MBA1733 Guest Teacher – Mesh Lakhani – How To Find The Right Cofounder and Business Partner

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Finding the right business partner, co founder, anybody who's going to have skin in the game is not an easy task. There's a level of commitment you're going to have to make to this person and a level of responsibility that person is going to have to have in exchange. This is not like hiring an employee because employees can come and go. This is somebody that if it doesn't work out, then it's not so easy to say goodbye to this person. This is such an important topic. That's why I'm so happy that we have Mesh Lakhani to teach us and highlight what are the main points, the main attributes you should be looking for in your next partner in business. And this would apply to anybody who is going to get some equity in your business. This could be a C level higher. This could even apply to an investor that's going to be involved in the business. So I want to pass it on to Mesh Lakhani to teach his guest teacher a lesson. But I'll be back to wrap up today's episode, give my takeaways and fill in any gaps. But for now, take it away, Mesh.

Hey, everyone, I'm Mesh Lakhani. Thank you for joining me today. Today I'll be teaching you about finding the right business partner or co founder. Let's get down to business. Okay. In today's lesson, we're going to learn about how you think about finding the right business partner or deciding to have a business partner. And that can be co founder as well. This doesn't necessarily just go into like tech startup plan for the most part. It actually can be applied to anything. You can have any type of business. It could even be in content. It could be a small business. You could be opening up a restaurant together. There's so many components where you want to find a business partner and one that's complementary that you can grow together. Okay, so I've got six main points. Number one, don't rush. Like dating. Take your time. You don't want to rush into partnering with someone just because you're excited about an idea. And this is the thing. I've been there before. I know you get excited about an idea and you look at your friend or you look at whoever you're talking to, you're like, we should do this. We should start a business together. Don't do that. Honestly, I'm talking from experience. There's so many more things that go into it. I mean, if you go on a first date, maybe you think that you want to marry this person, but you don't sit there and be like, let's get married tonight. The chances of that working out are probably pretty low. And you have to think about finding a business partner or choosing the right business partner. You're getting into a long term relationship and it could be years, it could be a decade, it could be decades. And so you really want to be careful about who you want to build something with, something sustainable for years to come. I've made this mistake quite a few times actually right out of college.

Two people.

I remember just being like, hey, we should start this together. Like, didn't think about anything else. I just thought like, hey, you know, the three of us should do this. And didn't really work out. We weren't very complimentary to each other. I didn't really think it through. I actually did this in college too. I remember I was trying to throw a party and it was my first paid event and I got my roommates involved. They didn't do anything. I did everything. And I still split it with them three ways. And granted it was super simple, but like, I didn't really think about the relationship, I didn't think about the long term aspect of it. I just got excited and I jumped into it. And every time I've done that, it's been wrong. And so there are a few ways to think about how do you find the right partner for yourself. But the number one thing is don't rush. Take your time. Make sure that this is something that you want to do, or make sure it's someone that you want to be with and work with for the foreseeable future. Number two, opposites attract. Make sure you have complementary qualities. You want to partner with someone who isn't just like you. You don't want two of you in the room. Their strengths need to be your weaknesses. And you both need to bring value and expertise to the table and set those expectations early. Now what I mean by this is when you jump into business, you want to make sure that both of you aren't exactly the same. And that basically means that you're not doing the same thing. Because what happens there, it ends up being counterproductive. You're both doing the same thing, you're both competing for the same work, or you're not getting as much done because the other person doesn't know how to do the other things. And you need to play to people's strengths. I Remember when we started a fund, part of the issue was, is that I didn't know anything about fund administration as an investor. I didn't really understand the accounting that went into. That doesn't make me a bad investor. I'm just not a good accounting accountant. And I realized that those weren't my qualities and those weren't my strengths. We ended up having to hire a third party admin. But the thing was you have to make sure that when the two of you or three of you or whoever is getting involved together that you all recognize your strengths and your weaknesses and you all have to see if you're complementary together, who brings what to the table and delegate that early on. You don't want to be fighting about this down the road and the chances are things will change, but at least you set expectations early. And you know what each of you is in charge in, you know, what each of you is good at. And that is really, really important. To decide from the beginning, assess the commitment. How much is this person willing to sacrifice? Do they care about the equity and long term goals of this business? You want someone who's just as committed and excited about the business as you are. And again, it comes down to expectations. When you get into business with somebody and they say, hey, well, I need to get paid a salary, but I also want equity. And you're not taking any salary. I'm sorry, that's not the same level of commitment. Those are completely different. I wouldn't even call that a business partner. I would call that an employee. And so the people that you get involved with that get involved for the long term. And you need to make sure that they're committed to this. And you need to make sure that they're in a place that they can be committed to this. You know, a lot of times people have a lot of overhead. They might have a family, they might have all sorts of expenses and they might be counting on you to make sure that they're going to be okay. At the end of the day, that is their own responsibility. You are not responsible for them, but you are both responsible for your business. And you need to make sure that the business performs. And so therefore you don't want someone who's potentially committed but then says they want to extract the revenue out of the company to pay for their personal life doesn't really help the business out. It's a very short way of thinking about things. So I think assessment of commitment is really important. You need to make sure that you sit down, you need to discuss how long this potentially may last, who's putting in what, how much time are you guys willing to do? What are your salaries going to be? How much equity are you each going to have? And that really comes down to figuring out if that's the right partner for you. And so commitment is really important. Number four, real talk about money. You need someone who is upfront about their financial goals, but also realistic. Like we talked about in three sometimes you're going to have people that have just different financial needs, and that's okay. But you need to talk about it from the beginning. If someone looks incredible on paper, but they want a ton of equity and a ton of salary, which ultimately keeps you from growing the business, it's not the right partner. And there's a difference between a salaried employee and a business partner. A partner shares risk with you, and that's really, really important to find early on in a person. When you want to start a business together, you need to share the risks. And the risks can be anything from putting money in. And maybe only one of you has money and the other person doesn't have as much. And that's okay. You can figure that out. But you need to put the time into it. You need to show that you're both risking so much for this business, for the success of the business. And money is important. Money is important to talk about. And you need to talk about what the other person's expenses are and your own. You need to be realistic about it. It's okay to take a salary. There's nothing wrong with it. All that stuff about cup of noodle soup and living like eight people in a bedroom, that's not what we're talking about here. You might meet someone who's married and they have kids, and that's okay. You just need to be realistic about your goals. Like, they may be willing to sacrifice a lot of things financially in their job to take on the risk with you in the business, and that's okay. They just need to know the risk that they're taking, and you need to understand that risk as well and respect that. Number five, experience matters. And this kind of goes back to number two. When I say opposites attract, you want to have someone who's complementary to you. The thing about experience is, ideally, you want a partner who has done this before, has something to share with you. In terms of lessons, you always want to be growing and learning and make sure that you keep each other accountable through the new experiences and the past lessons. A lot of what I experience is that early businesses I tried to do that people had no experience where they said they had a ton of experience and I didn't know, really know how to value that. I didn't really know how to assess that. At the end of the day, you want experience, you want someone who has domain knowledge, which means they have an expertise within a certain field and that's what they're bringing to the table. And essentially when you look at companies and great companies that I personally invested in or even funds that I've invested in, you look at the experience of these people like what have they done to show that your money or your investment is going to be safe with them? And obviously you're taking a huge risk. But if they, they're doing something in the restaurant business, you want to know that they've had experience in the restaurant business or in the hospitality business or something to do with understanding the risks involved with that and how those things function and how to operate it. And I think that's always really, really important. Experience is important and your own experience is important. And maybe you don't have any experience. Okay, then find someone who does. It matters obviously in the case where maybe neither of you have experience. Well, understand that and know how hard it's going to be and how are you going to gain experience. Number six, pay attention to the small things early on. Red flags, you know, I'm saying in the beginning, when you're feeling out someone, whether they want to be your business partner or not, pay attention to the little things, the red flags. How do they communicate with you potentially is how they communicate with you as a partner. How they email you now is how they'll email you as a partner. The little things count. And there are all sorts of ways that you can look for red flags from day one. Keep a journal, write these things down, think about how they react to certain things or if they get defensive or maybe they get too overly optimistic about things and need to reign things in. And some red flags are okay, but some things might be reoccurring. And if it bothers you in the beginning, make sure that you question that. Face them, find out why they're doing those things. And if it's something that can be fixed, great. If it's something that can't take that into account. Alright, so those are my six main points in figuring out who the right business partner is for you. The right co founder. Again, this is, it's a learning curve. Sometimes you might have to do it a few times to find who the right person is. I know I have, and I have a great business partner that I've been involved with for the last almost five years now. And, you know, we've developed a great relationship and we've had those ups and downs. We figured out who's good at what and who's not good at what, and we've had to reassess our business as we've gone down the road. We've had to actually think about restructuring different components of who does what and who earns what. And that's okay. That's just being an adult and gaining experience on what it is to run a business and then eventually doing what you really love to do. So my main six, number one, don't rush. Number two, find someone complimentary. Number three, assess the commitment. Number four, talk about money early. Number five, experience does matter. And number six, pay attention to the small things. And one more thing to add. Communication is key. Always be communicating. Don't be passive aggressive. If you have a problem, talk about it, talk about it early. And figure the best way to communicate. Lack of communication, just like with any relationship, can be a downfall. Okay, guys, this was my lesson in finding the right business partner and co founder. If you want to continue learning about a lot of the business lessons that I teach, you can go to thetalkmoney.com which is actually my podcast where I teach about business and finance through storytelling. Thanks again for joining me today. And back to Omar.

Take care.

Be safe.

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What a great lesson by Mesh Lakhani. Make sure you check out his podcast Talk Money. You're going to learn a ton from Mesh. One of the things I want to add to today's discussion is whenever you're making this decision, and like Mesh said, you should take your time, but you need to also understand that nobody's perfect. Okay? You're not going to find this person with no flaws. And it's good to just come to terms with that in the beginning, even if that means creating a pros and cons list as you're evaluating. If you want to work with this person long term, if you want to partner with them, and what I found in my experience, it's just good to know, hey, this is who I'm going to have to work with, deal with, maybe even argue with sometimes. And also get some wins with. Are these cons livable? Are these drawbacks things that I can live with? Because everybody's going to have drawbacks, everybody's going to have flaws. The way I see is that if the positives really get you to where you want to go, they're essential to getting to where you want to go. You need to have these positive traits in your team and the negatives are not detrimental. There's just things that you're going to need to work with. That's a good thing. And it's really good to know in advance so you're not frustrated. When you are facing those challenges with that person, you're expecting it. You know, this is what you decided to commit to. So it's always good to get in front of it and to just have it in front of you before you make this decision. Yes, I know these are the positives, these are the negatives. I'm okay with it or not. And that's when you make the decision. And you won't know unless you actually make the effort to put them down on paper. Thanks so much for listening to the $100 NBA show. If you love what you hear, you know what to do. Smash that subscribe button so that you can get the next episode automatically. Also by subscribing. And by the way, subscribing is absolutely free. You get our archived episodes. You get access to over 1700 episodes in our archives. A ton of lessons for you to go deep in. Before I go, I want to leave you with this. Sometimes it is scary to go into a relationship, a long term business relationship with a partner, with a co founder. You're not sure if you're protected. And my advice to you is for everybody's sake, it's good to get an attorney. Even if they're just on, you know, contracted hours, if they're just part time, if they're going to just charge you for a block of time to help you draft a contract, help you draft a memorandum of understanding, something where you know that it's fair that both sides basically get a deal that makes them feel like they're taken care of. There are plenty of lawyers that understand startups are on a tight budget and you can just flat out say, hey, we're on a tight budget. This is our budget, this is what we want to do. We have drafted something for you. If you give a lawyer some document and they can review it, that's a whole lot better than you asking them to create the document. So get a lawyer to feel a little bit safer about your decision and that both sides are protected. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care. Of.

This Valentine's Day, the UPS Store certified packing experts are helping pack and ship all the ways we care from the Lovey dovey XOXO Gifts gifts for your Galentine's gal pal, even pet gifts for Doggy Dearest. When you ship UPS Air at the UPS Store, your items arrive on time or your money back, guaranteed at no extra cost. Exclusively at the UPS Store US retail location. Send your Valentines on time at the UPS Store. Visit theupsstore.com airguaranty for full details. Terms and conditions apply.