December 2, 2009
HomeVenture capital99.99% (or its totally going to happen but isnt signed yet)

99.99% (or its totally going to happen but isnt signed yet)

By  Venture capital  9 Comments

I hear this number a lot – 99.99%.

It is usually within this context:

Me: Is it a done deal?
Them: Yeah totally.
Me: Is the deal signed?
Them: No, but it is 99.99% going to happen…

dice

This can apply to so many different things but I thought I would share a few examples below

The advertising deal

This one usually comes with different odds – somewhere in the 50%+ range

“We are about 60% certain this IO is going to get signed”

This applies to a few different cases but usually gets into things like sales pipelines and assigning percentages to deals in Salesforce

The Sale (goods or services)

Anything above the 80% confidence level gets attention and scrutiny.

“We got 90% of the way there – and have the last 10% to go”

Warning: This last 10% is the hardest part. You might as well reset your scale and have the last 10% reset to 100% left to go.

What can get in the way?

Diligence
Terms
Conditions
Exceptions
Last minute shenanigans (yeah, I put shenanigans in the list)
Caveats
Out clauses
Launch timelines
Leaked information
Competitor language


The new company hire

This one always gets a 50% chance up until deal docs – then seems to move magically to 80%. I remember an experience in a previous company where this one woman was 50% for about 3 months, then we went to deal docs and she was at 80% then got another offer out of left field for literally DOUBLE the offer I was aware of and she didn’t take the job.

Time wasted? Maybe not as there are lessons learned.
Percentages talked about? 50%, then 80%, which got the wheels in motion for “making room for the new hire”


The sale (of the Company)

This one suffers from a major misinformation problem. People at the top have their percentages, and the people at the bottom have theirs. In my limited experience these range from “10% going to happen to 99.99% going to happen”

This one is a favorite because the “%” has almost no bearing on anything other than the psychology of the number. Things can go awry at any moment and it literally is not a done deal until the documents are signed.

There are countless other examples but I wanted to share some that come to mind.

My point? Nothing is a done deal until it is signed. Everything else is just a percentage chance of happening.

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Eric Friedman

  • Awesome post. So true. I'm fond of saying the likelihood of anything happening is very low. It's just so hard to bring things to definitive closure.

    To get an individual deal of any kind done has extremely low probability. Hence the need for diversified options in all cases

  • Haha. I find myself using percentages a lot. I wonder why. I do think that it does give more context to how complete a deal is than just saying “it's close” or “we're almost there”.

  • I am 99.99% sure you should use it less.

  • I lol'ed.

  • I've definitely had this problem before. One big sale which was 90% there… for 3 months. For those 3 months, they were just getting the budget cleared, smoothing everything over, etc. Every time we talked it was a slam dunk, that is until his boss suddenly pulled the plug.

    For that reason, I would venture to go one step further than you – a deal isn't done until money is in your bank account.

  • Ha – whatever your 100% is then yes.

    I would tend to agree though, perhaps a signed deal is not enough.

  • I've definitely had this problem before. One big sale which was 90% there… for 3 months. For those 3 months, they were just getting the budget cleared, smoothing everything over, etc. Every time we talked it was a slam dunk, that is until his boss suddenly pulled the plug.

    For that reason, I would venture to go one step further than you – a deal isn't done until money is in your bank account.

  • Ha – whatever your 100% is then yes.

    I would tend to agree though, perhaps a signed deal is not enough.

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