Saul Talks Business Partners - How I manage 6 companies doing $3M/Year in profit

Hello. Welcome back to another sawtalks video. Super excited about this one. Today we're going to talk about business partnerships. So those that don't know who I am, my name is Saul. I make these videos where I talk to you guys, just talk to the camera, no edits, very little prep. And the goal is just to answer the questions that you've given me over the last week, two weeks last month, on Twitter, through our paid discord program, through whatever it is. This is not a video where I'm going to sell you anything. This is really just a video where I get to talk at you and hopefully you find some value. I recently tweeted about the fact that I want to make this video about business partnerships, and I got some really great questions as a reply. And I've also kind of talked during the last few videos about my setup and the different businesses I run and all the how that's structured. To keep it very brief, I have some level of ownership in about six companies. As little as I think. My lowest is maybe 25% and as much as 100% in the sixth. But five of those six, I have partners. So, you know, for the one that I have 20%, I may have three partners. For many of the other ones, I'm closer to 50%, and I have one, if not two, partners. And so I want to talk about how I look at partnerships. Why I think that partnering for me has been a bit of a cheat code for growth and for success. What I've learned over the last nine years, running businesses with other people, the good, the bad, the ugly, as they say. So I did take some notes here. I don't always, but I think for this one, I wanted to make sure that I was answering all the questions that you guys gave me. And also, I could kind of clear my head of these thoughts before jumping in. So first and most importantly, I have two questions. Number one, should you partner? Slash, why? It's kind of one question. And number two, what makes a good partner? So Ryan asked me online. He's like, why? Why would I partner? Right? Why would I go and partner when I could build my business, retain 100% equity? And maybe if the person I want to partner with, they could run their own business and we could almost kind of work together to grow our businesses in tandem, but we both own 100% equity, which is a totally fair question. And I think from the point of view of looking at it that way, that does make some level of sense. Right? If you're going to run a company and you feel comfortable and adequate to run it solo, and you have other people in your world or in your space that also want to run the same company, but they, of course they want to be owners, then, yeah, maybe they aren't necessarily the best partners. A lot of times partners come at you when you have a gap in your knowledge base or in your skill set. So it's most common, right, in software where you might have a technical co founder, where someone who understands code can get in there, can actually create the product the end user sees. But they're not the one. They don't want to be on camera, they don't want to be marketing. They don't want to be kind of in the limelight. So then you have this other partner who's more of the marketing head, and they're the ones actually selling the software, talking about it, maybe making videos, doing sales calls. And those two people make sense together because one is filling in the gap where the other one doesn't have. Now, of course, you can have someone who does it all. Nothing wrong with that. In where Ryan's coming from, because I know Ryan owns and runs an Amazon sourcing business, right? So he buys inventory and sells it on Amazon. He scales it up. I know his goal is, But I think 30,000 is kind of his current goal for profit in the month of November. And, you know, for his point of view, like, why would he partner when he's doing that? And maybe he has a friend who's also doing it at slightly lower margin or lower revenue, but they're doing it side by side. The thing that I would talk about there is, you know, when you're running a business and you're growing it, and let's say you get to $30,000 a month in profit, there will eventually be bottlenecks or scale issues that you don't know or can't see. It could be a time issue, it could be a logistics issue. It could be something along the lines. At that point, you have two options. You can hire a staff or an employee to fill in that gap for you. Someone that you're paying the salary or hourly, and their whole job is to go in and do the thing that either you don't know how to do as well as them, or you don't have time to do. The alternative, if you don't want to hire and you don't feel like it's physically possible for you to do everything, is that then you could, you know, work with someone else who is doing the similar business. But Maybe doing it slightly differently or at the same time as you also is running into their own level of bottlenecks, maybe time, et cetera, and your two brains become stronger than one. So, you know, let's say I, you know, I have my own Amazon business, and let's say I'm starting to feel squeezed. I have a bunch of other things that I'm doing. I have these other companies I want to get to. You know, let's say $300,000 a month in sales on Amazon. Like, that's my goal. But I'm kind of stuck at 200k. Ryan's also doing it and he's kind of in a similar place. We might decide to partner up and say, all right, we're going to go 50, 50 on an Amazon business because together, you know, we can arguably work fewer hours. We can hold each other accountable. And instead of each of us, let's say I'm doing 200 and he's doing. We scale it to 500 total because we're, you know, aligned on our goals as opposed to working next to someone who, yes, you're aligned to both growing, but you're not necessarily going to show everything. You're not going to share leads, every single lead. You're not going to share all the things that you learn. But if you partner with him, maybe you guys then are aligned totally on what is going to make sense for you to get to the next stage. And I think for me, when I say it was a, a cheat code, it really comes down to that second part I said, which is accountability. You know, I started my Amazon business solo, I ran it solo, and in my first two years, I failed as a solo business owner. I eventually made it work, starting essentially six months later. So about two and a half years into starting, I figured out how to do it alone. That is the only business I still operate, totally alone. But I also found a bunch of friends and mentors that were able to hold me accountable. And that really helped me get out of my own way when it comes to time management. Other things. For all these other companies, though, I don't have enough time in my day to run everything solo. I can't run a 3 PL and an Amazon business and a software and a group and a DTC company by myself. And what I have found is if I find the right people who fill in the skill gaps but also pick up the slack, where I may drop it, may I have to focus on something else for a few days, they can come in and they're doing More whereas, like if you run it by yourself and something occurs in your life or something happens when you are no longer able to afford to run that business alone. You know, you have to either rely on employees which hopefully you've trained well and you know, they can be a huge asset to a company, or you have a partner who is able to step in and do everything for you. And I don't think that everyone watching this needs to go out and get a business partner. Definitely not what I'm saying and not the goal. But this is more for people who are curious about it or of course want to hear kind of why I'm doing or how it works for me. So going back to like, should you partner? I think it is situational. If you're starting a brand new business and you know part of the business, you know how to market or you know how to do the technical stuff, or you have the idea and you want to get off the ground faster. Usually they need to partner or hire. And to hire the right people costs quite a bit of money. In certain situations, maybe you have to raise money to get that. Whereas a partner, they're getting paid in equity, right? So they're going to be fully aligned with your needs and your goals. And so when you go in and work with them, they could be more advanced than you, but it doesn't matter as long as you're buying in on the same idea and the same vision. And that is ultimately what we did for our software company. I have a partner, a technical co founder in that regard, where he came in and he's writing all the code and he's running everything. And I was the educational body and the one actually doing and using the software. And so we were kind of a perfect fit for the group. It was the same thing. You know, when we first started that group, there were three partners that we launched with and that was because one of them had a marketing background. He understood how to grow a group, he understood Twitter, he understood social media. I didn't really understand it at the time. And then my other co founder, he was the education with me. So we kind of split those duties. We make videos, make content, we help people.

At one point I tried doing it all alone and it was just a massive burnout for me. I couldn't manage, you know, 200, 300 people all DMing me and all ask me questions. I had staff, but you know, still you're kind of the founder, you're the head and there's a certain expectation of you. And I felt Like I was dropping the ball. And so bringing people on board as partners in that way was a superpower for that company, for that business, because every single one of them has their own unique story and their own unique abilities, and they're able to bring that into kind of the world and ecosystem of what we're building. And to them, you know, regardless if you think that you have a perfect employer or not, you know, payment and other motivators are still a factor when you have something that actually is equity. They're aligned on the big vision from day one and they should be right if you're finding the right partner. So I know we're 10 minutes into this and I really haven't talked a whole lot about partners yet, but, you know, that's a pretty light ish answer to that question. Should you partner? And why? Again, it is going to be situational for me, it's been very, very helpful just based on the life that I live and the life I want to live. And I find, fortunately, I find the right people to work with, which can be tricky. So that's kind of what my second point is. What makes a good partner? You know, if you're. If let's. You've decided that you want to go explore finding someone to start a business with, what makes someone a good partner to do that with? I wrote down on my list, I wrote down marriage. You know, essentially when you're partnering with someone on a company, they are, you know, I want to say, just as important, but you're going to spend probably just as much time with them, if not more, as you will espouse. This is someone that is going to understand and should understand everything about you and how you think and how you act. You know, you shouldn't really have a true business partner. Now. You might have owners, you might have someone who owns a small percentage of your company and they're kind of partnered with you. But we're talking like a true co founder. They need to understand everything, what makes you tick, how you work, why you're doing it. You guys need to sit down. And it's a very aggressive interview. And not aggressive in a scary way, but in a. Like, we're gonna dig deep here. You don't need to be aligned on exactly what you're going to be like every single day, every single minute, what you're doing, but you do need to be aligned on the vision. Do you have the same goals with the company? Why are you creating this company? Who is, you know, at least the beginning kind of who is the target market? Why did. Why do you think they need this product? If you're off on any of those, regardless of how great you are, there's a lot of opportunity for miscommunication and error, and that is the fastest way to a breakup. You know, if I want to grow a company and I want to exit in 10 years, but you want to grow a company and you want it to be a lifestyle brand, and you want to have this thing for 40 years and give it to your kids, well, that's something we need into day one, because there's a clear mismatch. I'm working towards an exit and you're not. That's gonna depend on how I make my choices in the business. I'm gonna question maybe some choices that you make because they don't align with what I want and what I need. And so we need to understand, again, big vision. We also need to understand the time commitments, like what, why, and what are you doing here? Oh, yeah, I have an idea, and I'd love to be a co founder. I'd love to start a business, but by the way, I work 50 hours a week full time, and I have four kids, and I can do hours a week where you're sitting there and you're like, no, I'm going all in on this. Again, a mismatch there. So you don't need to count hours. Right? We're not going to micromanage your co founder, but at the same time, you do need to be in a place that says, okay, at least we both are putting in the level of effort that we expected when we said yes to this, because otherwise it will fall flat in its face and there will be resentment, and again, it will lead to a breakup. So what makes a good partner to me is someone who has the same ethics and the same vision for the brand. So we do business the same way. You know, we're not here to cheat or lie. We're not necessarily trying to grow by acquisition. We're not, you know, we want to grow kind of the same conventional way we want to. We're not going to click bait. We're not going to do these things, you know, that is effective. And maybe you find a partner that you want to do that and they want to do that, and, you know, that makes sense for you guys, great. But when I'm looking for a partner that's not really someone that I want again, I try to fill in gaps of my own knowledge base. So at this point in my career, I'm a pretty decent operator. I'm pretty decent at marketing. I'm not great, but I'm pretty decent. I'm happy to be on camera, I'm happy to be present. I'm happy to be a personal brand and ambassador. And so what I ideally would look for, depending on the company that I'm starting, I would love someone with some experience. Let's say I'm starting a company that I've never done before. I would love to bring someone in who's done it before, has walked the walk and I can learn from them while we're growing this together, relationships or contacts in that particular niche. So if I want to grow, you know, again, let's go back to we have a 3 PL right now, but it's pretty niche, right? We're just going to handle certain shopify sellers. We don't have this huge operation. We're running out of 5,000 square feet, 4,000 square feet, something like that. But let's say I want to turn the tables on that business and say, hey, I want to build this into $100 million company and I want 100,000 square feet and I want tons of staff and I want to buy all these things. I've never run a business of that size in that way for a 3PL. So I might say, well, I own 100% of business right now. I would really like to bring on a co founder even though I'm years in and we're profitable. I want to bring someone on who maybe has worked as a C suite or has even co founded or founded something else in the past that resembles something similar. In this case, I may go after like a really big Amazon seller who has a 20,000 square foot warehouse already and is running his own operation, but has had to deal with a lot of the headaches that come with scale. They could come in and be my partner on this because they're bringing a level of expertise that I don't have in that way. And so when I think of a good partner, they really do have to kind of check some kind of box, ideally something that I can't do or don't do, or they have a passion in ways that I don't have. You know, I've brought in partners that absolutely love, love, love getting on phone calls now. I love Zoom and I love talking to people and love networking. But as my family has grown and as other businesses have expanded, I'm not in a situation where I can spend eight hours a day on the phone anymore. They love it like they Live for that. So, yeah, I could hire them as sales, but at the same time, I also could work with them longer scale, again, creating alignment. And so sometimes I may consider like, all right, well, listen, they have a great background in doing this. They have a passion for doing this. We've talked about. I've seen them work and I've seen them operate. They're going to be able to come in and they're going to be able to sit here on these calls 40 hours, 50 hours a week, crushing it. And they could call themselves a founder, and that usually has a lot of weight on the calls. And they're going to really push the business incredibly forward in a way that I really can't do right now. Or it could be someone who has run and operated large teams. They've managed 50 people. They've done it very, very well. You want to start a company and you want to operate with a lot of staff. This goes back to Amazon. So maybe you're an Amazon seller and you realize that in order for you to grow, you need to have 15 to 20 VAs or some kind of employee status to scale. Now, I have a friend, Jeff. Jeff has, let's say, 35 employees. He has multiple employees in the states, some VAs. He has an operation in the warehouse. You know, I might try to partner with Jeff or I might try to do something with Jeff. Let's say Jeff is retiring or getting out or doesn't want to be a solo seller anymore for whatever reason. He might be a great partner in this business. He doesn't have to worry about the growth and scale side as much because, you know, I'm gonna. I'm gonna handle the buying and I'm gonna handle all that. But his brain is gonna be on team operations. Maybe that was his favorite part of his job or his old business. I can bring him in. He can just essentially do what he loves best, which is just scaling teams, managing teams, managing operators. And I'm gonna do everything else and we're gonna grow together that way. So again, where is the gap in either your knowledge base, your abilities, or your time that this person can fill in? Are you aligned in all the big questions?

There is a podcast, My First Million. Sam is one of the guests and one of the hosts. He actually has a great blog all about this and there's a really. He kind of has a great series of questions that you can go through about talking to your potential co founder ahead of time and making sure all those things are checked. The next one here I have is types of partnerships. There are different kinds, right? We talked about more like a 50, 50 co founder status. Now co founders don't have to be 50, 50 generally speaking, I think it's like anything above like 15 or 20%, you kind of are considered co founder status at that point. And so, you know, again, you might want to start a company and you might be the backbone of that company, but you again want to bring someone and you want to work with someone for whatever reason, you can still partner with someone and they have a lower equity than you with the expectation that whatever that means to them as far as work or expectations that they're going to bring to the table aligns with it. And so while some of my partnerships are split, some of them are, I do have a few where I am the majority stakeholder or I am closer to the minority side. But what I bring to the table makes sense and kind of aligns with that. Or I came in late to the party. Right? You can technically have a partnership that starts two or three years later into your business. Let's say you're already running a business, already profitable. You can bring someone in and give them 20% and they've essentially become a partner. But they're not going to get 50% of something you've already, you know, built to a million or $2 million. But they're, they're getting a huge upside because they, they're out of the startup phase. The risk is much lower. So for that they're going to get a lower equity but you know, potentially work just as hard as you because they had, they got to skip through, right? They got to kind of the fast pass through to the middle stages of the company. So there are various types of partnerships. Most of what I do is co founder, most of it started at the beginning and it's set up contractually and we can talk. I wrote, I kind of wrote down here contracts. It is set up through legal entities. So we have a business entity set up, usually an llc. And underneath that we have different partners who own a different percentage or equity. We have agreements and contracts within that, usually some kind of S Corp or C Corp. So we do have to have an agreement to talk through all of that and the bylaws and everything. And those things are important too. We talked about how do, what's a good partner and how do I tell as a good partner? Well, part of that is how are you setting it up on the back end in case it goes wrong? Because, you know, no one goes into a marriage expecting A divorce. No one goes into a partnership or a co foundership expecting to break up. But things do happen. And you really want to, number one, talk through those possibilities up front, but then also build them into whatever agreement that you're going to have. And I have had a couple partnerships where they didn't work out for one reason or another. And it's always ended in me buying out my partner. And part of that was because we can put it in a contract that you get. It's actually first opportunity, right. So right of first refusal. So if someone that you are partnered with is in a place where they need to sell financially or they just want out, they can't just go sell it to anyone. They can't just go. It's actually sell it to I spitter who might be a terrible partner for you. And then your business is in jeopardy. They have to sell it to you. They have to sell it for market value. You guys obviously can determine what that means. You can have an arbitrator come in and determine what that means.

But that is a way to do it. Also kind of in that contract we have things where like if I don't hear from you for X number of weeks, if you say anything disparagingly on the Internet about the company, if you do any of these things, you essentially relinquish your equity at this valuation. So you force a sale. You can force them out if they do something that you've already pre written in, kind of like a prenup. And I think at some level that is important because we don't expect people to change, but sometimes they do. And I've been in situations where I have had partners. I owned 30 something percent of a company, but I felt like I was doing 100% of the work. And it was, it led to resentment, led to some, some burnout. Now they were there still and I could talk to them and I voiced these concerns. And fortunately we were able to come to a place where, you know, they stepped up and it worked out. Eventually, you know, I was able to take ownership of one of the companies as a partner in and I was able to buy out my, my partner. And that's not any fault of his own. He actually went through a medical crisis and so he was in a place where he had to sell. But we had it kind of written in and we understood what was going to happen if that was the case. So doing all these things up front is incredibly important and crucial. I wrote here alignment and everything important. We talked about that, expectations, who does what we talked about a little bit, right when you go into a partnership, ideally you're going in because you have a gap in your knowledge. You have something that you don't understand or don't know how to do or you want help in. But it is also important to set those expectations of who is doing what at kind of the high level. So we talked about my current partnership for our software. Well, right now there is a pretty obvious expectation there. I'm not coding, I don't know how to code. I understand the language well enough to talk about it with people and to voice opinions and understand when they're talking to me, but I can't sit there and actually write. And obviously I could probably vibe code something, but that's not really going to be helpful in this situation. And so the expectation there is that my partner is going to be the developer, he is going to develop this software. If we need to go hire other developers, he's going to manage that hire process because he knows what he's looking for, he knows how to interview, he knows what questions to ask. That is his domain. My domain is talking to our customers, talking to the market, making content, getting on social media, being a user of this software so I can give him ideas and essentially help guide through like this is what it should look like next. Here's where we should go for development. Creating that roadmap that makes sense and that is how it's worked and it's been incredibly effective. And because of that, I've been able to bring on additional partners and additional help in that business that help on my side. And my co founder was able to do the same on his side and that business is excelling and really happy about it. But you know, a business that isn't as obvious, you do need to come up. So let's go back to Ryan's example as an Amazon seller. Let's say Ryan wants to grow his business. He wants to get to a $20 million business in Amazon. But he is kind of at this bottleneck at $4 million.

And he has some options, but he wants to explore what partnership would look like. So he goes out and he interviews some co founders, some interviews some people, and he finds someone that he really likes. He really aligns with them and it makes sense. And for him to potentially bring them on as an equity partner. Now, Ryan has built this business by himself, so maybe not 50, 50, but he brings them on. He gives him 25% of his company. That's, that's kind of his, his expectation And Ryan feels that he's an excellent sourcer. He's phenomenal at sourcing. He literally like will run out of money, like that's there is not enough money in the world. He will buy everything. He just nails profitable products. What he is struggling with currently is managing the team effectively at size, right? So now he's up to, let's say, 10 staff. He just is having difficulty even with a manager. Maybe he's having difficulty managing his manager, whatever it is, at scale. He's having a problem there logistically as you grow, as volume goes up, he's dealing with more returns, he's dealing with more logistic problems with his business. With the. So there's a leakage, right? Financially the business is doing well, but it could do way better if he was tighter on the financials. So what he does, he goes out and find a partner. And in this case I would look for someone who does those two things, is a fantastic operator. So they're going to come in and they're going to manage the team with Ryan. So they're going to see Ryan and this person as their boss, but this person is going to be the one kind of probably doing most of the one on ones, doing a lot of the interviewing, hiring and firing, essentially managing the team through excellence and setting SOPs. And they're also going to help manage the CPA or bookkeeper, whoever it is, and they're going to make sure that, that not only the financials tight, but where is the leakage and how do we fix it? So that's maybe finding agencies or other people to work with that are going to help them with their returns, setting up new practices for that. Maybe you're kind of almost like a CFO role, bringing in the opportunity to save money by instead of using a prep center, they're going to use a warehouse. And Ryan thought that, but he didn't know how to go about validating the idea. Well, this person does and they're going to validate it and they're actually going to go through the whole process of doing it. So the expectations become pretty clear. Ryan's going to source and buy inventory. He's going to be the profit arm of the company and this other individual is going to be the operations arm of the company. And that's how they're going to operate as partners. So whatever it might be, setting clear expectations is crucial. And you and your business partner in this case need to have very clear line of communication. Now you can set boundaries, right? I don't expect to Pick up the phone at 1am but you should be able to message them very freely and expect a response fairly quickly. You should have very little that's off the table as far as what you're talking about. If they have a family, I mean, likely that you're going to get to know their family at some level because again, you're going to be in their life a tremendous amount. Especially if you're both doing this full time and if your vision aligns on what the future is. Right. Maybe Ryan wants to get to. Again, we said $20 million a year. That's going to take a lot of effort for both him and his partner. And their families are going to be affected by that. They might have to take business trips. They may have to do things. You know, you need to like each other as humans to the best of your ability. I'm not saying you have to be best friends, but you know, it very well could happen in that way. Next one I have on here is payday and equity. We kind of talked about the equity standpoint. You know, I'm a big proponent of giving generously. Right. 100%. Nothing is nothing. So if my business is, you know, worth $10,000, I'm doing $10,000 a month. I will give you 10% of my business. Now, granted, I have to do all these other things first, but I might find someone to give 10% of my business. 10% takes my business from 10k a month to 20k a month. Wind up just doubled the value of all my other equity and I just had to trade 10% for it. Now, you know, partnerships are going to save a bad business necessarily. They're not a get out of jail free card. You have to be a good partner as well. Right. You can't expect to go find a partner and have them be, you know, the saint and a player and you're not living up to your end of the deal. So you just have to be just as good as them. Like every good marriage, 60, 40 is the rule. And everyone should be thinking they're doing 60% of the work, but at the same time, finding that right person can excel your business tremendously. And to me, and we can take a very real world example. Let's go back to the software for a second. When we started that company, I own 50% of the business and my partner owned 50% of the business. Again, he is the developer and I was the guy kind of helping guide what it should look like and the marketer and all those things. Well, about a year into it. I said, you know what, I think that we could use another brain in this conversation, another person like me to help guide community. Another person that's going to use the software tremendously, maybe already aggressive user that's going to help us guide the roadmap. Just someone that makes sense for the team. And so I went out and I found that person. I was already great friends with them. We already worked on some other businesses together. And I gave him 5% of my equity. So now my co founder had 50%, I had 45% and this new person had 5%. And I, of course before doing that, talked my co founder. He was totally on board. He met them, he vetted them, and he was like, hey, I don't know them, but if you trust them, let's do it. I like everything I've seen so far. You know, I appreciate that you're giving 5%. You know, they're keeping their 50% and I'm going down 5%. Now. The business grew because of that. The 5% I gave away, quote, unquote, is now worth, you know, my extra 45% is worth way more because of that. And fast forward six months and my co founder, my, my developer said, you know what, this person was doing such an excellent job, he gave him 5%. So now we're at 40, 40, 10. I'm sorry, 45, 45, 10. I'm a big fan of that. So, like, you know, if your business is in a place that can allow for extreme growth or like a clear a player that's going to fill in a gap, you know why? You know, most businesses, we see the stats right? Most businesses fail well, again, like 100% of equity, if it's worth nothing, it's worth nothing. If your business goes to zero, it's worth zero. So, you know, if you can give up 2% or 3% now, you know, you're not going to hire 30 people. And giving each 2% as you scale equity is very important. You should, you should definitely hold it close to your heart because you only give away so much. But if you find that right person, you know that 2 or 5% can make a huge deal for your business. You find the excellent person and you own 100%, that 20%, right, could be the change that your business needs to really thrive. So when it comes to equity, I think, you know, is important to understand that is something that you have that you should consider.

You know, working with someone, you could sell it to them at a very fair rate or you can give it to them as kind of part of the opportunity. They're working with you now. Giving someone equity doesn't have to be all or nothing. It can't be. You know, I gave my person a 5%. Gave him 5% day one, because I trusted them and I worked with them before. But I'm actually that same company. I'm actually bringing someone else on. So I'm hoping to give them 5%. So I'm gonna go down to 40%. But the reason I'm doing that is, again, I think they fill in a gap, and I think they're a great person to grow the business, But I'm not giving them 5% day one. Instead, we're doing, you know, we're essentially doing it over a period of 18 months. And so you can have different ways, different mechanisms. You can do cliffs, you can do different things where, hey, I'm going to hire you or whatever. I'm offering you this 5%. It's going to essentially vest, right? That's what they call it. It's going to vest over 18 months. So every month for the next 18 months, you're going to get a little bit of that 5%. At the end of that 18 months, you're going to have it all. If something were to happen between now and the end of 18 months, you just get what you vested. So we can make it simple. You know, half of 18 months is nine months. So let's say they work for nine months and something catastrophic occurs. Well, now they have 2.5% of the business that, you know, on paper is theirs. They own two and a half percent. Now in that contract, we also have, like, I get first rate of first refusal. There's a bunch of things. They can't just go sell that to anyone, but on the books, on the cap table, they're gonna have 2.5%. Ideally, that doesn't happen. They're gonna end up with 5% at the end of 18 months. They're essentially a partner in that business, and their role will continue to grow for that. And this is how multiple partners work. One of my companies, I'm the majority founder and the majority equity holder, but I have five other partners. And then they all have specific things that they do that benefit the company as a whole. And a lot of them start as staff, but now they've moved on to part owners. And I think that's also a great way that you can show your staff that they're part of a team and aligned. So even in Ryan's sake, you Know, let's go back to Ryan for a second. Let's say he gets to 5 million and he has a fantastic manager. He has like this manager that's an A player. She, like she or he is just absolutely crushing it. And Ryan wouldn't know what they would do without them. Well, that might be a great person to start thinking about equity. Right. Start bringing them in as a quote unquote partner in your company. And so it doesn't have to be a straight 50, 50, give them two, 3% can go a long way because you know, you start realizing that if they leave, the company is going to get hurt tremendously. And money is important, but aligning someone through equity is, is a great way to make sure they stay for the long haul. I am likely going to do that probably next year with my 3PL. I have, I own 100% of that business. I have a manager that manages the floor. She is phenomenal. She does all the receiving. She manages the other staff. She does like a lot of the pick pack. Like I don't have to go in very often because I trust her and know she's there. I would love to bring her on as an equity partner and so that she has upside on both sides of that. That kind of brings us to payday. Well, how do these people get paid? The simplest form is profit sharing at like an early stage. Right. So that's kind of what a lot of my companies do. If I own 45% of the business, we say, all right, well the business made $10,000 this month. We had $1,000 in expenses. Maybe you all decide that you want to do 10% to savings. And so then what's left over gets split and I get 45% of what's remaining. I get 45% of the remaining profit. As since I own 45 company, that's a very easy way of doing it. It's fairly clean. Depending on the business that you run. As your business grows, let's say you're doing $5 million a year and you're profiting a million dollars a year. Well, I don't expect that you're going to give me $450,000. That wouldn't make sense for the company. You probably have bigger visions and goals. To be 10% isn't enough anymore for savings. So then you move on to a salary position and that salary might be adjusted based on your equity, maybe adjusted based on your role. And that gets a little more complicated the bigger the business gets. As roles go, maybe one of you becomes A CEO, one's a coo, whatever title you want. But for a lot of early stage companies, I think profit sharing is very straightforward and often the way to go there.

I have written down your warning signs and how to address them. We kind of talked about this a little bit.

I think, you know, as long as you're vetting your partnerships closely upfront, so you're asking all of those hard questions, you're understanding who they are as humans, you're getting to know them, you will start seeing problems before their problems. And this is, I mean, if you're a good manager, you should see this with your staff too, right? They get become slightly slower to reply. They're not as available when you are talking to them. Their brain seems to be somewhere else. They're not following through as well. You start to slowly feel like you're running more than you were before, that you're doing more, that you really don't even have a partner or the vice versa. They start making unilateral decisions. Maybe they start hiring people without talking to you. If that was the arrangement that you have or that you guys hired people together, maybe they fired someone and you don't know why. Maybe they're making purchase orders or doing things that historically you guys did together communicated. But suddenly that's happening solo. Whatever it is, there is a shift that is occurring that is a warning sign. You need to address it quickly like you would any other employee. You need to talk to about them. You need to understand why it's happening, what is happening. Express your feelings as a human. They might not even realize it's happening, number one. Or there might be something else going on that you have to dig down and actually get to. And it could be something as trivial as like, you know, they're having difficulties at home with their kid, they're stressed since they're bringing out to work, and they're starting to be a little bit manic. Maybe they absolutely just have come up with a new idea and they're so excited to start this new company, but they can't because they don't have time. And so they kind of start resenting. And this existing one that they're working in, whatever it is, you know, unfortunately the worst case, right, one of the worst cases is they're stealing or something is occurring. And so people start getting fired because maybe they saw something. So you do have to kind of push. And that goes back into the original contract and setting it up correctly. So you have the ability to kind of flex certain powers. Even if you're equal partners if they're clearly doing something and you can bring in a third party arbitrator, you know, you know, it depends on the size of the company. If you're $2,000 company, probably not worth it at that point. But this goes again, when you choose your partner, it's like choosing a spouse. You really need to be able to have this open line of communications and make sure that both of you understand that there's very little that you guys can say. There's no judgment zone. And this is your baby, right? Your company is your baby. And so you need to do what's best for the company. And it's hard to do that if you guys aren't being very honest with each other all the time or at least open to really hard conversations. And so if you find yourself in a situation where you might want to partner with someone, but you don't feel comfortable approaching them about various topics, maybe they aren't the right partner for you. Or maybe they're supposed to be a minority partner, someone that gets 5% that has a very specific job and expectations, but they're nowhere close to making decisions on the company overall. And then the last point I have on here is where to find partners.

It's a mixed bag. Kind of like how to find a good employee. Some of them are going to be your friends, some people you've already known, right? They're going to be people that you've known through childhood or through other relationships that you guys get talking and realizing you both have a passion for XYZ and maybe, you know, their background is working in this, again, this area that you need help in. They may be people that, quote, unquote, are your competitors. You know, my software company, again, going back to that one, because it's just like the easiest one to talk about.

That partnership. You know, my developer that were partnered, he had a similar software that he had already built for another market. And so he was thinking about building something new in my market. And I was also thinking about building something in, you know, in another universe. We were going to compete, but instead we became partners because it made more sense to do it together. In our DTC company.

There'S three owners of that company. And we, I found the main original founder of that company. I found her through, through a family friend. We went to dinner and she was there and she told me about her company and told me where she felt that she needed help. Not that she was asking me for help, it was just a conversation. And I was like, I know how to do that. Like, you know, I have run companies in that space or I know how to, you know, do E Com. I would love to help you. And so I just volunteered to help and fast forward a couple years and I became a full co founder with equity and she's been very generous with equity to make me a co founder of that company. But I didn't start the company. So that was one where I came in technically six months later. Right. So the company had already been founded and there was already product market fit. And so, you know, she should have majority equity in that, in that company. But she's, you know, she's given me a very generous amount. So, you know, there's lots of ways to find a. Twitter has been a great resource. I've found a number of partners through Twitter, through social media, you know, going through LinkedIn and saying, who works at, you know, you want to start a company and you want to compete with Facebook. All right, well, who's working at Facebook right now that might be interested in being a co founder leaving or who recently left Facebook, who recently got fired, laid off, who is in a position to have expertise or knowledge in the space that you want? I know there's a bunch of.

Forums and things for technical co founders that exist where you can go on and they'll help you find technical founders. There's tons of ways, mutual friends, you know, you tell people in your circle what you're trying to do and they might know someone that you can talk to. Sometimes it's going to be serendipitous, like it's just going to happen and sometimes you're going to seek it out, but they're kind of all over the place. I'm very confident that I will have future partners and I'll have future businesses and maybe someone watching this will be my partner on a future business. And that's because you watch this video and you're like, I remember that Saul did XYZ or Saul has experience doing that. And you know, I get emails or DMs quite often and people like, I really want to start X and I would love to work with you. Right? So they're, they're reaching out because they want me to be a partner in their company.

And they're finding me through social media. They don't know me, but they're doing exactly what we just talked about. So lots of ways to do it. That's kind of the talk on partnerships. I think the first 10 minutes or so was a little muddled. So hopefully that was you made it through this far. But as I said, for me it's been a tremendous help. I would truly have to work 150 hours a week if I was going to try to do everything solo. So having the right partners in places has not only allowed me to still have a life, but also allowed me to grow the businesses outside of like, I don't know how to do that thing. And they just come in and they crush. And I guess the last like I, like, I literally just brought in a new founder or a new partner for, for the buy box, which is our, our discord. We haven't announced it, but like there's a new partner. I sold him 10% equity. And so, you know, I. And that's not a small feat because we've been around for six years. That's an established brand. But I felt there was one giant missing piece that we just couldn't seem to figure out. And we tried it internally and we just either fell short because we didn't know how or we ran out of time or we weren't passionate enough to like, we weren't motivated or the momentum wasn't there. Whatever it was, we just could not get to the finish line on that particular area of growth. This person has absolutely crushed that area in a number of other businesses that are adjacent. And so I said, hey, look, yes, like we've been friends. I approached, there was mutual interest and now I sold them 10%. And they've already been incredibly helpful in just the columns. They've been a part of the team. So, you know, I'm never, it's never an off switch. You know, I don't know if there's a point where I'll, I'll just, I'll stop, I think is, you know, I'm going to leverage the crap out of. I rather bring someone as a partner 10% than go raise VC funds than go raise venture capital. You know, I know what I'm getting. I know I'm not going to get diluted and I have another team member that is just going to be both a tremendous asset, but also be super aligned with everything that we're trying to build for the future. And so I don't feel like I have to carry that burden alone. So that, that to me is the value of a partner. If you're watching this, I'm not trying to convince you that you need to have a partner in anything that you do, but just know it can be a true asset if you find the right person and you do it for the right reason. So that's it for today. That's selltalks. I will likely put another one very soon. If you have questions, feel free to send to me on Twitter all sellcellstuff. If you're in the discord the buy box, you can send them there too. You can DM me or you can comment on this video, whatever you want to do. I love questions. I love to be able to answer. And clearly I can. I can yap away. So thanks for watching, guys, and I'll see you in the next one.