What's missing here is that powerful people are almost always transacting on behalf of many others who are not present at the bargaining table. By being nice, they may be trading other people's money for personal goodwill that they get to keep for themselves. This is "being nice" in some ways, but this isn't good for society and may be highly unethical. Would you want government regulators to be nice to the industry people they are regulating because in the long run they benefit from having good relationship with industry leaders? Would you want hedge fund managers who's managing your money to be nice to banks, that is, overpay for services, because fees come out of your pocket while they can monetize the relationship in the future? Would you want college admissions officers to be nice to their friends with college-bound kids? When you're applying for internships, would you want the hiring managers to be nice to all their church friends who may need something to do during the summer?
People in powerful positions being nice to personal acquaintances at the expense of strangers is a huge problem and the root of all corruption. I'm not saying that you shouldn't be nice - being ethical and balancing the interests of all parties involved is an extremely tricky proposition but I'm surprised at the amount of agreement here, because so much of what people complain about around here often comes down to other people being nice to one another at your expense.
Edit: I'm especially surprised that a VC would make such a comment because it's an industry where being nice for the sake of relationship can be highly unethical. You're always working with other people's money and whether as an investor or a board member, you're often responsible for making decisions that benefit people you represent even if it involves some kind of hit to your "nice" reputation. At the top level of management, big decisions are rarely easy and always have winners and losers.
Edit2: As another example, the recent non-poaching deal between SV companies was probably rationalized as "let's be nice to one another" while those that didn't participate were seen as not being nice or being too cutthroat. Niceness between natural competitors can quickly lead to a collusive agreement.
Edit3: I'm not advising any specific course of action, simply noting that the advice as given is far too vague and can often lead to rationalization of highly unethical activities. I'm sure Steve Jobs thought Google trying to recruit Apple employees was "Google screwing over Apple" and the consequent no-poach agreement is partners being nice to one another.
Edit4: Dreamweapon, I didn't downvote you (don't have the power anyway) but regulators work with executives, directors and employees who are people. Regulators have strong incentives to cultivate relationships with people in the industry so that they can transition into the private sector. Likewise, hedge fund managers aren't trying to be nice to the banks - they are being nice to specific salespeople, brokers and bankers because they can expect favors in return. Also favoritism to people you know is being nice to people you know - the gist of what's being advocated here is be nice to people you know, because relationship.
By your reasoning Amazon are crazy for keeping as low margins as they are. They are leaving money on the table in the belief that as long as they stay somewhat profitable their future earnings will outweigh the short-term benefits from the money grab they certainly could make. They also have the added benefit of being hard to attack this way.
Fred Wilson is making a similar argument. By leaving some money on the table you increase your long term growth potential. People will be more likely to make deals with his funds if they know that he will make them a good deal rather than try to make the best deal for himself. His belief is that that strategy has a better chance of success, as he will get in on more good deals than someone who doesnt.
As long as he is open about that fact I see no problem. If you dont believe that is a good strategy you shouldnt invest with him. If you do, you should, in the same way that you should buy amazon stock if you believe in their strategy.
Running low margins in retail is often more of a really cutthroat business strategy, rather than simply trying to be nice to customers. You can easily run smaller competitors out of business, and increase your volume and overall profits, by making the competition unable to compete.
> I'm especially surprised that a VC would make such a comment because it's an industry where being nice for the sake of relationship can be highly unethical.
I think you need to read the rest of this thread, especially the portions noting how one often has to work with people long after any given decision to be nice or not.
But additionally you also assume that being nice somehow shortchanges your ability to advocate or make good decisions, which isn't the case.
Being nice does prevent you from making decisions to screw people over, and if that's what you're referring to then I'm glad VCs are not taking your advice on this.
Would you want government regulators to be nice to the industry people they are regulating because in the long run they benefit from having good relationship with industry leaders? Would you want hedge fund managers who's managing your money to be nice to banks, that is, overpay for services, because fees come out of your pocket while they can monetize the relationship in the future?
Umm, I think Fred was suggesting that we be nice to other people, not nice to abstract entities such as banks, or companies subject to government regulation. Also, the examples you cite would clearly fall under what Fred means when he says "I am not saying you should be overly generous or nice to a fault."
Would you want college admissions officers to be nice to their friends with college-bound kids?
Banks and other companies are not abstract entities to the people doing the negotiations; they are other negotiators and people like you. Being nice is a good way to improve relations with the other party, but this can often be short-sighted or even self-serving if you aren't taking into account the best interests of other people not present in negotiations; plenty of government representatives play nice with their donors to secure future campaign money, and/or ensure a cushy position with that company after leaving office, for example.
Abstract corporations are legal persons, but they are fictitious in the sense of relatinoship building. Relationships are only built with actual people, who may or may not have perfectly aligned interests with the legal entities they work for. This is both true in the instant (a VC might have more than one fund he invests from) and over a lifetime/career (that same VC migh work for various wholly distinct legal entities and /or transition between investing and operational roles. Similarly, governments and banks are run by people wearing multiple hats -- take alook at how many legal entities were inside of enron, lehmand, or one of the other TBTF entities just for some perspective. Other large corporations are likewise composites of various fiefdoms and P&Ls and are not at all aligned internally at the personal level.
edit: I didn't downvote you, but its just part of the picture that might expain something.
What's missing here is that powerful people are almost always transacting on behalf of many others who are not present at the bargaining table. By being nice, they may be trading other people's money for personal goodwill that they get to keep for themselves. This is "being nice" in some ways, but this isn't good for society and may be highly unethical. Would you want government regulators to be nice to the industry people they are regulating because in the long run they benefit from having good relationship with industry leaders? Would you want hedge fund managers who's managing your money to be nice to banks, that is, overpay for services, because fees come out of your pocket while they can monetize the relationship in the future? Would you want college admissions officers to be nice to their friends with college-bound kids? When you're applying for internships, would you want the hiring managers to be nice to all their church friends who may need something to do during the summer?
People in powerful positions being nice to personal acquaintances at the expense of strangers is a huge problem and the root of all corruption. I'm not saying that you shouldn't be nice - being ethical and balancing the interests of all parties involved is an extremely tricky proposition but I'm surprised at the amount of agreement here, because so much of what people complain about around here often comes down to other people being nice to one another at your expense.
Edit: I'm especially surprised that a VC would make such a comment because it's an industry where being nice for the sake of relationship can be highly unethical. You're always working with other people's money and whether as an investor or a board member, you're often responsible for making decisions that benefit people you represent even if it involves some kind of hit to your "nice" reputation. At the top level of management, big decisions are rarely easy and always have winners and losers.
Edit2: As another example, the recent non-poaching deal between SV companies was probably rationalized as "let's be nice to one another" while those that didn't participate were seen as not being nice or being too cutthroat. Niceness between natural competitors can quickly lead to a collusive agreement.
Edit3: I'm not advising any specific course of action, simply noting that the advice as given is far too vague and can often lead to rationalization of highly unethical activities. I'm sure Steve Jobs thought Google trying to recruit Apple employees was "Google screwing over Apple" and the consequent no-poach agreement is partners being nice to one another.
Edit4: Dreamweapon, I didn't downvote you (don't have the power anyway) but regulators work with executives, directors and employees who are people. Regulators have strong incentives to cultivate relationships with people in the industry so that they can transition into the private sector. Likewise, hedge fund managers aren't trying to be nice to the banks - they are being nice to specific salespeople, brokers and bankers because they can expect favors in return. Also favoritism to people you know is being nice to people you know - the gist of what's being advocated here is be nice to people you know, because relationship.