My buddy is one of the best networkers around. He’s got people everywhere and for anything. Need a “container guy” (a guy who sells shipping containers)? He’s got one. Need to reach the head of a major healthcare system? Check. So when he was approached to help build traction and sales for a new product for pets – he knew everyone.
- Product was ripe for ABC’s Shark Tank. He knew a guy who could get the company on-air. In fact, they started on the path of filming.
- Reached out to several local businesses as points-of-sale for the product – 1000 units preordered.
- Went to community events and locales to interview prospective consumers – got hundreds of great feedback and buying interests.
- Secured seed investment to make production runs.
- The list goes on…
He had agreed with the founders of the idea/ company on his compensation structure – namely, equity in the company based on milestones to which the founders agreed. After all the sweat and time spent to bring the company to executing on the funding, start filming, start production, the founders back-pedaled on everything. My friend never had a contract in place. The founders started sweating about equity only after he captured traction and pre-orders.
Needless to say, my buddy pulled out of the opportunity. Funding never occurred. The lots of product that was produced later sits in a storage unit.
I asked my buddy for his lessons learned…
- Never start without a contract. Similar to the entrepreneurs I spoke with months ago, being explicit and documented in expectations early on helps mitigate problems that will arise when there’s an inkling of success.
- Know who you’re getting into bed with. Startups are difficult, and having the right team in place for success is sometimes serendipitous but needs great consideration. The early team should be aligned as the culture starts from the beginning.
- Inventions are not businesses. Companies have products, but they don’t necessarily have revenue. Companies only exist as long as they stay solvent. The founders of the company believed having a product automatically equaled sales. Nope!
- 100% of 0 is 0. I remember at Body Boss when we were a bit greedy in sharing equity with a potential strength coach to become an Advisor. We didn’t end up asking him to be an Advisor and saved our ownership. Problem is that he ended up becoming the strength coach of the year and a Super Bowl coach while we kept 100% of a shut-down company.
- Your brand persists through ups and downs. My buddy made sure to meet face-to-face with each retailer he presold to to tell them the company wasn’t moving forward. He had to go back to his main investor to stop the check. As hard and shameful he felt about not moving forward, he ensured his contacts were in-the-know. His personal brand is fully intact and even strengthened due to his integrity and honesty.