Lessons in Information Asymmetry When I first moved to San Francisco, I didn’t have a car. Who needs a car in San Francisco? And the parking is like $350 per month so that is a hard no. But sadly because I had a , I had to go to Palo Alto, Mountain View, Oakland for meetings and events. That meant that I to rent a car or waste hours on public transportation and Uber/Lyft. Startup had As a Startup that never raised money from a VC, I knew we had to rent a car but our budget was best case $1200 per month. That’s $66 per day, including insurance. Welcome to Information Asymmetry. Information asymmetry is a fancy word of saying “I know something that you don’t”. You can use that when you , with customers, with sales people and you girlfriend/wife when it is time to do the dishes. negotiate for a job As the first step, we need to identify our . informational advantage The informational advantage I had was the length of the rent. 30 days is not usual. I decided to go with it. When you want to rent a car, the typical conversation goes like this: “Hello, I would like a car from that date to that date” “Oh, I see, we have this model and that model for $12 more” “I am looking for the cheaper option” “Got it, that is $100 per day plus insurance, plus taxes for 3 days”. Using information asymmetry: “Hello, I would like a car for ” three days “Oh, I see, we have this model and that model for $4 more” “Great, what is the price for the cheaper model?” “That will be $100 per day plus insurance, plus taxes for ”. three days “So it is roughly $100 per day, right?” “That is correct” “Can we do something better if ?” I wanted the car for a week “We could do $95 if it is for week” “Amazing! Thank you a lot. You know what, if we can do something better in terms of pricing, as I don’t want to bring the car back again”. I could go for three weeks “I see. The best I can do if you go for a whole month is $90”. “Thank you! That is perfect” The way we used information asymmetry was by in one go but in a style. not revealing all the information we had dripping Can it work when you negotiate your salary? Of course it can! You need to gather as much information as you can before going for an interview. That means knowing: The average salary for that position The average salary for that position in that company Other possible perks (extra stocks, more vacation days) Without this information, we are in an informational disadvantage as we have no idea whether the salary that we want is for that company. Yes, an engineer can make $350k in a public tech company but in a small Startup that is doubtful. even feasible During my whole professional career, I managed to get than any other of my peers in terms of salary, bonuses, stocks vacation days. way more and Are there any ways that you have used information asymmetry? Leave them in the comments below! Coming up next: Information Asymmetry to negotiate a raise If you liked what you’ve read, you should subscribe and hear many more stories! Previously published at https://jonv.substack.com/p/win-in-every-negotiation

Lyft

Uber

My money is managed by a Machine and I spend most of my time looking how to help Entrepreneurs

How to Win in Every Negotiation

Too Long; Didn't Read

People Mentioned

Companies Mentioned

Jon V

About Author

TOPICS

THIS ARTICLE WAS FEATURED IN...