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Podcast · Puheenaihe 53 · 2020-02-03 · 1:18:16 · In Finnish

Negotiation Skills and Ownership — Sami Miettinen and Tero Luoma on Puheenaihe 53

Published as “Raha: Neuvottelutaidot ja omistajuus (Sami Miettinen & Tero Luoma) | Puheenaihe 53”

Hosted by: Rami Kurimo

▶ Watch on Puheenaihe

Rami Kurimo hosts two guests who have each written the book on their half of the subject: Miettinen on negotiation (Uusi neuvotteluvalta, with Juhana Torkki) and Tero Luoma, investment director at Taaleri’s private equity funds and chair of several growth-company boards, on ownership (Osaava omistaja). They open by reviewing each other’s book rather than their own, and the two halves of the episode turn out to be the same argument seen from two ends.

The foundations of negotiating well

Miettinen’s opening point is the one he returns to across his work: negotiation, like leading expert organisations, is learned from nobody except your first bosses — who learned it from theirs — which makes it almost entirely a matter of chance. What it actually is, is a formal process aimed at a shared intent expressed as an agreement, and it runs on four levers: power, analytical rigour, sociability and principle. In an organisational context with resources behind it, power dominates, because money buys degrees of freedom that change everything else.

Luoma frames it instead as a lifelong learning process and reads a negotiation along three axes: people (who is at the table and what is the shared purpose), substance (keeping clear what you are actually pursuing), and process (M&A follows a known pattern, and knowing the pattern lets you read the situation calmly rather than reactively).

They agree there are no born master negotiators — certain traits help, but this is a long apprenticeship. Miettinen adds an observation about starting conditions: a resourced home and a society full of safety nets, like Finland’s, lets you take risks in negotiation experiments without catastrophe. In much of the world every risk is a potential fall into a far lower income. It is, he notes, exactly why the Nordic model produces startup culture and risk-taking — and also a certain amount of coasting.

Anchoring

The concrete tip. The world is full of people who believe you shouldn’t move first on price. This, Miettinen says, is simply wrong: it is scientifically demonstrable that you should be the one to anchor, preferably somewhat aggressively, credibly, and not in round numbers.

His worked example is a Helsinki apartment. If you know the area’s average is €7,327 per square metre for flats with a balcony on the third floor with this layout, you can say the hundred-square flat is worth about €745,000 based on those area prices. If you don’t anchor, the other side says maybe €6,500 would clear — and now you’re negotiating down from €650,000. He notes the difficulty is temperamental: the naturally risk-averse Finn hopes the other party will throw out a good number.

Emotion, and the fear at the end

Luoma’s contribution is the psychological layer, and it is the most practically useful part of the episode. In a transaction where the seller is an entrepreneur selling their life’s work, price and process eventually give way to whether trust exists between the parties. What he sees repeatedly is a psychological fear arriving right at the end, as the seller registers that something final is about to happen — and the deal comes together only if you can handle the person as a person.

Miettinen raises the exponent: six founders of different ages, one already retired, three working hard, one a natural successor, negotiating both with you and with each other about who continues and who sells — with a shareholders’ agreement written ten years ago that describes none of the current situation. You are not negotiating with one counterparty, as people assume, but with six different negotiating functions, each with money and feelings at stake.

On your own emotions: the first requirement is simply knowing how to behave. Not being emotionless, but recognising when you are going under and leaving the situation. Manage yourself before you try to steer the other person.

Luoma’s addition is the emotion to audit constantly in yourself: falling in love with the deal, going blind to negative facts because you want to finish it, a state made worse by the tournament fatigue that arrives on the home straight after months of long days and heavy costs.

Both agree that drama is deliberately built — anger shown properly, a walk-out through slammed doors, a process driven into crisis to find where the other side’s limits are — but that manners remain the foundation, because a reputation for not being able to behave spreads fast in Finland and then nobody wants to do business with you. And you must not drive the crisis so deep that you cannot come back.

Roles, absence and the third party

Kurimo supplies the episode’s best anecdote, from his own childhood: shopping for a mountain bike with his father, his job was to check the technical side, they targeted bikes already on offer, and when the salesman asked how it looked he might be enthusiastic — while his father was, every single time, unimpressed by the price. Around ten years old, he says, he worked out what the routine was.

Miettinen’s response is that this — dividing the team’s roles — is precisely what Finns don’t do: for heaven’s sake, before people walk into a meeting room with their coats open, discuss the roles. It is rarely done and the leverage is large. And it needn’t be a caricatured good cop and bad cop; you can add a third, absent party — the grandmother who is paying for the bike and must be phoned — an escalation authority who is not in the room and must be walked over.

This, he says, is why people like him are used at all: the investment banker negotiates extensively without the principal present and then subordinates the result to the principal. Negotiating as owner or chairman yourself, you cannot do that as well.

Luoma turns it into the significant owner’s first strategic choice: are you in the room or not? He knows one very substantial Finnish owner he has never once met at a negotiating table — always represented by a trusted lawyer with a defined mandate, which leaves the real owner free to make the final call unbound by what was said in the room. The cost is informational: you get the mediated version rather than the direct one.

The reference point is the Wallenberg motto about influencing without being visible — and Miettinen ties it back to the fourth lever, principle: an institution whose principles have been tested and visible for a century has a Wallenberg way that the market factors in without being told. The mirror image is the reputational track: in Finland, if you become known as the fellow who bristles and can’t handle it, nobody works with you.

Steve Jobs, and why the American market is a different game

Kurimo asks about abrasive figures. Miettinen — who interviewed Risto Siilasmaa twice for the book — brings back the lesson he took from those conversations. Cast Jobs as the brilliant madman of his own typology: an uncompromising, near-autistic vision, starting from a blank sheet in a market big enough that he could pick AT&T exclusively and build an entirely uncompromised iPhone for it, without listening to complaints from Vodafone or Telia about why the phones couldn’t be like this and why the operators shouldn’t own the micropayments and the app ecosystem. Nokia, meanwhile, was fragmented across hundreds of such negotiations. A first mover in a US-sized market plays a different game than Europeans can, and scaling on Europe’s fragmented markets is a different discipline.

The exception both name is SaaS — software as a service, which Miettinen explains for listeners as a monthly licence model with gross margins around 80 %, where cash flow compounds as licences accumulate, and which can be scaled even from a Finnish market. His example is the sale of Lyyti.

Luoma adds the team point: the CEO of that kind of company needs to be the visionary who charms investors and staff alike — the ability to charm with a vision is itself a form of negotiation — but the board and management team must then be deliberately diversified with the profiles who make sure everything is done by the book, which is rarely a visionary’s strength.

Alone or together

Asked what a corporate acquisition has in common with buying a bicycle, Miettinen notes the obvious difference — your own money after a punishing Finnish tax wedge, versus operating with the owner’s money inside a bureaucracy — but says the methods are the same four levers, and companies can have principles as explicit as any individual’s, citing Bridgewater’s rulebook taken to algorithmic level.

Luoma proposes a better dividing line than deal size: are you acting alone or together? Alone, your own money, you answer only to yourself and can move in a straight line. In anything larger you are an agent — a private equity investor is only the owners’ representative, with responsibility running in several directions at once, which makes the process more interesting and considerably more complicated. So a two-person business sale resembles a small bike shop’s owner selling to a buyer, and a multi-party bike purchase resembles a multi-party company sale. The variable is the configuration, not the object.

He notes the same pattern inside families: a first-generation principal owner who acts as though he still decides alone, and adult children who don’t dare voice an opinion despite growing into the ownership role the decision concerns.

Ownership, and the line between owner and investor

Luoma’s core material. Ownership is usually understood legally and financially, but it also involves feeling — and above all, the owner defines the reason they own. Ownership has no intrinsic value; it is always an instrument for achieving something.

Which makes every use of money a value choice for the direction you want the world to move — his example is renewable energy — and equally a choice against the things you decline to fund. Miettinen extends it: impact investing implies impact ownership, and notes that these choices are far easier with resources behind you, since money is condensed potential to make choices.

The definitional distinction is the sharpest idea in the episode: an owner gets to and has to negotiate; an investor mostly doesn’t. The owner’s stake is large enough that they must take positions on the board, on strategy, on whether to put in more money when things go badly. The investor operates through the exchange and can sell a small holding at any moment with nobody noticing — it just sinks into the market. A large owner cannot sell and vanish. In practice, both say, the same person is often both, holding an ownership role in one place and a portfolio elsewhere, which is why siloing family companies, private equity and listed companies as separate worlds is a mistake.

Miettinen sketches the stereotypical Finnish wealth curve of his own generation: everyone is born at zero net worth, earns through wages, spends the first twenty adult years in the asset class called owner-occupied housing with mortgage repayment as the primary accumulation, starts buying equities somewhere around forty, and then in retirement, with a bit more money, throws some at risk cases. He notes the younger generation values home ownership less. Luoma adds the counterweight: freedom is the point of wealth, but the form of your assets determines what you are free from and what you are tied to — and power brings responsibility, so accumulating does not simply mean doing whatever you want.

The Finnish capital problem

This is where the two halves converge, and the numbers are the part worth keeping.

Their diagnosis has a structural half and a mental half. Structurally: high taxation, and a small home market that forces internationalisation very early, whereas a Swedish company gets a bigger running start and then, better capitalised, ends up buying the Finnish one rather than the reverse. Mentally: settling too easily once the flat, the car and the summer cottage are in place.

Miettinen adds two mechanisms. Family capital — the friends, family and fools round that carries a company through the deadly early phase, where a Swedish nephew may raise ten million kronor from his immediate circle and a good Finnish founding team cannot. And networks: he spent twelve years in London banking where the Finnish population was around 5,000 and, he says, weighted towards au pairs, against a Swedish population ten times the size running from billionaires to academics, from which you can help your cousin in Stockholm grow. Finland has a decent spearhead in Silicon Valley and very thin support in most other growth metropolises.

The remedies they discuss: Sweden’s allemanskonto tradition, which got ordinary Swedes into tax-efficient equity saving decades ago and thereby simulated ownership; making economics and financial skills a compulsory school subject — Miettinen would start at primary level, with negotiation and leadership at least by upper secondary; and both are warm about Slush in particular, which Luoma credits with giving a new generation the mentality of aiming for the world rather than the home village, visible now in venture capital inflows. Miettinen’s practical addendum: professionals go to Slush for one-on-ones, not for the panels — his team took over twenty meetings with SaaS CEOs and chairs, and he watched with some puzzlement the ordinary attendees sitting politely through the talks.

Role models and reading

Luoma names Mika Ihamuotila — who wrote a doctoral thesis on ownership and then grew Marimekko as a significant owner — and Vesa Puttonen on the academic side, plus Warren Buffett and, from his own career, Taaleri’s founders Juhani Elomaa and Kari Haapa. Miettinen names his first bosses at Kop’s investment bank — Eeva Ahdekivi, Jukka Ruuska, Petter Fagernäs — and, later, Ray Dalio, whose Principles he reads as evidence that having principles is not in conflict with wealth. His recent academic favourites are Acemoglu and Robinson.

On books: Luoma reads heavily on paper and names Ludwig von Mises’ Human Action as the work that has most shaped his thinking, along with the first two of Björn Wahlroos’ books. Miettinen listens at double speed on BookBeat, Audible and Storytel and gets through two books a month, which he argues is what the sharpest people he knows do, and treats the audio revolution as a genuine democratisation of learning.

The closing exchanges

Two ideas worth extracting. Kurimo describes the Smarter Every Day practice of checking, whenever you feel certain you are right, whether you have actually understood the other person’s logic — because if you haven’t, you cannot know whether they are wrong. Miettinen turns it into a proposal: politicians should be made to do steelmanning instead of the identity-political straw-manning that is standard, and forced to describe an opponent’s policy at its strongest.

The other is Kurimo’s own: the better you understand reality as it actually is, the easier it is to navigate within it — beliefs resting on false assumptions eventually collide with something. Miettinen ties it straight back to anchoring: correct reference points are the whole game, and negotiating on bad information means negotiating badly. Which is an argument, he adds, for open facts, shared numbers and not running Finnish policy on assumptions or American data.

Luoma’s summary is that negotiation and ownership are the same kind of thing: a lifelong learning process you improve by exposing yourself to it, supplemented by reading and by conversations with people cleverer than you — most of whom, in a country this small, will say yes if you ask.

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