Rollercoaster Rides

Enjoyed Fred Wilson’s piece, “Freakouts Should Not Go Viral“.

From Fred’s piece:

I got a short voice mail from the CEO of the company we were doing the deal with. It simply said “call me.” I picked up that voice mail around 10pm and I thought it was too late to call. So I tossed and turned all night thinking the deal was dead.

At 8am the next morning, I called the CEO. Turns out he wanted to talk about something completely different.

This is the kind of experience that anyone who has worked on a transformative deal will remember. In fact, doing those deals is a rollercoaster. You see some big upswings in optimism; you also see some big downswings. Sometimes the swings are over imagined events, as in Fred’s case; sometimes they are real, with a big downswing forcing you to change approach to get the deal back on track.

I guess we can forgive Fred for making himself – a mere investor – the hero of this particular anecdote; but normally, it’s the CEO who has to bear the brunt of the motion sickness. A key CEO job during the course of such deals is soaking up the stresses of both upswings and downswings for the rest of the team.

Similarly, the CEO will often need to avoid communicating stress to the deal’s counterparty. Stress rarely helps with the confidence needed to get deal closure.

The CEO also needs to set appropriate expectations with investors and team, which is that genuinely transformative deals fall apart at least 50% of the time. Meanwhile, the team needs to be helped to continue to build value in the core operations of the business. Provided that happens, everyone can emerge with their heads held high, regardless of the outcome in the “big deal” casino.


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