Negotiating with Jake Carp, Co-Founder at Steppen

👋 Meet Jake Carp

Co-founder at Steppen (Acquired)

"I'm Jake, the co-founder of Gen Z health & fitness app Steppen. Steppen helped 400,000+ young teens around the world build lasting healthy habits. We raised $2M+, grew to a team of 12 before being acquired in 2023 by US company Alta. All my learnings have come by simply doing and figuring it out as I go, or as I like to say - 'by moving from one setback to the next with enthusiasm'.  I'm 23 years old and have made thousands of mistakes on my journey. But these mistakes have generated some of the greatest learning opportunities for me. Please take my advice with a grain of salt, as it's developed from my short professional experience and I know more than anyone that I still have so much to learn!"

What's your career story so far? 

Jake Carp: So career story. When I was 18 I finished school. I started working as a financial consultant of sorts at a startup called Luna - helping other startups with their financials and accounting.

I had no skills really. I started working there for a little bit, which was awesome. I learned a few skills like  how to use Xero, do my accounting, tax, that sort of stuff. Then from there, I started uni, started studying commerce and I got a job as an equity analyst at an investment fund for a little bit.

And then it kind of got to the point where I was building everything towards going into investment banking. That was the plan - my marks, what I was doing outside of uni, and work wise. And then, a girl who I went to school with, Cara, who ended up being my co-founder, came to me and was like, I've got this idea for this app and this is what it is.

We for a few coffees and I kind of said, "Screw this. I'm going all in". I turned away the investment banking offer. I was meant to be starting an internship at Goldman Sachs but I said, no, I'm not going to do that. I'm going to go all in on the startup. And then we kind of started working on that together.

We then brought on our third co-founder, Dave. Raised a bit of money, scaled the products, went to market, grew to a few hundred thousand users and raised a bit more money. And then finally exited to a company called Alta, which is a US based company in the combat sports tech space.

So kind of a really condensed three years from finishing school into exiting.

What types of negotiations have you tackled in your career? 

Jake Carp: Yeah, so it's the sort of things you don't think of specifically as negotiations when you're running a business, but they clearly are, so raising funds is the first one.

Negotiating terms - as a 21 or 20 year old when we were raising our first round, saying to the investors "Hey, this is these are the terms of what we're raising at" and they're looking at us being like, "oh that doesn't actually make any sense". So, firstly understanding what you're negotiating and then being able to find a happy medium where everyone's happy. We raised our first round on a safe note so that made it quite easy for us to kick the can down the road for when the real negotiations came and then second round was an equity round which we had to negotiate on valuation and on the different terms of the agreement.

At the time, I thought none of that really mattered. Looking down the track, that really matters, especially when you're selling the company. So would have done things slightly differently there, but that was some great learnings.

Employee agreements are another one. Tying to convince people who are the great talent to come.

Even our own co-founder agreements, renegotiating equity between three of us to distribute things fairly, were kind of negotiations we had and then probably like the last thing - it's quite minor, but there's always a bit of an art to how you negotiate with your SaaS tool salespeople to try and get the best deals. I think we did that quite well along the journey.

What do you think makes a good negotiator?

Jake Carp: I think there's the stereotypical negotiator - what comes to mind here is probably the inner banker talking to me - It's like someone who's kind of slimy and you know, you think you're being screwed over by.

What I've realised is 

you just never want an outcome where one party feels like they've beaten the other;

you obviously want to understand what you want and what the other party is looking to get and see if you can find a way to achieve both outcomes in a happy medium. I think if you can negotiate in that way, being upfront and honest and transparent the whole way through.

It's always a bit awkward negotiating salaries and ESOP with employees and if you go too hard one way or another, they're still working with you. Or the same with investors, they're there to back you. They're not trying to hurt your business. So I think it's just about being fair and understanding and appreciating both sides and then coming to a happy compromise.

Lucy Wark: Absolutely. It's so much more about respecting and understanding the interests of both parties than it is about winning necessarily. 

Jake Carp: Yeah, look, there's always a strategic element. You've got to be quite strategic when negotiating. You know, there's always more to give on both sides, so understanding what you're worth and what your value is, but I'm a big believer in merit, so you get what you deserve well, I hope you should get what you deserve in negotiations, and if you don't, you know, you should fight for that, so that's where your negotiations can break down as well, and that's happened in the past but if it does, and you're fighting for what you believe you should get or deserve to get, then I think, you know, you can't be at fault.

What's your style when you're negotiating?

Jake Carp: I think the one thing that's evolved the most for me is probably going from talking a lot to listening. So I really like to spend the first period of time really listening, letting the other parties speak as much as possible to try and understand and read between the lines around what they're trying to achieve, what do they want from this. And then evaluate, okay, well how do I want to approach the next phase of this. So definitely listening more. That's been an evolution in my negotiation style, and this is very natural, it's not like I'm thinking too much about this, it just kind of evolves over trial and error and what's worked. Then I think just being super honest. I think being transparent and upfront really allows you to get all the data points that matter and then make an informed decision.

And sometimes if you're holding your cards too close, it's hard to get that and you kind of get surprised on the other end.

Lucy Wark: What you're saying about listening there and being honest, I think those resonate a lot with me, having watched a lot of people train as negotiators.

One thing that is a really common early fear is that I need to dominate or control everything about the negotiation, because if I stop doing that, I allow the other party time to speak and have to listen to their demands, or if I talk too openly about what's important to me, that will be used against me, and I think there's actually a really useful kind of evolution that can happen there where you start to understand that nothing is set in stone, but you can get a lot more information and trust and win wins when you do that.

How do you prepare for a negotiation?

Jake Carp: I think like a lot of due diligence on the people who you'll be speaking, the parties involved. I think it's also super important to come in very clear around what your willing to give up and even three levels of that as far as the scale goes and also what you're hoping to achieve.

And then level around. How high, medium, low that could be and if you've got that in mind you are really prepared for what you can offer, what you can't offer, what you're not willing to move on, what you're willing to, and what you're wanting to get out of the whole situation. So I think

being very prepared from a personal perspective around who you're talking to and then what you're willing to accept is really important.

There's probably more detail you can do around scenario analysis and get really complex with it all. But I think that's never truly needed unless it's a really complex situation. I think it's being prepared to also walk away if necessary. Most people, they'll push hard, but not prepared to walk away if that's the outcome or prepared for the other party to walk away.

So whatever you offer, you have to be prepared that it won't go as planned. 

How do you react to surprises in a negotiation? 

Jake Carp: I think the first I think is just no knee jerk reactions and I think that's something I've been guilty of without a doubt. Something doesn't go right and you jump to try and fix it and by trying to jump and fix, you're kind of suffocated. Sometimes you just have to give things time, don't rush it, really assess what are the options as a result, speak to the key stakeholders and advisors and really understand. That's probably just my personality type is a little bit, you know, I want to solve all the problems as fast as I can, I want things to move really quickly.

So I think that would probably be

my number one advice there is just don't rush it and give it time. 

Lucy Wark: Yeah, I really agree with that as well. I think like a lot of people have this idea in their head of the strongest negotiators being like the most confident and actually in my experience, the strongest negotiators are the people who can manage discomfort the best and can withstand discomfort and expand their ability for dealing with discomfort without being reactive.

What are some common negotiation mistakes that you've seen in action?

Jake Carp: I think the biggest would be overvaluing your own assets. Whatever that may be. So everyone believes and you see this in the world all around from stocks to football clubs trading players, everyone overvalues what they've got and doesn't really see the bigger picture.

So I think that would be something to try take a subjective view on what you've got and put yourself in the other party's shoes and be like, Hey, what are they looking at here?

Contradicting that point is then if you are confident in what you are and what you've got, then fight for what it's worth.

So be wary of overvaluing your own assets blindly, but if you are confident, then fight for it

Another mistake is not fighting. I think getting pushed into something that's not really where you want to go and kind of just conforming to that. I think people who don't like confrontation or maybe feel like they're negotiating against a more dominate party, would very easily just be happy to kind of accept the way things are, which I don't think should ever be the case.

What advice would you give to people who are learning to negotiate? 

Jake Carp: I think

be respectful, be honest and quite clear around what you want to achieve.

I would still say, be clever, really like be a bit strategic about it as well. And appreciate that there's a lot of nuance to it. So, every situation is going to be different and you can't treat them the same. Sometimes a style of negotiation does require a lot of transparency. I think those conversations would be with employees or future employees - being really upfront around salary negotiations.

Like I just don't have the money, the budget for what they're asking, you gotta be upfront about that. But, maybe at times when you're negotiating with a buyer, there are things that you might not want to be so upfront with. So I think it's. Understand the nuance to it, but still be quite respectful and honest and clever.

Any advice for negotiating for yourself vs for your organisation?

Jake Carp: There's naturally going to be conflicts of interest and issues that will arise, but I think if you truly understand from a business perspective, your case, or I mean, all your stakeholders' expectations, what's their best interest and you are fighting for that then you can't go wrong from a business perspective.

And then from a personal perspective, it's up to you. What do you want in this situation? I think at times if you're fighting for the business, but you as a person, for example as a founder, might have a stake in the business, you know, there is an area for potential conflicts. But I think if you're doing what's best for the business and the stakeholders, I think then no one can fault you if you don't get the best outcome, but you had that in mind.

Lucy Wark: Yeah, I find it very helpful as a founder to separate myself from the office. It's being like, my responsibility here is to the business and I will even like say as much as that in conversations because I think it helps diffuse and like depersonalise a bit.

Are there any other resources that you'd recommend? 

Jake Carp: So far, I've never come across any resources that have helped me. I wrote down experience. That's the best resource. Like you're gonna learn by stuffing things up and by being in the situation.

I can't think of anything that's like guided me... advisors. I would always call on my advisors and mentors around me. Even my investors for like, you know, the big decisions, I think getting those perspectives and understanding them,

not necessarily taking every piece of advice, but understanding where they're coming from and taking that on board has been super valuable.

So you use the people around you and just kind of see how you go in those different situations. 

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This interview transcript has been edited for length and clarity.