Should the competitiveness of a deal and the effort already invested in it factor into the decision to do it?

TJ Parker · Jun 5, 2023

PillPack's negotiating position was strong because they never had to sell — they could have raised another round and kept going

Willingness to walk away meant no deal would happen unless the economics worked for everybody

49:41 20VC: The Largest Venture Backed D2C Consumer Exit; PillPack: $0-$300M Revenues in 5 Years & The Biggest Lessons Scaling the B2B Business to $300M in 2.5 Years with TJ Parker, Co-Founder @ PillPack

Larry Aschebrook · Jun 16, 2025

Signing the binding one-page Theranos secondary document before being certain was a costly mistake; the lesson is to be certain before signing such a document

They jumped in to play elasticity in pricing and follow the herd; you can have bad process and a good outcome, so the lesson is you must be certain before signing binding paper and must have a good process even if the outcome is bad

Scope: specific to the Theranos secondary

48:24 20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared

Nikesh Arora · Jun 22, 2026

Willingness to walk away does not make you softer — it makes you optimize outcomes and understand the pros and cons of what you're dealing with.

If you're fully vested in the outcome you eventually fold; negotiation is a battle of wits over who wants it more, and walking away clarifies whether the deal is worth your time and works for both sides.

62:57 20VC: Nikesh Arora on the Frontier Model Problem: Breadth vs Depth | The Future of Token Costs | Memory Becoming the Moat | Where Value Accrues: Infra, Models, or Apps? | Why Enterprise AI is Not Ready & Systems of Record vs Systems of Intelligence

Harry Stebbings · May 27, 2024

A good deal does not make a great investment

Scope: says he's made the mistake himself

59:20 20VC: Why Seed is Systemically Broken | Why Pricing is Worse Than Ever and There is More Funding Than Ever | Benchmarks for Churn, Retention and Growth Rates - Good vs Great | Why Last Vintage for Private Equity Will Suck with Jason Lemkin

Nikesh Arora · Jun 22, 2026

Winning a competitive deal against other bidders is not evidence of a good deal; the only test is whether the deal stands on its own merits absent any competition.

Beating eight VCs to a term sheet feels like proof of judgment but says nothing about whether the investment is sound.

68:34 20VC: Nikesh Arora on the Frontier Model Problem: Breadth vs Depth | The Future of Token Costs | Memory Becoming the Moat | Where Value Accrues: Infra, Models, or Apps? | Why Enterprise AI is Not Ready & Systems of Record vs Systems of Intelligence

Nikesh Arora · Jun 22, 2026

Decision-makers confuse the effort spent pursuing a deal with actually wanting the outcome, so the right test is whether you would write the check if the deal had walked in the door with zero effort involved.

Effort already spent is not money spent — the moment you write the check the money is gone and it becomes your job to make it succeed, so you still have one clean chance to decide.

67:16 Zero effort test strips sunk effort from the decision

Larry Aschebrook · Jun 16, 2025

Investors get pulled into deals they know they shouldn't do because of allegiances to the people who helped build their business and because they're already too far in to say no

You feel obligation to early supporters, and humans struggle to reverse course once committed

52:03 Allegiance to early supporters and sunk cost pull investors into bad deals