Best of Negotiations: Chris Voss

This week's Summer Series is another two-fer, this time on negotiations. The first is with legendary former FBI-hostage negotiator Chris Voss, the author of Never Split the Difference and founder of the Black Swan group where he teaches tactical empathy in negotiations. The second is with Yale professor Daylian Cain, who opened my eyes to the importance of walking away. Learn more about Capital Allocators University https://www.capitalallocators.com/capital-allocators-university/. Try ALEX https://tryalex.admiredleadership.com/ by Admired Leadership. Learn More Follow Ted on Twitter at @tseides https://twitter.com/tseides?lang=en or LinkedIn https://www.linkedin.com/in/tedseides/ Subscribe to the mailing list https://capitalallocators.com/ Access Transcript with Premium Membership https://capitalallocators.com/signup Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://thepodcastconsultant.com/)

• 0:06Speaker 00

  I'm Ted Seides and this is Capital Allocators. For the second year, our summer series will share some of the best episodes of the past, curated from our favorites and yours. You can pull down many of the great ones on our Spotify playlists. This series pushes them to your regular listening feed. Our 2026 summer series focuses on improving the investment process. Over the next six weeks, we'll share 10 gems from interdisciplinary skillsets that will help you level up your investing across decision-making, interviewing, storytelling, negotiations, and habit formation.

• 0:48Speaker 00

  This week's summer series is another twofer, this time on negotiations. The first is with legendary former FBI hostage negotiator Chris Voss, the author of Never Split the Difference and founder of the Black Swan Group, where he teaches tactical empathy in negotiations. The second is with Yale professor Dalian Kane, who opened my eyes to the importance of walking away.

• 1:13Speaker 01

  Before we get to the interview, we're excited to introduce the next chapter of Capital Allocators University, an online on-demand curriculum with an annual in-person gathering for investment professionals committed to continuous learning. One of the great ironies of investing is that the skills that matter most over a long career are often the ones least formally taught. Things like decision-making, communication, leadership, time management, interviewing, and building relationships. That's why we've evolved Capital Allocators University into an online on-demand experience, making those lessons accessible to investment professionals everywhere. The best careers don't compound through knowledge alone. They compound through knowledge and relationships. If you'd like to explore the curriculum or

• 1:57Speaker 01

  someone on your team comes to mind, visit the link in our show notes or the university page on our website. Thanks so much for spreading the word about the next chapter of Capital Allocators University.

• 2:08Speaker 00

  Capital Allocators is brought to you by AlphaSense. Here's something for you. Most AI tools today are very good at sounding right, but can you actually trace it back to a filing, transcript, or specific passage that drove the answer? Or are you just trusting the confidence of the output? For allocators, that's not a minor concern. A missed filing, incorrect source, or context that gets lost somewhere in the retrieval chain aren't edge cases. They're how decisions go wrong. AlphaSense is the AI platform built specifically for

• 2:47Speaker 00

  this. They own the content, over 500 million curated documents, from broker research and expert transcripts to filings and earnings calls. And they own the retrieval layer on top of it. That means every answer can link back to an exact verifiable source, because the answer is only as good as what's underneath it. And with AlphaSense, you know exactly what that is. See it for yourself. Try a free trial at alphasense.com/capital. That's alphasense.com with a hyphen in the middle slash capital. Capital Allocators is also brought to you by Morningstar.

• 3:28Speaker 00

  In a sea of data, you need to know what you can trust. Morningstar's data, analytics, and research helps bring clarity across public and private markets, connecting independent research and data into the tools and AI platforms you use every day, so insights are easier to spot and act on. Morningstar, nothing in your way. Visit morningstar.com/gameon to learn more. Capital Allocators is also brought to you by Juniper Square, the operations partner trusted by the leading private market GPs. One theme that keeps coming up on the show is GPs that build the strongest and most durable relationships with LPs are the ones

• 4:12Speaker 00

  that have both strong returns and strong operations. AI raises the stakes on operations, and having Juniper Square as your operations partner helps ensure your data is organized, accurate, and accessible, so you can unlock operational alpha. That's why thousands of GPs trust Juniper Square. Learn more at junipersquare.com/capitalallocators. Please enjoy my conversations with Chris Voss from 2022 and Dalian Kane from 2020. Chris, it's great to see you.

• 4:49Speaker 02

  Ted, great seeing you, man. And thank you for having me on.

• 4:52Speaker 00

  I thought it would be really fun to start with just a question of, hey, we're doing this podcast. If you wanted to catch someone's attention in a really short period of time, I know you've certainly had that situation come up in negotiations. How'd you go about doing that?

• 5:08Speaker 02

  I'd make an observation. I'd do what we call a cold read. Take a look at their face, do a read, say, you look preoccupied, you look troubled, you look happy, you look like your thoughts are someplace else. Just kind of whatever my gut instinct intuition tells me is going on based on a look on their face, and that'll catch their attention. It's a little bit of a dance. You gotta be Ginger Rogers, but as long as you're willing to be Ginger Rogers, it works out really well.

• 5:33Speaker 00

  Why don't we dive a little bit into your background? Without going through it, I read Never Split the Difference a couple of years ago and loved it. I know you've had this background in hostage negotiation, but how did you get from wherever you started through that to Black Swan Group today?

• 5:49Speaker 02

  Just sort of one thing out of left field after another. SWAT guy, switch to negotiations due to injury, working terrorism and hostage negotiations in New York. And it worked out great. I ended up being at several places at really zenith times. And when I was at the Crisis Negotiation Unit run by Gary Nessler, from us all the way up to the Director of the FBI, Louis Freeh, we couldn't have had more support. And no matter how good you are, you need the organization to be supportive of you. And that was really huge. The stars really lined up at the time.

• 6:24Speaker 00

  So I would love to spend as much time as we can trying to understand human nature. And maybe the way to start, I remember hearing you tell this story of being brought into a hostage negotiation and immediately having to figure out how are you going to engage someone because someone's life is on the line?

• 6:44Speaker 02

  What's the fastest hack in? You know, we used to still, laughingly, but it's true, you know, hostage negotiator is the ultimate cold caller, and we're selling jail time, and we got buyers. First of all, you can't start with predictable dialogue. Hostage negotiation, I gotta give my name out there, just my first name, and then I want to trigger a response and catch them off guard. Like a hostage negotiator, a bad guy's gonna assume that I want hostages out. A great way for me to catch that guy off guard is say, I'm Chris. Are you okay? And say in a way that I'm really interested. And we didn't even coach people, say, I am Chris Voss, FBI hostage negotiator, here to talk to you. That's too

• 7:27Speaker 02

  much. Like in every social interaction, you really just need to get your first name across to the other side. Let them know you're genuinely interested in them. And that's exactly what a hostage negotiator needs to do.

• 7:38Speaker 00

  How do you think about setting the stage? So you're engaging with someone, whether it's a hostage negotiation, a business negotiation, just a conversation with someone that you want to engage with. What are the things you think about setting the stage so you can have that good conversation?

• 7:54Speaker 02

  The first thing really is, everybody's got something to say. Now, the people that are most closed-mouthed and tight-lipped are the guys and gals fed up with not being listened to. You set the stage, you create an environment right away that lets them know you're actually gonna listen. You're not gonna pretend to listen. You're not gonna wait for your turn to talk. You're gonna take an educated guess on state of affairs, their mental state, their business state, what they're up against. And then you're gonna throw an educated guess out. The real critical thing that a lot of people are really scared of is being corrected. Being corrected is a superpower, and most people are horrified

• 8:36Speaker 02

  at being corrected. When in fact, when somebody corrects you, they're stepping to your side. I have been perusing your book, Capital Allocators. I like the quotes. I'm finding it really interesting. And at the beginning of, I think, the interviewing chapter, you got a quote from Maya Angelou about the real impact on somebody is how you made them feel. Well, it feels so good to correct that a lot of people don't realize what an advantage it is to get corrected. They're horrified that the person doing the correcting is gonna think that they're an idiot. In fact, correcting is such a satisfying thing to do that people that we train the Black Swan method, we get them used to being corrected periodically because it breaks down barriers faster.

• 9:16Speaker 00

  What's an example of something that you would tease out so that you get corrected?

• 9:21Speaker 02

  One of the students at Georgetown is in the middle of a commercial real estate transaction. The building that they're looking to buy, commercial, mixed-use in a historic area, commercial and residential, growing city, historical district as well.

• 9:37Speaker 02

  They ain't building anymore of them. They can't knock this baby down. And it is a cash machine. It's got near 100% occupancy. They got everything going forward possible. So this looks too good to be true. So he takes a shot and he says this to the agent. Sounds like the seller's looking to sell a cash cow because they don't believe in the market fundamentals. Now, he was just articulating a read, which happened to be wrong. The agent immediately shoots back, they got problems in other buildings. He had to sell this one. Now, that's proprietary information. You should not be giving that stuff up. But not only is it a correction, people feel safe and they're correcting. It just feels so good to correct.

• 10:19Speaker 02

  Not only does it feel good in the moment, but the other thing about an intentional correction is they never regret it. Cause again, like your Maya Angelou quote, what they remember is the feeling of the moment. It's one of the best ways to tease up, maybe not proprietary, but closely held. Cause they don't trust you yet, because not only do you need to get the information, but you also need them to not regret giving it to you, which is one of the problems with questions. I can question stuff out of you, but the chances of me getting closely held information diminish because nobody likes to be questioned, even good opening to questions can in many cases be hard to answer. But then the chances that if I get it out of you, that I've backed you into corner, pride you out of it, triggered it out of you by a question, chances that you're going to regret having told me that are very high.

• 11:05Speaker 02

  And the hostage negotiator realizes that I gotta get the information and I've got to diminish, if not entirely eliminate the regret, because the execution of the deal for a hostage negotiation is completely voluntary, which in point of fact, all deals are. The threat to sue somebody is just not a great way to do business. Penalty clause is not a great way to do business. If you're putting penalty clauses in your contracts, that means you're not a good negotiator. So you want to get information. You want to get people to feel good about the process. So when it comes time to execute, they're happy to execute.

• 11:37Speaker 03

  What are some of those other triggers that in the context of listening to someone, you can gather more information?

• 11:46Speaker 02

  One of the things, again, you talk about mirroring in your book. Mirroring is a great trigger. We believe that a mirror is one to three words. Once you get north of five, that's too many words. Typically you parrot it back to them word for word. You learn the skill based on the last one to three words they've just said. When you're really good at it, you can really guide a negotiation depending upon where you mirror. It's one of the really stealth, powerful methods to get people to talk. It's a great way to get people talking. The other thing that's nice about it, the reason why it's superior to a question. If I say, what did you mean by that? You'll probably repeat what you just said with the exact words, possibly even louder. Sort of like an American overseas.

• 12:30Speaker 02

  If you repeat the exact words louder, it automatically becomes more apparent. But a mirror, you'll never repeat the same words. You'll reword it. There's something about the mirror. The message comes across for me and it impacts you is, I heard what you said. For whatever reason, the words you used weren't exactly right for me. And it would be really helpful for me if you reworded the meaning of what you just said. All that is packed into the act of mirroring and the other person expanding, elaborating. Again, in many cases, a great way to get closely held information without the other side regretting it. So mirror is one of the great skills. Minimal effort, tremendously elegant, ridiculously effective.

• 13:13Speaker 03

  So that elegant, effective mirror is just a way to get you to continue talking.

• 13:20Speaker 02

  Right. My son Brandon, the president of the company, refers to it as a connector. It tends to connect thinking. For whatever reason, maybe you need just a slight break. The amount of time it takes to mirror and to respond to them is probably about three seconds. I remember a long time ago, I was at a conference sponsored by the Gallup poll. And they said, how long is a moment? A moment is three seconds, but effective pauses are often three seconds. Your brain can cover a lot of ground in three seconds. A mirror really creates that much time, slows the game down for you. The listener, it doesn't slow things down for the talker.

• 13:58Speaker 03

  So once you're past a mirror, you've talked about labeling as another technique that just allows people to gather information. I would love to hear what that means and how you go about doing it.

• 14:11Speaker 02

  Yeah. The labeling is like the MacGyver tool, like the ridiculous superpower. A label is it seems like it sounds like it looks like. You seem, you sound, you look, it feels like. And hostage negotiation was called an emotion label, specifically designed to just label emotions. And when we were adapting the Black Swan method out of hostage negotiation in the earlier days, number one, I didn't think labels had really any use at all. And they turned out to be like our most effective skill. Our top tier people will only label. And we've gone from just labeling emotions and dynamics to types of labels. An asking label, it seems like you're uncertain versus what are you uncertain about?

• 14:54Speaker 02

  Now, the label is much more likely to get a solid stream of consciousness response. It's so much better than asking questions. Once you learn how to convert over, we've got clients that say, labels unlock the floodgates of truth talk. They're vastly superior to questions of any type. Closed in questions where you're fishing for a yes, tend to be really bad. Intentionally fishing for a no, are you against this? Is this a bad idea? Is this ridiculous? Have you given up on? Those are great ways to kick conversations into gear. There's also an issue of decision fatigue or maybe your ability to respond to questions.

• 15:39Speaker 02

  Like if I ask you a great what question or a how question, anytime after three o'clock in the afternoon, chances are your decision fatigue has gotten you to the point where you're just like, I don't know. Because the what and how questions trigger what Danny Kahneman would call slow thinking or in-depth thinking. You have to have enough gas in the tank to do that. Every human being alive has a limited number of decisions that they can make in a given day. Whether you're Warren Buffett or whether you're Joe Biden, or whether or not you're the guy in the corner that's selling newspapers. Limited decisions. So if I ask a great opening to a question, it requires an in-depth thoughtful answer for you.

• 16:21Speaker 02

  Anytime after 11 o'clock in the morning, there are a whole bunch of biological things getting away. Circadian rhythm, diet, how much stress you had that day, what you had to eat, whether or not you've eaten at all. After 11 AM, labels, on the other hand, that's just not there. Let me give you an example. I'm coming back from overseas a couple of weeks ago. I shoot out a question via text to one of my colleagues. Now, getting the background behind the question is always much more important. So he could have responded to me with what makes you ask? Which is a great response when I have enough gas in a tank to answer. And I was tired. Instead, he shot back a label, seems like you got a reason for asking.

• 17:05Speaker 02

  And I was like, wow. And I just bang, bang, bang, bang, bang, knocked out and concise text messages, all my reasons for asking. And I know that if he'd have said, what makes you ask? I'd have been like, I don't know. Answer the question. Don't ask me what makes me ask, because I didn't have enough gas in the tank. So the labels end up being like this ridiculously versatile tool. It's great at getting information out of people without making them feel cornered or interrogated, no matter how tired they are.

• 17:35Speaker 03

  We hear a lot about open-ended questions as a good thing compared to closed-end questions. So now you have the open-ended questions at certain times a day. And then you have labels, maybe all day, but in particular other times a day. What are some of those other questioning tools that are effective in eliciting information?

• 17:53Speaker 02

  Well, really getting a no-oriented question. What I've also found is no matter how tired I am, I can answer. I can say no, and I can probably, having said no, throw in some more information. Guidance. I had an intern that I told, never ask me a question after two o'clock in the afternoon. I can't answer with no. Do you want me to do this is much better than what do you want me to do? Cause if I don't want him to do it, I go, no, don't do that. Do this, bang, bang, bang. And I'll give him immediate guidance right away. I think it's one of the reasons why it's very difficult for executives and companies. Friend of mine, Tom McCabe is head of the DBS for the Americas. He was talking to me about how to thrive as an executive is going to the boss, be willing to get shot down, take his feedback and come back with a smarter idea.

• 18:38Speaker 02

  So boss got limited time, walk in, make a proposal. If it isn't dead on, boss is going to say no. Now you're going to be crushed. But instead of being crushed, the boss is probably going to give you some great guidance in a really short period of time. Show them that you've learned and come back again, having gotten wiser as a result of the guidance who gave you after he said no. And we're seeing very consistently across the board that if you get somebody to say, no, are you against this? They'll say, no, I'm not against this, but here are the following problems. When you might ask a yes-oriented question, which would be a mistake. You might say, are you in favor of this? The problem with that is you'd love for them to say, well, I'm in favor of it,

• 19:21Speaker 02

  but the following problems are here. No one is comfortable referring to the following problems because they feel like everything they throw out is a commitment, is a trap, is a tie down. And nobody likes to get tied down. Having said no, you feel no obligation to continue, even if you laid a whole bunch of stuff out. Cause I never said I was going to agree, but here are the problems. Solve them and maybe we'll talk about it. There's just so much more freedom after having said no, that you want the other person to feel safe in proceeding. You don't want her to feel trapped. And getting out of the yes business entirely is a really smart move.

• 20:01Speaker 03

  What are some of those cues for the no type questions that lead into that opening?

• 20:07Speaker 02

  Typically, if you feel like you want to close or you want to offer ideas, you want to proceed in some way. I may hear you out and then I may say, are you against me sharing some thoughts with you? It's a bit of a temperature check. You may say, no, I'm not against you sharing thoughts, but I got seven minutes. Can you do it in seven minutes? I may suddenly know there may be a time deadline I didn't know about. No, I'm not against you sharing some thoughts, but I got a few more things to say. Nobody can listen to you until they feel heard. Basically debris they have in their brain. So no, it's a question is typically what we use as a close or a test to see if it's okay for us to throw some ideas out.

• 20:48Speaker 03

  So you said, no one can listen to you until they feel heard. And we've talked about some of those techniques. Are all of those techniques ways of allowing someone to feel heard?

• 21:00Speaker 02

  Definitely part of it. Paraphrasing typically, you really want to make sure you got it right. You're going to throw the labeling and the paraphrasing together and bundle it all up and summarize. Like if you're going to summarize the other person's perspective, it's a combination of what happened and how they feel about it, which is actually how we structure teaching people to summarize. So far you've told me X. As a result, you feel Y. If you've done a really good job, what you're driving for is a that's right. That's right is what people say when they feel heard, when they feel that what's been repeated back to them is true. If you got a full on summary and you get like a that's right out of the other side

• 21:42Speaker 02

  and possibly even add some insights based on what they've said, what you triggering them is an epiphany. You're trying to trigger an epiphany in the other side or bonding moment of some sort. Bonding moments come from oxytocin. Oxytocin is a bonding drug. Interestingly enough, well, we've always talked about oxytocin as a bonding neurochemical. Listening to Andrew Huberman, my favorite podcast, a couple of podcasts back, he talks about oxytocin also increases the chances you'll tell the truth. So when people feel heard, they bond to you and the likelihood that they will be honest with you increases dramatically, which is what you want for the negotiation. You want to feel attached, so you want them to tell you the truth.

• 22:26Speaker 03

  How else when you're approaching someone, whether it's a negotiation or day to day interaction, do you engage with people so that they feel safe?

• 22:35Speaker 02

  It's an effort which becomes smoother with practice, but frequently it's just something as simple as practice and throwing out a cold read label on somebody just because it's a perishable skill. There's no way around the fact that negotiations is a perishable skill. There just isn't. And anybody, if you're not working at your communication skills, you're keeping your emotional intelligence up, it goes dormant. It doesn't go away, but it does go dormant. I get a charge out of people that say, yeah, I'm a great negotiator. And I tell you about a deal that they're really proud of, which was years ago. I can always tell right away. They're not keeping up on their skills and they're picking up bad habits and every now and then a bad habit will hit a home run.

• 23:20Speaker 02

  You can stand improperly and swing the bat improperly enough times, you're bound to hit one out of the park, but that's the one you're going to remember. So the selection bias, people remember their victories and they forget how few and far between they are. So you gotta work at it on a daily basis just to keep your instinct up.

• 23:37Speaker 03

  So let's dive into the negotiation side. When you're approaching a negotiation, how do you think about preparing?

• 23:43Speaker 02

  I'm going to want to summarize what they've got against the deal. The issue of preparation versus over preparation. If you're interviewing, you're in a negotiation. Most dangerous negotiation is one you don't know you're in. You're starting to interview somebody, you are negotiating. And while you're interviewing, you're gathering information. Ideally, you're not diminishing the relationship simultaneously. People are going to tell you stuff faster the sooner you engage. The information that you're trying to gather on somebody is pretty much like looking at their dating profile. It's not a bad starting point, but if you have looked at somebody's dating profile

• 24:23Speaker 02

  and assume you got a good bead on that person, you're in for a surprise. Several years ago, Millennial was talking to me about using a black swan method. It's a great success. And by the way, my comment on generations, millennials versus Gen X, Gen Z, baby boomers, whatever. Top performers are all alike across the generations. It doesn't matter what generation they're part of. The top one to 5%, they're all curious, they're all ambitious, they're all learners. When you start talking about difference in generations, you're talking about the middle of the bell curve, the C students, the C to the B minus students. You're in business, you're interested in the top performers. It doesn't matter how old they are.

• 25:07Speaker 02

  They want to learn, they want to get better. So this millennial is talking to me about using a black swan method and his job at his company was to get a second meeting. He's the cold caller. It's his job to set up the second meeting. So I said, I love what you're doing here. Are you doing more research as a result before you make this call? He goes, no, no, way less. They're going to tell you stuff faster than I could ever find out. It's going to take me a month to find out what I could find out from them in five minutes if I know how to get it out of them. So your most valuable commodity is time. If you love research, if you love data, if you love information, you may spend a month

• 25:49Speaker 02

  gathering the information external to the conversation that you could have gotten in five to 10 minutes. Time is the most valuable commodity. How do you use your time most wisely?

• 26:00Speaker 00

  We're going to take a quick break in the action to tell you about RidgeLine, the investment management platform built for firms who are rethinking how work gets done. You're at your desk looking at a line graph of your firm's growth. The line is moving sideways, linear growth, and you know exactly why. You're constrained by your operational bandwidth that's been the same for so long, it just feels like the cost of doing business. RidgeLine is built to change that line's trajectory, to be the inflection point that takes your growth from incremental to accelerated with the team you already have in place. RidgeLine is the only AI native investment management platform that brings together

• 26:44Speaker 00

  the front, middle and back office with one set of data and powerful AI agents that automate away operational drudgery. So your talent can shift from managing old technology to materializing new ideas. RidgeLine helps asset and wealth managers understand and improve their firm's growth trajectory. To see how your firm compares to 16,000 of your peers, visit ridgeline.ai/trajectory. If you file Form ADV, your firm is already there. Then talk to RidgeLine about how you can do more with the team you already have.

• 27:20Speaker 03

  So how do you teach how to use that time wisely in the black swan method?

• 27:24Speaker 02

  We encourage people, no matter what you're doing, you got to start pulling data on what's going on. And what am I talking about? From initial engagement to close, how long does it take you? Somebody that you've closed, you need to start to become aware of the people that you never close and how long they take. First start paying attention to the behavioral profiles of the people you don't get deals with. Suddenly you're going to find out a tremendous repetitive pattern of behavior. So what we first do when we're teaching on our people, first start listening to people and then let's start paying attention to who you close with and who you don't. You're going to find that at least half the people you don't close with, it wasn't your

• 28:09Speaker 02

  fault, it was written there the whole time. If that's true, we can start diminishing our time commitment with these people. We call them halves. It's a phrase we learned from Joe Polish, hard, annoying, lame and frustrating. A very specific cluster of behaviors and statements that they make. And I got my people, first of all, I said, all right, so I'm happy to walk away from the halves. We got to learn how to walk away from the people that are wasting our time sooner. The whole team has embraced it. So then we started pulling some data on it. People that we make deals with, we call them elves, easy, lucrative and fun. Another Joe Polish term. So then I told my head of business development, now let's start comparing time. How much time to close a deal with a half versus closing a deal with an elf?

• 28:54Speaker 02

  No less than three times the amount of time, closer to five times the amount of time. Plus, if they're hard, annoying, lame and frustrating for us, to be fair, we may be for them too, which means the chances that we're going to repeat are very low. So then you say, all right, so here's a customer here that we close in 20% of the time and gives us repeat business. Here's another counterpart that takes us five times as long and is not going to give us repeat business. The interaction is going to be so painful for both sides that we don't ever want to do it again. Who do we focus on? I strongly encourage our people and we implement it to a very high level, stick with the people

• 29:38Speaker 02

  that the velocity of the deals is high, the profitability is good, we share the same core values, we're going to want to keep doing business with them.

• 29:46Speaker 03

  In the context of that initial research and then you're going through the process with the halves and the elves, what are the things that you coach people to move the ball forward?

• 29:57Speaker 02

  Deactivating the negatives in the other side's head. As human beings, before we decide to do something, we actually reconcile all the negatives. I noticed another thing in looking through your book, one of the books you recommended is Iger's book, The Right of a Lifetime by Disney. Phenomenal book. And also to me, he defines the success of empathy. Empathy is the ability to articulate the other side's point of view. Now Iger is in company after company after company that gets taken over. What happens first when a company is taken over? Many of the executives are shown the door because they are now in a company that they didn't join and they don't like the new rules.

• 30:41Speaker 02

  They were successful before. There's all these reasons why executives in companies that are taken over don't survive, good and bad on both sides. Iger rises to the top every time. He's in a company that gets taken over and he rises to the top again. When he was with ABC Sports, he was talking about under Rude Arledge, they were rock stars. They're riding around in limousines, they got expense accounts, they're living the high life. Then the company, I think Cap Cities took him and said, no more limos, no more living the high life. Their perspective could be like, look, I've shown you how effective I can be. Don't bother me. Iger's not that way. It's like, all right, so this new people are in charge. Here's what you want. Here's why you want it.

• 31:25Speaker 02

  And just the process of, first of all, saying why the other side wants new rules that you don't like leveled him out and established a relationship. Now, the negotiation for Pixar, Disney Pixar negotiation, probably everybody that's studied mergers will point to that as one of the great deals of all time. Disney can't make an animated cartoon for 10 seconds. Anybody watches? The inventors of animation, everybody hates their stuff. Pixar comes in, it's a marriage made in heaven, and everybody assumes that obviously it went down well. Not the case. Iger talks about how bad that was between Jobs and Eisner. Prior to that, and Iger walks into this and Jobs is blaming him for everything. So what am I driving at? The negatives.

• 32:10Speaker 02

  They sit down and do a whiteboard exercise. Iger's smart enough to go to Apple. Jobs writes pros and cons on a board. Says, you go first. Iger knows how much Jobs hates Disney. He's scared to pick up the pen. So he's like, nah, go ahead. Jobs begins to slaughter Disney. Just slaughter them. I mean, just short of using profanity on them. Does everything but calling profane names. Talks about that they're life sucking entities from which there is no escape. All this nonsense. I mean, brutal. Doesn't write a single pro up. Iger's devastated. He doesn't know what to say. And he says, man, there's a lot of negatives there. And Jobs says, yeah, but sometimes a few positives outweighs the negatives.

• 32:53Speaker 02

  Like, I think people read that story and they completely miss the necessity to make a deal is deactivating, reconciling the negatives first. So if you can reconcile the negatives first, it clears the debris in our reptilian brain, our survival mode brain, which is 75% negative. There's nothing more effective to clearing negatives than just calling out the elephant in the room, not denying it, not explaining it, just calling it out. That is neuroscience proven the best way to get rid of negatives. And what happens is exactly like what happened in that interaction between Iger and Jobs. When Jobs has the opportunity to get all the negatives out, just articulate them, suddenly says, the positives outweigh the negatives.

• 33:39Speaker 02

  That's the way everybody makes decisions. You're pitching gain. It's a very low percentage success rate. You're successful, just not anywhere near as successful as you could be by first deactivating the negatives, recognizing the elephants in the room.

• 33:56Speaker 03

  I want to ask you about overcoming fear. In negotiations and all these things, there's an aspect of being afraid of not getting what you want. How do you handle that?

• 34:08Speaker 02

  The short answer is curiosity at all times. I read Nassim Nicholas Taleb's stuff. He wrote the book called The Black Swan, which inspired the name of my company, 2007. I came across his book from 2012 called Anti-Fragile, where he talks about curiosity is an anti-fragile characteristic. What does it mean to be anti-fragile? To gain from problems, to gain from disorder, to gain from trauma, post-traumatic stress growth. Fear is traumatic. So what's curiosity? Curiosity is highly positive. They're gone. One of our two top coaches, over and over and over again, he said, stay curious, stay curious, stay curious.

• 34:51Speaker 02

  When you're curious, you also have pushed fear out of your brain. You can't be afraid and curious simultaneously. When you're curious, you're in a positive state of mind, which you're smarter. You hear better. You see patterns more quickly. You see deals faster when you're genuinely curious. And so the automatic hack to eliminate fear is simply to be curious. It sounds too simple to be true. You gotta try it to find out.

• 35:20Speaker 03

  I'm curious, in all of the work you've done the last couple of years, what's your favorite story to tell that embodies so much of these tips in a practical way?

• 35:32Speaker 02

  First big case, I worked in the Philippines. Terrorist group on the other side, American having done something, showing very bad judgment, which is how people usually get kidnapped. People don't get kidnapped doing smart stuff. They get kidnapped wandering into situations they shouldn't wander into. And there are always blue collar types because the white collar types got all kinds of security around them. They're hard targets. Blue collar type shows up, walks onto the X, if you will, to use my special forces buddies analogy. The X is where you take somebody down. So this guy walks onto the X, gets kidnapped. We don't have dime one to throw on the table when we start this kidnapping negotiation. International kidnapping is a lot like in a bank robbery.

• 36:14Speaker 02

  You give the bank teller bait money so the bank teller doesn't get killed. The bad guy leaves the bank with a small amount of money. Teller's not dead and the money becomes evidence. It's the best analogy for kidnapping negotiations. When this starts, we don't have dime one to throw on the table. Although eventually you can find some money someplace because relatively speaking, nearly every American is wealthy compared to people in the South of Philippines. You want to see extreme poverty? This is one of the places to go. But we're not going to throw any money on the table. We're just going to hear the other side out. We're going to hear this guy out. And finally, a couple of months into the kidnapping, what Brandon, again, my son, likes to call the birth of the that's right moment. We get a that's right out of a sociopathic killer.

• 37:00Speaker 02

  We summarize his perspective. Oppression, 500 years, colonial invaders, the whole nine. Everything that he said, all his justifications for holding the American and why he wants $10 million in war damages, not ransom, war damages. Complete summary and then dead silence. And a terrorist says, that's right. And a ransom demand just goes away. Kidnapping takes a couple of twists and turns. Our hostage walks away about three months later, just walks away, which means bad guys didn't get a dime. Like even if we'd have been able to find $5,000, they didn't even get that. So I'm back in the Philippines three weeks after with the negotiator I was coaching. He says, hey, you're not going to believe who called me on the phone. Yeah, I don't know.

• 37:45Speaker 02

  Who called you? The terrorist, the killer from before. Yeah, really? What did he say? He said, have you been promoted yet? You're really good at what you do. They should promote you. And he hangs up. He called him to pay his respects. Like, that's my favorite story. After it was all said and done, the application of this method, had these two met on the battlefield, they'd have killed each other. They're both warriors in their own right. The guy I'm coaching, good guy, but a very dangerous guy in his own right. But the respect between enemies to the point where they were certainly willing to talk with each other again, that's my favorite story.

• 38:24Speaker 03

  When you've taken the lens from hostage negotiations to business negotiation, I'm curious, what have you seen in terms of what's the most effective in coaching people in the business world in negotiations?

• 38:38Speaker 02

  Well, we emphasize tiny little shifts. All of it applies. We emphasize a calming, soothing voice, the late night FM DJ voice as a default voice in hostage negotiation. Smiling rarely. It's much more important to smile when you speak in business negotiations because you're driving a different emotional dynamic. I'm a firm believer in this stat from Sean Acker, Harvard psychologist. I think his TED Talk is The Happy Secret to Better Work. That's the name of the TED Talk. Wonderful, entertaining TED Talk. He says, you're 31% smarter in a positive frame of mind. Now hostage negotiators typically get to turn down anger first.

• 39:22Speaker 02

  So if you're 31% smarter in a positive frame of mind, you're at least 31% dumber in a negative frame of mind. What's your starting point? You want to get people into positive frame of mind. And there's no shortage of neuroscience out there now. The mind state of flow is highly positive. Curiosity is highly positive. You're smarter in a positive frame of mind. Curiosity is a superpower, by the way. Where are you starting there? Getting a read on the other side as to which sort of emotionality that you want to put into the situation. After that, information gathering, rapport building. We really feel like we've refined the hostage negotiation skills. The Black Swan method is so far beyond hostage negotiation because of our business experience.

• 40:06Speaker 02

  We've taken the same tools. We understand their adaptation much more intimately because we practiced it, studied it, refined it so much. And as a team, I got this phenomenal team that is constantly improving the method. So we're still using the same skills. I think we're using them in a much more sophisticated way.

• 40:25Speaker 03

  What's the process for someone who wants to work with you with the Black Swan Method? How do they go about it?

• 40:31Speaker 02

  The book is a great starting point. The book is inexpensive and we got a bunch of free stuff. We want people to subscribe to the newsletter because it's concise and it's actionable. You want to get your start, become familiar with the book, start immediately applying the lessons of the book. Start using all the free content that we have, tons of free content. Now, we've got some really sophisticated stuff that we're going to want to walk you through, but you got to be ready for it. You got to get the essentials, the cornerstones. You got to build your foundation with at least a familiarity with the skills. The masterclass is a phenomenal place to supplement the learning. The amount of feedback

• 41:14Speaker 02

  that we've gotten from the masterclass, which also interestingly enough, you're going to learn differently at different times of the day. Maybe you want to read in the morning, but you want to watch a video and listen to the video with sound in the middle of the afternoon or the evening. Your brain's going to soak it in at different times during different days. No matter what time of day it is, where you want to start, there's something probably on our website that we can get you started and begin to increase the velocity of your deal making.

• 41:41Speaker 03

  What's the latest addition to your repertoire that you've figured out over the last stretch of time?

• 41:48Speaker 02

  Two things. First of all, in halfs, hard, annoying, lame and frustrating, can you convert a half to an elf? We've got a couple of ways of doing that successfully. Like, some people are gauging in bad behavior just because they've been conditioned that it works and they don't know how damaging it is. Scope creep is a tremendous example of that, or asking for additional things after you've cut the deal. Like, there's a lot of coaching out there to continue to ask after the deal. People do it because that's the way they were coached and it works. And they don't realize how damaging it is to the relationship. So, we've got very specific skills as to how to get somebody out of that behavior. We've always coached people, let out no a little at a time. So, how am I supposed

• 42:33Speaker 02

  to do that is the first way of letting out no. Nobody should ever be surprised. When you come to a full and complete no, they should have seen it coming if they were paying attention for a while. But I didn't realize when you're saying no, you're saying no to one of four things. You're saying no to either the terms, the price, the behavior, or the person. Now, we taught people to say, how am I supposed to do that? Four different ways. Changing the emphasis, how am I supposed to do that? Which is, please take a look, very little about this works for me. How am I supposed to do that? Focuses down either on a specific term or a specific price. I didn't realize in coaching that we were really helping people understand, you might not be saying no to the whole deal. How do you tease out that you're just saying no to a portion of it so the other side knows and

• 43:18Speaker 02

  it gives them the opportunity to change that aspect of it? Most people think no is just a atomic bomb, blanket no, which is no to everything. Well, it's rarely no to everything. It's generally no to one of those aspects. No to behavior. Maybe the person's got bad behavior, they just don't know it. The deal's not bad, but the way they behaved, it doesn't work for you. Give them an understanding that it's a behavior oriented issue. They may be doing it accidentally. Give them a chance to straighten it up. You can't change everybody's behavior, but there's enough of them out there that you can at least give them the opportunity to change. And if you can get them to switch over, you can make great deals on them.

• 43:59Speaker 03

  What's next for you, Chris?

• 44:01Speaker 02

  We're going to put out a lot more video content on our own. We love where the software is going. We're just with a company that we shot a bunch of films so they could create avatars, so that if we want to change the content, we don't have to go back into the studio to shoot it again. They can refilm with the avatars and we look pretty good. We're actually, about a year from now, I expect the operations manual for Never Split the Difference. We're working on that now. All the things that we've learned, how we've up leveled the skills. We really are categorizing them at three levels now, which we didn't really understand we were doing before. And so, helping it make it more easily digested is what's going to be in a lot of the manual for Never Split the Difference. That should be out in about a year.

• 44:43Speaker 03

  Chris, I want to ask you a couple of fun closing questions before I let you go. What is your favorite hobby or activity outside of work and family?

• 44:51Speaker 02

  Any sort of adventure travel. I've got a white water, some rapids in China or in the Himalayas. I had a Harley, I'm going to have one again. I just jump on my bike, not knowing for sure whether I'm going to be out for 15 minutes or two hours, and I don't know where I'm going. I love any sort of discovery travel. Discovery light, discovery heavy, doesn't matter what it is. I like adventurous, unplanned travel.

• 45:17Speaker 03

  What's your biggest pet peeve?

• 45:19Speaker 02

  Not being listened to. One of the problems with getting good at listening is you get annoyed by those that don't listen. And then I also realize one of my follow-on things is, I'm highly sensitive to having my time wasted. I think everybody should be. Your most valuable commodity is time. If you're not listening to me, you're wasting my time. I'm talking to you, it's doing me no good, I'm totally wasting my time. I get triggered if you're not listening.

• 45:44Speaker 03

  Which two people have had the biggest impact on your professional life?

• 45:48Speaker 02

  Probably Gay and Nessner, my former boss at Crisis Negotiation Unit. Wow, you know, you want to go fast, go alone. You want to go far, go as a team. The team has really been organized and built by my son, Brandon. He's been a great sounding board. I realize to some degree, they say, is the son following a father's footsteps? Well, his feet are bigger than mine, which means he's expanded the thinking. Every time he stepped into a footprint that I left, he left it much bigger. So, he's really had the biggest impact because there are no shortage of other hostage negotiators that were at least as smart as me, that didn't pull together a team, and nobody knows who they are.

• 46:31Speaker 03

  What's the biggest mistake you've made and what did you learn from it?

• 46:35Speaker 02

  The worst thing you can do to somebody, no matter how wrong they are, is embarrass them, especially in front of other people. And we had a meeting at the National Security Council one time, where I embarrassed somebody from the Department of State, and they paid me back with interest. And I still not 1,000% sure as to how I should have handled it because I got put in a position of potentially needing to lie to get out of it, and I don't lie, period. I should have found a way to get out of it gracefully as opposed to getting angry and upset and subsequently embarrassing the people involved.

• 47:10Speaker 03

  What teaching from your parents has most stayed with you?

• 47:13Speaker 02

  Direct and indirect. Directly, my parents taught me to work hard. Just work hard. Be a hard worker. Indirectly, they're very big on me figuring it out on my own. Like, my father, my mother, give you a task, and I get out there and figure it out. You know, here are the tools, go figure out how to do it.

• 47:30Speaker 03

  All right, Chris, last one. What life lesson have you learned that you wish you knew a lot earlier in life?

• 47:35Speaker 02

  Just be a little nicer. You don't got to change what you believe in or what you stand up for. You should always stand up for what you believe in. That doesn't mean that you got to do it by making people feel like they got hit in the face with a brick.

• 47:48Speaker 03

  Chris, thanks so much for taking the time. Really enjoyed it.

• 47:51Speaker 02

  I enjoyed the conversation a lot. Thank you for having me on.

• 47:54Speaker 00

  Thanks for listening to the show. If you like what you heard, hop on our website at capitalallocators.com where you can access past shows, join our mailing list, and sign up for premium content. Have a good one and see you next time.

• 48:09Speaker 04

  All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of Capital Allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions and securities discussed on this podcast.