Many books have been written about the pitfalls when varying nationalities are negotiating. However, I am unaware of any guides to understanding the differences between age groups. This gap has been documented by one of the founders of Netflix, Marc Randolph, in his book, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. A similar tale is beautifully documented by Netflix in The Play List, a dramatization of the creation of Spotify by teenage Swedish coders.
The first lesson here is that great negotiators are not afraid of rejection. They know that their early proposals will be rejected particularly when they are promoting something new and innovative. Both stories start with rejections: in fact the founders of both companies would have lost count of the times their ideas were rejected by established companies. It is what they do next that makes them successful.
Daniel Ek the founder of Spotify applied for a job at Google and was rejected. Randolph tried to sell the startup Netflix to the dominant Blockbuster chain and was treated with disdain. Within five years Netflix had destroyed Blockbuster. He makes the point that established leaders in a market are not going to know where the threats to their business are, because the threats are not going to look anything like them. They won’t be on the traditional radar.
He says, “They are going to come after you where you do poorly or aren’t doing or can’t do, or are scared to do.” These words describe the destruction of the traditional taxi industry in Australia by Uber.
The record industry was under assault by the free download services operated by Napster and Pirate Bay. There was a collapse of revenue as customers opted for free music from the pirate sites. Although lawsuits by the record industry to protect their copyright were successful, new free sites sprang up overnight to replace the ones closed down.
One of the consistent flaws of company founders is inflexibility around ownership and control of the enterprise they founded. It has been said of them that they would rather own 100% of a failure than 30% of a $10 billion company
Millennials are the first generation to grow up in the digital age. While boomers see technology as a useful tool, millennials regard it as an essential part of their ecosystem like the air they breathe and the ground they walk on. The baby boomers running the record companies had no comprehension of how much the world had been changed by the internet and treated the founders of Spotify as their enemy. Today a substantial part of their revenue comes from Spotify.
The teenage coders who created the Spotify service had a passionate belief in the concept that the internet should be free. It was an article of faith and principle that they would be creating something free to all. The problem is that free would not recover the millions invested in creating the service and to fund a royalty deal with the record industry. An innovation that allowed both free and revenue was the freemium model now widely adopted. The base service is free and supported by advertising but can’t upgrade to a premium service. Hence the profit is made through creation of personal playlists.
The second lesson for negotiators is that both parties, the boomers and the millennials, had to become much more flexible in their thinking about innovation and the resultant change to existing business models.
Happy negotiating!
