, the catastrophe itself is further compounded by what happens next: negotiating with your insurance company to cover the damages.
There isn’t much positive to say about the insurance business. No one likes it, not the people who buy insurance policies or the people who sell them. It just is what it is: an unfortunate but necessary part of life. Negotiating with insurance companies is perhaps the most entrepreneurial of tasks. You always have fewer resources, less time, less experience, and less power than the insurance company. Yet, even as they condescend to you and challenge every ounce of personal integrity you possess, you have to sell them your product and be gracious the entire time.
About two weeks after our fire, as we were preparing the supporting documentation for our insurance claim, the owners of Main Street Café, our biggest competitor, called us and offered us access to their sales figures. They wanted to help us build a better case. It was an incredibly gracious gesture. We took them up on their offer and strengthened our claim as a result.
Nine months later, while we were still negotiating with the insurance company, I received a call from one of the owners of Main Street Café, the same man who had offered us the sales figures. He explained that for a variety of reasons they were selling the business. Knowing that we were in the market for a new space, he wondered if we’d be interested in purchasing it. Their asking price, while fair, was probably a little higher than we needed to pay, given the situation. But I didn’t negotiate. Two months later, we had a deal to buy Main Street Café, and after some quick renovations, Mezze Bistro + Bar was re-opened.
We did finally settle our claim with the insurance company. I am confident that, thanks to the information we received from Main Street Café, we came out better than even on the whole deal. Being gracious and recognising graciousness always pays dividends. You won’t always be successful in maintaining your cool. I’m certainly not. But the more often you stay calm and gracious, the better of you and your business will be.
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