How To Dissolve Partnerships The Right Way, It Used To Pay To Switch Jobs, Now It Doesn't

0:00I've had some bad partnerships and good partnerships. One of the longest partnerships I had was with my brother-in-law, Heathen Shaw, and we dissolved it in a really good way. We still talk. I just talked to him this morning. I'll give you an example of a bad business partnership. Wait, wait, wait. With Heathen real quick, are you free? I mean, I feel like you were very just generous and, hey, let's be done with it type of thing. And I think a lot of it came from you. I don't know his side of the story, but I know you were very generous. is so when i ended my partnership with him with assets like we had quick sprout and uh i first created the blog then we built into app just so everyone knows quick sprout was neil's blog before neilpatel.com and it got a lot of traffic uh-huh and then uh we were generating revenue i know we got it up to over a hundred thousand dollars a month in revenue but we're burning that money plus more on developers and after a while i wasn't interested in moving forward and i just told him he could have it all.

1:01And that's how I ended the partnership. You could look at that as very generous, but at the flip side, when I was starting off as an entrepreneur, he then put in hundreds and thousands of dollars and actually over time in excess over a million dollars of his own money into our ventures. And I remember a few of them failed. And when it came time to paying back our loan providers, which were family members at the time, he was excluded from the list. He never mentioned that he forgave the loans. He just removed himself from the list and all the money he put in and didn't want to share the total. And we just focused on paying everyone else.

1:43And he just said, don't worry about it. But he didn't even mention that he excluded himself. he just on the quiet end he just pretty much removed himself from being a debtor and just said so both of you are generous we were both generous and he's been generous from day one so it's been a really good partnership um when we had our first ad agency acs back in the day we had a few other partners that ended up joining the company one of them was from the pharmaceutical industry he was a really good sales rep him and he then went to college um so he went to cal or uc berkeley whatever you want to end up calling it and the guy was working out decently well but when things started getting bad in the 2008 recession it started to go haywire and we just closed up shop on acs and we had mediation because there was he filed to sue us i don't know if he filed to sue with the court but he started sending demand letters saying you guys did fraud and all this kind of stuff and we were stealing money is what he was claiming so we just provided him with the bank statements and we said please show us where we're stealing money so we went to mediation in san francisco they had all the files the bank statements etc they couldn't prove that we were stealing money because there wasn't any money to be stolen really from that business and we even got audited my guess is someone was telling the government that we're doing funny stuff because our the person who works on rnm finance used to be an ex-audit and he's like they won't stop he's like they just keep coming and prying and prying like as if we did something wrong or funneled money and the government didn't find anything wrong he couldn't find anything that we did to steal money and we were using wells fargo we're like here's all the statements here's a login what more do you need but he owned 10 of a software company that heathen and i own so what we did during the mediation is we gave him nothing for the ad agency because it wasn't working out the other company was producing profits we bought out his shares and he agreed to him out we gave him a check and it was a good deal for us at the time and it was a good deal for him because he wanted cash and it was a win-win.

4:04Yep. I'll give you some examples from my end. So I remember, remember I had that, uh, that SEO AB testing thing. Um, and we had a, I had a technology partner for that one. And, um, what I realized with that was that, you know, the, the, the, the saying in management is like, what got you here won't get you there. And I realized that was the case that we were kind of capping out from a, from a tech angle. And I realized that, I didn't think this was the right long-term partner. So we had a conversation about this and he's still a great guy. It's not like we're on bad terms or anything. I was like, hey, either we dissolve this thing or I'm just gonna have to take the whole thing over.

4:42But I don't see this going anywhere, like our partnership continuing on. And then he was, I remember he was pushing really hard to at least keep a piece or whatever. And he's like, what if this becomes like really big? I'm like, I don't think it's gonna become really big, first of all. Second of all, I don't even know if I'm gonna have time to focus on this. But no matter what, I think this partnership, like we can't continue. Um, and we dissolved the partnership that way. And I ended up, um, you know, legal paperwork and all that. And what kind of business it was that it was a, it was a software.

5:10Okay. Yeah. So that was, that's one example, but I have a couple more examples from high school friends, right? Um, there's I think two or three occasions where I work with high school friends and my biggest mistake I made on this one, this is like a little side quest is that when you partner with someone, they have to be as intense as you are. Like Like their intentions, their intensity for work has to be there. They have to love work. Right. And no knock on my high school. I still talk to all of these people, but I just realized that like when I'm working the whole time and when I see someone posting this Snapchat that they're cooking meatballs or whatever, what I like in the middle of the day and I'm like working and I see that over and over and over, it's, it's piss me off.

5:46Right. And then, um, and then when you give them feedback, they don't like the feedback either. And also, cause they look at me from like the same high school me too, as I can tell. Um, and so it's, it's hard to get work done that way. Right. And so in that case, it wasn't really contentious, but it did get to like a boiling point where I was like, hey, guys, like we just need to have a conversation here. What do we want to do? Do you want to dissolve this thing? Do you want to keep it? Because I remember for the senior living business, I put in like 100 grand or something like that. And I'm like, I'm going to keep putting money into this thing.

6:13And if I'm going to be the investor and I'm going to be working my ass off too, like I need to see the same intensity. If that's not happening, that's the right time to have that conversation. Because here's the other thing. And you and I both know this. if the business starts to take off it will get harder and harder to dissolve that partnership because they're gonna be like oh it's becoming more valuable i'm gonna just sit it out for a while you know what i mean yes it's best to have the conversations that are tough right away when things are going uh wrong versus waiting in essence nip it in the butt yeah and i would say the again the longer you wait the more painful it will be long term it's better that you have that hard conversation straight up it's going to be hard at some point it's either hard now or harder later.

6:56Yeah. So on a side note, you also had a partnership dissolving with single grain. How'd you end up doing that? Oh yeah. You were part of that. Yeah. So the single grain partnership, so single grain is not my original company. Um, it is Neil's cousin's company, Sujin. And so we, we, we all still talk by the way. And we, when I see Sujin at a conference, like we'll hang out, we'll grab food. We hung out at a SAS stock a couple of years ago in Ireland. Um, so, um, I think everyone in that partnership is doing well. Most everyone's doing really well. I think everyone is doing well. Yeah, everyone's doing well.

7:31AJ's doing well. Yeah. So I like to say it was four brown guys and one yellow guy. I'm the yellow guy. That's right. He's an eye around. AJ's around. Yeah, and Sujin was around. Sujin is as well, yeah. Yeah. So, okay, here's the deal. At the time when I joined, I'm sure nobody would care at this point. It's been so long. but because of the the work that we're doing didn't it wasn't as effective anymore as an agency right and that's why i was brought in initially um and then a year into it i think you and sujin were talking and then you're you're you're i think the three of us had a conversation and then it was basically like sujin wants out of the company he's just like he's been doing it for a while he's burnt out which is fair right um and so basically um okay sujin was gonna go out it's AJ was tired of the business too.

8:14AJ was already out. AJ was already out. Yeah. Yeah. So he went to go focus on the other company, the limitless thing, right? Kimberly Schneider. Kimberly Schneider and all these things, right? And then there's like other businesses in there, like getting buff and all that, right? Like gym stuff too. So AJ was already out and then Sujin and I were talking and then you were like, whatever. Well, no. So the business was doing decently well. It was growing. heath and i were driving leads heath and i own 20 combined yep then the business started having financial problems yeah mismanagement of cash uh not blaming any for just mismanagement of cash heath and i didn't care we're just like cool you guys can have whatever you guys want we just bowed out and moved along because we never did this to make money it was more like yeah we're driving leads give us something other than that we didn't really care yeah um and then it ended up being where AJ, in essence, I think, bowed out?

9:13Or did you give him money at the end? AJ, so Sujin bought him out. So there's a deal there. Sujin bought him out. And then the deal that we arranged with the five of us, and I think there's still some shares, I think, left for AJ. So basically it was, or maybe he was out already, but it was$1 for air shares for 10%. It was$1 for Heaton shares for 10%. So out of pocket, I paid$2, which is all the money I had at the time. $2 out of pocket. He had more. He's joking. He's being facetious. but legally when you're buying shares, you typically have to give something. Yeah. And then the other piece was, the rest was seller finance, which I didn't know the term at the time, which means that you're paying through the profits of the company and that would go to Sujin.

9:52And I actually, so we ended up doing that deal, but it was amicable. Nobody was really like a pain in the butt or anything like that. But we got that done through lawyers and then everyone signed and then that was it. So that's an example of five people, not even four people, but five people. And I actually made the company go from bad to worse. I was about to say, yeah it almost went bankrupt how many times after you took it over two two something like that in the early years and then he was able to recover it and yeah started doing better yeah and so like great i i enjoyed the experience would i do it again no um the recommendation is if you don't want to buy something that's going down because um at the time like if a business was going really well nobody would sell out right like let's just call a spade a spade um but well if the offer is good enough then everyone would sell but at that time none of you guys had enough money to pay each other a handsome multiple if the business was doing well like if the business was making two million in profit none of you guys could afford to buy each other out but the biggest problem was the work that we're doing didn't work anymore because of google penguin and panda so there's algorithmic changes and the work that we're doing didn't work anymore so it was actually you had to basically rebuild the plane while flying it.

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13:16I think we've always been respectful. Even when it's contentious, you try to just understand what the other side wants and try to get that deal done. By the way, let's switch over to, so I have this, I found this on Instagram the other day, but it used to pay to switch jobs. So it's, it's interesting because remember that you're rich BFF. She had one where it's like, yeah, every two years you got to be up or out. It's like, basically like that got a lot of views. I was like, yeah, I got to switch jobs. Right. And then what did I say when I saw that? You said, Oh, you, you commented, you're like, this is BS, blah blah blah i was like this is just terrible advice yeah and you you commented and i i don't know where that went but um here if wall street journal posted this right so it says job seekers hit wall of salary deflation so it was inflating a lot during covid times right um 2022 it went up a lot eight percent uh wage growth for job switchers and stayers so if you're a job switcher in the gold over here um you went as high as eight percent if you switch jobs right now it's deflated it went from 8 % over to like 5 % or so.

14:13What's the bottom line? The bottom one's a job stayer. So job stayer, you might get like, you know, five and a half wage growth like over time. But now it's pretty much even. Now it's even, yeah. It's closer than it's ever been. And I think if you truly, like it's hard to see this, like just numbers wise, but long-term, I think you're probably better. It's like if you're a high performer and you don't want to start a business, you don't want to take risk, you're probably better off staying somewhere because you can make a lot doing that. And climb the ranks. Yeah. And there's nothing wrong with that.

14:43And that was my argument with your rich BFF. He's like, to get paid the most, you should switch jobs. I disagree with that because if you want to be the CEO or CMO or CFO, in most cases, you're going to get there by climbing the ranks. Now, if you're a CFO at another company or CEO at another company, sure, you can switch to another one and go into the same role. But a lot of the people who get to the top do there by climbing their way up and sticking around at a company for a long time. Now, the one thing I'll tell you though, is if you're at one company too long, a lot of times you'll find that your career trajectory slows down.

15:17So the moment you hop to some other large corporation, you have a better title and promotion or whatever it may be, you're managing more people. And then you come back to the original company that you used to work for. They usually treat you better, give you a better title and pay you well. And then you're on a much faster trajectory. Dude, reading the NVIDIA way, there's a lot of people that left and would come back because they were addicted to that culture of working hard. And again, they would work Saturdays. Again, Jensen would come in at 9 a.m. and work till 12 a.m. or so. And I think I sent you the quote.

15:49He's like, you know, I find work relaxing. When I don't work, I think about work. And to an extent, I do find work is relaxing. You know, I don't really – I get annoyed. I don't really get stressed. I don't know about you. I don't think you really get stressed either. I think you probably get more annoyed than anything. stressed about work yeah i don't get stressed i get stressed you do yeah i'm really good at controlling my emotions so yeah i get annoyed but i don't get stressed um i don't know no would you agree or disagree with that you get stressed i've seen it when when like when your company's almost about to go under yeah but still what do i do okay what okay give an example what did i do you get stressed like you can just see that you're different like you're you're more trying to figure it out it's bothering you but that was 2022 2021 2022 these acquisitions yeah um i didn't see you because i was living in miami yeah but we were talking on the phone you're more on tilt in poker terms yeah so i was annoyed i was annoyed but not stressed no but that the financial burden and all the things that were happening at the time put pressure on you it was adding to stress here let's define what stress is let's just google this really quick stress and but continue on continue on okay let's um so i'm not saying you behave differently where you started yelling at people or anything like that i'm more so saying you're under pressure and it was stress but ceos manage stress that's what they're really good at just because you don't always show it to everyone doesn't mean you're not stressed out okay Okay, annoyance is a reaction to something specific that irritates you or frustrates you.

17:31I get irritated very easily, right? That's true. Agree, right? Okay, stress is a broader, often more intense response to a situation that feels overwhelming or threatening. It's triggered by external pressures like deadlines, major life changes, challenges that demand a lot from you physically or mentally. Stress activates your body's flight or flight response, releasing hormones like cortisol can lead to physical tense muscles, rapid heartbeat, whatever. So my point of saying I'm not stressed is when you look at my biological metrics at that time, my sleep is fucking perfect. I'm not losing sleep, stuff like that.

18:01People are like, they start to panic and stuff like that. That's not me because I get annoyed. I don't think being stressed means you lack sleep. I think you're the person, and I'm very similar. When things go bad for us, it adds pressure. It can create stress, but we're fighters. We fight. We don't just say, oh, I'm going to stay in a corner and be by myself. We go fight hard to go and solve the problems. Okay. This is so great with AI. Yes Stress can absolutely affect your health including your sleep when you're stressed your body stays in a heightened state Think elevated cortisol levels faster heart rate And so I'm saying and a mind that won't shut off that I'm saying that wasn't me No, but I've been stressed in my sleep is perfectly fine.

18:40So that's you I'm not even talking about you. I'm not talking about me right now I know but I'm saying you could be you cannot argue with this. This is this now we're talking a But who says that if you're stressed you don't sleep well, you can be straight here to sleep It says it right here. So it says if you're stressed, you will not sleep well. Stress can absolutely affect your health, including your sleep, right? When you're stressed, your body stays in the high. Stress, sleep takes a direct hit. Stress can make it harder to fall asleep. Your brain's too busy racing. Stay asleep. You wake up more often.

19:10Here, I'll tell you when I'm stressed. Here, let's use this example, okay? Are you listening? People still, I Googled it. You can still get great sleep if you're stressed. This is me irritated right now. All right. So let me tell you this. When I'm stressed, it's like when I talk to you about dating, for example. Remember that situation? That is stressful. I lost a ton of sleep over that. Remember when we're trying to save a certain person? I know prime business case that you're really stressed that I cannot mention on the video because of your outcome. Did I lose sleep over that? No. The only time I lose sleep is over like interpersonal relationship or things like that.

19:53That's what I'm referring to. That's my definition of stress, right? So that is like I don't lose sleep over business. But over that type of stuff where I'm trying to like save someone's life, like that is extremely stressful to me. And even like with my personal situation, like moving back here and all that, like that is stressful to me. And I've talked to you on the phone about that. But my point is, and by the way, your definition of stress, my definition of stress, like it might be different, right? But I think we're both using the internet. It doesn't mean a is right or my versions, right?

20:20Because on my version, it says that you can have great sleep and still be stressed. What what's he were in stuff? Yeah, stress does impact everyone. Yeah, but I double, you know, double his version of stress is very different than your and my version of it. You and me are very. We're similar, but I would say we're different than most people. If I look at most my friends group, when they're stressed, they're not like you and I, where we just fight and we just push forward. How do we even get to this topic? Because you said this is AI's definition. AI is right. Which topic were we on here? I have no idea.

20:56Let's move on. So I think the lesson here for everyone, I think there is a key takeaway here is when Neil has to deal with difficult things, and I've seen him deal with difficult things, I don't really see you panic. And when I have to deal with really difficult things on the business side, I don't really panic or lose sleep or anything like that. Like my heart rate doesn't go crazy, right? You do on the personal side. Yeah, on the personal side, because I think there's a lot more emotions involved with that. And because I can't really control that as much as I can with business. If business fails, I think I can deal with my failure.

21:28But I don't think it's harder for me to be out of control on the personal side. You know what I mean? Those are things that are out of my control. And I think that stresses me out. I'm the same for both business and personal. It doesn't change much for me at all. So you don't really panic or anything like that. But we're both very similar where you and I, and I think that's a really strong key of a good entrepreneur. It doesn't mean we're the most successful or anything like that. We both fight really hard when things go bad. Most people look at when shit goes bad, you're the same way on your personal too.

22:00If you recall personal issues you had, you start looking for solutions. A lot of people just give up. And in business, when things go bad for us, like the economy or we lose clients or things that aren't in our control we go and try to figure out how we can make things up and keep progressing forward yeah no i want you to think in the past any situation where i've panicked at work we could talk about it after because because no one's seen me for um 2020 2017 to 2022 or something like that so five years i can mention one right now no you can't mention it right now mention it after okay all right that is it for today guys please don't forget to rate, view, subscribe, and we'll see you tomorrow.