Speaker 1: Hey, Chandler Bolt here, and in this video I want to talk to you about why I don't believe in equal partnerships, why I especially don't believe in 50-50 partnerships, and why you should never enter into either. Now, I've got a couple quotes on partnerships, and then I'll kind of break down my core principles and beliefs and kind of really how to structure partnerships in this video. The first one is from an old mentor of mine where he said, don't partner out of insecurity. And I feel like that's probably one of the biggest mistakes that people make is they partner out of insecurity, right? I know for me personally, when you're starting a business, it can be lonely. It can also be frightening, and you feel like you need someone there to kind of validate what you're doing and to tell you that you're doing okay and to help out, right? Now here's the thing. A lot of times that person can be an employee. They don't need to be a business partner, and by partnering out of insecurity, you're going to give up a lot of equity, leave a lot of money on the table, and also long-term you're going to be really frustrated because you're working with someone that you don't want to work with. And then the second quote that always sticks with me is from another former mentor of mine. His name's Tommy Baker. He says, I love ships. So this guy's got a yacht. He says, I love ships. I love big ships. I love tall ships. I love long ships. I love fancy ships, but Lord have mercy, don't put me in a partnership, right? That was his stance on partnerships. And I got to tell you, I've been burned on multiple partnerships, so that is pretty in line with my stance on partnerships. So I do not partner in business with people anymore, and that's not to say I never will. This is my current stance because I'm just a firm believer if you're a really, really hard worker, then a lot of times if you get into these 50-50 partnerships, it's not going to work. Okay? So I kind of break into why I believe that and what you should do instead. So 50-50 partnerships. There is no such thing as 50-50 effort, 50-50 time spent, and 50-50 value added. So people just, when they go into a business partnership, the most common thing is like, oh, we just need to be equal. Well, the fact of the matter is you bring different skillsets to the table, right? If one person's doing tech, one's doing operations, what would you have to pay in the marketplace for that? Now, one way you can avoid a 50-50 partnership is to agree to pay yourself market-based wages once the business reaches that point, right? So then maybe one person is doing a job that you would have to pay someone $125,000 a year, right? Or you're currently doing a job that you would have to pay someone $50,000 a year, right? So now you can set wages, because I talk about this in another video on kind of compensation, owner compensation, but you get paid a salary for what you do. You get paid a profit on what you own. So what you're doing in the business oftentimes should not affect the equity that you have in the business unless it's at the very start. So that's why when it comes to 50-50 partnerships, there's just no such thing. And for me personally, as I'm someone who's very driven, very hard worker, I found that people were just riding on my coattails, right? So I had two business partners, and one of them was just dead weight, and then it went down to two, and I'll tell this story in another video on how to buy out a business partner. But then it went down to two, and then it went down to one. And what I found in that whole process is I did exactly the advice of what I just told you not to do. I partnered out of insecurity. I didn't believe that I could do it on my own, and it literally cost me hundreds of thousands, maybe over a million dollars at this point by doing that. So I'm just a firm believer, do not, no matter what, do an equal partnership. There's no such thing as equal work, equal money. Obviously you need to evaluate how much money is this person putting in the business, how much sweat equity. There's kind of this equation in how much skillset or value is being added. What does that equation look like? And I'm totally fine with partnerships as long as someone has a majority, right? I'm in a partnership for another business I'm at where I'm definitely the minority, and that's fine because I said to my business partner, this is your business, right? You can veto me on every decision. I don't need to be the majority. I'm an advisor and I'm an investor, and this is your business. So you run your business, right? So that's why I don't believe in equal partnerships, and really what I think you should do instead is create a partnership that resembles the work, the money, and the value that's being added to the business. So are you bringing sweat equity? Are you bringing capital? Are you bringing some other form of value for the business as a whole? And is it absolutely mission critical? So that's one way that you can go. Or the other way that I've chosen to go for the most part is just not do business partnerships. I'm at the point in business now where I don't need to, and I've got a lot of business partners. They're just my employees, and I include them in a profit share. So they get a piece of the upside, but there's no exchange of equity. And really, this is probably for a whole nother video, but in a business where your goal is not to sell, a profit share is actually better than equity because equity is only valuable if you sell, right? So they have something more valuable than equity, which is a profit share, and they're super happy. I'm super happy. I'm not putting a wedding ring on a day after I meet someone and saying, let's ride this thing out for three years, and let's be business partners, right? Because obviously I've been burned multiple times in that process. So when it comes to partnerships, proceed with caution. Do not partner out of insecurity. Definitely do not go into a 50-50 partnership, because like I just said, there's no such thing. Now, this will lead to difficult conversations, and there's been times where business partners I've talked to, I was 50-50 partners, where I said, hey, I'm working way harder than you. I put the capital in this business to get this business off the ground. You're obviously not as motivated or in this business. That's okay. Just give me more equity. I'm fine to go 60-40, 65-35. If we just readjust the equity, I'm fine. I don't have any problems here, and I'll keep working just as hard, and we can agree that you're going to work not as hard, and I'm going to really kind of put this business on my back. But obviously, that conversation is way harder to have after the fact than before the fact. So have that conversation before the fact. Set clear boundaries, and you're responsible for this, I'm responsible for this. Here are the equity distributions that we're going to do. Have an operating agreement. That's one of the biggest mistakes I made, is I went into business and I didn't have an operating agreement. And then as a result of all those things, I got really bitter and I felt burnt, because I felt like someone was just trying to ride my coattails and my hard work to success. So that's my advice on partnerships. I hope that you found this helpful. As always, comment below. Let me know what you think. I have a feeling that this is one of those videos that's probably going to stir the pot, and people are going to think that, hey, there is such a thing as a 50-50 partnership, and you might totally disagree with me. If that's you, that's fine too. Comment below. Let me know what you think and your rationale behind it, and I'd love to hear from you. And as always, I'll see you in the next video. See ya.