Let’s talk about making lemonade out of nothing…
I like win-win deals. They are really the foundation of capitalism. A voluntary exchange in which both parties feel they traded up. If you like a burger more than your $5, and Whataburger likes your $5 more than the burger they sell you, you took part in a capitalistic win-win exchange. I take this a step farther. Unless you have this win-win nature to whatever deal you are getting involved in, it will not last. When one party is doing a favor for another, arrangements like that are not built for the long haul.
Employees can also be an example of this sort of deal. Win for them because they get to trade their time for a value they agree is a worthwhile amount and you get to trade money for what you consider is a worthwhile resource.
Three weeks ago my lobbyist brought to my attention that a very well connected figure in the area just lost election and was looking for work. Not only could he pick apart the local bureaucracy better than just about anyone I could think of, he was hungry for some consulting work. Heck yes. Set up the meeting.
We all sit down for the meeting and he is super interested in working for us and wants me to “send him a proposal.” Well, at the same time, I really don’t want to pay top dollar for yet another resource. This guy wasn’t going to take some commission deal either. This crap is getting expensive, and I am enjoying banking some of this at this point. Another 10 grand per month sounds sucky, but he is a good bet.
Throughout the meeting the guy was bringing up a use for our technology that no one had ever thought of. He kept driving home how big of an opportunity it would be in this role and how he could sell it in this role in his sleep. My partner and I were rolling our eyes at this crap because everyone has something to say about their big ideas, but they want you to carry it out.
After the meeting my partner and I had a few cups of coffee and discussed the strategy that this potential new hire came up with. We loved it, but the thought of paying another consultant had us weighing whether we wanted to focus efforts locally or not.
Then I had the idea I call turning nothing into lemonade. The deployment idea that he had. He was super excited about it. He kept going on and on about how great of an idea it was for this specific role. I said, why don’t we feed his ego and multiply our winnings here. I decided to form an entirely new company. One which took that new idea he loved so much and made it its own company. Remember, we weren’t even going to attempt this 4 hours earlier. We had never even heard of this use, but it did look like an opportunity.
We proceeded to draft our proposal giving him a 20% stake in the new company in exchange for representing our interests across the board. We would provide the operations aspect for the new company. Sliding this over to him this morning about made his jaw hit the floor. I said, we think you would be a valuable addition to the team and this was the best way we could come up with to make you rich. This is a nice chunk of stock that will pay distributions, and be a great retirement when we liquidate. He agreed and said where do I sign?
This is a glowing example of creating something out of nothing. I pay exactly nothing for this. Not only did we retain the help of this resource, we made him extremely happy. I also took home 80% of the stock in an entirely new company, one that we have a built in salesman and already built out operations.