To Win in Business Deals, Focus on What's Meaningful for Your Partners
How companies can create value by internalizing the conversational nature of dealmaking
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“Can we just skip all the crap and cut to the chase, Gairik?” the head lawyer at our to-be-collaborator, Teak Biotech, said. Her words were laced with exasperation at the state of negotiations. But all I heard was the rudeness they exuded. I had known that closing deals over distant Zoom webcams was hard, but this felt more existential. All the crap she was referring to was just me prefacing the meeting with the progress we had made over the past few weeks. We were so close to a final contract for our two companies to start collaborating on making new cell therapies for cancers. Except for this one last issue.
Six months before that tenuous Zoom call, I was mired in similarly complicated, albeit more dignified, negotiations with a much larger company, Linden Pharma. They too wanted to access our genetic engineering technology to create new cell therapies. We were excited to partner with them. Linden had an reputable track record in developing drugs for patients with serious hereditary diseases. But negotiations were stuck on the same point in the contract.
Our proprietary technology could be used by many drug developers, and enabling several of them was central to our company's mission and business model. However, to each of our potential partners, the other was a competitor.
Linden wanted to be able layer-on their unique additions to our technology, and block others from doing the same. To us, that was like buying your favorite brand of tomato sauce and patenting the idea to, say, add roasted red peppers to it. Sure, maybe one of our licensees thought of it first, but couldn’t others have come up with it if only they had tasted our sauce?
I’d gotten Linden’s lawyers to acquiesce by flipping the script: how about we let all our partners learn and gain from each other? If they’d be willing to let others use their idea to add roasted red peppers, that would set a precedent. They’d have to let us own any such new idea that was built upon our technology. This is the concept of “platform ownership.” As more licensees signed on to this concept, we could pool all such ideas - any new ingredient to the sauce that others came up with. In turn, because all our licensees had access to the same technology, everyone would be able to draw from that pool. Instead of worrying about competitors, Linden could use others’ ideas they hadn’t even thought of yet.
Platform ownership works because it’s limited to just one part of what goes into the partner’s product. After all, everyone still has their own patented meatballs, sausages, and pasta that makes their meals special. Linden was willing to entertain our offer, but in exchange for this unusual arrangement, they wanted something else. They wanted to be able to use our technology for a larger set of products and for longer. While that large scope was worth more financial value, it didn’t interfere with our core model. Hence, we didn’t particularly mind sweetening the deal for our first partner in that way.
Now, with Teak’s belligerent lawyer, I had to think of something similar on my feet. Let’s cut to the chase then. Knowing what had been meaningful last time around gave me a head start. It helped that Linden had signed on to our platform ownership idea. Now, it was even clearer how Teak could benefit from participating in the pool if they too agreed to give up ownership of their own improvements to our technology. Still, as with Linden, Teak wanted something more.
They were worried that their risky cancer drugs may not work in clinical trials, so I tied the platform ownership clause to helping them on that front. If they had to start over with a new product, Teak didn’t want to have to pay us all the license-related fees over again. Those fees are meant to be shared rewards - if their products succeed, we get to join in part of the gains along the way. We agreed to give them more flexibility to pursue new drug designs; if those were replacing an earlier design, we would let them keep most of the rewards this time around.
Even knowing that partnerships with other companies make it cheaper and faster to realize their own goals, negotiators find it hard give what it takes. Business development leads and lawyers are too often clouded by a zero-sum perspective, focusing only on what they think is the best deal for their team. But business partnerships, like in life, force us to create value for someone else. And that is too uncomfortable for some.
Paying attention to how you create value for your partner, however, is one of the keys to achieving your own longer term goals. As poet David Whyte puts it, the “conversational nature of reality” means that real progress only happens at the “frontier of actual meeting” between ourselves and others. It is only by truly engaging and forging a newer, more optimistic reality for both sides that each can fulfill their functions. The benefits are not just the deal you get, but also lessons you learnt by helping others. And if such partnerships in biotech lead to more efficient drug discovery, as they intend, that’s beneficial to many more of us too.
Note: Some names and details have been changed to preserve confidentiality of parties involved.