“People get caught up in wonderful, eye-catching pitches, but they don’t do enough to close the deal. It’s no good if you don’t make the sale. Even if your foot is in the door or you bring someone into a conference room, you don’t win the deal unless you actually get them to sign on the dotted line.” – Donald Trump
If you look at the great entrepreneurs of our era – Kirk Kerkorian, Donald Trump, and Rupert Murdoch, to name but a few – the one thing they all have in common is that they are great dealmakers. All of them hire others to handle their day-to-day operations, while they work on identifying and closing lucrative deals.
And so it is with many individuals in a wide variety of occupations, people who have used their dealmaking prowess to build empires.
Wolfgang Puck is undoubtedly a great chef, but probably no better than thousands of other great chefs. From what I know of his rise to the top, it is clearly because he is a dealmaker supreme, who found a way – make that many ways – to transform himself from a gourmet chef into a culinary empire.
Ditto Howard Schultz, the man who built Starbucks into a global phenomenon. Start a chain of coffee shops? Are you kidding me? What a terrible idea. Nevertheless, in the face of declining coffee sales in the U.S., Schultz had the audacity to charge $3 for a cup of the world’s dullest and most common drink – and served it in a paper cup, to boot!
And this came about at a time when the world appeared to be moving too fast for people to slow down, relax, and enjoy a cup of coffee, as they did in the good old days. Now, with $30 billion in sales, Schultz leaves the day-to-day management to CEO Jim McDonald, while he travels the world making deals to further expand Starbucks’ reach.
I could go on and on… with Steve Riggio, who built Barnes & Noble into a retail giant and, in the process, transformed the way bookstores do business… with Martha Stewart, who built an empire by teaching women how to excel at being good housewives… with George Lucas, who created a one-man industry based on a single story. The list of dealmaking, empire-building entrepreneurs is endless.
But even these giants pale in comparison to Bill Gates. Many people think of Gates as a computer super-nerd who made good because of his awesome techno-skills. But Gates is much more than a computer maven. The real roots of his success lie in his incredible dealmaking skills.
As pretty much everyone knows by now, Bill Gates did not invent the DOS operating system that launched Microsoft into the stratosphere. What he did do, however, was make the deal of the century when he negotiated the purchase of DOS (referred to at that time as “86-DOS”) – for a mere $50,000!
Funny how life works. I’ll bet you don’t even know the name of the guy who actually wrote the DOS program (for a now-defunct company called Seattle Computer Products). It was a 20-something programmer by the name of Tim Paterson, and he accomplished the feat in – get this – four months.
Paterson got paid pocket change for his efforts, while Gates parlayed the acquisition of Paterson’s creation into becoming the richest human being on the planet. I guess I could say that life isn’t fair – but if you’re over 21 years of age, you already know that.
Of course, Gates was just getting started. He then turned right around and set up a meeting with top execs at IBM. At that now-historic gathering, the IBM corporate types wore pin-striped business suits, while Gates showed up in a stained T-shirt. According to one observer who was at the meeting, he looked like a 17-year-old kid negotiating with grown men.
But underneath that geeky-kid persona was a master dealmaker. Gates managed to negotiate the second deal of the century when he got the guys in the pin-striped suits to agree to install DOS in all of IBM’s PCs.
And he still wasn’t through. Perhaps an even more masterful dealmaking accomplishment was that Gates reserved the right for Microsoft to sell DOS to other companies. That one dealmaking coup (which, in dealmaking parlance, I like to refer to as a “throwaway bonus”) laid the foundation for Microsoft’s worldwide domination of the software business.
This little story underscores my oft-repeated belief that the difference between success and failure is much smaller than most people might suspect. And that small difference can often be traced to a subtle dealmaking nuance that can change the course of an entire industry.
Unlike dancing, painting, or playing a musical instrument, you can’t practice dealmaking at home. The only way to become a profit-producing dealmaker is to jump in and do deals. There’s no spring training, no preseason, no practice sessions. You can (and should) do a certain amount of preparation for each deal, but you cannot practice the art of dealmaking itself. It’s strictly baptism by fire.
And that means being willing to jump in and get your feet wet – which, in turn, translates into rejection… embarrassment… and, yes, even failure. The willingness to fail is important, because no matter how good you become at the nuances of dealmaking, your bottom-line results are tied to the law of averages. Which is to say that the more you work at dealmaking, the better you get at it and the more deals you close.