Scams You Might Easily Fall For & Mastering The Art of Deal-Making

Summary

Podcast Summary: "Something You Should Know"

Episode Title: Scams You Might Easily Fall For & Mastering The Art of Deal-Making
Release Date: December 26, 2024
Host: Mike Carruthers | OmniCast Media
Guests:

• Steve Wiseman: Attorney and Author of 50 Ways to Protect Your Identity in a Digital Age
• Barry Nailbuff: Entrepreneur and Professor at Yale School of Management, Author of Split the Pie: A Radical New Way to Negotiate

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Part 1: Scams You Might Easily Fall For

Guest: Steve Wiseman
Topic: Understanding and Protecting Against Scams and Identity Theft

Overview:
In the first segment, host Mike Carruthers interviews Steve Wiseman, an authority on scams and identity theft. Steve delves into the pervasive nature of scams, emphasizing that they are not limited to online platforms but also exploit low-tech avenues like physical trash.

Key Discussions and Insights:

1. Ubiquity of Scams:
   Steve underscores that scams are omnipresent and adaptable, targeting individuals through various means.

   “Anyone can get scammed. And the person that thinks they're too smart for it, they're going to be the next victim.”
   — Steve Wiseman [07:08]

2. Internet of Things (IoT) Vulnerabilities:
   The discussion highlights how connected devices like smart TVs can be entry points for hackers if default passwords aren’t changed.

   “Nothing is as bad as you think. They're far worse.”
   — Steve Wiseman [23:42]

3. Medical Identity Theft:
   Steve introduces the concept of medical identity theft, explaining its potential fatal consequences. He reveals that stolen medical information can alter medical records, posing serious risks to victims.

   “Medical identity theft is a huge, huge problem.”
   — Steve Wiseman [16:31]

4. IRS and Imposter Scams:
   The segment covers common IRS scams, where fraudsters impersonate IRS officials to extract money through deceptive means like gift card payments.

   “The IRS never initiates contact via phone, email, or text. If you receive such communications, it's a scam.”
   — Steve Wiseman [26:43]

5. Identity Protection Strategies:
   Steve offers practical advice, such as implementing credit freezes to safeguard against unauthorized account openings, emphasizing that proactive measures are crucial.

   “The best single thing you can do is freeze your credit and freeze your children's credit.”
   — Steve Wiseman [22:09]

6. Psychological Manipulation in Scams:
   He explains how scammers exploit emotions like fear and greed to manipulate victims into compliance, making even sophisticated individuals vulnerable.

   “They want to get the most vulnerable, the most greedy, and people who will fall for it.”
   — Steve Wiseman [07:08]

Notable Quotes:

• “Everything is designed to separate you from your money.” — Barry Nailbuff [00:45]
• “Things aren't as bad as you think. They're far worse.” — Steve Wiseman [23:42]

Conclusions:

Steve Wiseman emphasizes the importance of awareness and proactive protection against various forms of scams. By understanding the tactics scammers use and implementing security measures like credit freezes and changing default device passwords, individuals can significantly reduce their vulnerability to identity theft.

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Part 2: Mastering The Art of Deal-Making

Guest: Barry Nailbuff
Topic: Innovative Negotiation Techniques Beyond Traditional Approaches

Overview:
In the latter half of the episode, Barry Nailbuff joins Mike Carruthers to discuss negotiation strategies that transcend conventional methods. Barry introduces the "Split the Pie" approach, advocating for creating and fairly dividing value rather than engaging in zero-sum bargaining.

Key Discussions and Insights:

1. Redefining Negotiation:
   Barry and Mike explore how negotiations often miss the fundamental element of understanding the underlying value each party brings, leading to suboptimal outcomes.

   “Most people don’t appreciate what they are really negotiating over. They think it’s over some total amount, as opposed to what would be lost if the two parties don’t reach a deal.”
   — Mike Carruthers [30:27]

2. The "Negotiation Pie":
   The concept of viewing negotiations as a pie to split rather than a battlefield to win is introduced, emphasizing collaboration over competition.

   “The pie is how much value is created by an agreement compared to what the parties would get if they end up working on their own.”
   — Mike Carruthers [31:21]

3. Practical Negotiation Example:
   Mike shares a real-life scenario involving a trademark dispute, illustrating how framing the negotiation around shared principles rather than personal gains can lead to fair outcomes.

   “He recognized that I do, so if you want to do a deal with me, you have to accept the fair outcome.”
   — Mike Carruthers [35:01]

4. Avoiding Common Negotiation Pitfalls:
   The conversation covers mistakes like making unrealistic offers or responding emotionally to provocations, which can derail negotiations. Instead, maintaining principles and employing logical strategies are recommended.

   “Fight fire with water. So that when somebody does something that is escalated that is inappropriate, don't respond the same way.”
   — Mike Carruthers [42:22]

5. Contingent Agreements:
   For situations where one party lacks expertise, contingent agreements allow for shared benefits based on future outcomes, mitigating risks and fostering mutual trust.

   “Here’s what I’m prepared to do. I’ll sell it to you for $1,000, but any money you make above $10,000, we split evenly.”
   — Mike Carruthers [49:16]

6. Creative Solutions in Negotiations:
   Emphasizing the importance of looking beyond monetary aspects, Barry discusses how identifying additional interests and needs can lead to more fruitful and creative negotiation outcomes.

   “When you want to do better than what they would get without an agreement, how do you measure that?”
   — Mike Carruthers [37:49]

Notable Quotes:

• “Principles beat arbitrary.” — Mike Carruthers [35:19]
• “I’m prepared to give them what they want. The reason is if they get what they want, then I can get what I want.”

  — Mike Carruthers [39:54]

Conclusions:

Barry Nailbuff advocates for a negotiation paradigm that prioritizes the creation and equitable division of value. By understanding the mutual benefits and maintaining clear principles, negotiators can achieve more satisfying and sustainable agreements. Techniques like contingent agreements and focusing on shared interests enable parties to navigate negotiations with integrity and effectiveness.

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Final Thoughts

Mike Carruthers effectively bridges two critical life skills in this episode: safeguarding oneself against pervasive scams and mastering negotiation to enhance personal and professional interactions. By bringing in experts like Steve Wiseman and Barry Nailbuff, the podcast provides actionable insights that listeners can implement immediately to improve their financial security and negotiation prowess.

Key Takeaways:

• Stay Vigilant Against Scams: Understand the diverse tactics scammers employ and adopt proactive measures like credit freezes and securing IoT devices.

• Embrace Collaborative Negotiation: Shift from a competitive mindset to one that seeks to create and fairly divide value, fostering better relationships and outcomes.

Resources Mentioned:

• Steve Wiseman's Website: scamacide.com
• Steve Wiseman's Book: 50 Ways to Protect Your Identity in a Digital Age
• Barry Nailbuff's Book: Split the Pie: A Radical New Way to Negotiate

For more in-depth strategies on protecting your identity and enhancing your negotiation skills, consider exploring the resources provided by the guests featured in this episode.

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This summary encapsulates the main content and key insights from the episode "Scams You Might Easily Fall For & Mastering The Art of Deal-Making" of the "Something You Should Know" podcast, providing listeners with a comprehensive overview of the discussions without the promotional segments.

Transcript

[Mike Carruthers]

If your bingo has ads in it.

[Steve Wiseman]

That'S not a bingo.

[Mike Carruthers]

If it doesn't have the coolest tournaments, minigames and the most breathtaking design, Nope, not a bingo. If your bingo moment makes you feel so excited that you just want to burst in joy and scream out loud, bingo.

[Barry Nailbuff]

Sorry.

[Mike Carruthers]

So you're playing Bingo Blitz.

[Steve Wiseman]

Now that's a bingo. Cover a world of excitement with Bingo Blitz, the number one free bingo game. Download Bingo Blitz and play for free.

[Mike Carruthers]

Now that's a bingo.

[Barry Nailbuff]

Today on something you should know. If you want to get to know someone better, there's a simple technique that works really well then protecting yourself from the constant threat of scams and identity theft.

[Steve Wiseman]

Identity theft is high tech, low tech and no tech. It isn't just coming through your computer, it is going through your trash. This is anything they can do to get the information they will do.

[Barry Nailbuff]

Also, a simple way that will help you remember names a lot better and a look at some common negotiating techniques that don't work. Like starting with a lowball offer.

[Mike Carruthers]

The problem with doing that is that you make yourself untrustworthy. If I'm selling something that's worth $1,000 and you offer me 200 for it, are you trying to take advantage of me? Do you not know what this item is worth? What kind of person are you?

[Barry Nailbuff]

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[Steve Wiseman]

Fascinating intel, the world's top experts and practical advice you can use in your life today.

[Barry Nailbuff]

Something you should Know with Mike Carruthers. Hey there. Welcome to Something you should know. Have you ever been taken by a scam artist? I have, and fortunately it hasn't happened very often and it wasn't very much money. But I don't think I know too many people who haven't fallen victim to some scam sometime, somewhere. Which is why I think you're going to find the conversation with Steve Wiseman coming up in just a moment. Really interesting. First up today, you probably think that one of the best ways to get closer to someone you would like to be closer to is, is to do something nice for them. Do them a favor, make some nice gesture. Well, it turns out that you're better off asking them to do you a favor. A study in the Journal of Human Relations revealed that when someone gives you their time or advice or does a small favor for you, a connection is made. And it's a more powerful connection than if you were to do them a favor instead. I'm sure you know from your own experience that it feels good to do someone a favor. So when you ask them to do a favor for you, you're making them feel good. And then it also opens the door for a return of the favor in the form of lunch or a cup of coffee and presto, you've got the opportunity to get to know each other a little better and to get a little closer. And that is something you should know. I think it would be hard to find someone who has never been scammed or never had their identity stolen or their credit card compromised in some way or been taken for a ride by some scammer out there. Scams are everywhere. A lot of them are online, but they're not all online. And most all of them are designed to separate you from, from your money. And I know a lot of people believe they're too smart, too sophisticated to fall for a scam. But as you're about to hear, some very smart, sophisticated people have been victims right along with the rest of us. One of the leading authorities on scams and identity theft is attorney Steve Wiseman. He also wrote a book a few years ago called 50 Ways to Protect your Identity in a Digital Age. Hey Steve, welcome to something you should know.

[Steve Wiseman]

It's great to be with you.

[Barry Nailbuff]

So I'm kind Of curious how you got interested in scams and identity theft and these kind of crimes in the first place.

[Steve Wiseman]

I'm a lawyer and also a college professor at Bentley University where I teach white collar crime. Actually, before I taught at Bentley University, I taught at a number of other colleges with ever setting foot on the campuses. I used to teach in their prison education programs in the Massachusetts state prisons. And it was there I met a number of scam artists and con men and criminals. Always found it fascinating. And then unfortunately had a personal experience about 20 years ago where I was a victim of identity theft. And this was, I think, really around the time that identity theft was taking off as a crime. It is now the biggest consumer crime. So I just find it very, very interesting and timely.

[Barry Nailbuff]

I have a sense, and I'd like you to comment on this, if you agree or disagree, that there's this kind of general perception amongst a lot of people that scams are for idiots, that I'm too smart to be scammed. And, you know, if you're dumb enough to read and give money to the Nigerian prince because he sent you an email, well, you know, that's your problem. But I'm way too smart.

[Steve Wiseman]

Well, you know, there's two things about that. First of all, no one is too smart to be scammed. All you have to do is look at Bernie Madoff and the many intelligent people that wound up being victims of his scam. And he actually was kind of of that mind that if you're too smart, you wouldn't be scammed. He actually blamed his victims. At one point he said, if anyone looked into what I said I was doing, they would know it's impossible. But when you mentioned about the Nigerian email scam brought a SM to my face because lately the Nigerian email scam still with us, and they are absolutely even more ridiculous than ever. And at first I was thinking, you know, why would they do that? And the thing is, they want to get the most vulnerable, the most greedy, and people who will fall for it. They don't want to spend time with someone who'll be asking a lot of questions. But the short answer to your question is anyone can get scammed. And the person that thinks they're too smart for it, they're going to be the next victim.

[Barry Nailbuff]

Okay, so because this is such a big problem and can come at you from lots of different directions, where do we start? What should we be? What should I be on the lookout for?

[Steve Wiseman]

One of the things is the. The Internet of things. Anything that you have that is connected to the Internet. And that is a vulnerability for you. So you know, if you have a smart TV in your home, if you haven't protected that and changed the default password, an identity thief can get into, hack into your Internet of things device. And there were more than 1.5 billion attacks last year on these. Get to your computer, from your computer, they get to your online bank account. You know, there are other times where again, the identity theft, they trick you into providing information. I was speaking with some victims in a TV crew about a, a victim of a scam. They went online, they found a, what looked like a legitimate site. It appeared to have all of the good credentials, but they didn't check it out. And the bottom line is they sent their money to a scammer. So we really have to do our homework in these scams. The sec, which is interesting, actually did a phony website called for a non existent cryptocurrency called Howie Coin. And it looked good, had all of the endorsements of celebrities and everything to make it appear good. And if people click through, when it got to the part where they were going to send their money, there's a big announcement on your screen telling you that you would have been scammed, that this is a scam. So different scams lure you in. They all take advantage of fear and greed.

[Barry Nailbuff]

I want to go back to what you said a few minutes ago about scammers getting into my computer through my smart tv. Can you go into a little more detail about that? Because I hadn't heard of that before, so I'd like to know how that works.

[Steve Wiseman]

They're going to attack your router. Remember, your router is the gateway to all of the tech equipment you have in your house.

[Barry Nailbuff]

So they'd have to be parked outside then. I mean, they'd have to be close.

[Steve Wiseman]

Oh, no, no, they don't even, they don't. This, this can be done at a distance. As a matter of fact, the FBI issued a warning about hacking into routers by Russian cybercriminal gangs. And the problem there is a lot of people don't change the default password on their router. And those router passwords are available online. Criminals halfway around the world can hack into it.

[Barry Nailbuff]

See, I would bet that most people, or at least a lot of people, don't even know that their router has a password or that their smart TV has a password, let alone would they know how to change it.

[Steve Wiseman]

I mean, there are other issues there with our smart TVs. And interestingly enough, the prices of our smart TVs are less than what we would actually pay for it if those televisions were not subsidized by companies that are taking information that we agree, agree we don't realize. We agree to be gathered about us, that is gathered by our smart TV that is watching not only what we're watching on tv, but the TV can be. Can pick up and be connected through your router to all of the other devices in your home. And so the privacy that you give up unless you know enough, and most of us don't, and they make it difficult, too. I mean, even children's toys, they come with a default password. And if people don't change those passwords, that's the Trojan horse that can lead the hackers to your computer, to your bank account.

[Barry Nailbuff]

So a lot of these scams are under the radar. It isn't a matter of appealing to your stupidity or your greed or whatever. You wouldn't even know it happened.

[Steve Wiseman]

Absolutely. I mean, it's all of the above. The Jamaican lottery is still a major one that appeals to our greed. And there are gangs in Jamaica that have gathered telephone numbers of generally older Americans, and they call them, they tell them that they've won a lottery that they never even entered. And, you know, it's tough to win a lottery. It's really tough. Yeah. And so they. They have to pay fees or taxes, and that thing is huge now that, you know, that depends on greed. But there are plenty of times, particularly with cybersecurity, that we're not necessarily taking the steps and we don't realize where we are vulnerable. And, of course, even if you, you know, I'm one of these guys, even paranoids have enemies. So, you know, being in the business, I'm particularly paranoid. And I was particularly angry in 2017 with the major data breach at Equifax, where 147 million of us, and I include me in there, had our personal information stolen. And so despite the fact that I'm taking care to protect my personal information, the companies didn't. And with Equifax, what made it worse is Steve Jobs once said, if you're not paying for a product, you are the product. And with Equifax and the other credit reporting agencies, they make their money from selling our personal information. And so the idea of protecting our information wasn't as high on their priority list as it should have been.

[Barry Nailbuff]

We're talking about scams and identity theft and how to protect yourself. And I'm talking with attorney Steve Wiseman, whose website is scamacide.com this episode is.

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[Barry Nailbuff]

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[Steve Wiseman]

Interpol once indicated there were only about 100 cybercriminal geniuses, but their business model now is they will create the malware, the botnets to distribute it, provide tech support, and they will sell and lease what they've created on the dark Web to less sophisticated criminals. So they will be able to get all of our information. So your credit card, if it comes with other personal information about you, will go for about $45 online on the dark Web, but your medical insurance will go for much more. And that's because they are able to turn that into medical they can get medical equipment, they can sell the use of the insurance. And here's the thing that makes no sense whatsoever. You become a victim of medical identity theft. Somebody has accessed your medical insurance. You find out, you report that, and you attempt to get this false removed from your medical records. Well, that would violate the privacy of the medical identity thief. And so all you can do is have a notation on there that this information is disputed. But quite frankly, you could have information on your medical report that could contain a false blood type or a medicine to which you are allergic to, and that these things could be potentially fatal. So medical identity. Identity theft is a huge, huge problem. And unfortunately, the healthcare industry has been very, very lax in protecting data, including medical insurance records.

[Barry Nailbuff]

Wait, what? That's preposterous. That, isn't it? That an identity thief could put information in your medical records and they protect his privacy.

[Steve Wiseman]

Yep. The HIPAA privacy law is protective. It makes. I mean, when I first found that out, I kept looking for. I must have had bad information. But nope, that's it. That's our government at work.

[Barry Nailbuff]

And even you, I mean, somebody who's. Who's pretty sharp about this. You said you've been the victim of identity theft. I've been scammed. And I mean, I don't know too many people who have not had some rub up against this, whether they thwarted it or not, that have been scammed.

[Steve Wiseman]

Years ago, there was a cartoon called Pogo, and Pogo had a saying, we have met the enemy, and he is us. All too often, when it comes to being scammed and when it comes to becoming victims of identity theft, we may be our own worst enemies. For instance, we put too much personal information up on social media. So the grandparents scam, which is still going on, and that's where the grandparent gets a call in the middle of the night. The grandchild is having problems. Wherever they are, they've been arrested or there's been a medical emergency, they gather the scammers gather that information through social media. I used to like the Big Bang Theory, the show, and, and Sheldon used to call his grandmother memaw. And so they could. The bad guys could know from checking out your social media, you call your grandmother memaw. And so they get a call. Memaw, it's me. I'm in trouble. I need some money. Get it to me fast.

[Barry Nailbuff]

Yeah, well, it's understandable. Somebody in that situation might panic and send money. And in fact, I think. Wasn't there just some woman? I think she used to be a police dispatcher who got scammed or they attempted to scam her and they showed up at her door to get the money and the police were there and tackled him in the front yard.

[Steve Wiseman]

Yes, I saw the videos of that. It was terrific. But, you know, and along with individuals, you know, Willie Sutton, a famous bank robber, was once asked, why did he rob banks? And he said, because that's where the money is. So major, major scams are perpetrated against companies and government agencies. We've seen that with ransomware and other. But one of the biggest, as far as companies goes, is called the business email compromise. And what happens is the bad guys get into the computers of a company. They find out when a particular CEO or CFO is going to be away or on vacation or something, and then they send an email that appears to come from them asking to wire money to a particular company that they're doing business with. Of course, there is no company that they're doing business with. It's going to the scammers. But they now have this deep fake technology which can be used for videos as well as audio. And there was a German company in which they had a subsidiary in Britain. And the criminals were able to get the voice of the CEO of the company from some YouTube videos, and they were able to take that to do a phone call that sounded exactly like the CEO. There's an easy technique called spoofing where you can fool your caller ID so you can make it look like it's coming from wherever. And the scammers picked up a quick $200,000.

[Barry Nailbuff]

Oh, what about, you know, there are these services people can buy that are supposed to protect your identity. Are they worth it? Do they do a job? Is it at least a minimal level of protection or is it really good or what?

[Steve Wiseman]

When I describe these identity theft protection services, I say this kind of like you're crossing the street and you get hit by a bus and someone rushes out to tell you, hey, you just got hit by bus. That's what these services do. They don't protect you from becoming a victim of identity theft. They alert you sooner that you have become a victim. So it's helpful you can do these things for yourself. I think some of them are priced so that they may be worth it. But frankly, the best place to find a helping hand is at the end of your own arm. And the one thing that, that absolutely none of these identity theft protection services do, which is the absolute best thing for protecting yourself, is putting a credit freeze on your credit reports. And now, since 2018, you can do it for your children. And children, according to a Carnegie Mellon study, are 51 times more likely to become targeted for identity theft than adults. This can protect you so that even if someone gets your personal information, they're not gonna be able to open accounts in your, which is a big way that people get whacked. So a credit freeze, easy to do. If you're going to apply for credit, you can go online and lift it so that the creditor, at least a car recently and they had to check it out, can check my credit report and then put it back on automatically. So best single thing you can do is freeze your credit and freeze your children's credit.

[Barry Nailbuff]

Isn't it true that a lot of identity theft still happens by people going through your trash?

[Steve Wiseman]

Absolutely. And you know this. One of my mottos is things aren't as bad as you think. They're far worse. So what if you have a shredder and you shred the documents before you put them out? And in Arizona in particular, there were identity thieves who hired methamphetamine addicts who would stay up all night piecing together single shredded, you know, just vertical shredded documents. And so if you're going to shred, which is a great idea, make sure you get a cross shredder.

[Barry Nailbuff]

And I don't put my trash out until the morning, you know, until I hear the trucks coming. Because just for fear that somebody could go through that at 2 o'clock in the morning and take their time and maybe find something I didn't shred or.

[Steve Wiseman]

Yeah, quite frankly, I don't think that's an unreasonable fear. Identity theft is high tech, low tech and no tech. It isn't just coming through your computer, it is going through your trash. This is anything they can do to get the information, they will do.

[Barry Nailbuff]

You had mentioned irs. How do those scams work?

[Steve Wiseman]

You know, they're twofold. One of them is imposter scams. And this is, according to the Federal Trade Commission, the biggest level of scams that we've had in the last year. And this is where you get a telephone call, a text message or an email that is coming from some. Maybe it's the FBI, maybe it's Social Security. And lately it's from the IRS that spoofing where the scammer very easily can trick your caller ID to make it look like it's coming from the irs. They tell you that that here's the thing that bothers me, the fact that the IRS has had to put on its website we don't ask for or take gift cards, but criminals posing as the IRS will do it. So under a wide variety of pretexts, they'll ask you for gift cards, credit cards, some kind of payment that you do over the phone. The other thing is income tax, identity theft, which is a multi, multibillion dollar problem. Someone gets your Social Security number, files electronically, a tax return using your number, and a counterfeit W2, they get a big refund. If you file after them, your return will be held up. And right now the IRS is taking about close to 300 days to process claims for your legitimate refund. So income tax, identity theft, people say, well, you know, they don't not getting me the government's money, but you're not getting your refund for pretty much close to a year.

[Barry Nailbuff]

Does the IRS take payments over the phone? I thought they did not.

[Steve Wiseman]

They did not. And as a matter of fact, I'm glad you mentioned that. You know, people say, how do I know if it's the IRS calling me? How do I know if it's the IRS sending me an email or a text message? And the real easy way to know it is the IRS never initiates contact in any of those three manners. The only way they initiate contact is through snail mail. So if you get a phone call, an email, or a text message indicating it's from the the irs, you know it's a scam.

[Barry Nailbuff]

Well, there is obviously a lot to know if you want to protect yourself. And if you do want to know more, you can check out Steve's website, scam aside.com. there's a lot on that website you'll find helpful. The name of the book he wrote is 50 Ways to Protect yout Identity in a Digital Age by attorney Steve Wiseman. And there are links in the show notes to both of those resources I just mentioned. Thanks for coming on and sharing all this, Steve. Appreciate it.

[Steve Wiseman]

Terrific. Great talking with you.

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[Steve Wiseman]

The holidays are about spending time with your loved ones and creating magical memories that will last a lifetime. So whether it's family and friends you haven't seen in a while, or those who you see all the time, share holiday magic this season with an ice cold Coca Cola Copyright 2024 the Coca Cola company.

[Barry Nailbuff]

Negotiation is one of those things. We don't talk about it a lot on this podcast because I think people's impression is that negotiation is a very businessy topic, or it means we're going to talk about how to negotiate the price of a car, that kind of thing. But the fact is we all negotiate all the time, every day. And there is a very different approach to negotiation that I have found fascinating. It comes from a guy named Barry Nailbuff. Barry is an entrepreneur and professor at Yale School of Management, and he's the author of a new book called Split the Piece A Radical New Way to Negotiate. And I really think you're going to enjoy what he has to say and his approach to this topic because it is different than what you've heard about negotiation before. Hey Barry, Welcome. Thanks for being here.

[Mike Carruthers]

Thanks for inviting me.

[Barry Nailbuff]

So start off by explaining how your approach to negotiating is different and what it is people sometimes miss about what you think a negotiation is.

[Mike Carruthers]

Sure, most people, it's strange to say, don't appreciate what it is they're really negotiating over. They think it's over some total amount, as opposed to what would be lost if the two parties don't reach a deal. That is, they don't understand the actual negotiation pie, and therefore the arguments they make are really not over the right numbers, which leads people to be confused about power and fairness, and negotiations end up going south.

[Barry Nailbuff]

So explain the pie, because I think of a negotiation as I want this, you want that. I don't see it as a Pie to split. So explain that.

[Mike Carruthers]

The pie is how much value is created by an agreement compared to what the parties would get if they end up working on their own or doing something with other folks.

[Barry Nailbuff]

So let's get specific with a real example that would explain what you just said.

[Mike Carruthers]

I made a rookie error. I filed for a trademark and didn't realize that trademarks are public the moment you file for them. As a result, some troll, and I'll call him Edward because that's his name, ended up buying the URL, the domain name associated with my trademark, and he offered to sell it back to me for $2,500. Now, Edward doesn't care about fairness. He's a jerk. For him, it's a zero sum mindset. It's like, how much money can he get? And I pointed out to Edward that there's an organization called ICANN, which is the domain registry. And for $1,300, they have a dispute resolution process. And what Edward had done is called registration in bad faith. And so I was guaranteed to get that domain name back If I paid ICANN $1,300. So, Edward, look, I'm going to get the domain name either because we reach an agreement or because I go to icann. So the only question from my perspective is, do I pay them $1,300 or do I pay you something? And there's no way I'm paying you 2,500 when I can get it for $1,300 from ICANN? And sure enough, he comes right down to $1,100. But from my perspective now, 1100 is better than I can, but I'm only up $200 and he's up $1,100. And so I say there's a $1,300 pie. That's what I can save by doing a deal with you. And I'm prepared to split it 650. 650, at which point he comes down to 900, kind of halfway between my 650 and his 1100. And he's saying, that's the lowest I'll go. I won't move anymore. And my point is, I've made you a fair offer if you can tell me why we do something different. Okay, but you know, what you're proposing is giving you more of the benefit than it is to me, and I don't see why we should do it that way. And so I stuck at 650. He was at 900. And at the end of the day, I had a Principle, he was arbitrary, and he came and said yes to my 650. So he didn't care about fairness, but he recognized that I do. And therefore, if you want to do a deal with me, you have to accept the fair outcome.

[Barry Nailbuff]

See, I would have thought he would have said, okay, well. Well, if you're going to pay them $1,300 to take the domain away from me, give me $1,200 and you can have it right now. And you would have said okay, but you didn't say, okay, Well, I didn't.

[Mike Carruthers]

Because if I did that, he's up 1,200. I'm only $100 better than I can now. Fight fire with fire would be I go back to Edward and say, I'll give you 100, and then I'm up 1,200. But in fact, I say, look, for the same reason that I wouldn't expect you to accept $200 offer, leaving me 1100 ahead, you shouldn't expect me to accept your proposal of 1100, which leaves you 1,100 ahead and me only 200 ahead. It's true that I need you to save this $1300, but you also need me. We need each other. And that's why we should split it 650. 650.

[Barry Nailbuff]

And you got him and he got.

[Mike Carruthers]

Me, and we got each other and we saved the 1300. And I was 650 ahead, and he's 650 ahead. So, yes, he's a jerk, yes, he's a troll. But he also understood the logic of what I was saying, and he didn't have any countervailing logic. So my view is principles beat arbitrary.

[Barry Nailbuff]

Well, that's a great example, a great story. And I like how you appealed to his sense of fairness with whatever sense of fairness he had by pointing out your sense of fairness. But not everybody will agree with that. I mean, people come into negotiations often wanting to get as much as they can possibly get. And that's kind of the job of negotiation in many ways, to get as much as you can get.

[Mike Carruthers]

And so you're right. The reason for a negotiation is to do better than what they would get without an agreement. And the question is, how do you measure that? So let me give you a real world example. My mother had the opportunity to buy the house that she was renting from the person who she was renting it from. And if she did the transaction with him, there would be no real estate agent involved, and therefore they could save a 5% real estate commission, which in this case was around $40,000. So the question is, how much of the 40,000 should my mother get, and how much of it should the seller get? The seller could say, well, if you buy this kind of house from anybody else, you'd end up having to pay 800,000. So I should get the full 40,000, or you can pay 799. And my mother could say in response, if you sell this house to anybody else after the real estate commission, you're only going to get 760. So I'll give you 761, and I'll keep almost all of the 40,000. My view is that the negotiation here is over saving the $40,000 real estate commission. Each of them are equally powerful, equally necessary, and so they should split it 20,000. 20,000.

[Barry Nailbuff]

And so what happened?

[Mike Carruthers]

He agreed to that at the end of the day, essentially, he said, well, it's a hot market, and so therefore, I should be getting more of it. And the answer is, the hot market is what determines the price from which we subtract the 20,000, not how it is that we divide up the 40,000.

[Barry Nailbuff]

So every negotiation has to start somewhere, somehow. And often I think people throw out a number. That's the starting point. That's where we begin our discussion. Is that a good way to start, do you think?

[Mike Carruthers]

I like even more the idea of starting off with the rules for how we'll negotiate to say to the other side, can we agree that our objective is to create a large pie together and split it equally and understand, is this the person who's going to be a jerk and says no? My view is, is I want to engage in a zero sum negotiation where I get as much as possible take advantage of you, and in the process shrink the pie. Or are they say, yes, great, let's figure out how we can make a big pie together that we can split and equally benefit from.

[Barry Nailbuff]

Something that often seems to derail negotiations is emotion, personality, ego, that, you know, wanting to win or. Or feeling the other person is trying to cheat you, and that those emotions get in the way.

[Mike Carruthers]

It's true that a lot of people find emotions to be dominant when they're doing a negotiation. So I'm a little bit like Spock in the sense that I'm trying to bring some logic back into negotiations. And if you can combine Spock logic with Captain Kirk's emotional intelligence, you've really got it made. So I appreciate that you should be empathetic and curious about what the other side's interests and positions are. In fact, one of the things I like people to do is to make the other side's arguments for them. You see, we can't always win on every point, but we can always be understood. And a great way to demonstrate that you understand the other side's perspective is to make their arguments for them.

[Barry Nailbuff]

Why would you want to do that? What would be the benefit to you to make the points for the other side? Seems like you're helping the other side get what they want.

[Mike Carruthers]

What I'm trying to do is figure out what it is that they want, because my goal in negotiation is actually to give them what they want. The reason is if they get what they want, then I can get what it is that I want.

[Barry Nailbuff]

And so when people enter into these kind of discussions, negotiations with other people, what do you think are the things that derail? What do they do wrong? What are the mistakes they make?

[Mike Carruthers]

That's a long list. So one classic mistake is that they try and anchor with a low ball offer or a super high ask, and they try and soften up the other side. But the problem with doing that is that you make yourself untrustworthy. If I'm selling something that's worth a thousand dollars and you offer me 200 for it, are you trying to take advantage of me? Do you not know what this item is worth? If I were to say yes to that deal, what kind of person are you? And then you have to come up, say, from 200 to 600 to 750 to 900, and next thing you know, you've demonstrated that you are just like Gumby. You are totally flexible, that you have no principles in terms of the way in which you're negotiating. And so by starting at a point that's unreasonably far away from an appropriate number, causes all sorts of troubles in negotiation thereafter.

[Barry Nailbuff]

And so how would you do that? Otherwise, if someone says, well, make me an offer here, I'm selling this thousand dollar thing, but without, without mentioning the number, I'm selling this thing, what will you give me? And you know it's worth $1,000, wouldn't you want to try to get it for less?

[Mike Carruthers]

Absolutely. So I'm not saying you start off with $1,000, but I also don't want you to start off with 200. I want you to start off with a number that you can justify. If they ask you how you came up with that number, a good answer isn't, yeah, I tried to pick this low number because I read in a book somewhere that's a good way of softening you up and that I can anchor you with that number. Instead, it's, look, when I see prices on ebay for this, the price is $847. And I know that you might be able to find somebody who will perhaps overpay. They're really desperate for it, but I'm prepared to give you the same price as I could find it on ebay would be one way of doing it. So providing some other possibility, giving them a reference, giving them an argument and a reason for why you're making the.

[Barry Nailbuff]

Number you're making, what else do people do wrong?

[Mike Carruthers]

One thing people tend to do is fight fire with fire. But as Smokey the Bear will tell you, you want to fight fire with water. So that when somebody does something that's escalated that is inappropriate, don't respond the same way. Find a way to put out the fire. In one of my negotiations, I once asked for a price that was way too high. And the person on the other side, the buyer, looks at me, says, great, where do I sign? And then watching my smile grow on my face as I just kidding. If you really think that's what is needed, I'm afraid we don't actually. It's not going to work out. And it was the nicest possible way of letting me know that what I had done was just not really appropriate as opposed to coming back and making a lowball offer in response. So that's one example of how not to respond in kind when somebody makes an ultimatum. Don't make an ultimatum in response. Figure out how to walk them off the ledge. When somebody acts like a jerk, say, look, here are my principles. I'm prepared to split the pie with you. I'm not prepared to do a deal that's unfavorable, that's unfair to me. So if you can give me a principle in response to show me why my argument's wrong, I'm flexible on that account. Or somebody will lie to you, and that doesn't mean that you should be lying in response. So there's a lot of fight fire with fire as opposed to figure out ways to put out the fire.

[Barry Nailbuff]

Do you think it's a good idea when you're negotiating something with someone else, that you keep the discussion strictly on what it is you're negotiating and what the value of this thing is to you and what the value is to them? Or should you bring in other things, like the reasons why you want this? Is that relevant to the conversation? Or is it better to just, you know, stick to what you're talking about and don't elaborate too much.

[Mike Carruthers]

So imagine a person is selling their family business and it's a gas station. And the reason they're selling it is because they want to go on a sailing trip around the world. World. Should they reveal that or not? Well, you could say it's a frivolous reason. And so let's keep it hidden. Let's just say I'm planning to retire and spend more time with my grandkids. But when it comes down to it, there are good reasons and bad reasons for selling. The buyer knows that you got a for sale sign, so they're wondering, why are you selling? Is it that there's a leak in one of the storage tanks and the gas station is about to become a super fun cleanup sign? Is the highway exit ramp about to close? So there will be no more cars coming this way. In fact, the idea that you want to take a trip around the world is a good reason, not a bad reason from the buyer's perspective. And so, yes, go ahead and let them know why it is you are selling the station.

[Barry Nailbuff]

What about though? If I'm selling something, I just did this not long ago. I had a piece of equipment that was no use to me, no value to me. It was a piece of recording equipment that it's obsolete. Nobody wants it except collectors. Collectors collect this type of equipment. Consequently it has value to them. It has virtually no value to me other than I know it's worth something to a collector, but I don't want to tell that person it's worthless to me. I want them to pay me what it's worth to them.

[Mike Carruthers]

That's true. So that's a great case. That's like I said, when the seller values it less than the buyer does, there's a pie and that's the time to do the transaction. So you valued it near zero. The buyer values it at $1,000. Great. Now it turns out if there are lots of buyers and one values it at 800, one values it at 900, and one values it at 1000, then you want to sell it to the thousand dollar person. And I think the right price there is more like 950. Because your alternative is I can sell it to the nine hundred dollar person. And so that's really my fallback. The reason I'm selling it to you is to beat the 900. I can't beat 900 without you. You can't get this value, this extra value without me. And so we have an extra hundred to split and that's why I think it should be 50. 50.

[Barry Nailbuff]

What else do people maybe miss? Because it often seems that people, when they talk about negotiation, what they're talking about or what they're thinking about is money, that it's all about the money. But as you just said a moment ago, you like to think there's more than just money. So what else are people missing? By thinking this is just dollar, they.

[Mike Carruthers]

Miss the opportunity to have creative solutions come into play. So if I go back to my couple selling the gas station, turns out that when they come back from their trip, they don't have a job. And as a result, they needed a big reserve fund to help tide them over until they find work. But the person buying the station thinks they're great managers, and they're always short on good managers. So it would be delighted to have them come back and work at the station as a station manager upon their return. So offer them a job. And now the person really wants to sell the station to you rather than to sell it to somebody else. So figure out what the person really wants and give it to the or. When you're buying a house, how likely is the closing to happen? Is the person getting a mortgage? Is it a mortgage contingency? Is there an inspection contingency? What are you going to do with the furniture that's in the house? Does the buyer want it? Does the seller want it? Is the closing date? Do you want it to be soon, or do you want to delay it to help the person have a little bit time to move? So look for things that can create value that are besides money.

[Barry Nailbuff]

Talk about what happens when you're in the position of you don't know as much as the other guy, that he's more of an expert on whatever it is you're negotiating and you feel kind of stupid. How do you work that to your advantage, if you can?

[Mike Carruthers]

Well, let's try to at least work that not to my disadvantage, because I am in the challenging position. One of the things I like to do there is make what's called a contingent agreement. So imagine the art dealer comes in and sees this painting that I inherited from my father and says, all right, I'll give you $1,000 for it. And I have no idea if this painting is worth 2,000, 10,000, 100,000. And the problem is, it could cost me $2,000 to get it appraised, which could be more than this painting is worth. So what do I do? I could come back and just say $2,000 or $5,000 and pick some arbitrary number which could lose me the deal if it's really only worth 1000. Or perhaps I'll get 2000, but the painting is still worth 50 and I've missed the big opportunity. Instead, I prefer saying things like, here's what I'm prepared to do. I'll sell it to you for 1,000, but any money you make above 10,000, we split evenly. So now if the painting is worth Somewhere between 1 and 10, okay, fine, they can make some money on this. But if this thing is really a hidden masterpiece, now I've protected myself. So if you don't know what something is working worth, make a deal where you get some share of the upside if it turns out to be worth a lot.

[Barry Nailbuff]

And that way you get a piece of the bigger pie. And it's all about splitting the pie. It's really a unique way to look at negotiating. I've never really looked at it this way before. Barry Nailbuff's been my guest. He is an entrepreneur and professor at the Yale School of Management, and his book is called called Split the Pie A Radical New Way to Negotiate. And there's a link to that book in the show notes. Appreciate you being here. Thanks, Barry. Have you ever heard of the Baker Baker Paradox? Basically, it's the result of research that says it's much easier to remember a person whose profession is a baker than it is to remember someone whose name is Baker Baker. Why? Psychologists believe it's because when people hear about a man who works as a baker, it conjures up images and tastes and smells from our past and creates a very vivid impression. On the other hand, the name Baker doesn't mean much. There's nothing about a generic name to latch onto, so people forget it more easily. The lesson here is that when you meet someone, find something visually memorable about them that connects with their name. When you meet Mr. Baker, imagine he is a baker. When you meet Bob, imagine his head bobbing up and down like a fishing bobber on the water. That kind of thing. You get the idea. It sounds silly, but it's very effective if you want to remember names. And that is something you should know as someone who enjoys this podcast. The best thing you can do to support this podcast is is to tell someone else about it who doesn't listen. So it helps us to grow our audience. I'm Mike Carruthers. Thanks for listening today to something you should know. There is a fascinating and unique podcast I'd like you to check out. As I have it's called Only One in the Room. A few years back, Laura Cathcart Robbins attended a writer's retreat where out of 600 attendees, she was the only black woman one. So later she wrote about her experience and the article went viral because people understand what it feels like to be the only one in the room. Only one in the room is for anyone who has ever felt alone in a room full of people. I bet you've had that feeling. Listen and you'll hear guests like Hilary Phelps, sister of Olympian Michael Phelps, sharing her story of her secret addiction. Former Fox News reporter Christine O'Donnell, who was fired after one of her social media posts was taken out of context. Context Only One in the Room was named a top podcast by Reader's Digest, the Manual, and Bustle magazines. Every week, Laura and her co host, Scott Slaughter invite you to join them for an hour and lose yourself in someone's only one story. Check out Only One in the Room wherever you get your podcast. Merry Christmas, everybody. My name is Eric Peterson. I'm here with my good buddy Danny Jordan, and we are the co hosts.

[Steve Wiseman]

Of of the Chris, let me try that again.

[Barry Nailbuff]

I Merry Christmas, everybody. My name is Eric Peterson.

[Steve Wiseman]

I'm here with my good buddy Danny Jordan, and we are the hosts of Christmas Countdown show. We're so thrilled to be bringing the.

[Mike Carruthers]

Merriment to you all this holiday season.

[Barry Nailbuff]

It's gonna be awesome.

[Mike Carruthers]

It's gonna be massively merry.

[Steve Wiseman]

Gigantically jolly, fantastically festive as some people might say.

[Mike Carruthers]

Eric, we are all about alliterations and we are all about Christmas spirit.

[Steve Wiseman]

On Christmas Countdown, we love to count.

[Mike Carruthers]

Down Our top 10 favorite things related.

[Steve Wiseman]

To the holiday season that could be.

[Mike Carruthers]

Food, movies, music, everything that we all love about this massively merry good time. So wherever you get your podcast, make.

[Steve Wiseman]

Sure you click that subscribe button.

[Mike Carruthers]

Eric, are you ready?

[Steve Wiseman]

I am ready, and we hope that you are, too.

[Mike Carruthers]

Merry Christmas, everybody.

[Steve Wiseman]

Let's go.

[Barry Nailbuff]

It should be like, let's go. Ho, ho, ho.

[Steve Wiseman]

Should be.

[Mike Carruthers]

Yeah.