To Win Transactions, Don’t Be Transactional
How often do you meet someone new and within 10 seconds get the feeling that they’re a transactional person?
If you haven’t heard this term before, a transactional person is someone who navigates interpersonal relationships expecting that if they give, then they should receive (in very short order). This type of person often “keeps score” within their relationships and generally will not offer something to the other person unless they have a clear line-of-sight to when they will get their “reward”. Transactional individuals think first and foremost, “what’s in it for me?”
We all have transactional relationships in our lives. Many relationships — such as in commerce — presume a direct and immediate quid pro quo. And there’s nothing inherently wrong with that. But in my experience, long-term success comes from looking far beyond the horizon of a single interaction. Especially when it comes to the world of technology startups, where any given endeavor has a high probability of failure.
And believe you me, there are a lot of transactional people in startup land,
Founders who talk your ear off about what they’re working on but never ask about about your startup
Investors who reach out for an update on your progress without offering any insights in return
Engineers who join “because of the mission” but leave the moment their stock options vest
Board members who text you day and night when things are going well but ghost you when you hit a bump in the road
VCs who reach out to other investors when they want deal flow but never offer anything back
Let me get right on that…
The sad thing is, most of these people have no clue just how obvious their behavior is to others (or the negative impact it has on their reputation).
But if you plan to spend 20, 30 or more years in a single industry, you’ll realize very quickly that you encounter the same people over and over again. And you carry your reputation with you wherever you go.
Competitors become coworkers
Coworkers become cofounders, investors and “co-conspirators”
Customers become colleagues
Colleagues become friends
And all of these people become backchannel references on you
Just think about your local tech ecosystem. How often do you run into the same people at meetups, networking events and other gatherings?
Naval Ravikant and Babak Nivi, co-founders of Angellist, published a podcast back in 2019 about playing long-term games with long-term people. Their conversation does a great job of capturing the impact that a long-term approach to relationships has on long-term success:
“In Silicon Valley, the trust comes from the network of people in the small geographic area, that you figure out over time who you can work with, and who you can’t. …those people have to signal that they’re going to be around for a long time. That they’re ethical. And their ethics are visible through their actions.
In a long-term game, it seems that everybody is making each other rich. And in a short-term game, it seems like everybody is making themselves rich. … In a long-term game, it’s positive sum. We’re all baking the pie together. We’re trying to make it as big as possible. And in a short-term game, we’re cutting up the pie.”
I’ve written before about the fact that the best investors approach meeting founders with a long-term perspective. Yes, in the back of their mind, they’re spending time with founders in order to have an option on a potential future investment. But they’re also going in with a full expectation that the most likely outcome is nothing. In other words, the best investors spend time developing relationships with founders and others in the startup ecosystem knowing that they will likely get nothing in return.
Nothing except paying it forward and, perhaps, founders saying positive things about them. And guess what? That has value.
Brent Beshore, Founder and CEO of Permanent Equity, has in my opinion one of the best perspective of any investor in the power of thinking long-term. He founded one of the first — and only — PE firms that places a genuinely long-term lens on investing, co-founded the exceptional investor conference Capital Camp, and was the inspiration for the title of this post.
And although his perspective is very much that of an investor, anyone — founder, investor or employee — can learn from his approach. Treat people well, help others even when you have nothing to gain in return, and be “outrageously reliable”.
In the long-term, you’ll have more success. And it’s a hell of a lot more fun.