Editor’s Note: Thomas Talhelm is a professor of behavioral science at University of Chicago’s Booth School of Business. His company Smart Air Filters is democratizing clean air by providing cheap, effective air purifiers for homes and offices. As a professor, he researches how southern China’s history of rice farming gave it a different culture from the wheat-growing north. His work has been featured on National Geographic, as well as The Economist. He also teaches a course on negotiation strategy.
In this interview, he shares how he got started battling the air pollution problem in China at a micro level, as well as some tips on handling negotiations. To learn more about Smart Air Filters, go to their website here (China) or here. (India)
How he got the idea
A lot of people have the goal of starting a business. I didn’t. I didn’t care about business – I just wanted to solve a problem. The business aspect came after because I realized it was necessary so that I could help more people.
I had lived in China for several years and was there in 2013 on a Fulbright scholarship doing psychology research. And of course, the air pollution was bad. We had many “Airpocalypses”, where the Air Quality Index was above 500. Just to give you an idea of what that means, the World Health Organization’s annual limit is 10 micrograms. In Beijing, it was over 500 micrograms. I was coughing on and off for weeks, and had a recurring cold. Of course I was worried about the air quality outside, but then I started thinking about INSIDE. I mean, if the AQI is 800 outside and indoor air quality was about half of what it is outdoors, that’s still a dangerous 400 inside. Naturally, I was concerned about my health.
I Googled it and realized that an air purifier is just a fan and a filter
I did some Googling, and my first thought was: are air purifiers BS? So I bought a particle counter for a couple hundred bucks and started to run some tests. Now, a $1000 air purifier wouldn’t have been a reasonable purchase for me at the time given my budget, so I had to get creative. Once again, I Googled it and realized that an air purifier is just a fan and a filter. I then bought a HEPA filter from Taobao (the ebay of China) and stuck it on an old fan I had lying around.
How he got his first customers, and grew organically
I published everything online: how I made the purifier, the particle counter I used, the test data, everything. Long story short, I ended up holding a workshop on air quality – so I bought 20 fans and velcro straps and filters, with no idea whether or not people would show up.
The event sold out. So I kept doing more workshops and eventually the media showed up, and I realized people care about this. People want to take measures against the air quality problem. I kept on getting questions about how to build these purifiers. So I thought, what if I just ship people the purifier, already built? My original intention was to manufacture a low-cost purifier, but that ended up taking a lot longer than I thought. I wanted to work on something more immediately.
I always feed the profit back into the company, so I can help more people.
As easy as it was to DIY it, a lot of people didn’t have the time or the patience to build it, so I shipped pre-made DIYs to people. I took these basic air purifiers – remember, just a fan and a filter – and started selling them on Taobao. There was no advertising involved – all my sales were through word of mouth. I framed the business like a social enterprise: I always feed the profit back into the company, so I can help more people. At this point, Smart Air has held over 200 workshops, we have 6 full-time employees, and offices in Beijing and Delhi. We even have a shipping company that warehouses and ships them.
Common mistakes people make when it comes to negotiations, and what to do instead
Mistake 1: People aren’t aggressive enough when they’re negotiating.
Most people go in and make an offer that they think is a reasonable final offer. In reality, you should make a more aggressive offer (one that leaves you better off), and then re-negotiate from there. That’s because the negotiating game is going to be played no matter what your initial offer is. If you start with a reasonable offer, you’ll end up having to concede further from there.
What to do instead: Start with a very aggressive offer.
Mistake 2: People think that making the first move is bad.
I poll my students every year, and the majority of my MBA students think you should let the other person make the first offer. People don’t like to make the first offer, but studies show that people who make the first offer tend to get better deals.
What to do instead: Make the first move.
A few tips on negotiating better using the above strategies:
A lot of people don’t want to make an aggressive offer because they’re afraid of offending the other side – my experience has been that people are overestimating the offense. Also, you can always pull back and make a more reasonable offer if they outright refuse or ignore you.
If you can make the first move in a negotiation with an aggressive but educated offer, you’ll usually be better off making the first offer.
The second thing is, you need to do your homework and justify the offer you’re making – research and compare current prices, the costs & benefits, pros & cons of the deal. I’m not encouraging you to make the first move if you have no idea what you’re talking about. But if you can make the first move in a negotiation with an aggressive but educated offer, you’ll usually be better off making the first offer.