Alexander Johnson of Mixt Solutions Discusses Partnership Dynamics
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It was circa 2015, and me and my good friend, for this we will call him “Brian,” sat in his parents’ screened-in porch. This specific memory still feels like it was just yesterday. It was evening—presumably after we worked full days at our other jobs—when we started to plan our new business venture. The air was sticky as the sun went down and Ohio summer held on to its last few days.
Brian had been my good friend through high school, and we had stayed in touch as I went to college. Once I graduated, I was also working on building another company and working retail. When he approached me to join him in sales, I quickly made him aware I was too busy.
“That’s fine,” he said, “but I made $30,000 this summer and bought a brand-new truck.”
I was convinced to make time and sold a few jobs that summer. As fate would have it, the company we were working under stiffed Brian for his year-end sales bonus. That was enough for us to change our direction, and it was my idea to start our own shop.
“Why do we need them? You are always saying how incompetent management is,” I said.
The first mistake I made was in the screened-in porch that night. I knew that I wouldn’t be nearly as involved in the company over the initial going, as I was already building another business. My partner insisted that we be 50-50 owners for “simplicity.” I fought a little, but eventually gave in. We decided that to reimburse his additional time upfront, he would get 60% of the profits and I would get 40%. I guess no one reminded us that first-year companies don’t usually have much in the way of profits.
That decision to be 50-50 partners would come up again and again in our following years of arguments. We were supposed to be able to simply agree on the approach to managing the company, but that wasn’t the case. I should have just insisted on being a 30% partner or an advisor, but I felt like I was getting free equity. Why turn down 20% additional ownership? What I didn’t realize was that the additional 20% ownership would create a sense that we were a 50-50 team. Because I wasn’t in the office all day long, many times decisions couldn’t be made on the spot. I relied on Brian to be the day-to-day arm of the business, and he relied on me to be a 50% partner. No one partner had full control and neither felt comfortable making decisions without the other. Making decisions together was never a very smooth process.
Rule 1: Understand the impact of each ownership percentage and communicate what is expected from equity holders at all times. The quickest way to annoy someone is to make them feel like you aren’t pulling your weight. Be open and very specific about what each person’s job duties are. Unspoken expectations breed future resentment.
The second mistake I made was going into business someone I only knew on a personal level. While Brian and I had a lot of fun going out, we didn’t really interact much on a business level. We always got along before, why would business change that? What I quickly found out was that Brian was a micromanager, stubborn, and hard for our employees to approach. Because I wasn’t there on a regular basis, I couldn’t do enough to influence the culture that had developed in my absence. Because I never established what the culture would be like from the start, we got whatever Brian ended up giving.
This tumultuous culture ended up driving me further away in 2018. Brian and I’s relationship had been fractured by a few larger arguments and our communication was nearly non-existent. The solution to arguing was to have me come into the office even less. I went from 5 days a week in the afternoons to 2 days simply paying invoices and installers. By then, I had mentally turned everything over to Brian and didn’t care very much. This had the exact opposite effect desired and Brian’s micromanaging and brash communication style rippled to every corner of the company without me there for balance. Employees began calling me when I was out of the office to vent in frustration.
Rule 2: Understand who you are going to be working with. They aren’t going to be your friend, family member, or spouse any longer. Those things will go out the door when the business begins to grow. The character and actions of an owner will reverberate throughout the business. Make sure this aligns with what you are trying to build at your company! You can influence how you act, but you can’t change how your partner will act.
The third mistake I made was not doing anything with ownership sooner. I can totally understand why people stay in relationships when they aren’t happy. The anxiety of shaking things up so significantly and setting my employees back petrified me. I was considering it for nearly 18 months before I was able to muster the courage.
We had hired a new employee that was working next to Brian on a day-to-day basis. Things had been bad with the company culture for some time, but adding this new employee stirred the pot to the point it was boiling over. The new employee was mad at my best salesman, who was mad at Brian, who was mad at everyone. I became the office psychiatrist listening to all the problems unravel at my feet.
This culminated on a call I had with my mentor. He said something that made me see things as clear as could be.
“If Brian was to walk in tomorrow and say he was done, how would you feel?”
I had a literal sense of optimism flourish in my stomach that I couldn’t contain. Then my mentor told me something that will stick with me for a long time.
“Being a leader means sometimes you have to take action.”
That night I texted Brian and said it was time to change ownership. This time, it was me offering to buy Brian’s 50% shares. Once it became evident there was no going back, the transition happened rather quickly. I sent my text on a Monday night, by Wednesday the staff knew what was happening, and by Friday Brian had moved his belongings out of the office.
Rule 3: Leaders have to take action to establish every aspect of the business that they want. If they don’t establish it, someone or something else will. When the culture and the direction of the company is compromised, the leader must step up. If your business partner can’t be the leader that the business needs, you must be. If you can’t do that together, the business needs one leader.
It has been said every relationship has a beginning, middle, and end. Mostly, this is true. But I also have business partnerships that haven’t ended. Maybe those are just better interpersonal fits, but I tend to think everything is able to be influenced by our actions. If I could go back and grab myself 5 years ago, maybe Brian and I’s partnership would have survived. Maybe our differences would have been too much. I guess I will never know.
If you are in the middle of a partnership now, look at these options for keeping your own alive. If you simply can’t, a leader’s job is to act. Step up for what is best for yourself and the business. It may just feel great.
