You’re most vulnerable right after you win a deal

This is part of my ongoing series, “Start-up Lessons.”

Recently I wrote a blog post about how I hated losing, but I embrace it. My starting line with every entrepreneur is that everything I learned about being an entrepreneur I learned from F’ing it up on my first business. I even put that in the the preamble to my Start-up Lessons outline.

As I pointed out in the above post, I feel like you learn the most from your failures as long as you’re willing to learn. Fred Wilson wrote on his blog this week about learning from failures here and quoted Obama’s speech from tonight:

you can’t let your failures define you — you have to let them teach you. You have to let them show you what to do differently next time

Or as I picked up from Bruce Dunlevie at Benchmark Capital (who I’m told took the quote from elsewhere)

Good judgment comes from experience, but experience comes from bad judgment

I plan to write a whole separate blog post about this quote because it’s always stuck with me. But for the rest of this post I want to talk about the specific lesson I learned about losing: you’re most vulnerable right after you’ve won the deal.

In my blog post about how I hate losing I told the story about how when I was running my first company in the UK I competed and won a major contract with the largest water company, Thames Water. That is, until I lost.

An external consultant helping the procurement team overturned the decision and got the company to select a small software company owned by the consultancy. 5 years or so later I still revisit that sales campaign and relive many of the steps.

Here was my biggest take away from the loss. I naively thought that when somebody told you that you had won the deal that it was so. In fact, I think it was quite naive of me to think that every time it was announced that I had lost a deal I should just graciously accept defeat. I have to admit to still having a weakness for calling it quits when I’m told that the game is over.

An example of how bitter things get was the contract awarded by the US Airforce to EADS / Northrup Grumann, which was overturned by the protest of Airbus and is now due for a new decision (see here).

I wanted to write a follow up post because it was such an important lesson for me and so eye opening. In every sales campaign of any substance (e.g. you’re really competing for something big and therefore have fierce competitors) you have to assume that there are people inside that organization that are against you. It’s probably nothing personal — they may have been using your competitors product at a previous company, they may think that using your competitors product is better for their career, they may even be friends with a senior member of your competitors team. Or frankly, maybe they just believe that your competitor has a better product. Let’s call this person, for simplicity, “the enemy.”

Many times the enemy just accepts their loss and it is smooth sailing toward your contract. But some enemies live to fight another day. They are hell bent on getting their way. They believe that the fight is not lost. They may question the decision making process. They may solicit the support of people more senior in the buying organization. Quite honestly they may even resort to feeding your competitor information about your proposal or your product to help them better fight. I know it sounds ugly, but it happens.

When it’s announced that you’ve won internally sometimes these people feel that they have nothing to lose if they try to torpedo the decision. They’re no longer on their best behavior because in their eyes their enemy won. And if they’re friendly with your competitor they may solicit them to help wage the war. If anybody has nothing to lose it’s your competitor. They’ve just been told that they’re out. If it involved a lot of money or a lot of prestige don’t assume that they’ll just walk away. Especially if it’s their existing client and you’re unseating them.

You’re goal is to get to the finish line as quickly as you can. So when you’ve been told that you’ve won make sure that you keep your sales campaign up. In fact, ramp up your efforts. Go into overdrive to get the contract completed. Continue to meet with senior executives at the buying organization. Don’t take anything for granted. And make sure you spend as much time with your enemies as you do with your friends.

As I always tell my wife — we never celebrate until the ink is dry on the contract and the check is in the bank.