Last year I started a few projects outside of my day to day at Push ROI. I wanted side hustles, the kind of small business I could actively help grow, but also that didn’t require funding more than I could bootstrap. Some of those failed pretty epically, for reasons I was sure, were in no way my fault.
I made the mistake of complaining to a mentor, under the guise of seeking advice. After breaking down how my partner in one side hustle let a motorcycle (intended to be repaired and resold) get stolen just weeks after its purchase. While another venture ran many months behind schedule because a different person greatly exaggerated their abilities and work ethic.
I told him how a company I teamed up with on an analytics tool stopped responding to any communication, after failing to meet several deadlines. Leaving me to find an alternative at the 11th hour, to avoid a contract breach.
Don’t ask for advice if you want sympathy
I expected some degree of sympathy, maybe a story of how the same kinds of things had happened to him in the past. Instead, he asked me…
“How many of your business partners announced themselves to you as unreliable before you started working with them?
Honestly, in all but one case, I had reason to believe that my chosen partners were not reliable. I had ignored obvious signs, for bad business reasons. In one case I wanted to help a friend, in another, the opportunity cost seemed low and the time just seemed right, of the three projects I had just complained about, two involved people I viewed as only slightly more reliable than a meth smoking toddler.
The third project still felt like a blind side. An acquaintance of mine ran a VC funded startup, and we were licensing the use of their existing technology. It required their development team to make a few changes that we’d all discussed and agreed on, but it should have gone smoothly.
His next question…
“How many of these businesses would you have attempted without personally knowing the people you were working with?”
It was just one, the technology project. The other business just seemed like opportunities because I know the right people. He had an unamused look, but was laughing when he said:
“Such amazing opportunities, that you could work with people you just described as unreliable.”
He asked one more question:
“Of these problems you experienced how many of them could have been avoided with different actions on your part even with the same partners?”
That wasn’t something I liked thinking about. Actually, in all three cases, I should have acted differently. When it became clear things were running off the rails, friend or not I needed to have a do your part or get replaced conversation. When risks I wasn’t comfortable with were being taken I should have said no.
Since I was the one putting money in any of these projects, I was the only one with a possible downside as opposed to just a lack of upside. It was my job to protect my investment, and this is more true than usual because I was working with people I already knew weren’t reliable. And regardless of the people I was working with I should have had backup plans if someone couldn’t deliver on their end.
After all, when something intended to be repaired and sold, was stolen; for my partner, it meant he wouldn’t make money, but I lost money. His recklessness and unwillingness to tell me he needed help were almost as responsible for the theft as the thieves. But I knew he was being reckless, I knew he was unreliable, making my inaction a contributing factor in the ordeal.
On reflection, even the technology licensing from a real, functional company with funding and customers should have been handled differently. I was very Laissez-faire about everything because the upside was clear. But the agreement should have been contracted in a way were the other parties failed to deliver on deadline had an actual cost; let’s say covering the fee of hiring a contractor who could complete the project on deadline. That would have been very reasonable, even standard for this type of deal.
The Takeaways from Last Year
Never work with people simply because you know them.
That is something I should have learned from past partnerships when I’d work with someone I knew because of the nine things I needed a partner to do they could help with four. Historically, I started seeing better results form every business relationship when I found people to fill a role, instead of seeing who I knew who could be a round peg shoved into a square hole.
Partners should share in failure and success.
With each project the others I worked with could have made money and didn’t. I was the one who had the ability to lose money, meaning quite literally the buck stopped with me. But if I were managing an investment fund, and I’d made the same type of investments with other people’s money, it would be highly reasonable to assume I’d be getting sued.
If someone isn’t a true partner, make them a freelancer.
In all three projects, it would have proven far cheaper to just pay my “partners” a rate to complete tasks. That way even if the people I knew weren’t reliable, screwed up in a predictable manner, I would just stop paying them. It seems people are more motivated by even small loss than by the possibility of reasonably predictable rewards.
Header Image by jima