“An honor is not diminished for being shared.”Lois McMaster Bujold (“Shards of Honor,” 1986)

Great partners make great partnerships — even if the partnership itself doesn’t work out.

In my view, a great partner has the following characteristics:

  • He has something besides money to offer the partnership that you don’t. This might be intelligence, assertiveness, creativity, perspicacity, a capacity for networking, an indomitable spirit — anything, so long as it is helpful to getting the job done.
  • He is fair-minded. By that, I mean he understands that there are many ways to contribute to a relationship (see above) and values the way you contribute.
  • He is long-term-oriented. He understands that building a business takes time.
  • He is loyal. He will never try to break the original deal even if it seems unbalanced or unfair.

You don’t need all of these qualities. Of those listed above (and there may be others on your list), there are two that are essential. You need a partner who fair-minded and loyal.

Let me tell you why I see it that way.

I have been in many successful partnerships. The best of these were with great partners — men and women who had all the virtues listed above and more. But some of the successful deals I’ve done have been with partners who had nothing valuable to give except the willingness to give it a try. I can think of two such relationships right off the bat that netted hundreds of thousands of dollars. I was always happy to give my partner his share, and I think I was right in feeling that way.

So while I think LK’s point is a very good one, I don’t follow his advice. The reason is simple. I don’t believe I’m ever truly objective about how much value I’m contributing or how “little” value the business is getting from my partner.

Often, partnerships deconstruct because of arguments over who does what and — a related topic — how much everybody is making. That’s bound to happen if you go into a partnership expecting it to be “fair.”

I think the reason I’ve had such good experiences with partnerships has to do with three things, all attitudinal:

  • I recognize that however much I “bring to the table,” it’s not enough.
  • I know from experience that everyone, every partner, has something to teach me.
  • I know I’m a better performer and can make tougher decisions when I have a partner to run ideas by.

More importantly, I have a very special — and I think correct — view of how value in a business should be decided. In my view, the profits of a business are decided when the partners originally cut up the shares. The best partnerships are those that value the shares based on resources (intellectual, capital, reputation, etc.) contributed at the inception of a business. All contributions made later — whether one partner runs the business or gives advice or simply attends meetings now and then — should be paid for on an arms-length, free-market basis. If you do it like that, you will never have any need to fight about who does what. If one partner wants to stop working, no problem. Just cut his salary (for working) and use it to hire his replacement. If your arms-length evaluations for such contributions are accurate, you’ll have just enough money to pay for a very good replacement.

Here’s another thing. Some partnerships begin with one partner contributing most of the valuable work and end up with the other partner taking the lead. If you bicker in the first instance, you’ll end up screaming later on. When I think about it, I’d say this to LK: If I had applied your standard to all of the partnerships I’ve been in, I would have been in very few indeed. And I can count up millions of dollars worth of income I’d have given up. Don’t be afraid of partnerships. Pick a partner you trust and make sure you agree on how these sorts of things should be fairly worked out. Ask a few “What if …?” questions before you sign the contract. Then get to work and enjoy each other.