Top Tips to Avoid Partnership Nightmares with Paul Bolaji

Hello, my friends, and welcome to another exciting episode of Negotiate Anything. Negotiate Anything is produced by the American Negotiation Institute and with over 3 million downloads and listeners in over 180 countries, listeners just like you have made it the number one negotiation podcast in the world. I'm Kwame Christian and I'm the director of the American Negotiation Institute. We're growing and I want to introduce you to our new team members and new trainers. This will give you new and diverse perspectives on negotiation and conflict resolution. And that's why Shane Martin, our head of sales and partnerships, is going to serve as co host of the show from time to time. We're excited to continue to provide you with the best content that will help to make your difficult conversations easier both at work and at home. Lastly, our team conducts negotiation and conflict resolution trainings in the United States and abroad. Our trainings will give you the practical skills you need to resolve conflict and negotiate, lead and persuade with confidence. Click the link in the description below to learn more about how we can make your difficult conversations easier.

I am here with one of my best friends, Paul Balaji. He has one of the most interesting entrepreneurial and professional journeys I know right now. He just graduated from Columbia Law School. Is it this weekend or last weekend?

It's this Thursday.

Yeah. Congratulations.

Thank you, sir.

But yeah, let's just give the audience an idea of what it is that you did in the past and a little bit about your entrepreneurial journey.

Okay. Thanks, Kwame. So prior to law school, I lived in Dallas, Texas. I was a Teach for America Corps member in 2010. And I wasn't really happy with the amount of money and the amount of experiences and learning experiences that I was having through teaching. So I actually ended up starting a company with one of my best friends from high school. And what happened was originally the idea was for a personal training company that was going to help these modern luxury apartment buildings utilize, fully utilize their state of the art fitness facilities by providing their gyms and their buildings with, you know, fully certified professional personal training staff that would conduct seminars, do consulting for them in terms of making sure that their equipment was up to date and their layout was fine. So that was the idea. And my friend at the time was living in California and we were very close in undergrad and even going up through middle school. So I thought it would be a great idea. And he was also very entrepreneurial person, so I thought it would be a great idea if he came and, you know, since we had a close relationship, I thought that, you know, the business would Kind of grow naturally as a side to that. And boy, was I wrong. And the issue is, you know, when. Especially in, you know, when you're starting companies or you have ideas, you know, it's very, It's. It's very easy to get excited about them and to reach out to those people that you're very close with to, you know, to immediately try and jump in the boat with you and get help from them and get their support, encouragement. I mean, that's natural human nature. However, what's really, really important for, for people with ideas, for visionaries, for people who want to start new things, is they have to realize that their ideas are born and raised like in. Inside their heads. Right. It's not something that everybody around you can necessarily see. So I think the number one. The number one foundation when you're starting anything, you're bringing anybody on board is you need to fully understand what it is that you're doing and what you want. And you also need to fully understand that you're in control in the sense that the other people around you that are not also living in your head are not going to know exactly what it is that you're trying to get across.

So.

Speak a little bit about that experience. What had happened was we got together, we built our business plan, we made our sales pitches, and slowly but surely we started getting business one by one. We started signing contracts with some of the biggest apartment community managers in Dallas, Texas. And, you know, things were great. And what happened was we got to a point where the business started to. We got to a certain level and the business could go one way or it could go the other way. And it being my idea, I was very sure of the direction I wanted it to go, but my partner seemed to have a different idea. And unfortunately, we weren't on the same page in terms of what those ideas looked like. And because of that, I think that there was a lot of dissonance in between in our communication and our understanding of the business. So what ended up happening was we just. We got into a situation where we couldn't move forward together because we were going in different ways. As a entrepreneur, you have to realize there's only. Companies are like cars. There's one driver's seat, there's one driving wheel. And normally cars are driven best with one person, right? You can have co pilots, you can have navigation assistants, but they can only be one hand on the wheel. And when more than one hand gets on the wheel, especially when you're not in agreement about which direction you're going. That's. I think that's where a lot of accidents occur. Right. So basically our relationship got to a point where it just couldn't function. And it was difficult because of our friendship. But at the same time, knowing that, you know, we had a business, knowing that I had a business idea that I was trying to develop, nurture, I unfortunately put more weight and more value on the soft factors like our friendship. Is this person still going to be my friend after this, as opposed to really thinking logically and putting my business at the front? And I think that one of the most important lessons that I learned is when you're working with somebody, when you're managing your relationships with people that you're going to call your partners, like I said, you need to be 100% certain that you're on the same page, but you also need to make sure that they're certain that you are the driver.

That's a great point. Let me ask you this question. Were you 50, 50 owners and 50, 50 with decision making?

Great question. And this is another. This kind of ties back to the initial problem, is because even though I knew that this was my idea and I had laid the groundwork, for the most part, put the plan together myself, I had the vision, in order for me to really make my friend feel like he was going to have it was making sure this opportunity was going to be worthwhile for him. We did end up going 50, 50 because he moved out from California to Dallas. And it was just, it seemed like the right thing to do, mainly because he was my friend. And in hindsight, that was, I think, the single biggest mistake that I made. In terms, from a legal perspective, from a business perspective, you have to contain, you have to maintain control. You can't. And if you're not going to maintain control, you can't give it up that early. I gave it up before he, you know, before he. He even moved. We. I put a contract together, and that was part of the terms, was that it was going to be a 50, 50 partnership. And even though we didn't really negotiate. And that's another thing that I've learned, I think is very important for young entrepreneurs, is everything is negotiable. There is nothing that is ever set in stone. And even when you're dealing with consumers, when you're dealing with partners, when you're dealing with other businesses, everything is negotiable and everything. I mean, I think there's a. There's something to be said about intangible things such as goodwill and Quote, unquote, stacking up favors and putting that stuff in the bank. But from a business perspective, everything is negotiable and it needs to be in dollars and cents. It can't be in feelings.

Let me ask you about the internal negotiations you've had with that business and the external negotiations you had with the managers at the different apartment complexes and how that went. So with the internal negotiations, what do you think you would do differently this time? Just a little bit more specific when it comes to before, when you're dividing the equity of the company and decision making processes, and later on, when you ran into those inevitable disagreements, how you would go about negotiating with the partner to make sure you're on the same page going forward.

Okay. So first and foremost, the equity structure has to be as an entrepreneur, when you're trying to start something, you absolutely have to make sure that you have control to the point until you get to a point where you're able to relinquish some control. And at that time, it's about revenue, it's about getting investments. There's a time for that, but at the beginning, that's not the time. So one thing that I wish that I, I certainly looking back, would have done, I would have renegotiated, I would have actually made a negotiation because there was a negotiation. I just said 50. 50. So first of all, understanding who the people you're dealing with, really putting an actual numerical value on what that person's skill set brings to the table. And I didn't, that's another thing that I didn't do. I thought that this guy, you know, he, he had experience with web design. He was a very entrepreneurial minded person. Him and I had actually worked on a couple of projects in college together. But in reality, this man didn't really bring anything to the table for a personal training, health and fitness company. Besides that, he was my friend and he could make a website which lots of people can do for $10 an hour. Right, right. So internal negotiations from that perspective, really being the person who's leading the valuation of the whole project, the people in the project, the actual product itself, you have to be in control. Another part of the negotiation process was the external negotiations when we were dealing with the managers of the different places at the different apartment communities. And that was a very. Every single complex was as a different, had a different vibe, different, I think, different goals in terms of what they wanted their environment to feel like for their residents. So, for example, the biggest selling point for our company was the fact that we had created a structured, formal, professional way for these residents to utilize their fitness centers because prior to that, mostly most residents could just bring in anybody they found off Craigslist who set their personal trainer. And I don't know if you're familiar with it, a lot of listeners might not be familiar, but Craigslist is the end all be all for people who are not what they say they are. So it was just a huge liability for these people to be letting anyone who is, people that are supposed to be nationally certified with insurance to come in without any type of verification and training the residents. So that was our biggest selling point. But on top of that we had to feel like, okay, well great, you know, you're going to be able to take off that, that's that little bit of liability in the black and white. But what about in real life value? Like what can you bring, what can you, how are you, what more value are you going to bring to our community? And in negotiations, one of the most important lessons that you have to realize when, especially when you're doing external negotiations is a, as a business owner is like I said, number one, everything is non negotiable. But number two, there's always value that you can create from places where you may not necessarily see. So the increasing the pie, making the pie bigger is the number one. It's the number one, I think, goal that you should be making. You should have in your mind when you're negotiating with somebody externally. For example, there was an apartment community who had a very nice gym. But in addition to the fact that, you know, they were willing to, you know, happy to have this formalized structure of trainers in the gym, it was just completely a mess. And there was, you know, they had a Smith machine directly against the wall, which made no sense. They had treadmills facing each other so that people that were running were staring directly into the face of somebody else. That's awesome. Things that didn't make sense. So part of the way that we realized that we could add value to them was to completely just redesign their whole layout for them. So after we did that, you know, they, they realized that the gym felt much more professional, it made more sense, but they still weren't completely the value that, the additional value that we could bring to them as community. So we ended up going back to the drawing board and realized that another thing we could do would be to offer water bottles and towel service. So we got a, about a 6, 6 by 6 shelf and we put promotional materials on it. But we also, you know, two times a week would deliver fresh gym towels and bottles of water with different sponsors from the community, different nutrition companies that were happy to do that. So we're, we got from a place where people didn't understand even though our bottom line wasn't as a company wasn't we're going to design and help you with floor plans and do consulting. We ended up realizing that that was an additional way that we could create value for a client.

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Wow, that's a great point. And I think that one of the most valuable skills for entrepreneurs as negotiators is the ability to be creative. A lot of times we get ourselves in this, we have this very myopic perspective, a very narrow minded view on what it is we can offer. As far as our services. We say we offer set services for a set cost and we don't really waver on that. But you were able to find a way to kind of expand your scope of services in a way that catered to the specific needs of your customers. And that's a brilliant example.

Right?

With those additions to the service model, were you able to charge them more as a result?

So that's the thing. Even though we weren't able to specifically charge them more because. Mainly because we didn't, as you know, we were kind of putting this together as we were going. We didn't realize that, oh, you know, this is another thing that we could charge extra for. So at the time we didn't, we weren't able to monetize that with that specific client. However, when we started going into the new apartment communities, that was something else that we brought to the table. And we were, and at that time we had realized, okay, this is something that we could actually charge people for, we could actually make more money from. So even though it didn't help us with that specific deal, it helped us moving forward and it actually came in handy.

So I want to shift the conversation a little bit to your personal professional shift from the personal trainer, the person actually delivering the services, to the owner and manager. Because you were able to get to a point where you had independent contractors working for you. Right?

Right. Yeah. Okay. Yeah. So first, you know, it really just started with me going into places and, you know, asking them to drop off materials. And I was doing the bulk of the training. But as we grew, my time was limited and I realized, you know, I had, I was able to actually get help to do what we were doing. So running a service based company is very difficult. I learned it's not a type of, I mean, I guess it applies to goods as well. But when you're, when you're paying somebody, when you're essentially acting as a broker or as an agent for services or goods, there's always a possibility of being sidestepped. And my biggest concern was that I have 20 to 30 clients, people that are looking for trainers. And going into it, I knew that the market in Dallas, Texas, personal trainers are starting to get paid, I think between $14 and $18 an hour. So in trying to make sure that I was getting quality people, we set our price, our starting, our starting wage at $20 an hour to make sure that we were going to be able to, you know, effectively get the most talented trainers, the people that were the most trustworthy, the most professional people out there. But that didn't change the fact that if you realize that, okay, Mr. Paul is paying me $20 an hour and he's charging Mr. Johnson $60 an hour for a session. Why can't I just get cash for Mr. Johnson and cut Paul out? Paul's not gonna be watching me all the time. So that's a very real problem that I think, you know, people face when they're expanding service based companies like this. And it's not, there's no way to really fully eradicate it. But my approach was to, when we first interviewed trainers and when we were talking to them and telling them about our vision, we tried to keep it as low to the ground as possible. I didn't speak in terms as the company, I would say things like, you. And I tried to make sure that these potential candidates felt like I was invested in them. So just trying to build rapport with people and to make sure that they felt valued. I felt that if, if you're going into this type of enterprise, their trust is going to be, I mean, you have to have people that are talented, people that are intelligent, but you also have to have people that are trustworthy, people that can trust you and people that you can trust. So building trust was the way that I tried to tackle that hurdle. And you know, for the most part, I think that we were successful in doing that. The problem is it's not 100% certain that we caught all those instances where people were trying to sidestep us. And I mean, it could have been, could have been more than we accounted for. But overall, the main goal was to make everybody feel valued, to make sure the people were. Felt like they were being taken care of. So we were paying them well. We had weekly or, sorry, we had bi weekly meetings where we would take the staff out to dinner and just making sure that we were always on a first name basis on a one on one type of level with each of our employees or each of our contractors.

Right, that's great. Were there ever any instances where somebody got out of line and you had to kind of resolve that dispute and get them to operate the way you wanted them to?

Well, so a couple of times. There's two different scenarios that stick out in my mind. First is wonderful trainer. And she did a great job. All of her clients were very satisfied. But she had two children that she oftentimes couldn't find babysitters for. And so she would actually bring her children and put them in a car seat in the gym while training her clients. And a manager at one of our communities saw that and was not happy and just thought that it was very unprofessional and brought it to my attention. And so I reached out to our trainer and I let her note that our client had concerns and that regardless of what our client thought, that that wasn't really an industry best practice to bring your child to a gym while training people. So I brought it to and I couched it in a way that wasn't an attack on her, but it was in a way that this is for the safety of your children and for the, you know, just for the appearances of professionalism for our company and for your services for, you see other people. Because the main way the trainers get clients is by, you know, watching them. And so if you're looking professional, people are going to approach you. If you're, if you're not looking professional, if you're just there and your children are there crying while you're trying to stretch somebody out, that doesn't make you look like a very approachable trainer. So we had that conversation. And she didn't, she didn't bring the children back for a few weeks. And unfortunately, it happened again. And I think the main issue there was, you know, people have issues, people have problems. You know, you have to really, as an employer, when you're leading people, you're managing people, you can't, you can't think of them as just as robots. Like, these are people with lives, with things that they're going through, situations that sometimes are difficult for them. Like, these are human beings. Just like we're human beings. We have our own issues too. So, I mean, it turned out that she just was in a very, very difficult place where she wasn't able to find babysitters or afford to pay babysitters. And even though I felt that and I understood where she was coming from, we still had to let her go just for the fact that, you know, it wasn't the image that we were trying to portray for our company. And it wasn't a bitter, by any way. It wasn't a. It wasn't a bitter breakup. I didn't quote, unquote, tell her she was fired. I just explained to her that for our insurance policy purposes, that she wasn't even able to have her children there and that the client, you know, didn't want that type of environment. So we just, we were able to amicably part ways in that regard. There was another scenario where I had a trainer that consistently would text people and be on his phone while working with clients. And I mean, if you can think about it, it's very. It would be very irritating if you're paying, you know, 60 to $80 an hour for a professional to work you out and to teach you different things, and to have that professional be on his phone, you know, texting people with emojis and not even trying to hide it, just doing all types of crazy things on Facebook during your one hour session. So that happened time and time again. And it got to the point where, you know, that that situation was different from the previous situation with our female trainer with the kids, because that was a. I think that was an example of people having their own lives so they actually have to bring in to work with them as opposed to somebody just being straight up unprofessional. Right. And so in approaching that situation, I did. I felt like I needed to come in more as an authority figure, you know, to really make sure that this trainer understood that that was not an acceptable thing to do. I mean, that. That's the one. That's one of the Things, the few things that could actually completely ruin a business of ours like that is if their trainers are, you know, they spend their time, half their time on their phones while you're paying them $80 an hour. It's just that's. That wasn't something that was going to be able to fly. So it came in with more authoritative tone and made it very clear that if we got such a complaint again, that that would be a wrap. And in that situation, we never got another complaint again. And, you know, the trainer continued to do to work with his clients and his reviews ended up getting better and better because of that. And I think that those two illustrations just kind of showed that as a manager, you have to approach different issues with different people in different ways. Had I come in my first trainer, you know, with the very authoritative one strike, you're out rule, I don't think that would have been beneficial to our relationship. Not even just as a employer employee relationship, but just as, you know, person to person. You want to always make sure that you're treating human beings like human beings. I think it's very easy to dehumanize people when you're, especially in business, when you're really focused on dollars and cents. It's very easy to kind of forget that people are individuals with individual stories. But in other situations, you have to come in with a little bit more finesse, as some of my friends would say, and other ways you actually have to just come in with a hammer and you have to know that what you're doing is specifically for your company. And there's certain situations and decisions that you have to make that are more directly attributed to the success of your company than it is to the success of your relationships with people. Sometimes they differ and you just have to be able to identify situations when you're leading people to how to approach them with different types of solutions to different problems.

Yeah, those are great examples because it just demonstrates that the ability to negotiate and resolve disputes takes creativity and flexibility too. You can't just approach every situation the same way. Those are great points. Let's shift the conversation to your next business endeavor, the international business in China.

Okay, Right. So essentially after this, this personal training company, one of the. My partner actually, who had moved to California, to Texas, put me in touch with a friend of his who was actually an educator in California that was in some work in China with this preparatory high school that's kind of specialized in preparing Chinese students to come to American universities. So at the time I was a high school teacher. I was with Teach for America. I was just finishing up. I enjoyed my time there, but I was ready for the next move. So I'd actually secured a job overseas, but I had about three months in between when I started that new job. So, long story short, we decided that there was a way that we could create some synergy between my network and my friend's friends network in China and helping them create curriculum for their students and also helping them staff teachers at their high school. So it got messy very quickly. And the reason it got messy very quickly was in hindsight, I didn't really know anything about the type of person I was getting in bed with. I didn't really. I knew that, you know, she was an ambitious, driven person with a big network in China who had the opportunity to help me make some money, but I didn't know anything about her as a person. But, you know, as Richard Branson said, I said, screw it, let's do it. And jumped headfirst. Got on a plane to Beijing for a five week project. And while we were, it didn't take, I don't think it took up to four days being in Beijing for us to get into our first, first disagreement. And we had signed a contract that was dictating the amount of money I was going to be paid for each teacher that I was going that I was able to successfully recruit. And apparently when we got there, there seemed to have been a misinterpretation or a miscommunication between the amount of teachers based on an aggregate as opposed to individual. There was, apparently it was. The other party was telling me that the numbers that we were supposed to be getting paid were based on if we were able to get a minimum amount in different brackets. Like if we got five, then we get paid at a certain level. If we got 10, we got paid in a certain level. But that was never discussed in real life at all. It was just a simple, you get X amount of dollars for X amount of staff. So getting there, I had zero power. And it was a horrible place to be in, in terms of negotiation because I was in Beijing, China, I didn't know anyone. I wasn't familiar with the culture. I was living at an accommodation that my business partner had provided for me. She was essentially feeding me. You know, she, she had secured my, my apartment that I was staying at and I was going to be there at her mercy for the next five weeks.

Oh, wow.

So I had zero bargaining power. The teachers I had already brought were already there. It wasn't like I was able to, you know, renege on my part of the deal and say, okay, well, I'm not gonna, I'm not gonna bring teachers at this rate because we were all already there. So I think from a negotiation standpoint that you couldn't be in a worse position in a situation like that where you have essentially no bargaining power or tools in your favor and in a situation where you're completely at the mercy of the other party. What I realized the only option that I had was to kind of reframe the whole negotiation paradigm. And I had to focus, I had to shift the focus of the situation that I was in right then and how we were negotiating and dealing and to move it into a future negotiation. So basically I told her this person, I said, listen, this is what's happening now. You got me here now, great for these three months and you can go ahead and you can continue to, you know, rewrite the terms of the contract that you had signed already under whatever pretenses you have, and realize that this, not only is this relationship between you and me completely over when this, this, this two months is over, but in the future there will never be any opportunity for us to work again. And because the, the international education network is so small, I will make sure that people know that this is how you operate. Right. So I completely shifted the focus of, you know, her thinking that this was going to be a one off transaction where she was going to be able to pull a fast one on me and kind of walk her back down into an, into a role with integrity, knowing that if you treat me well now, we have greater potential to work together to make more money and to establish a more structured long term program in the future. And that was the only way I was able to get any more, to get any type of, I don't want to call it necessarily leverage because at that point, I mean, I really had no leverage. But I was able to reframe the whole perspective as to, from changing it to us from what was a summer project to creating a company out of it, something that we could continue to benefit from the other. So that alone helped us to fix the deficiencies in our current situation and also paved the way for, you know, future, our future dealings. And even though it sounds a little difficult because this, you know, you've been given fair warning that the person you're dealing with can be shady, to put it nicely, at the same time, you're prepared now. So, you know, before, before I sent any of my teachers to her, I was getting my money up front, I knew that going forward. So I was able to readjust my expectations after an understanding of this person I was dealing with and then shift my business strategy to make sure that I was protected in different ways in the future. So that was an experience that I think could have ended up horribly if, you know, if I had just looked at it in a very kind of narrow, linear way, as opposed to trying to make. Trying to expand the pie and create more value or the opportunity, at least the appearance of more value for the person that you're dealing with.

Right. So just to clarify, after you reframed the negotiation, were you able to get the terms to the. To the status you thought they were in originally?

I did.

Okay.

Wow. And that was, like I said, that was the only way I think that that could have happened because otherwise I was completely at this person's mercy in a foreign country with people that weren't necessarily very friendly to people like me.

Yeah, that's interesting. And let me put my, my business lawyer hat on real quick and ask you, did you have a lawyer draft up the contract that you wrote with her originally?

No, Kwame, I did not. And that was another huge mistake is that I think a lot of entrepreneurs and small business owners make when they're starting companies or projects is to think that they can protect themselves or to think that, you know, they can create contracts without having professional. And that is just. I mean, I understand that everybody's trying to save money in the beginning, but that is just one way that you absolutely want an area you can't afford to cut corners on. At the beginning of starting any type of venture like this, you absolutely have to make sure that you have a sound lawyer draft sound legal documents for you before you proceed.

Yeah, yeah. It was funny. I was listening to the advertisement of another lawyer and he said, I love sites like LegalZoom because after you pay them $50 to get your contract done and then you mess yourself up, you're gonna have to come to me and you're gonna have to pay me a lot more on the back end to clean up your mess.

And accurate.

It's tough because like you said, it's not cheap to get this stuff done, but it saves so much time and frustration and it gives you a clear vision of what's going to happen in the future when you have these contracts done professionally.

Right. I mean, that's the cost of doing business, period.

Exactly, exactly. And I know now, for me now as thinking as a lawyer, lawyers are typically pretty risk averse. And so Whenever they see, whenever you tell them the business situation, they can see potential problems and help to protect you beforehand. So.

Right. And now, you know, coming, coming out of law school, I look at so many things that I did in those two projects that I worked on earlier and I, I just, it's painful to look back at. Makes you want to cry realizing how many errors and mistakes, just completely unforced errors that you make, you know, when you're trying to, to protect yourself legally. I mean, there's a, there's a very good reason people go to law school for three years and pass a 16 hour test to be able to do what they do. Right?

Yeah. Okay, let's end with this. What is one negotiation tip you'll leave with everybody today that they can, they can use to make their business better.

One negotiation tip. I think it's got to be creativity and defining value. I think a lot of people go into situations where they're very constricted into what they see as potential value and they end up missing a huge portion of what's actually available to them. And I think it's very important that people just understand that if you're going into negotiation, you know the subject matter that you're negotiating. But prior to that, you also need to identify tangential areas, ancillary, you know, ideas or concepts that you can bring into the discussion that the other party may not have thought of or may not have mentioned it had not been the subject before. But in negotiations, you can bring anything to the table. The table is infinite, right?

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