Partnerships. Strategic Alliances. Joint ventures. Investors. Vendor-Client relationships.

Teaming up with other humans is undoubtedly the fastest way to create extraordinary business success. Good partnerships are greater than the sum of their parts.

No one is an island. No entrepreneur succeeds alone.  

Whenever and wherever you find yourself with a terrific, exciting opportunity to jump into something with another human, you also expose yourself to huge risk. 

As The Shrink for Entrepreneurs, about 50% of conversations I have with clients center around the stress, chaos and heartache of business partnerships gone awry.

Here’s a list of seven questions all my clients wish they asked their partners – and themselves – before they jumped into business-bed together. 

Ask yourself these questions. Ask your biz partner. 

Before it’s too late. 

1. What does success look like?

When you’ve got a sizzling hot new idea and you’re drunk on the excitement of it, it’s easy to look a potential partner in the eye and say “Do you want to come with me and change the world?

Steve Jobs said precisely this to John Sculley, in Central Park, when he asked him to quit his role as Pepsi’s CEO and join Apple.

It’s tempting to want to emulate these kind of grand gestures. But even though John said yes… he eventually contentiously left Apple. The partnership ultimately didn’t work out.

It’s staggering how many entrepreneurs leap into bed together without articulating what success will actually look like. If you’re going to work together, you need to understand what both of you consider a win to actually be.

Are you aiming for an exit? If so, when? Are you taking your idea all the way? And how far is that? Or, do you see yourself as someone who starts things and ideally hands them off so you can jump into something new?

How big are you willing to go? What size of vision are you willing to keep showing up and working toward??

Ideally, these are questions you want to be confronted with. Hopefully your partnership goes so well that you have to answer them.

You can avoid a lot of heartache by clearly defining success, together, before you get started. 

2. What does failure look like?

I’ve seen so many founders essentially sitting in a slowly sinking ship together, each refusing to reach for the life raft because they don’t want to let the other person down. Or – even worse – because they each incorrectly believe the other person in the partnership is more optimistic about turning things around than they are.

People don’t like to articulate their personal definition of failure in when they start a new project or business. It feels like a bummer to do so. But also, they’re hiding: If and when they fail, they won’t notice that they failed. Not defining failure means it won’t hurt so bad if it happens.

The danger of this is that – as we all know – most business ideas fail. The problem is, they rarely do so catastrophically in ways it’s easy to notice. Instead, they putter along in a slowly declining direction.

When entrepreneurs fail to define what a failure is, they fail to draw a line in the sand that lets them say “It didn’t work out”. They fail to define when it’s okay to free themselves from a bad idea and a bad partnership.

When you kick off a new venture with a partner-in-crime, sit down and do the uncomfortable work of agreeing on (and documenting!!!) your point-of-no-return cut off.

I call it a new venture’s – or project’s – “Minimum Viable Outcome”. Know what yours is. Ask your partner for theirs. Give your MVO a specific timeline and a specific target.

Ask yourself and your partner: “What is the absolute minimum X month result – be it sales, or some other KPI – that would be validating enough to keep us interested and committed to this opportunity?” 

Agree, here and now, that if that timeline (of say, six months) plays out and you come in UNDER that number… that you’ll both call it a tragedy and move on with your lives.

Be real about the number you set: If hitting 80% of your MVO target feels like it’d still be enough to make you want to keep trying… then you didn’t define the real MVO. Don’t bullshit yourself about what is and isn’t a failure.

3. How will you feel about sustaining the partnership if things just go “okay-ish”?

In my experience, most joint ventures (and business projects in general) are not wild overnight successes. Nor do they turn out as abject, disastrous failures.

They go okay.

It’s never as fast as you think. It’s never as easy as you hope. It’s also never as difficult and high risk as you worry about, late at night.

Most things go okay-ish.

Are you ready for okay-ish?

Will sustaining the partnership make sense – by investing effort, time and even money – in the event that it produces moderate, mediocre results?

Preparing for success and failure is smart. Being ready for “good enough” is true wisdom. 

4. When and how are you going to untangle your partnership and part ways?

It’s essential that you ask about success, failure and the in-between. Because at some point, the partnership will come to an end.

Less than 1% of business partnerships last “until death do us part”. When you’re enamored with an exciting idea, the future looks peachy.

When you’re “in love” with someone you believe to be your ideal partner, it’s easy to think you’ll build an empire and lifelong legacy together. The reality is, founders – of even the world’s most successful startups – usually see their founding team re-shuffle within 5-10 years.

The world’s greatest rock bands always experience “creative differences”. Your idea sounds great, but five years is also a really long time. Paradoxically, five years will also speed by in a flash.

Make sure you’re proactively planning a strategy that can fairly (and quickly) untangle your affairs. Make sure you know how to free both parties from the partnership.

Some of the worst partnership troubles arise when both parties want out of a venture, but the financial resources to fairly buy-out or compensate one or both parties aren’t yet available.

Don’t let your partnership become a prison. Always plan for exits. Not just the good ones. Know how you’ll both get out, in both wildly successful and disastrous scenarios.

It’s likely that reality will go okay-ish – as we said –  so be ready for that too.

5. How much energy and work are you both willing to put in?

Nothing… NOTHING… creates more conflict than two business partners who fail to think about this question before they commit.

Entrepreneurs have very different personal sets of values that drive them in business.

Don’t make the mistake of assuming yours are the same as everyone else’s. Or even the same as one specific person (your partner) you think you know so well.

Are you building this thing to create a legacy? To scale and dent the universe? Or are you doing it to create freedom and lifestyle design for yourself?

The tension between “freedom” and “impact” – doing enough to escape vs sacrificing everything for a legacy bigger than yourself – is just the tip of this question.

It’s complicated, because most entrepreneurs want a bit of both. The question becomes: How much impact before we take a break? How much freedom is too much?

I’ve seen so many successful partnerships tragically fall apart because one entrepreneur wants to kick back and enjoy the success, while the other still wants to push ahead for growth.

It can happen because personal definitions of success itself are different: What I consider a solid annual income living in New York City (with NYC bills to pay) is wildly bigger than what my partner in the midwest might aspire to.

It can also happen because our internal drivers and values are different: We might agree that we’re aiming for X, after which we kick back by the pool as nomadic and free entrepreneurs. What if you get bored of that life before I do?

What if you want to take the asset we’ve built together – that in your opinion is criminally under optimized and still filled with huge growth potential – and grow it beyond what I ever wanted? Do I still get paid for your efforts, even though all I want is a four hour work week and cocktails on the beach?  

6. How often should you both question the “big picture”? 

Founders have to wear a lot of hats. Especially early on, they must do a bit of everything and get good at switching between roles.

The biggest, toughest hat-switch to make is the switch between thinking and doing. The cerebral work of coming up with smart ideas is super important, because it sets the overall direction and vision of any early-stage venture. However, the grit-and-hustle work of relentless action on those ideas is equally critical.

Execution is everything.

… but so are good ideas.

Spending all your time in your creative bat cave – thinking up ideas but never acting –  makes you a clueless dreamer. Likewise, an over zealous focus on execution can result in working on the wrong ideas, missing opportunities or not seeing the forest for the trees.

It’s not just as simple as doing a bit of both, either. Finding the right oscillation between strategy and execution is a delicate art.

Entrepreneurs drawn to strategic thinking often struggle to fully follow-through on their ideas: As soon as a project gets tough, they prematurely retreat to the comfort of the white board to re-think everything.

Execution rockstars – who tend to be hustle, sales or biz-dev superstars – can make any idea work through sheer force of will, but often end up keeping a bad business idea on life support far too long.

Sorting out your own individual balance between strategy and execution is a critical step in your entrepreneurial evolution. Matching that balance to your business partner exponentially multiples the challenge.

If you meet monthly to set out KPIs or targets, you have to be confident your partner is going to put her head down and execute. You have to both come up for air – to ask strategic should-we/shouldn’t-we questions – at the same time.

If you don’t ask yourself and your partner this question, you’ll forever be in different head-space: You’re trying to get things done, they’re wondering if you should both pivot. You’re re-thinking the narrative you present to customers/investors, they’re out there selling it.

Good partnerships thrive because of pre-framed, pre-decided structure. Set a schedule of top-level, bird’s-eye-view check ins. Then stick to it. Once a month, once a quarter… even once a week. However often you think it’s right for your business to question everything doesn’t really matter, so long as you’re both on the same page.

There’s nothing that breeds resentment faster than a business partner who burns days gazing into the “existential strategy void” while you’re making shit happen.

Make sure you have an agreement in place that when you’re not working together to ask the big questions, you’re both getting busy executing on the plan you set in the last strategy meeting.

7. How could change in your personal lives change your answers to these questions?

The questions we’ve asked so far have presupposed that your life maintains an equilibrium. In other words, they’ll serve you and your partner well, assuming nothing major changes for you. And assuming nothing major changes what you value.

The tricky thing about partnerships, especially successful and long term ones – and the most successful partnerships should last a long time – is that people change.

Over a long enough time period, the probably of massive personal-life changes happening… rapidly approaches 100%.

Think about the things that could occur in someones life that could shake them to their core, and cause them to – by necessity – reevaluate their partnership with you:

  • The birth of a child
  • The death of a loved one
  • Getting married
  • Getting divorced
  • Relocating
  • Mental illness
  • Chronic physical illness
  • Spiritual awakening

I’m not even kidding about that last one.

I’ve witnessed entrepreneurial partnerships in which one participant has had a bonafide (if subjective) spiritual experience, causing them to totally reorganize their values, to withdraw from the mission of entrepreneurial flourishing and to essentially live a monastic life.

This was kinda a curveball for their business partner to deal with.

The thing about the above list – by no means complete – is that each of these events has the power to re-write the motivational values humans are driven by, at the deepest levels of their psyche.

If your partner goes through one of these external, random, chaotic events… chances are their answers to the fundamental questions that govern your partnership will change. Sometimes they’ll change overnight.

The definition of success. Of failure. What is worth sustaining versus pulling the plug on. How to part ways. Questioning the high level strategy.

… it’s easy to see how any one external life event would change everything.

And it’s worth mentioning, this may not happen to your partner. It might happen to you.

If you find yourself sitting down to collaborate with someone on a vision that could carry you both years into the future, you need to have this discussion. You need to understand that what you’re about to embark on is closer to a “business marriage” than a simple project collaboration.

Nothing is “…not personal, only business”. Every entrepreneur operates – at their best and at their worst – as a central node in a complex web of social relationships.

Our personal lives matter. Your sleep last night, your spouse’s office drama, that conversation you had with your mom, your mortgage, your kid’s report card… it’s all part of the web. Your business isn’t separate from your life, it’s an organic plant-like thing that grows out of your life.

The same is true for your business partner.

The ultimate take-away from this article should be that you need to have these conversations, and that finally you need to assume that tremendous changes WILL happen. Changes will even happen to what you think is important or what you think is your “mission”.

And these changes aren’t your fault. They just… are.

The truth is that your partnership is made up of humans. And as humans, you cannot always escape chaos in your lives. Life is messy. You are messy.

Partnerships that fail to accept – and plan for – these truths are fragile. They crack under the first sign of all-too-human chaos.

By answering these questions and by preparing for your answers to inevitably change in ways you can’t imagine, your partnership gains the supple strength of flexibility.

You should have clear agreements, incentives that align and accountability. You should have you and your partner pinned down, on paper, as engines of value-creation within the business you’ve partner on.

And, you should also establish a mutual sense of each other’s humanity. Of the messy, wonderful vital life behind the suit-and-tie.

It’s your business partner’s humanity, after all, that makes them worth partnering with. 

  1. Hire the very best people 
  2. Make sure the company doesn’t run out of money 
  3. Articulate the vision and lead it 

The key word is “only”. This list is important because of everything that is not on it.

A startup founder should only spend their time doing these three things. 

Of course, this is ridiculously idealistic advice. 

In the real (messy) world, most founders start out doing almost everything else too. They have to. The definition of scrappiness is doing whatever it takes to move ahead. 

So non-technical founders will twiddle with code. They’ll try their hand at design. They’ll create marketing campaigns – even though they’ve never done it before. This is all totally okay. 

As soon as a founder raises serious money though, it’s time to become idealistic about the three golden rules. 

Venture capital exists to be deployed, to hire people who’re better at things than the founder. In fact, to hire the people who’re the best in the world… if you can get them. 

(And you need to get them!)

The founder’s job is to persuade and seduce that top talent – to sell them on the vision. Once they’re on board, you must lead those people in the right direction. That’s the vision part. Your one-on-ones, internal memos and town hall meetings are all tactics to do this. 

While all this is going on, you also have to manage your financial model, your burn rate and continue wooing investors in preparation for your next capital raise… the urgency of which has a habit of sneaking up on you. Making sure the company doesn’t run out of money is a daily to-do. 

Hiring. Money. Vision. 

You could write a book on each of the three rules. Many have.

And again, it’s what is not on this list that matters. 

The key is to remember that – if you’re building a venture-backed company – these three things aren’t just your north star. They’re you’re everything.

Any decision to deviate from these rules means you’re inserting yourself as a cog into the machine you’re trying to build. 

And that might be okay, but know that there is always a price. Usually it’s an execution slow-down in your race to get to market. 

Worth noting: These principles do not apply if you’re NOT running a venture-backed startup. 

So if you’re bootstrapping then you’re simply not in the business of using other people’s money to race for market share. You can and should go slower, get your hands dirtier and gently scale. 

After years of bootstrapping, you’ll wake up on a Saturday morning and realize you just spent your whole week doing just those three things. That’s when you know you’ve made it. You’re not bootstrapping anymore. 

Truly great businesses never fail to adhere to the simple principle that Tim O’Reilly coined:

Create more value than you capture.

The obvious examples are institutional: 

Microsoft changed the world with Gates’ vision to have “… a computer in every home”. The actual revenue the company captured from selling Windows licenses seems like a drop in an ocean compared to the value Microsoft’s customers created with the Windows product. 

Think about the businesses built. The efficiencies gained. The creativity that sprung forth from the personal computing revolution. 

Likewise, Apple put a computer in every pocket and nothing was ever the same again. 

The iPhone is consistently the most expensive smartphone out there, but a few hundred bucks every few years is a small price we pay for the benefit. Just think of any business that used ubiquitous mobile computing as a launch pad. 

(Think of all the money made by drivers, driving for ride-share apps, that couldn’t have existed without Steve Jobs walking on to that stage with the original iPhone.)

What Apple and Microsoft collect in revenue from these products is just a drop compared to the ocean of economic value the products ultimately create. 

For entrepreneurs, “Create more value than you capture” can serve as a powerful north star pointing to success.

Think of it as a guiding philosophy for optimal decision making in business. 

Example time…

Let’s say you’re pitching a B2B consulting contract. It’s valuable to think about your pricing as a fraction of the value that’ll be created by the impact your consulting has. 

Leaving enough “meat on the bone for the next guy” when setting fee structures is important. Playing the long game this way means that you yourself might be the next guy. When your customer experiences a 10x ROI from your services, they’re gonna be much more likely to re-hire you. 

Creating more value than you capture goes deeper than just pricing your services though. 

The aphorism to “sell pickaxes to the miners” is saying the same thing: When your product or service empowers others to succeed at mining – to create MORE value – you’re following the principle. 

Every technology revolution in history is a revolution precisely because of how much value it creates. The wheel. Steam power. Electricity. The telephone. These things all became tools that empowered other people to do incalculably significant things. 

Even if you’re not some patent-owning inventor-entrepreneur, you can create significantly more value than you capture…

The secret is to have a vision for your customer’s success, not just a vision for your own goals.

If you’re dedicated to creating more value than you capture, every person your business touches must be transformed. They must level up, in the direction they desire. 

Companies like Active Campaign (no affiliation but I use their stuff) are determined to turn their customers into marketing extraordinaries. To that effect, they don’t just sell software: They run workshops and host conferences. They teach. They want their customers to succeed because they know that when their customer is winning, the few hundred dollars a month for marketing automation is an afterthought. It’s a drop in the ocean of value. 

Startups focus on network effect, building market places, solving discoverability problems in the gig economy. The best startups all create economies of massively more value than the business at the center.
 
Dribbble.com (also no affiliation) helps some of the world’s best designers find the people who need their help. Those designers make magic (and money!) with the clients that discover them. Instead of clipping the ticket, instead of trying to insert a layer of inefficiency and charges between the customers and the vendors who serve them, Dribbble just charges a nominal monthly fee. It’s a total no brainer.  

Creating more value than you capture is a philosophy of generosity.

The principle holds true in the B2C world too. Most gyms just focus on optimizing for maximum fees, from a customer base who desperately don’t want to be there (and conveniently don’t show up). Meanwhile CrossFit builds a community of people dedicated to transformation, to showing up, to leaning in and learning. It really works, and people’s lives are changed – they become a better version of themselves – and the price of entry seems like nothing. 

Make Generosity your north star.

The opposite is a race to the bottom. It’s attempting to charge the biggest brokering fee you can get away with, for example.

(I once had an acquaintance who asked for a commission for referring his friend to me for therapy.)

The opposite of the “create more value than you capture” rule… is trying to inject as much inefficiency into transactions as you possibly can. The world of affiliate, referral marketing (more often than not) seeks to get between consumers and what they’re looking for, then charge for sending them where they wanted to go in the first place. And the customer ends up paying more. If any value is created, the amount is too close to what’s captured.

What you can do next:

Entrepreneurs have the opportunity to wake up to the idea that helping customers succeed massively – empowering them to go out and creating their own value – way beyond what they thought was possible… is the long term path to building extraordinary, universe-denting businesses. 

No matter what business model you’re building, it’s worth brainstorming what it’d look like – what it would require of you – to create ten times (or a hundred times!) more value for your customers than what they pay for.

Pursuing this philosophy has an uncanny way of making entrepreneurs filthy rich. It’s no accident that the companies that create vastly more value than they capture are the most prosperous on the planet. 

Brownian Motion – and seriously, bear with me here – is the theory of molecular science that explains why particles in a gas will distribute themselves to evenly fill any container they occupy. 

These are the fancy science words for describing complex probabilistic math that’s baked into the laws of physics… which makes gases in a container spread out as much as they can, until the gas is distributed as diffusely as possible throughout the container. 

(I told you to bear with me!)

This is a crucial METAPHOR for entrepreneurial productivity.

When you inflate a balloon with helium, the particles you put in the balloon don’t hang out in one corner of it. They spread out as much as possible, filling the balloon evenly. When you smoke a cigar in an office – like an old timey entrepreneur fat cat – the smoke wisps and curls… but eventually spreads out to evenly fill the room. 

This law of physics basically states that individual particles in a gas will always spread out, endlessly distributing themselves equidistantly from each other, evenly filling the container they occupy.

That’s “Brownian Motion”. 

Got it?

Entrepreneurs fill their days with work in the same way. 

Your calendar is the container/room. 

Your to-do list is the gas that spreads out into it. 

“Entrepreneurial Brownian Motion” is in play when you have your to-do list… and you dive into your day with a loose plan to get things done. 

What happens next? 

Your work spreads out over the day, filling all your available time. 

This is especially true for “important not urgent” creative work. The kind of growth-driving activity that takes courage and produces exponential leaps forward.  

On any given day, you may or may not get everything on your list accomplished. Regardless, the available hours – the space inside the “container” of your day – will get entirely filled up by work.

Like that cigar smoke, uncurling and spreading out, filling every corner of the room… you’ll constantly feel like you’re working on something. Every inch of your schedule will fill up. 

The whole day gets spent. Every time. The work seems to expand to fill it. 

Entrepreneur “Brownian Motion” is why deadlines work 

Have you ever wondered why a very real deadline has this magical power to 10x your effectiveness? 

When you book a flight to take a trip, and you have to finish X project before you leave… it’s amazing how much you get done in those last few hours of crunch time. 

It’s because a pressing deadline shrinks the container. 

You have less time in which you’re able to do work, so the work you need to do compresses like a gas to fit the space available. 

Brownian Motion is a principle of physics, aerodynamics and pneumatics that scientists and engineers take into account and plan around. 

They don’t try to fight it. 

Neither should you. 

Entrepreneurial Brownian Motion is a principle that YOU should take into account and plan around. 

Your work is going to want to spread itself out to occupy all the nooks, crannies and time available in your day. 

The solution isn’t to wish for more willpower to fight this effect… it’s to shrink the container that’s available. 

Parents know what I’m talking about

Over the last decade of my Shrink-for-Entrepreneurs client consults, every entrepreneur who’s had their first child while on my roster has described learning the true meaning of productivity. 

They suddenly start getting WAY more done, in FAR less time each day.  

It’s not that some faculty of theirs shifted or improved. In fact, sleep deprivation probably means they’re less energetic than before! 

What’s really happening is the container – the time they’re actually able to make available for work to gaseously fill has seriously shrunk. 

Smaller container = less diffuse spreading-out of work. Their execution, in other words, is concentrated. 

Why wait for life to shrink your container for you? 

Do it now. Do it with volition and mindfulness.

You have the potential to get much more done in less time than you normally do. 

You know this is true. It’s already happened on dozens of occasions where something external (like an impending vacation) shrunk your “container”.  

Instead of urging yourself to be better – or trying to use more willpower or caffeine to “focus” – why not stack the laws of entrepreneurial physics in your favor? 

Shrink your container. 

That means putting other stuff in your schedule to act as the container walls. 

The most effective entrepreneurs I meet have other stuff going on. They have to knock off work at 5:30pm on Tuesdays – instead of working all evening – to go to their Ultimate Frisbee league. Or they pick their kids up from school every day, because it matters to them. 

They commit to things that make life worth living outside of business… and those commitments serve as strong bulwarks against the naturally ever-diffusing Brownian Motion of their to-do list. 

Figuring out what your stuff should be – what would be worthwhile committing to – is the most fulfilling, rewarding part of all. It’s the whole point of entrepreneurship, remember?

The best thing you can do to make yourself more productive… is make other plans. 

Completely clearing your calendar is not an opportunity. It’s not a good tactic for boosting focus. It’s an invitation to fluff around and do in 10+ hours what you’re capable of doing in three. 

If you want to make an impact, and to find (and keep) Wealth, Freedom and Sanity along the way… you have to make Entrepreneurial Brownian Motion work for in your favor. You need a smaller container. 

There’s a fun game entrepreneurs play over drinks: 

Imagine starting over, totally from scratch.

With nothing.

Probably in an unfamiliar country or something. 

You have zero access to any of the capital or physical resources you have now.

You get to keep everything that’s already in your head: All the experience and hard-won learnings. 

But that’s it.

How long would it take you to get back to where you are today, success-wise?

People like to imagine that the Richard Branson or Elon Musk types of this world would wake up unrecognizable in some exotic place and immediately concoct a scheme. They’d figure out some re-brand, re-selling of bananas (or whatever).

Within a week, they’d be being driven around in a Rolls Royce. They’d be wearing a five thousand dollar suit. They’d be hailed by the locals as an entrepreneur genius. 

Or so the popular wisdom goes. 

I’m skeptical. 

I think there’s one important question to ask about this game:

Do you get to take your Rolodex with you?

If you were to really “start from scratch”, do you get access to that mentor who set you on your path when you were young? 

Do you get access to that first boss, who taught you everything you know about X?

Do you get that first client who unknowingly financed your first website… the website that landed you your second client… 

You get the idea. 

You can’t really remove entrepreneurial success from the environment it happens in.

An intricate and invisible web of social, psychological relationships weaves around you. It lifts you up and is as much a part of your success as your attitudes and thinking. 

Entrepreneurs struggle when they operate from a place of total entrepreneurial isolation.

The internet enables more people to build small – and large (but decentralized) – businesses from home than ever. The side effect of this? Entrepreneurs are more disconnected than ever before in history.

It is now absolutely normal for a business owner to operate from home and only socialize with “civilian” 9-to-5er friends, or – at best – people in wildly different businesses to theirs. 

The days of spending your time in close physical proximity to the people you’re accountable to – as an entrepreneur – are over.

This is problematic.

Isolation makes entrepreneurship harder than it should be.

This is why – if you really were to start over from scratch – your results would skyrocket the second you got someone in your corner. Genuinely support does tremendous things for the entrepreneur brain.

To drop into any situation and show up immediately as a focused, high leverage, execution powerhouse… requires help: Business success requires other humans to activate your social-primate brain that, in turn, motivates and focuses you. 

The first thing Richard Branson would do if were he dropped (unrecognizable) into Marrakesh with ten dollars in his pocket… would be assembling a team. 

You’re not supposed to do this by yourself. 

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