Over a couple of posts, I posed the question: is your partner worth $5 mill.?
Through some suspect mathematics, I ‘proved’ that partners aren’t worth the price you have to pay (in lost equity) UNLESS they are the ones with The Big Idea!
I bring this up, because a reader (who shall remain nameless, as business plans are currently in motion!) told me:
One of my clients-turned-friends is doing the coding [for my new site]. This was an idea we’ve tossed back and forth for a couple years… he was one of my first clients. [I worked on his previous] site for 2 years or so, then helped him find a buyer who paid a couple MILLION for the site. I got a $5,000 bonus… then we worked on [another site] for a year or two. I helped him sell that, but for something in the hundreds of thousands rather than a couple million but he gave no bonus! I was a little peeved! I mean, sure, the bonus wasn’t a requirement but … you know, it was sorta expected. I couldn’t very well say – where’s my bonus? A couple weeks later he asked if I was interested in collaborating on the project we’ve been tossing back and forth the ideas for, we worked out some stuff and he’s outlaid all the costs and most of the time to get it going. [W]e’ll barely see 15% of profits [each] when all is said and done …
[AJC: I had to ‘square bracket’ a bit to protect the innocent … but, you should be able to get the picture?]
I told this reader that this guy has a track record, and 15% of something that costs our reader nothing could turn out to be something worth while! I said: “I guess that’s his bonus ‘gift’ to you ….”
This is the real value of a partner – besides providing the ‘Big Idea’ – if they are the true entrepreneur and you are more the ‘worker bee’ type, then a partnership MAY be the only way that you’ll get a business up and going …
… you see, this guy – and, this is true of many successful entrepreneurs – can show a track record of:
(a) spotting winners i.e. good potential business opportunities, and
(b) spotting winners i.e. good potential people who can help him make them happen.
The ability to spot winners is all that it can take … BUT, that’s a rare skill that’s very hard to bottle 😉
I have to say…after reading this post, this reader seems to be working with a real cheapskate. It seems to me that someone who does the majority of the work, including finding a potential buyer for the site deserves a little more than less than 1% of the purchase price of the site.
I do agree that this partner would be worthwhile, he does seem to have a very good enterpreneurial track record. There are many, many people with so-called “big ideas”, but very few have a track record of being successful with them.
@ networthcanada.org [is that really your name … phew! … or, is it a website?! ;)]
I agree, that’s why I gave my accountant a 5% of the sale price ‘bonus’, just for helping me in the early days … of course, he was also well-paid ‘for doing his job”, the usual argument for NOT paying a bonus. But, I’m with you!
I also love this comment: “There are many, many people with so-called “big ideas”, but very few have a track record of being successful with them.” Thanks!
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