My firm has been propositioned more times than I can count to “partner” with a client. That is, share in the risk, and share in the reward. At first, I was more than happy to engage in these partnerships, but over time I have become less and less enthusiastic and more and more selective. Why? Because out of the 10 or so partnerships I have entered into I have ended up spending a significant amount of money and have never made a dime.
What I’ve come to understand is that when someone wants to partner with me on a web development project it is generally because they don’t have any money, or they don’t believe in their idea enough to risk their own money. However, they are asking me to risk my money. Just because I own a web development firm doesn’t mean I can build whatever I want for free. If I put a developer on a project full-time for a month that just cost me $6-7K.
The idea guy who comes to me generally puts little effort into the project, whereas I am putting hard money into the project. If it fails, he walks away with nothing more out of pocket than a few hours of his time, while I’m out thousands of dollars. And what I’ve seen happen all too often is that the idea guy loses interest in the project, and without his ideas, or his connections, or whatever he brings to the table, we can’t continue the project. There’s nothing like putting a lot of effort into a partnership only to have the partner say “You know, I’m actually going to put that project on hold for the time being, I’ve got some other things I’m also working on that need my time.”
What?! What about the thousands of dollars I just put into your idea? Am I supposed to just be happy to sit by until you want to pick up the project again? I was counting on you to make this project work. I thought you were excited about this partnership. You sure were when we started.
In fact, I’ve written off partnerships altogether many times and swore I would never enter into one again. And yet I find myself getting drawn into them somehow. Maybe it’s my unfailing optimism that somehow, some way, one of these will work out. Maybe it’s the depression I feel when I find out that the equity stake in that startup that I turned down several years ago in favor of cold hard cash would be worth several times the cash I took (i.e. Logoworks).
I just recently I entered into a partnership, and to add to the cardinal sin it’s with a family member, another thing I constantly swear I’ll never do. But the risk is low, the investment is low, and if it fails miserably I won’t feel too put out. If it succeeds it won’t be a huge deal, but it could provide a nice little stream of recurring revenue. I’m considering another partnership right now with a former client. In this case I know the background of the guy who would become my partner and I believe him to be honest and smart with a clear business plan based on good due diligence and years of experience in the industry and a commitment to see it through. And that’s pretty much what I would look for in any partnership, kind of like how VCs evaluate deals. Not just a good idea with great potential returns, but a good team that’s committed and willing to work as hard as I am. Maybe I’ll still miss out on a good deal here and there, but for now I’m playing it safe.Liked it? Share it!