Whether to partner or not partner in a business venture can be a vexing question. In this Tough Things First podcast, Ray Zinn talks with guest host Rob Artigo about it doesn’t have to be so difficult.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First, the podcast with Ray Zinn, the longest serving CEO in Silicon Valley. Hi, Ray.
Ray Zinn: Hello, Rob. How are you doing today?
Rob Artigo: I’m doing well, thank you. In the business world, there seems to be no end to decisions that you have to make, hundreds of them a day, right? Some decisions are big and some are smaller. Ray, where does the decision about partnering with another person in a business venture fall? Is that a big decision or a small, inconsequential decision?
Ray Zinn: Oh, it’s a big decision.
Rob Artigo: Well, a friend of mine recently told me, this is my subject here, it was directly from a conversation I had with a friend, and I said, “Well, I got this friend. I’m gonna do this business but then when he’s done doing what he’s doing, he’s gonna partner with me.” That friend said, “Don’t partner with him. You immediately will double your chances of complications because you have another person being put into the scenario.” Is it good or bad for an entrepreneur to go 50/50 on a company with somebody?
Ray Zinn: Well, I don’t know. It depends upon who your partner is. If it’s your wife or your spouse, 50/50 works great. It has to work. If you don’t look at it as 50/50, then you’re not gonna share appropriately in the responsibilities. If you’re 60/40 or 70/30 or whatever, then of course you’ve changed the scale with regard to how your partner’s gonna respond. You can be a partner at 1% but then realize that you have a 1% say in what goes on. The problem really occurs when you start approaching 50/50. If you’re 60/40, then usually the person understands that you who hold 60% has more to say than he who holds 40%. But when you go to 45% and you go to 48%, 49%, and then 50%, now that everybody says, “Well, these have gotta be divided equally,” everybody starts counting things, saying, “I’m gonna go play golf today.” Way to hold the fort, you know?
Rob Artigo: Yeah.
Ray Zinn: I’m spending more time here than you are and then arguments occur. If both people don’t view their responsibilities equally, for example in a marriage, I look at it 100% on each side, meaning that I worry 100% about my wife and she worries 100% about me. We worry about each other and not about ourselves. In a partnership where there’s not a marriage in the sense of a word of a legal marriage, the people start taking advantage of that relationship and they end up letting the other person take on all the load of the work. I’ve seen that so many times it’s not even funny.
I have a friend, by the way, that had just gone through this with his partner where he says, “Hey, I’m doing all the work.” He’s just off running his other business and he’s not putting his full effort into our partnership. When you talk to the other partner who is working on his other business, he says, “Well, I put up the money and I did this and I did that. It was understood that you, the other partner who didn’t put up that money, was gonna put the work and the time in.”
Let me tell you, 50/50 partnerships do fall apart if it’s not clearly recognized by both parties their responsibilities and what their contribution’s gonna be.
Rob Artigo: Yeah. It’s a big decision no matter how you put it because you wanna know that you have- It’s like forming a partnership when you’re gonna collaborate on writing a screenplay, for example. You partner with another person. You gotta know that that person is gonna be the right person to do this with. They are going to play their role as you play yours. I suppose that a best case scenario is that it is like working with your wife.
You already understand each other’s pluses and minuses, weaknesses and strengths. You know each other well enough where if you go into a project, there are a lot of things that happen between a husband and wife that are unspoken. You can work things out because you just know the other person’s gonna do it or not gonna do certain things.
But when you go into a partnership, for example writing or starting a business, if it’s not clearly delineated every little part of this thing, maybe you had a contract form or other way of expressing it, you could run into problems because you could find one person turns out to be, when you’re spending that much time with them, just not contributing very much and just along for the ride.
Ray Zinn: In a marriage in the US, the divorce rate’s north of 50%.
Rob Artigo: Yeah, it’s crazy.
Ray Zinn: You can see that in a business it’s gonna be even worse. I would say the divorce rate in a business, or the breakup in a business, is probably north of 50% even then, more so than in a marriage. Just be careful when you decide to partner with somebody that you got the right partner.
Rob Artigo: Thanks, Ray, appreciate it.
Ray Zinn: Thank you, Rob.
Rob Artigo: Find out more at ToughThingsFirst.com, “Tough Things First” the book, also on Facebook. You can reach out to Ray. Again, message him at ToughThingsFirst.com and he’s on LinkedIn, as well. Any one of those avenues, you can get more information on how to reach out to him. You can join us for the conversation here. You can also just offer your own topics and we’ll cover them on Tough Things First. Thanks again, Ray.
Ray Zinn: Thank you, Rob. Appreciate being with you.