Five Negotiation Lessons From the Movie “The Social Network”

“Do well the little things now. So shall great things come to thee asking to be done.”

  - Persian Proverb

ACTUAL MOVIE*: This SkloverWorkingWisdom™ newsletter will be best understood and most appreciated by those readers who have enjoyed the movie entitled “The Social Network.” It is the story of “Facebook,” from its origins in a college dorm room to its present status as a worldwide social network with over 500 million regular users.

Those readers who have seen the movie will see in this newsletter, and its lessons, critical elements of the storyline. As to those readers who did not see the movie, I will not spoil your potential enjoyment by telling you the plot. For both entertainment purposes – and educational purposes – I do recommend you see it.

However, many of those who have not yet watched the movie will still likely recognize the lessons below because so many of you have learned these lessons “the hard way.” What happened in the movie is what happens every day to so many people: being taken advantage of in your attempts to gain fair treatment and compensation at work. 

Specifically, what happened in the movie, and what also happens to so many people? Every day many people are promised that, if they “invest” their ideas, efforts, creativity, time, loyalty and dreams, they will in turn come to enjoy the fruits of those “investments,” only to be tricked, shortchanged and disappointed. When I watched the movie I saw in it the experiences of so many of my clients over the years. And, I saw, too, the missteps and traps I want to help so many others to learn to avoid. 

LESSON TO LEARN: As noted scientist Louis Pasteur said, “Learn from the mistakes of others. Life is too short to make all the mistakes yourself.”

WHAT YOU CAN DO: Here are five valuable negotiation lessons to learn from the movie, “The Social Network”:

1. Protect Your Ideas: If you are going to associate with other people – whether as an employee, a consultant, a partner or otherwise – try to protect any of your ideas that are original and valuable. If you don’t try to do so, you may quickly have those ideas, and their value, taken from you. Imagine if the idea for Facebook was yours; it is now reportedly worth $50 billion.

To most easily protect your original and valuable ideas, before disclosing them to others, consider sending those people an email in which you request their agreement that any ideas you may share will not be used or divulged to others. You can describe the nature of the idea, the industry it may be used in, and perhaps why it’s unique – just don’t disclose the idea. An email like that, accompanied by a return email that says, in effect, “I agree,” serves as pretty good protection. 

Also, when sharing your idea with others, do so in writing – whether it is hand-delivered, mailed or emailed doesn’t matter – and in that writing also put “Protected and Proprietary Original Material of Bob Smithers.” 

A third measure you might take when disclosing your idea, is to (a) write over your idea, (b) under your idea, or (c) on top of your idea, words to the effect, “This is valuable proprietary information of Joanna Smith, protected by agreement not to use or disclose it.”

While no one step, measure or agreement is “bullet proof,” it’s a sure thing that “some efforts are better than none” when it comes to protection of valuable ideas. (For those who have seen the movie, you will know what I mean.)

To obtain a sample “Informal Idea-Protection Email” to use for this purpose [click here].

In sophisticated business settings, parties use what is called a “Non-Disclosure Agreement” for this purpose. In “smaller” business matters, these may turn off prospective business associates, who do not want to sign anything without an attorney first reviewing it, and who don’t want to expend legal fees. However, in “larger” business matters, more formal NDA’s are commonplace, and expected, and would more likely be deemed more appropriate. 

Two characters in the real-life Facebook saga sure wish they did this for themselves.

To obtain a formal mutual Non-Disclosure Agreement (“NDA”) [click here].

2. Know Who Your Lawyer Is, and Who It Is NotIt always amazes me, but employees often tell me that they thought the company’s lawyer was their lawyer, as well. This is what I have heard, many times, “Even though she is a lawyer for the company, I assumed she would look out for my interests, too.”  Such “representing both parties” cannot be true for at least three reasons. First, every lawyer is ethically required to look out for his or her client’s interests, and no one else’s. Second, it is human nature to “protect the hand that feeds you,” and you don’t “feed” that lawyer or his law firm. Third, an attorney who is not formally retained by someone has neither the obligation nor the inclination to provide services to that person. If you have obtained  “free legal advice,” you got no bargain.  

One of the characters in the real-life Facebook saga sure wishes he was careful in this way, that’s for sure.

3. Use “Relative  Negotiating” regarding Stock or Other Units of Ownership: When  negotiating any form of company ownership – whether stock, stock options, restricted stock, partnership interests, or the like – remember that your interests in the company can always be “diluted” and/or made far less valuable in any number of ways. For example, if you are given common stock in a company, and all other shareholders are later given a different – and more preferable – type of stock, such as preferred stock, your own holdings of common stock may become nearly worthless.

What’s the best way to protect yourself? Ask to get into the same “boat” as the most influential of the owner-group, because you know that, if anyone is going to be treated well, it will be them. So “piggy-back” on them. Ask for a commitment – in writing – that “my interests will in all respects be treated no less favorably” than (a) the founders and new investors, if you are speaking of a new, young company, or (b) all other employees at your level, if you are speaking of an established company. You may not be given what you ask for, but then again, you just might.

To read our Newsletter entitled “Negotiating Stock, Stock Options, Etc., in a Very ‘Relative’ Way,” [click here].

Failure to use “relative negotiating” cost one young person in the real-life Facebook saga $15 billion; perhaps more.

4. Be on the Lookout for “Non-Aligned Interests”: This is a subtle, yet powerful negotiation concept. No doubt you have heard the phrase “win-win solution.” In negotiating matters which are not “buying” or “selling” things (such as houses, cars, etc.), we are striving to set up a lasting relationship of mutual advantage (employment, partnership, etc.) Think about the wheels on your car: if they are not aligned, sooner or later they may diverge, and even fall off. So, too, in business relations: alignment of interests creates and enhances lasting relations; non-alignment of interests is a clear bad omen.

Those who claim to want long-term relations, but who do not align interests, are either unconcerned with the long term relation, don’t intend a long term relation, or are intent on taking advantage of you. Beware of non-alignment of interests, and those who set up their relations in that way. They’re rarely, if ever, to be depended on, or trusted. 

5. “If You Build It, They Will Come”: That was the famous line from the movie “Field of Dreams.” Successful endeavors, and especially new initiatives, require boatloads of faith. Faith in yourself, faith in your mission, and faith in its value to others. Don’t expect to make money – or much of it – in your first year of business; maybe not in your first five years in business.

Some business visionaries never get to see their visions reach “the promised land.” Some give up, some are bought out, and some are pushed out by incoming investors. That’s surely among the risks you may face.

But don’t expect success if you don’t have that faith. Chances are, you will be fooling only yourself.  But with faith, anything is possible, even setting up from your college dorm room something that half a billion people want to be part of.

Try to keep these five “Facebook” lessons in mind. They can save you from a whole lot of heartache. And share them, too, with your friends and loved ones. Had the characters in the Facebook saga kept them in mind, their lives would have been a whole lot different, both qualitatively, and perhaps, too, by billions and billions of dollars. 
Always be proactive.  Always be creative.  Always be persistent.  Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what our SkloverWorkingWisdom™ is all about.

*A Note About Our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.    

Please Note: This Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale. 

© 2011, Alan L. Sklover All Rights Reserved. Commercial Use Prohibited.  [Attorney Advertisement]