Important Conversations to Have with Your Business Partner with Roland Frasier and Ryan Deiss

Foreign.

You're listening to Business Lunch with Roland Fraser. This is your seat at the table.

Hey everybody, Roland Frazier here. Welcome to the Business Lunch. I also have my co host, Ryan Dice here, who's not going to introduce himself this time because he's going to be shy this time. It's like we're going to do this different every time on the intro.

Welcome to the podcast.

Really excited to have you guys here. We're going to talk about something today that hopefully you will never experience, but you probably want to be aware of it as a possibility and think about how you can avoid it and how you can deal with it. Ryan, there's been some interesting mutiny at a company that was quite popular recently that is in the news right now. Do you want to tell us a little bit about what it is and what's going on?

Yeah. So there was this company, Great Jones. Well, still is. The company's still in business. But this company, Great Jones E Commerce, I think they did bring on some more after the ones that left. But yeah. So I mean, long story short, you got this company, Great Jones, founded, I think they were founded in 2016, 2017 and they basically made really kind of cool direct to consumer cookware. So different cooking pots and I don't know, I don't cook pots. Stuff that you make food in.

Cooking stuff.

Yeah. And it was all like Instagram friendly kind of stuff. And really, it's kind of a sad story, right? Cause you had these two women who were like super great friends in college and they graduated, kind of went off, did their own careers. One of them had kind of this design and branding and really understood kind of social. And the other one was more of an operations type person. And so they get together and they say, hey, let's do this business together. Let's do this startup. And they raised some money and they hired some people and got really. They were great at pr. And so from the outside looking in, everything looked perfect. But behind the scenes, it was anything but. These two co founders were just always out of alignment. One person wanted to do another thing, the other person wanted to do another great big mess. And I guess one of the co founders, it's tough because you go and you read the story and again, if you want to Google it, look it up. We'll drop it in the show notes, but it's a Business Insider article. Mutiny at Great Jones. It's all about this co founder, by.

The way, a great service to subscribe to if you're a business person. I'm going to give them a free plug. I think it's great.

Yeah, they've got good stuff and they really kind of my critique of this article is they kind of clearly wanted to have a good versus evil slant. And so I think they made one of the co founders kind of seem like the bad person and the other one seemed like the good person. Having been through this myself, I know anytime something craters like this this badly is always both people are at fault. Right. So I just be cautious when you go through and read it, make sure that you're not necessarily taking sides. But I do think it's worth reading, especially if you have started a business and you have a co founder because this happens all the time where you will have infighting with co founders and it can bring down great companies. And in this case, one of the co founders pushes out the other one. That co founder that got pushed out kind of had a better relationship with the team that was there. And so the entire team walked. And so here you're left with one of the co founders, Boots outer, co founder, entire company, everybody quits trying to figure out how to make it work. It's just a mess. I hope they work it out. I hope the company still succeeds. I hope the investors make lots of money. I hope, you know, all the folks who left find, you know, new great jobs. Man, it sucks. So how do we, Roland, you know, we're, we're business partners. How do we make sure that this doesn't happen to us? Right. How do we make sure that we don't get into some co founder work? I think in general we, we agree, but there's times when we, you know, don't. And so how do we make sure that disagreements that are going to happen, that they don't lead to this kind of infighting?

Yeah, it's all communication, I think. I think first you have to be careful who you go into business with because I think a lot of people go into business with people that they have fundamental disagreements with before, just ideologically or philosophically before they go in. If you're focused on I want to do good in the world socially and somebody else's, I only want to make profit, then that's going to be a conflict that's going to be hard to resolve. Ultimately they're very different ideological places to come from. So I think that's the first thing.

Ideally, basically kind of putting that into the category of like align through values, not, not just like moral values, but also, you know, it's kind of like a marriage, right? Like you'll have. It's not good to get married to somebody if, if they're like I never want to have kids and you're like, I want to have seven. Right.

And it's not good to get married or even in a relationship with somebody to a deep level until you've had a conversation about a lot of those things. Finances would be another one. Right. What's our idea on how we're going to run money? Are we building it and always investing in the company again, or are we going to take some profits out? Are we going to take all the profits out? Those are all really important. What's the work ethic? I think that we should work forever to do everything we need to do. And somebody else might say, well I'm 8 to 5 or 9 to 5 because I've got family and I'm not weekends or anything else. And then you get like, as an.

Attorney, seeing so many things fall apart.

That were friends, family, best friends since third grade, relatives, spouses because of business. I can say that those are really critical things. And so, so what are some.

I would say I think that list is good. So I'm sorry Roland, I didn't mean to interrupt those things. So agreement on how are we going to take. So you said work, like what is, what's from a work perspective. Are we both agreeing that we're going to be all in 80 hour weeks or are we going to kind of have a lifestyle work when we want? And almost defining that spectrum and saying, where on this spectrum do you fall? And it should almost be like the Newlywed Game where you each like write down your answers separate and then come back together and talk about it. And so another one would be taking money out of the company versus leaving it all in. I guess another one would be are we going to go and raise capital? Do we want to own it all? What are some of the other areas that you think would be worth having a conversation about?

I think one like just as a general overview, one of the best things that you can do is go and get a form, a long form partnership agreement from LegalZoom or something like that and take a look at what goes into a partnership agreement. What are the things that people agree on there? Because that covers a lot of that. What happens if one of us wants to leave is a big deal. And what happens if we need more money in the company? What happens there? Right, because you can have a company that gets completely deadlocked because it's just two people or it's four People. And another thing would then be, what happens if we get deadlocked? How are we going to break a tie? Can we build a mechanism in that we're both happy with so that we don't have to go to litigation if that's the case? So I think those, like, get that. I don't think going through a whole long list of them here would be as helpful as just hitting the highlights that we did. But going to. Another thing that I think that we saw and you saw in Digital Marketer is that it's really hard if you have two people who are good at the same thing and don't have necessarily complementary skills, as opposed to the same skills that you want your partner to add something that you don't have or to be superpowered in an area that you're not so that you can own particular things within your business relationship. For example, I think when you and Perry were there, you guys were both marketers, and I know vastly different ideologies, vastly different desires for outcome and things like that, neither one of them wrong, but competing and not a process that had been agreed on or built in for handling that. So it was kind of like, I think you or he or maybe both of you told me, it's like, we go into the office one day and Perry's on vacation. And so Ryan's like, these are our initiatives. These are our objectives.

This is what we're gonna get to do.

We're all rallied around, everybody into it.

Yeah, yeah, yeah, yeah.

Everybody's in. And then you go on vacation, and Perry comes back and he's like, no, man, we're gonna do this, this, and this. And everybody's like, ah. So that created a challenge, which I think you should speak to, because that you had that direct experience, and it would probably help people to hear.

Yeah, for sure. And this is what I'm saying where at the time, in the moment, I was like, this guy's such a jerk. What is his problem? He's obviously the bad guy, and I'm obviously the good guy. The reason that I say it's not that black and white is because I lived it. And being on the other, just being further removed away from some of those and also just getting some good coaching from some people who have been there and done that, I realized, oh, crap, I got to own some, if not most of this. And for us, what you said there, who holds the trump card on certain decisions? Because if you got a co founder, you can't say, well, let's make it majority wins. It's 50. 50. You don't want to get into that anyway. So it's like, on what area are where there are clear divisions of labor, clear distinctions in skill sets, it becomes easy. I'm never going to go to you and say, I don't know, Roland, from a business structure perspective, from how we're going to do this deal and set this up, you know, we need to do it my way, because obviously you used to practice law, right? So you're going to have more experience, you know, in that area, and there's going to be certain things where, you know, I might be able to be like, hey, dude, come on. Like, this is my thing. Like, let me have this one. Right? So I think having those conversations and the challenge, like you said, that Perry and I ran into is we had so much overlap in our skills, like, the things that I'm really great at. So. So is he now. In the early days of our partnership, it worked out because I had the company, and he came into what was then my company. And so in the early days, it was just generally like, hey, if we can't decide, Ryan, you pick, because it's your company. Right? And so I got used to this idea of, like, well, I hold the trump card on all these things. Well, understandably speaking, after a certain amount of time when he's full partner, when his contributions have, you know, generated at least as much, if not more than mine, he's gonna start saying, well, I deserve to hold the trump card on some of these. And so now he starts doing it, and I'm thinking, like, well, why did the. Why did the rules change? I didn't actually think this, but I'm like, I thought I got to pick this, and now he's doing it, so I'm gonna take it back. And at some point, he's thinking, why does this guy get to hold the trump card? I'm gonna take it back.

Right?

They never talked about it. If we had just said, wait. And funny enough, after we had kind of split up the business and, you know, kind of, I took parts and he took some other parts after we bought each other out of certain things, had that conversation once the emotions were removed, and it's like, God dang it, I was such a jerk. He's like, yeah, I was such a jerk. Like, ah, I didn't mean that at all. You know, I didn't. That's. Of course, I would not want to deny you it. You said it. It's really just communicating. What do we think? Talking about it like, what are the areas that I really respect about you? What are the areas that you really respect about me? What you are? What are the weaknesses that I'm going to acknowledge now? What are the weaknesses that you have? Where do these things overlap? Where, frankly, do. Where do we overlap in our strengths? Where do we overlap in our weaknesses? How do we make decisions? Who's ultimately gonna have that?

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Kind of last little trump card.

What are responsibilities in the business? But I think also, and you mentioned this, you don't want to get to the point where it comes down to a vote, even if you have control or even if you could sway the other people that are owners in the business so that you did have control. If you ever have to do that, you failed, and you're really starting down a dangerous road. So I'm a huge believer in consensus. And so I think your responsibility as a member of the company is to advocate your position and persuade the other people that it ideally never comes down to a vote. Because I tell you what, if it does and you're on the losing side of it and you're not like, as opposed to you conceding, like, you've wanted to do things that I did not agree with, and I'm sure vice versa. And I've just said I am going to go along with that. I don't agree with it. I may have said that to you or you've said it to me. What is it? It's agree and something.

Agree and commit. Disagree and commit. And that's the point. Right. If you're going to go that route, then as far as everybody else is concerned, it's kind of. We talk, we joke. It's like, but we can't fight in front of the kids, right? As far as everybody else is concerned, if it's something that you wanted to do and I didn't, I'll say, I don't think we should do this, but we're going to go along with it. As far as everybody else is concerned, I am all freaking in now. If it doesn't work, it doesn't mean I'm not going to be like, told you so, jerk face. But we know that goes both ways. Yes, right. We know that. And we know that we had something blow up kind of recently that cost us a lot of money. That was my call. And I was like, hey, guys, I'm really, really sorry. And what I appreciate about you and Richard is y' all were like, these things happen. Had it made money, you wouldn't have asked for more of it because it was your idea. That's what a partnership is. So there is that sharing. But, yeah, you got to disagree and.

Commit and work on consensus and then pick the hills you want to die on. It's just like with your kids, right? It's like, you will eat the salad. I don't want the salad. It's like, do you want to die on that hill? Do you want to clean up that lettuce all the time?

There's another little wrinkle here that I think is important because when I looked, there were, like, three big articles that this challenge. Three big challenges, I guess, that this article pointed out. The first was that basically they pointed out that, like, really inexperienced co founders, they hired too many junior team members. Right. And I do think that that's a mistake that co founders will make you get co founder conflict. That happens a lot of times, very often because team members aren't doing what they're supposed to do. And so that bubbles up and now you have, you know, co founders, owners doing work that they probably shouldn't have to do. And when this happens, like last month. Right, Absolutely right. And so be careful a lot of times that you're not fighting with each other because there's somebody on your team who isn't doing their job. And that like reading this article, that to me kept coming up again and again. There were people that were on their teams that weren't doing the job. And so, you know, one of the co founder had to pick up that slack and they started getting resentful about it. Well then fire that person and get somebody who will do their job. Right. So I mean, but that is, I mean it sounds simple, hard to do in practice and when you're in it. But that's kind of the first thing if you're going to do a postmortem on, you know, why did this co founder war happen? I think the biggie is they were inexperienced and they hired people on their team at fairly high levels that were just too junior, like they weren't ready for it and it didn't take the pressure off of them. The second thing was misalignment of vision. I want to come back to that one. But the other biggie, and this is something we dealt with as well, is in this case, and we see this a lot with a lot of different businesses. I know this was the case with me and Perry. One of the co founders sort of is the face of the company and the other one is kind of more behind the scenes. Right. So one of them more is the brand and the other one is the person behind the scenes. And maybe they're running things operationally or maybe they're doing the kind of the blocking and tackling of like sales and marketing. And where this can build up a lot of resentment is if you're the person who is the brand, which that was me. Like I was the face and the brand of digital marketer. You start to feel like, well, no, we're not going to do that because I have to go out there and represent this thing. Right. It's my face, it's my name on the line. I remember me saying that. That is really, really dangerous. Right? That is really dangerous. So the Person who's the face can get bitter because they're having to represent something they don't want. And then on the other side, the person who's behind the scenes start to get bitter because they're like, why are you getting all the publicity? You know, and you think about, like, bands, like music groups, you know, why is the lead singer up there? And, like, the drummer is kind of off in the shadow somewhere. Like, this sucks. I don't. I don't feel like I'm getting my just due. And you've got to recognize that, again, these are different roles. And the fact that one, you know, founders, one co founder's role is that they're going to be more the face, that doesn't mean that they should necessarily have more authority. And the fact that somebody's more behind the scenes, it doesn't mean that they're any less valuable. But if you don't communicate these things and talk about it, it can be tough.

You couldn't have a situation, I think, where somebody could get outvoted and be the face of something that they just didn't believe in. That would be a conversation if you were going into that kind of relationship that you should have. The other option that you have is to build your own presence, right? So I've built my own presence. Even though you and Perry were well known, I was like, I don't really want to be famous, but I do have stuff that I'd like to share and say, so I can create that personality. And now we have multiple faces of the business, which actually makes the business stronger. Right. The other thing that I experienced when I was practicing law, I came into the very first law partnership that I had. And the guy that we were partnering with, Grant, who I met in law school, who was a litigator and me, partnered early on in our law firm with a guy who represented Tony Robbins and a bunch of other clients. And he was big in the entertainment law area. His mother was Esther Williams and his stepbrother was Lorenzo Lamas. And he had connections in the entertainment world, which is one of the reasons, I think, that Tony Robbins had sought him out. And our conversation at the first negotiation for that partnership was, hey, listen, I've had this problem in the past with partnerships that didn't work out because people want to go hang out with Tony, and he'll invite me to go fly airplanes or something like that, or I'll get invited to this movie set. And, you know, I can't take you guys along for all that stuff. So I Just don't want it to be a problem. And we were like, yeah, we totally don't care about any of that stuff. But obviously many people do. Like, I represented a whole bunch of well known athletes, football players and such, and I'd get tickets to the super bowl for free and the players boxes and stuff and I'd be like, give them away because I didn't care about. I don't. Celebrity doesn't impress me. I think it's very valuable as a tool for yourself and it's very valuable as a tool, as we talked about in another episode, to use to market and sell stuff. But neither you nor I nor Richard really is overwhelmed by that. It's just like people are people. Some people are more well known, some people are less so. In that relationship though, when we were negotiating, we had to have that conversation in advance that hey, this is going to be. These are perks that come to me as a result of these relationships and my role in the business that won't be available to you and I need you to be okay with that. Having that conversation in advance, though, I got to give him a lot of credit for doing that. It's a hard conversation and it stops you later on from building this resentment. I think that whatever relief valves you can build in in advance for anticipated potential resentment is a really strong thing to put in to your conversation. And as you go into the partnership and then having continual conversations where you're not afraid to have hard conversations too stops resentment. Because a lot of people are conflict adverse. Like Perry would literally fake being on the phone and walk out of any negotiation of any type. Right. And still would. I don't like that. You know, so we need to talk about how we're going to split this up. You know, it's like he'd be looking at the other end, be like, where did he go? Oh yeah. And so with a guy like that though, how do you deal with potential conflicts that come up that he has where he's feeling resentful and you know, he's conflict averse or confrontation averse even in a friendly negotiation conversation. So that you have to be aware of as well, because resentment to me is the big thing. And I think that's what happened in this business because you don't just take all of the people unless things have fallen so far apart, which is absolutely both people's responsibility for sure.

And it was, you know, you go through and you look at it and you know, one of the co founders was, you know, featured in a magazine and the other wasn't. And it was clear that that made the other one, you know, upset. And I'm sure had they come on and said, like, look, so as a part of doing this, if I'm the face, then I'm going to be the one going to the photo shoots and stuff. And you're not. Like, if you want to be that, then we need to tweak how we're doing this branding to make sure that it's both of us and it's a conversation. And probably, if it had it, like, I'm going to go and do this so you don't have to, then nobody's getting their feelings hurt. If I. If I had a choice in it and I wouldn't want to do it anyway, that's fine. If I was left out, even if I didn't want to do it, now I'm pissed, you know, I'm pissed that I was. That I was left out. And I love that idea of a relief valve, I think is so good. I remember when we were selling Traffic and Conversion Summit to Clarion, talking to Alex, who is our business partner, the person who's responsible for that group that TNC is under, saying to him, man, let's have a conversation now about all the ways that we might piss each other off. And that was exactly what I said. I mean, you had a much nicer way of putting it, but it's like. And I went to. I was like, here's all the things that I could see you doing. That's really going to piss me off during the negotiation. And then after, when we're working together, here are the things that are really going to piss me off. Now I want to hear yours. And it's a really healthy thing to have. And it's very safe on the front end because none of it's happened. It's almost kind of fun, you know, none of it's happened. And so I would definitely. I would encourage you have those conversations. And one of the most important conversations to have is how. How are we going to break up? Right? That can be a bit awkward if you're talking, like, literal marriage, but in a business relationship, businesses are not designed to last forever, right? They're not designed till death do us part. That is not the function of a business. So to say, hey, let's decide what it looks like right now to get divorced. And that is the terms that I will use. What does it look like for us to get divorced, for us to separate? It's a very healthy and helpful Conversation to have going back. I'll kind of make one more point about this, one of my takeaways, and we can move on or close things out. But kind of the three points. First, again, you know, one person was the face and the other wasn't. That can build up resentment if you don't talk about it. Hiring people who are too junior and so different co founders, you know, resentment created when some co founders happened to pick up the slack. The biggest thing, though, was they were misaligned. And this is kind of where you started things off. They were misaligned on the vision for the company. One of them wanted to pursue profitability and, hey, how can we make money ourselves? How can we actually get paid? And the other was like, no, we're going for unicorn. We're not going to take any money out. That is one of the areas where it can really. I mean, you and I have got into conflict over this, where I've been like, dude, I think we need to leave more money in. I think we need to take more out. We've always worked it out because it's not difficult to convince me that we should take money. But in general, what do you think about that? Because that is an area where I could really see if one of the founders, like, we're shooting them in. Right. This is a unicorn or die kind of thing. And the other is like, I thought we were doing this to make money. That's the one that I've seen create more conflict than most.

Yeah, that and effort. The amount of time that somebody's going to put in. Because you may be able to get everything that you need done to take care of the part of the company you're in charge of in four hours a day or three. Right. Or a week. And maybe it takes me 80 hours a week to do mine. That's just how it is. Right. So do I care that you're not spending the other 76 hours a week that I am? Maybe, but we've got to have a conversation about that, is, are we focused on time commitment or things done? And then the other thing is money. Money makes people crazy. So I think if you're not aligned on that going in, you don't do that partnership. And that's a conversation you have before you go in, because otherwise you're never going to be in alignment. If you can't agree on a happy compromise of how are we balancing unicornism and getting paid, then you'll always have conflict and ultimately it's going to blow up. I've Only seen it a billion times. So I think that's the key. If you talk about those things, who deal with the face fame, how do we resolve conflicts around that? How do we deal with money and how do we resolve conflicts around that? How do we deal with the time commitment and resolve conflicts around that? And then what happens if we don't agree? How do we resolve deadlock then? And you mentioned breakup as well. I think those are really, really key things.

Yeah. Well, let's hope that just by having this conversation here we prevent any future potential co founder wars. Because I like this. I don't want to go down. I don't want to go down like that. Hopefully we've helped other people, helped other people do the same.

I think if you're just to leave, if you're going into any kind of partnership or deal or company, be sure you get aligned on all those things. And if you are in a partnership now and nothing is going wrong, but you haven't addressed those things, I think it would be a good to do now while you have good emotional capital with each other and before something gets out of control. And having these conversations can really spark good conversations about how to deal with those things.

And dealing with these conversations on a.

Chin attached is huge. Huge, Huge.

Yeah, have them on a good day, not on a bad day. It's really painful to have these conversations when you're about to run out of cash. It's really painful to have these conversations when one or both of you is at burnout. It is really painful to have these conversations when resentment is already sitting there festering. So, yeah, I love the idea. This may be a great action item. If things are awesome right now, say, because things are so awesome. I think that we need to have a conversation about what it looks like if things are less awesome because it's an imperfect world and we're imperfect people. And so sit down, pour your favorite adult beverage and really set aside some time. Set aside a couple of hours for it. And it's therapeutic. It's oddly fun. Hard to do on a bad day, but even if it is a bad day, don't put off having some of these conversations. Absolutely.

Cool. Well, with that, let's sign off for this episode. If you guys enjoy the stuff that we're talking about, we would definitely appreciate it if you would subscribe so you don't miss out on any of the good stuff we cover. And we would also appreciate if you would review us on whatever platform you're listening on. If you really, really like us. If you don't really, really like us, I mean, we're less excited about you reviewing it, but we would love feedback because we always want to make the show better and we appreciate you being here. Also, if you are interested in growing your company and putting in an operating system that will make it even better than it is already, we have one and it's available at Scalable. If you're French, it's scalable. So that's it for today. Thank you guys for being here. We really appreciate you and we'll see you next time.

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