Negotiating Other Games
Not all games are win-win. There are many different types of games, but two others make interesting counterpoints to the financing game. Let's start with the polar opposite of the win-win game.
The winner-take-all game is the classic high-stakes litigation situation. You are being sued by a patent troll or have some type of “bet-the-company” situation. In this game, reputations matter little, and results are all that count. You should prepare yourself for what will be an emotionally taxing, time draining, long and drawn-out battle. Don't assume that the other side will have the same moral code that you do, as lying generally isn't illegal except under oath. Even then, we've all seen people lie in a courtroom deposition. These cases usually involve lawyers becoming that attack dog that you envision in the movies. This is not fun. But beware, don't bring a knife to a gun fight.The second case is where you have an extremely adversarial situation, but reputations still matter. The classic version of this is when a company founder is fired. There will be plenty of hard feelings and lots of emotions. However, as ugly as it may get at times, this isn't a winner-take-all scenario. Both the company and the departed founder have mutual interests in that they both want their reputations to survive intact and it's highly likely that the departed founder will keep some equity in the company. Therefore, the game constrains behavior to some extent. While not everyone needs to be friends post financing, civility will hopefully win out. In these cases, we normally see lawyers engage with respect, but firmness on their positions.
As we close out our thoughts on game theory, remember, you can't change the game you are in, but you can judge people who play poorly within it. And having a game theory lens to view the other side is very useful.