Rust’s Rules of Negotiation
November 17, 2025
Over the last 20 years, I’ve been involved in negotiations for everything from small sales contracts to IPOs.
Over the last 20 years, I’ve been involved in negotiations for everything from small sales contracts to IPOs. Whatever the stakes, it’s abundantly clear most people do not adhere to the basic rules of negotiation. Here’s my core principles in these situations:
We must first decide what matters to us. Ideally this is a very short list, to allow you flexibility elsewhere. It’s important to workshop this with all the stakeholders on your side, as it’s often a surprise to see the actual top priorities. For example, for a sales contract you might care most about the initial signature, so you’d be willing to compromise on other issues.
In areas where we can be flexible, there’s often a limit and we need to understand those in advance, so we can avoid decision making under pressure. For example, you might be willing to increase the salary compensation of a job offer, but only within your department’s budget.
Understanding the other side’s priorities is often the key for easy negotiations but it’s unlikely they will spell it out. You’ll need to ask polite but probing questions around the core terms to approximate their goals. For example, if a customer requests urgent delivery, you could ask for a higher price to confirm they’re prioritizing speed over cost.
If you need this particular negotiation to work out, the other side will sense it and you will be at a severe disadvantage. Do the work to find and retain backup options, so you always have a choice. For example, even after you’ve signed a Letter of Intent with an acquirer, you need to maintain business growth because many buyers will try to re-trade the terms before final signature.
If you don’t ask for something in return for your concessions, the other side will keep asking for more and more. For example, if a potential employee asks for more equity in their job offer, you might suggest a corresponding reduction in the cash compensation.
Starting with the easy wins builds goodwill with the other side and momentum for the negotiation as a whole. For example, when negotiating a VC term sheet it’s relatively easy to agree on board construction and the stock option pool, while still negotiating the final price.
If you’re walking away, do the right thing and close the discussion politely. Silence, as a tactic, tends to create frustration on the other side and induces erratic behavior, which can cost a lot of time to unwind. If you’re busy, just be upfront about your responsiveness. For example, waiting until the day of a deadline to begin negotiations often causes unpredictable behavior on the other side.
This includes lies, exaggerations and information hiding. If you’re discovered, or even suspected of this behavior during a negotiation, it’s usually the end of the discussion. Even if it isn’t the end, the lack of trust can make even basic steps brutally slow. For example, if you lie about your growth to a potential employee, they might leave when the truth is discovered and their explanation could hurt your reputation within the company,
Humans appreciate trust so you should assume the other side has the best intentions, at the beginning. With other honest people, this can speed the process significantly. However, if your trust is breached or you have other disturbing information then you should be more guarded going forward. For example, if a debt provider told you the interest rate would be “roughly 5%” but their document says 10%, you will need to double check every term in that agreement.
Even if the other side is behaving poorly, that’s not a good reason for your side to do the same. Being rude, mean or malicious may not have consequences today but people have long memories and these stories are often told.
When faced with terrible conduct, it’s easy to deny there’s any choice but drastic action. I believe that is a trap, and most would do well to consider if their actions would be so different if they faced the same set of circumstances. In those moments I’m often reminded of this quote by George R.R. Martin in Game of Thrones:
“We only make peace with our enemies, that’s why it’s called making peace.”
Best of luck out there.
