Right now, experience is more important than money
I was originally going to call this article “You win some, you lose win some.” Here’s why:
I am totally discriminatory in my pricing for many things. If a poor, sincere college kid asks for some advice, I won’t charge him a dime. But if a get a call from a large, multi-national conglomerate wanting the same thing, I’ll charge them enough to fund my high-class diet of chips and salsa for like 182 years.
This occurred to me when I got a call from a consulting client last week. They wanted me to do a small project for them over the next month. Very flattering. The thing is, I started consulting for them while I was back in school, and even back then I had been working at a lower consulting rate than I would normally charge. Why? Because I wanted to get my foot in the door, the people are great, the work is interesting, and it’s for a good cause. And consulting for this group opens many more doors.
I had mentioned that I wanted to run some logistical questions by the head guy, so a few days ago, we chatted and ended up having an impromptu negotiation. I wanted to settle my new consulting rate before I started this project, and I explained that even my old rate been undermarket (and why I deserved more, etc).
He listened patiently. And then he calmly said no.
DAMNIT!!! But then I took a step back and realized it wasn’t so bad. Either that or this whole article is just a huge rationalization about getting shot down in the negotiation.
He told me that they need to maintain some reasonable fairness for other people they’ve hired to do similar jobs (e.g., you don’t want one person making 8x the rate of someone else doing the same job). Also, he pointed out, I can do this in my free time right from home. He suggested if I wanted to make my normal rate, I could spend some more time and add some more value. (But I like this arrangement because I don’t have time for any serious consulting commitments right now.)
Fair points. I told him I’d think about it and, within a couple of hours, decided to take it at my old rate. But here’s where it got interesting for me: I was chatting about it with a few friends, and they all told me that I should have walked away. They said that the rate was “below” me.
What the hell? I think this is where a lot of people differ. When pride gets in the way, everybody loses. These friends were basically saying that I should tell the client to pay me my normal rate or take a hike—with no regard for the long-term potential. Good business doesn’t work like that. If you’re only concerned about the short-term money, you are a fool (and greedy). If you think negotiations are zero-sum, you are a fool. And if you don’t realize that at our age, experience is more important than money, you are a fool.
The question is this: Do you want to feel good about walking away from a negotiation that didn’t go exactly 100% your way? Or do you want to do interesting work that will open more doors over the long term?
“But Ramit,” you might say if you are stupid and completely miss the entire point of this article, “I don’t have any ‘consulting gigs.’ This whole article is irrelevant for me!” I guess it is, for you. But for everyone else, it doesn’t matter whether it’s a consulting gig or a job negotiation or the chance to give a talk at a little girls elementary school. The example doesn’t matter.
“But Ramit,” you might say in a slightly more cogent and pointed critique, “you keep writing how you shouldn’t take the money. You told Facebook not to take the money. You told bloggers not to take the Adsense money. Are you a poor bastard living on the street, or are you a hypocrite?”
Well said, sir. You’re right: There are definitely places where you negotiate the hell out of a deal and walk away being fully rewarded for your skills. When this happens to me, I feel GREAT. But more often, I feel really happy to take an opportunity that will open more doors down the road. The value of these opportunities is incredible—imagine doing cool work, knowing great people who can give you advice and connections when you need them, and improving your skillset.
My point is, think long-term. Think about what you can learn and what you can do for the client/job/school. My friend, for example, is interviewing at a new job where she’ll be paid $10,000-$15,000 less than she’s currently making. The hiring manager was worried at first. What he didn’t realize is that my friend is smart. $15k sounds like a lot, but at this level, it’s not really that much. What is valuable are great contacts and opportunity-generating opportunities. She knows very well that a $15k hit isn’t beneath her. And if you think it’s beneath you, you’re probably wrong. Trust me—when it really is beneath you, you won’t have to make that call. Your gold-cane-carrying butler will tell your personal assistant to tell your trophy wife to tell you. Ah, what a simple life I will have.
Now there are some legitimate reasons for walking away from a deal, even at this point in our lives. If someone is trying to take advantage of you, there’s nothing wrong with walking away, and if your gut says to go, it’s probably right. For example, until recently I never understood why street-side merchants would ever refuse lowball offers that some tourists made; after all, the merchants almost always profit (just not as much as they would want). I finally realized it when I started a t-shirt company: Everybody I knew tried to get deals off of me (Anton, you jackass). At a certain point, even if you would have profit a little bit, you just say “no way.” Someone else will come with a fairer price and you’ll get paid, even if you lose a small amount here and there from lowballers. In other words, if you cede to every demand, you’ll be desperately selling to the lowest common denominator at the lowest price. That’s no fun.
But too many people walk away from opportunities for dumb reasons that mostly involve pride. “They won’t pay me enough!” or “They didn’t do X for me.” All of this, without considering the long-term doors that we’re closing. For now, while we’re young and learning, I think we should be actively taking opportunities to work with organizations that give us these opportunities. The money’s important, but it’s not the only thing.
A few months ago, I wrote Success and The Shrug Effect, where I noted:
We see a famous CEO and point how “he took 5 companies public and got a Harvard MBA.” We see a successful children’s book author and point out how she already knew 4 publishers, so her book got published immediately. We point to Donald Trump and talk about how he had billions…
But guess what?
CEOs don’t just magically flip a switch and start wearing a fancy suit one day, directing their staff to do this and that.
It starts earlier. For that CEO, it probably started when he took a paper route in junior high, or started a Web site in high school, or designed an interesting product in college. It started by knowing how to get in touch with the right people and learning–through lots of experience and failure–that senior executives are just people. They’re regular people who started their path to being extraordinary by taking small steps.
First of all, can I just say how simultaneously cool and absurd it is to quote myself. I love it!!! Anyway, this idea of thinking of long-term opportunities—not pride—seems like a perfect application of how to avoid The Shrug Effect. It starts right now, when you’re thinking about your first job, or your summer internship, or that volunteer opportunity. Try to actively seek out opportunities that generate more opportunities—and stop blocking yourself with pride or worries about how much money you’re going to make.
I dropped my plans and went out to this gentleman’s house to take care of his computer problem. Long story short, it turns out this guy was the Senior Vice President of a HUGE insurance company and is now a venture capitalist who has helped some pretty well known companies get off their feet. We ended up talking about business related topics for more then 3 hours and it looking like he is going to help put a few of my ideas in the spotlight. Opportunities arise when you least expect them, most people would have told this guy to call back during business hours, opportunity arises when you least expect it.
