You Work Harder Than your Partner Does Ep 168

In a candid discussion on the complexities of business partnerships, the host reveals personal experiences with failed partnerships, emphasizing the significance of clearly defined roles, particularly in small businesses. He notes that partnerships often falter due to differing perceptions of effort and a lack of role clarity. While he acknowledges that married couples may succeed in business together due to shared finances and goals, he advises against partnerships for non-spouses, suggesting that hiring help is more cost-effective than sharing ownership. He stresses the importance of having all necessary skills to run a small business independently and recommends establishing clear buyout agreements to facilitate potential exits from partnerships.

• Speaker A reflects on their personal experience with failed partnerships, indicating they have had eight failed partnerships.
• They recognize that a common feature in these failures was their own role.
• Speaker A has developed strong viewpoints on partnerships, especially in fitness-owned businesses.

"I have tons and tons of scar tissue around partnerships. I think I have eight filled partnerships that I can think of off the top of my head. And the common trait of those partnerships is me."

This quote highlights Speaker A's extensive experience with failed partnerships and their self-awareness regarding their contribution to those failures.

• Partners may have different perceptions of the effort involved in tasks.
• Speaker A uses the example of taking out the trash to illustrate how partners can ascribe different levels of value to the same effort.
• This discrepancy can lead to issues within the partnership.

"If I take out the trash, and I think it's a three out of ten or a six out of ten... And then my partner sees me take out the trash, and they think that's a three out of ten effort. Inherently, there's a discrepancy between how much effort we think is put into X, Y, and Z."

Speaker A emphasizes that different perceptions of effort can cause disagreements and misunderstandings in partnerships, using the task of taking out the trash as a metaphor for larger issues.

• Lack of clarity and division of roles is a common issue in small business partnerships.
• Speaker A points out that new entrepreneurs often do not have defined roles, leading to both partners trying to do everything.
• This lack of clarity can cause conflict when partners judge each other's work or have different work styles.

"Where small businesses don't have that because most times the entrepreneurs that are starting out are new entrepreneurs and don't know... is that there's no clarity of roles, as in there's no division of roles."

Speaker A identifies the lack of role definition as a significant problem in small business partnerships, suggesting that new entrepreneurs often lack the experience to establish clear divisions of labor.

• Partnerships can be strained when one partner takes time off, leading to perceptions of unfairness or slacking.
• Speaker A compares betting against partnerships to betting against relationships, implying a high likelihood of failure.
• They suggest that while it might be statistically sound to bet against partnerships, it is not a constructive approach.

"When one person takes a day off, it's because he thinks he deserves it and the other person thinks he's slacking."

This quote illustrates the potential for conflict in partnerships when one partner's actions are interpreted negatively by the other, in this case, taking a day off.

• Speaker A acknowledges the statistical likelihood of partnership failure.
• They draw an analogy with relationships, pointing out that most relationships do not last, and a similar pattern is seen with partnerships.
• Despite the odds, Speaker A suggests that betting against partnerships is not a helpful mindset.

"So if you're a betting person and you want to be a negative Nancy, you should bet against partnerships and relationships, because that's typically what happens."

Speaker A acknowledges the high rate of failure in both romantic relationships and business partnerships, suggesting that a pessimistic view could be statistically justified but not necessarily beneficial.

• A clear division between the entrepreneur and integrator is essential in a business partnership.
• The entrepreneur typically handles promotion and selling.
• The integrator typically manages operations and fulfillment.
• In small businesses, operations may not be highly demanding, allowing for easier replacement of an integrator without the need for a partner.

"The only way that I have seen this work is that you have clear division between the entrepreneur and kind of an integrator."

This quote emphasizes the importance of having distinct and separate roles for the entrepreneur and integrator to ensure the smooth functioning of a business.

• Married couples often work well together in business due to shared financial interests and personal dynamics.
• They tend to have fewer conflicts about money since it all goes into one bank account.
• There is a built-in understanding and flexibility when personal life affects business responsibilities.
• This dynamic is unique to married couples and may not translate to other partnership situations.

"I do see married couples all the time working together, but that's typically because they're delusional."

The speaker is humorously noting that married couples may have an overly positive view of each other's abilities, which can actually benefit their business partnership.

• Clearly defined roles are crucial in a business partnership to avoid conflicts and overlap in responsibilities.
• Each partner should fully own their respective areas, such as marketing or operations.
• Partners must take responsibility for their actions and outcomes in their areas of the business.

"Now, if you don't have that dynamic and you are in a partnership, then the way, and really the only way to make it work is to have clearly defined roles."

This quote stresses the necessity of having well-defined roles in a partnership to prevent disputes and ensure that each partner knows their responsibilities.

• Small businesses often do not generate enough profit to justify the costs of a partnership.
• Entrepreneurs may be better served by running their own businesses and hiring help as needed.
• Partnerships can be costly, especially when considering the equity given up for financial contributions.

"And so if you have two true entrepreneurs, they would usually be best served just both running their own small business and finding the person to do the extra things that they don't do for a fraction of the price of a partner."

This quote suggests that entrepreneurs may find more value in independently managing their businesses and hiring employees rather than entering into partnerships that could be financially inefficient.

• Partnerships often don't make financial sense.
• Math typically supports the argument against the success of partnerships.
• Speaker A is not trying to be negative but realistic based on observations.

"It doesn't really make sense financially." This quote succinctly states that partnerships are often not financially viable.

"Most times, if I say I don't think that your partnership is going to work or make sense, it's because I also know that math is on my side." Speaker A explains that their skepticism about partnerships is backed by mathematical reasoning, suggesting that the numbers often don't add up in favor of such business arrangements.

• The host takes a break to encourage listener engagement on LinkedIn.
• Listeners are invited to connect and suggest connections.

"Hey, mozanation, quick break. Just to let you know that we've been starting to post on LinkedIn and want to connect with you." This quote is an invitation for listeners to engage with the show's hosts on LinkedIn, indicating an effort to build a community around the podcast.

• Defining and discussing strengths and weaknesses is crucial.
• Tasks within the business should be clearly outlined and divided.
• Clarity of roles helps prevent resentment and inequity.

"Well, one is you have to clearly define and you have to have a real heart to heart about the stuff that you are good at and that you're not good at." Speaker A advises that partners must have honest discussions about their competencies to effectively divide tasks.

"And then all you do is you have to circle those things and assign them. And then from that point going forward, that is your clarity of roles." Speaker A emphasizes the importance of assigning specific roles and tasks to each partner to establish clear responsibilities.

• Resentment can arise if the business struggles or if effort isn't equitably recognized.
• Partners may consider the replacement cost of each other.
• It's important to be realistic about the potential thoughts and feelings that could emerge in a partnership.

"And then there's this inequity that happens. And inequity happens typically, because there's not clarity of roles that wasn't agreed upon in the startup." Speaker A points out that unclear roles can lead to feelings of inequity, which can damage the partnership.

"And then you start thinking thoughts that you don't like to think or that you don't want to think, and you can't imagine the fact that your partner is thinking that about you." This quote reveals the uncomfortable reality of considering the value of a partner's contributions and the possibility of replacing them, highlighting the emotional challenges that can arise in business partnerships.

• Partnerships outside of marriage are challenging for small businesses.
• Betting against partnerships is usually mathematically favorable.
• Those considering partnerships should critically evaluate the decision.

"But I'm saying what I have observed in general is that for small businesses, partnerships that are not marriage partnerships have a very hard time working in the long run." Speaker A shares an observation that non-marital partnerships in small businesses often face difficulties sustaining in the long term.

"I also acknowledge that betting against a partnership in general over the long run is in my math favor." Speaker A acknowledges that statistically, it is more likely for partnerships to fail, which is why they often bet against them.

"Because usually, it doesn't really make sense financially." Speaker A reiterates that from a financial standpoint, forming a partnership is often not the most sensible decision.

• In small businesses, owners should possess fundamental skills for all departments.
• Delegating or partnering is less necessary at this level due to the basic nature of the skills required.
• Having too many people with the same skills can be redundant and lead to conflict.

"In a small business, you should have all the skills that are necessary to operate a small business."

This quote emphasizes the importance of a small business owner being well-rounded and capable of handling various tasks without the need for specialization.

• Partners in small businesses often think they work harder than the other.
• Skills in small businesses are basic, and roles often overlap, leading to a lack of clarity.
• Identical skill sets between partners can make one partner seem unnecessary, causing tension.

"You probably think you work harder than your partner does, and your partner is reading this thinking that they work harder than you do."

This quote reflects the common perception conflict between partners in a small business, where each believes they are contributing more effort than the other.

• Having a spouse as a partner in a small business can provide an advantage.
• Spousal partnerships have been seen to succeed many times.

"If you do have a spouse in it, then you probably have a head start compared to everyone else."

The quote suggests that spousal partnerships in small businesses may have a competitive edge due to their closer relationship and potentially better teamwork.

• Partnerships with redundant skill sets can lead to a toxic dynamic.
• When both partners contribute the same skills, it becomes apparent that one is unnecessary.
• This can result in years of conflict and complaining to third parties about the perceived lack of contribution from the other partner.

"Both of you bring the exact same thing to the table, which means that there's no need for one of you."

This quote highlights the issue with having partners in a small business who have identical skill sets, leading to redundancy and conflict.

• Co-founding a larger entity requires niche knowledge and clearly defined roles.
• In small businesses, niche experience is rare, and roles are less defined.
• Partnerships in small businesses are generally not recommended due to the lack of need for niche skills.

"I vote no for proposition 15 for partnerships for small businesses, which is different than co founding like a large entity or something like that."

The quote represents a stance against partnerships in small businesses, contrasting them with co-founding larger companies where specialized knowledge and roles are more critical.

• It's crucial to clarify roles, set expectations, and agree on buyout terms early in a partnership.
• Partners should agree on a fair valuation method for buying each other out.
• Having an agreed-upon exit strategy can prevent future disputes and provide a way out of the partnership if necessary.

"Just establish early on what math you would both buy one another out for."

This quote advises partners to have a pre-determined buyout agreement to avoid conflicts and ensure fairness in the event one partner wishes to exit the business.

• The speaker suggests not tagging your business partner in discussions about partnership issues.
• They encourage feedback on the advice provided.
• The speaker wishes their audience a good Friday and signs off.

"Hope that was helpful for you. I would say tag your partner. Maybe don't tag your partner in this."

This quote concludes the advice with a bit of humor, suggesting discretion when sharing the content with a business partner, and wraps up the conversation with well-wishes.