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Need Help Deciding Between Two People

Topics relating to managing people and relationships

VisionNN

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If you don't want to read the whole thing, just jump to the Dilemma section.

Long story short, started a new business and it seems to be slowly building interest. There's two people that are part of this story, I'll just call them Dave and Phil.

I came up with an idea that i decided to pursue. It's been a couple months so far and i have spent money on getting the website developed, lawyer fees, advertising, product sourcing, product packaging, brand design, and of course my own time to get social media up and running. On top of this, took about 2 months to figure out how i wanted to do this as it's a tough market to break.

Background on Dave and Phil

DAVE:
  • My best friend and one that i have known for a long time
  • I always talked about owning something of my own and Dave just casually mentioned that we should do something together (I said it would be nice but it was a casual conversation, nothing formal).
  • I wasn't planning to originally work with him. I just told him the idea because we're good friends. He say's he wants to help, i say sure.
  • His help so far has been "emotional support" of him hearing me talk about everything and just bouncing ideas off him and him posting maybe 4 instagram pictures out of 25+ (I did most of them).
  • I don't know what "help" entailed so i asked to talk. Explained i'm very serious about this and that it's business first, friends second if we do this. He was thinking its more of a "good friends do something fun" so he backed out when he realized i was serious about it.
  • Couple weeks down the line, he starts rethinking his position and wants to meet to talk. (Im assuming he thinks he's part of this project. We mostly only talked about this business, i did 99% of the work. 1% comes from his 5 instagram pictures)
  • Pros
    • He's very good with people and is extremely patient. (Great for customer service and talking to people in general)
    • He's also a consumer in the market we're aiming for so he at least has some idea of what we're selling and industry.
  • Cons
    • He's in debt and cannot put up capital.
    • Hasn't finished school and in my eyes doesn't have much value he could offer. (No business skills, design, presentations, etc)
    • Seems to be pretty lazy at times (didn't finish school, works minimum wage job, in debt, etc)
PHIL:
  • Met in school through a large project we had. I have a sense of how he works (calm, but can be lazy without a push)
  • Comes into this story about 4 months after i start the business.
  • When he finds out what im working on, asks what needs to get done and finds a person through his contacts to help with said task (The task i was trying to solve was a large headache).
  • Says he wants a 60/40 split of the company (Too soon? Nothing has been done yet.) Says third person is unnecessary (i agree).
  • Pros
    • Has capital and is willing to spend money to make this run.
    • No debt
    • Seems fairly well connected and knows someone here and there
    • MIGHT have a way to sell to big B2B companies (His dad knows a lot of execs in this market, but this is of course not a for sure thing)
  • Cons
    • Doesn't use what we're selling, so it seems like he's disconnected from the core product and might not understand it as well.
    • Can seem lazy at times without a push.
DILEMMA:
  • How do i explain to Dave that i see no value in what he has done so far and in general no value in terms of what he could offer.
    • We're best friends so i would like to do this as clean as possible.
    • I dont have a problem being blunt if need be, but trying to find the best answer here.
  • Do i ask Dave to see what he truly wants out of this business? (Salary, volunteer, small help here and there). Maybe work something out?
  • Is it a dick move that Dave has known about this project from the start and im basically cutting him out now and bringing on Phil full time?
  • Is 60/40 split fair with Phil? Is it better to do a vested percentage where i give him 10% each year (up to 40%) as long as he stays on the project and does work?
Writing this I feel that Phil is the better option. Even though I'm trying to think as rationally and logically as possible, i feel that my emotions are playing a slight role in feeling like a dick if i push Dave out (Even though it was never officially OUR business, he's always been there for mostly emotional support).

Thoughts? Thanks for reading the essay by the way.
 
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ApparentHorizon

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I'd just be blunt, since that would take the least amount of your time.

But if you're not an a-hole like me, you can allow him to come to the same conclusion.

In a casual convo you can just go over what you've done. Pause and then let him speak.

Ask if he's serious about it. How serious? Drop out and do this full time serious?
 

Mikkel

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I'm not going to pretend like I've been there, but I will quote someone who has.

"Emotion is a dangerous pill when doing business" - Gary Vee

It's important to keep your friends, but friends should have nothing to do with business. Now, there are exceptions, but you should always be looking to make the absolute best decisions for your business. If your emotions are getting in the way of doing that, then you will not have a business anyways... and then I guess you will have another problem.
 

Andy Black

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Neither. It should be "Hell Yeah, or no."




Why take *anyone* on though?

It sounds like you're at the beginning of your entrepreneurial journey.

You've a lot of learning and growing to come, and your business will go through many twists and turns.

What would happen if you concentrated on getting a sale this week?

If they bring you a sale can you give them a commission?

You can create win-wins without giving away equity and without getting tied up with someone.

Telling someone should be simple - just talk of making sales and creating win-wins.
 
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GSF

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Imo, Don't do it, friends and business just don't mix.

Last year I made a stupid almost spur of the moment decision and went into a partnership with my 2 good friends on their side business (they asked me to join), at the time I thought "what's the worse that could happen, it'll be fun", a few days later I came to my senses and politely pulled out. One year later that business has closed and their 10 year close friendship is ruined.

Also do you really need Phil? I honestly can't think of anything worse than partnering.
 

devine

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  • Dave's Pros:
    • He's initiative, inspired, and has second of top 3 most essential qualities in business: Patience.
    • He's already done more for your business directly than the second guy, which you don't seem to appreciate just because you see no value in it.
The fact that he cannot put capital in doesn't make much sense.
Need money? Make money and reinvest or find a sponsor.
Need human resource? Use it.
A person who has both already runs their own business.

Has no skills? So what he can do?
What does your business need? What human resource will benefit it?
Everything else doesn't matter to your business.
  • Phil's Pros:
    • Has helped you find a 3d person to help with your problem. Once.
A person with some cash walks in, doesn't showcase any value in long-run and asks 40% before he did anything. That's it.

Overall, you have a venture and need to use resources, primarily human resources. You need people who are inspired to give their touch and are willing to take only according to their input. Anyone who wants equity - needs to prove he deserves equity.

Read this thread first: https://www.thefastlaneforum.com/community/threads/small-business-partner-dead-business.69338/
Then take a week off and re-think your business. There is a lot to think about in your situation.

Also, re-read your message and highlight everything that is wrong about your decisions, approach and situation you are in: you'll immediately realize that you have other more important concerns to think about.

[HASHTAG]#partnershipposts[/HASHTAG]
 
Last edited:

AlexanderCordero

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Let's keep it simple...

Dave... Thanks buddy. I'm 99% done. I appreciate our friendship but why should I cut you in when I have busted my .... to get this done. What are you willing to bring to the table that increases the value of the company exponentially?

Phil... Let's be clear here... from your what you shared, Phil provided you with contacts. Yes, necessary contacts to get you to 99% done. But that is not 40% worth at this stage... (We all here share knowledge and contacts from time to time, but do we ask you for equity?) He did you and his other contacts a favor. If he wanted IN you 2 should have had that conversation from the beginning.

The question is have you done everything you can (hustle, bootstrap, sell etc...) to grow your company without the need for a partner/investor yet?

At this point Phil needs to buy in to the 40% equity. That is if you still want him as a partner. (That is lots of equity).

Also, there is lots of difference between a partner and an investor. Get clarity first!

Warmest regards,

Alexander
 
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eliquid

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as someone that has been a part of lots of these deals....

equity is not split among what you have done in the past, but what you can do in the future.

can either of these two double your business in the next 12 months? ( via hard work, skills, or money )

if not, they need to not have any equity whatsoever.

the only other consideration is if they are a key player. maybe they themselves don't directly double the business in the next 12 months, but they are key in that process.

a key person though, has to give you the real gut instinct they can help you double the business though in some way.

if neither can do that, then don't give up equity.
 

devine

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Equity is determined by one thing only:
How the departure of this particular person will affect your business?

Not the fact of him joining your business, but what will happen if you fire him?

"I'll make your business shine" is not enough to deserve equity. That is a primary definition of a service.
"You'll have no business if you fire me" does sound like equity.

Regarding lazyness, I know a lot of lazy people who make millions.
Deal with it.
 
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Last edited:

VisionNN

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Thanks for all the input guys, gave me a lot of material to think over.

What would happen if you concentrated on getting a sale this week?

If they bring you a sale can you give them a commission?

You can create win-wins without giving away equity and without getting tied up with someone.

Telling someone should be simple - just talk of making sales and creating win-wins.

Sales will be done online, so unless Phil can get the big B2B clients onboard (i doubt it would be possible without my help, I've seen how he presents and he does not feel comfortable in front of a board. That being said, this is a potential door we can open using his connections) i don't see commission being an option.

If i concentrated on getting sales this week it would just be me working on it as i will be in charge of advertising, developing, and building the funnel. The more i talk about it, the more i realize that im A) a control freak and love to have absolute control over what happens and B) partnering with anyone might be a bad idea just knowing my need for control.

Now that I'm thinking about it, having a partner might not work for me because for me to want to give up 40% equity would mean that the person partnering has to want it as bad as i do. I just don't see the fire in both these people.

Imo, Don't do it, friends and business just don't mix.

Last year I made a stupid almost spur of the moment decision and went into a partnership with my 2 good friends on their side business (they asked me to join), at the time I thought "what's the worse that could happen, it'll be fun", a few days later I came to my senses and politely pulled out. One year later that business has closed and their 10 year close friendship is ruined.

Also do you really need Phil? I honestly can't think of anything worse than partnering.

Phil has connections here and there and his dad knows a lot of execs in the industry we might be going after. While not a guaranteed win, it's at least a door to get into the B2B side and make this thing really go off. I don't know how difficult it would be to get into the same industry if i was to show up without an introduction.

  • Dave's Pros:
    • He's initiative, inspired, and has second of top 3 most essential qualities in business: Patience.
    • He's already done more for your business directly than the second guy, which you don't seem to appreciate just because you see no value in it.

Well, Dave has been there emotionally and posted some work on social media. Phil has so far been helping me out with a problem i had in logistics. I feel like logistics is more important and holds more value IF it works out in the next week.

I see no value in what Dave did because A) Its not critical to the business, B) I could do it myself and have been doing it myself, so the role is overlapping.

Phil... Let's be clear here... from your what you shared, Phil provided you with contacts. Yes, necessary contacts to get you to 99% done. But that is not 40% worth at this stage... (We all here share knowledge and contacts from time to time, but do we ask you for equity?) He did you and his other contacts a favor. If he wanted IN you 2 should have had that conversation from the beginning.

He didn't help me reach 99%, Phil has just come on board after 4 months that I've already been working on this. He just helped me with something that was already working on. But you make a good point, just because he put me in contact with someone doesn't automatically mean he's entitled to 40%. If anything, i could pay him a finders fee but not more than that.

You already have significant reservations about each one. That will only grow larger. Being lazy and running a business doesn't mix. at all.

So, I'd vote: Neither

Slowly staring to think this choice as well.

Regarding lazyness, I know a lot of lazy people who make millions. Deal with it.

If they're making millions, they're not lazy in my book.
 

devine

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Well, Dave has been there emotionally and posted some work on social media. Phil has so far been helping me out with a problem i had in logistics. I feel like logistics is more important and holds more value IF it works out in the next week.

I see no value in what Dave did because A) Its not critical to the business, B) I could do it myself and have been doing it myself, so the role is overlapping.
I worked with a lot of businesses that had logistics in top 3 main concerns, we have always found a right specialist to hire, it's not something essential.
It's just what seems more troublesome for you at this moment.

Everything has value, the fact that you don't know how to make use of certain human resource doesn't make it useless.
Tell the Dave guy to start working on his social media skills and whatever else he can do, so you can put this responsibility on his shoulders.
You don't need to offer him equity. See how things will go and what will pay out.

If they're making millions, they're not lazy in my book.
They just do what matters to them. You cannot be lazy when you do things you're highly passionate about.
 

DevilDog

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My opinion without knowing any more than what you have written:

Dave: He's not a fit to do what you need. The fact of the matter is that you already know this and just need a way to tell him. Just say "Look man, I value our friendship and going into business together isn't the best idea right now."

Regarding Phil:
No equity split...right now. You still need to see if 1) You can work together well and 2) He can do the job you need him to do.

Similar to Andy's suggestion, I would say bring Phil on board for one month. Work together for one month on a daily basis. If it is going poorly, give him a pre-agreed upon $ amount for his time and to end the relationship on good terms. If it goes well, look at an equity split. Be sure it vests over time, four years is standard...which is a freaking eternity in start-up land. The amount of the equity split is also important. Be extremely careful with how much you give to him.
 
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