We recently had a company who wanted us to help promote their platform to investors, key people in the industry, and clients. The company didn’t have the funds to acquire our services so we requested some exclusivity and a percentage of the revenue or profit that may come from the growth or sale of the company. It’s not going to happen. They couldn’t imagine that we were asking for so much for such little effort on our part.
Aside from the risk of not ever getting compensated for our efforts, there’s a much bigger picture that this prospect did not understand. They weren’t paying for the effort we would make for them from here on out, they were paying for the effort that we’ve been working on for the last 20 years. We have one of the best networks in the industry because of the time and care put into building relationships with key stakeholders. We have one of the best blogs in the industry because of the resources we’ve applied day after day for about a decade. In other words, we’re not tying the compensation to what we are doing, we’re tying it to what we’ve already done.
Access to our audience, access to our expertise and access to our network is valuable. But it’s valuable only because we’ve invested in that audience, expertise and network for our entire careers. While we’re asking for a percentage that could lead to six figures, they’re asking for access that we’ve invested millions of dollars into.
5% Percent of Zero
Companies almost always overvalue themselves… especially online. Ask anyone with an app and they’ll often tell you about the billion dollar industry they’re in and the opportunity for their product to make tens or hundreds of millions of dollars. If they give away 5% of their hundred million dollar company, that’s $5 million! How could we possibly deserve $5 million?
The problem is that they’re not a hundred million dollar company. In fact, the majority of companies fail altogether. Without a thriving client-base, being well-marketed in the industry, and access to investment, they’re worth $0… regardless of the investment they’ve made to date. And 5% of 0 is $0. They’re worth $0 without our assistance… but with our assistance, they have a greater chance of being so much more.
When no guarantee of a percentage could be provided, we had to walk away from the prospect. We had already introduced them to one key influencer within our network that could very well lead to rapid growth or investment. They thought that effort was minimal… just an email that led to inclusion in a blog post. They don’t value the fact that that email took us years to come by and the reason why they were mentioned was because of the respect the influencer had for us. It took a lot of work for us to get to that point. It’s unfortunate they don’t understand that value.
5% of Millions
Investing 5% of a company into an influencer who could drive millions of dollars is a tiny investment to make. The company could walk away with millions and, yes, we could walk away with a healthy sum as well. But the company would have never received those millions had it not been for using our resources (knowledge, network, audience).
I don’t see this any different than someone who has spent years writing a book and wishes to sell it. They go to a publisher. That publisher has the marketing, the distribution, and the publishing capabilities. In exchange for the majority of the revenue, they do business with the author. The publisher risks never making a dollar, but could also make a lot. The author risks never selling a copy, unless they get access to the publisher’s resources.
It’s a business relationship that works throughout several industries and it’s a business relationship that works with technology.