Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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How to "Ask for the Order"

Sign I just read Fred Wilson's blog post about the need to ask for the order.  I completely agree -- if you don't ask, you don't get. 

However, I believe that there are different ways to ask for the same order.  And the way that you ask can either increase or decrease the odds of a successful outcome.  Some examples:

Before we launched Half.com, we knew that we needed to have a lot of  inventory on the site -- so we reached out to dozens of used bookstores, CD stores and video shops.  We had a team of three business development people working full-time to get these sellers to agree to list on our site.  Initially, we would call a prospective seller, explain our site/model, and if they were interested, we'd "ask for the order" and send them our standard three-page seller agreement.  Despite our best efforts, we found that small retailers were either intimidated by our agreement or didn't want to spend the money to have a lawyer review it. More than 60% of the interested sellers would drop out of the process before they signed the agreement.

We then made a slight change.  Instead of sending them a three-page legal agreement to physically sign, we added a click-wrap agreement to our site.  We then asked the sellers to register online, and during registration we simply asked the seller to agree to our terms of service by clicking a box.  Instantly, we eliminated our biggest challenge in getting sellers on board.  Because in this case, users are far more willing to agree to terms on a website than they are to sign a three-page contract.  We didn't change what we asked for -- we just changed the way we asked for it.

One of my portfolio companies recently experienced the same thing.  They were talking with a variety of prospects about a big advertising deal.  And initially my company was sending out an "Advertising Partnership Agreement" -- outlining the full terms of the relationship.  They quickly learned that all  non-standard agreements had to go to legal -- which added weeks/months to the process. 

So the company decided to try a change.  Instead of sending over a custom agreement, they sent over benign looking  "Ad Insertion Agreement" which had the exact same terms of our prior agreement.  Our marketing contact had full authority to sign an ad insertion agreement -- they do that all day long -- and now my company is able to get deals signed much faster by changing the format of our "ask".

The list continues.  When TurnTide wanted to send out a free evaluation unit of their anti-spam router, they originally had a long written agreement.  When they changed the format of their agreement to a one-page trial acceptance form, they cut weeks off their sales cycle. 

Say you work at Google and you want to get a prospective partner to sign an NDA.  You can send someone your NDA document and it goes to their lawyer.  There will probably be a bunch of back-and-forth on the terms.  That's pretty time consuming.  However, why not do it the easy way?  Just invite the guy over to lunch on Google's campus. 

Because whenever anyone gets a visitor badge at Google they are asked to sign an NDA as part of their visitor badge process.   I'm sure glad everyone brings a lawyer to help them sign-in at reception ;-)

The way you ask is just as important as asking.  If you focus on reducing friction in a transaction -- and ask for the order in the right way -- you might find that you improve both your odds of success and the time needed to get a deal done...

Comments

John Ramey

Excellent post about flipping perspective.

But is the value to the person asking for the order the same under these alternative methods? An NDA seems more enforceable/legit if it has gone through legal as opposed to an obligitory checkbox.

For something important like a sales contract, it might lead to a quicker sale but would it lead to problems down the road?

Ethan Bauley

The courts have said in a number of cases that clickwrap EULA's are enforceable...but yeah, I had the same question as John.

Google this:

eula site:techdirt.com

Great post Josh, thanks!

Ethan Bauley

The courts have said in a number of cases that clickwrap EULA's are enforceable...but yeah, I had the same question as John.

Google this:

eula site:techdirt.com

Great post Josh, thanks!

Ken Simpson

Hi Josh,
Great suggestion. FYI, there is a Canadian company that offers painless electronic contracting, for those who need a more sophisticated legal seal of approval than just a click-through.

Check out http://www.recombo.com

noah kagan

Fun fact: One thing I think Dave McClure taught me is that at Google you can refuse the NDA and have a cool "non-nda" on your sticker. Just don't sign the agreement at the end...

Brady Brim-DeForest

Excellent point Josh. I think that this lesson can easily be applied to a wide variety of potential sticking points in business and in life.

It's not what you ask – it's how you ask it.

Srinagesh Eranki

How much of it as got to do with the fact that ..

In the first case, you are presented with a nonstandard agreement where you perceive the onus of due diligence is entirely on your shoulders.

In the second case, you are presented with a "standard" agreement that everyone else is being subjected to. Standard, by virtue of being in a clip-wrap agreement, visitor badge process ..

Stanislav Shalunov

When you sign in at Google, you have an option of signing an NDA. The first time I came there, it was to give a tech talk, so I naturally wondered why I'd need an NDA to *give* a talk. The receptionist explained that I didn't need to accept the checkbox.

The machine printed out my badge just fine and made a mark on it that I did not sign an NDA.

So, the trick of making the agreement as checkbox is cute. But not checking the box is always an option.

Luca

Excellent post.

This approach requires self-discipline, though. You have to make sure that any terms in a click-through or Google NDA-style "just sign here" agreement are truly non-controversial. You don't want a "if I had read it I would not have signed it" reaction afterwards.

fred wilson

it's such a great lesson.

legal docs scare people.

so do lawyers.

reduce the legal stuff but don't eliminate it and make it digestable

fred

Graeme Thickins

Josh, this is one of the most valuable things I've read in the way of advice for Internet startups.

I love your notion of "reducing friction in a transaction." Reminds me of a company I named back in the day: ZeroFriction.com. Sadly, however, they could have used more help in getting orders.

Graeme

pwb

I think it's a good point since contracts and agreements and TOUs have gotten out of control. I even wonder if all that legal mumbo-jumbo is at all necessary.

However, I will point out that I agree with the post as long as it includes going the other way. We have lots of customers who refuse to agree to click-through terms. All they want is an easy-to-use piece of paper.

Andy Blackstone

While I think the examples are instructive, I think the real lesson is that business will always be easier, friction will always be lower, and orders will always be more abundant when you focus on your customer instead of your company, your product, and your internal requirements.

CJ Jouhal

Great blog - We have run into a similar issue with registration.

The word fee (which is early on in the terms and conditions) throws a red flag up and customers feel obligated to have legal review it.

For us, A/B testing is going to tell us the right verbage to get the most fluidity in our registration process.

Erol Toker

Thanks for the great post! Very informative and well written. It brings to mind one of Guy Kawasaki's post, which addresses simple ways to increase market adoption http://blog.guykawasaki.com/2007/01/the_top_ten_stu.html .
It's amazing how little changes can make such a big difference.

Bobby Steel

Josh - the Google example is a bit of a stretch. The sign-in NDA is primarily for a personal visit and covers things seen/discussed on that visit. There is still a necessary NDA required for any deal negotiation. A primary concern is that an NDA must be signed by a director to be useful. Most employees don't have authority or legal standing to sign a meaningful NDA.

chanel

Its interesting reading what the VC community discuss about the online communities. I think this recent move from FB shows that the original developers are still involved.

chanel

Its interesting reading what the VC community discuss about the online communities. I think this recent move from FB shows that the original developers are still involved.

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