Should You Do A Joint Venture? (Part Two!)

Joint Venture

“Dear Naomi and Dave,

I have a question. Everyone (well, but you that is) is raving about JV’s (joint ventures).

I’m not sure it’s something I’d like to explore – it doesn’t speak to me and I don’t like to be bombarded by 25 people all telling me what their good friend is up to this time.

It kinda makes me wanna puke.

But maybe there is something to say for JV’s, I don’t know. I do get that joint efforts can generate more leads and sales. It’s just the WAY I see people do it that makes me dislike it.

I have the impression you don’t do the JV thing in your launches, and I would like to hear your take on it:

Do you do JV’s?

If yes, why?

It not, why not?

I would love to hear what you think about it, and what your view is on how effective it really is.

If you’ve answered this question already, please let me know and I’ll look it up on one of the recordings.

Thank you!”


Dave’s Answer!

Ah, the JV. Do I have a lot to say about that.

First of all, don’t believe the hype that everyone tells you about JVs. Yes, they can be very lucrative, and they can be very successful, but so can investing in a stock. That doesn’t mean they’re inherently going to do either.

A good JV involves a true win-win that usually has little to do with money. Like partners in a company, both bring complementary things to the table that allow both people to do what neither could do on their own, or accelerate the process of growth for both parties involved.

However, that’s when you have the match made in heaven factor on your side. Most matches are not made in heaven.

So, I’m going to answer your question by giving you some criteria for figuring out if a JV is right for you.

1. Evaluate the real probability you’ll get what you want.

JVs are notorious for not panning out to the big promises. People say they’re a great way to get scads of people onto your list. But getting people on your list involves the other participants in the JV putting a serious, put-their-back-into-it effort into telling their people to sign up for your list.

The bigger the other participants are, the less likely they are to take their hard-earned people and send them your way. Would you? This is where people with a list of 500 get together with someone with a list of 5,000 … and the one with the bigger list doesn’t exactly want to send potential customers somewhere else.

Now, in some cases that may not be true. When Naomi and I wrote our first book together, I did a lot of heavy lifting in the writing process, and she did a lot of promotion for me in return. In the years previous to that I did a lot of heavy lifting for other people, and not one of them reciprocated.

Naomi tells me she did a JV with someone else and got a whopping 8 list signups. I can say that’s often been my experience.

2. Evaluate the probability that you’re being used.

This is a bit of a darker point, but this is the world of business and it’s just the way it is. Often people with larger lists will intentionally rope in JV partners to do promotion and heavy lifting with no intention of reciprocation or fulfilling their promises. Some people are sharks, plain and simple.

The more your JV partner is motivated by money and quick rewards, the higher the risk for this is. The more they are invested in long-term brand building and steady growth, the lower this risk is.

3. Evaluate the benefits you’ll lose by doing the JV.

Going through the process of a JV is a distraction from core (read: boring) business building activities. We bust our ass for a JV because it “could” get us 1000 list signups. But normal routine marketing gets us 750 in the same period of time. With those numbers, put as much work into building up your home base as you do into your JV and I promise you’ll get a lot more than 1000 signups.

4. Evaluate the risk of your JV partner going off the rails or making brand-damaging activities.

I think Naomi addressed this in her answer. But I’ll give a little background based on the implosions I’ve seen from many a blogger over the years.

Some people do a JV, become a big deal quicker than they imagined and it makes them go crazy. They can’t deal with success – not because they are crazy people, but because finally “making it” can be a brain breaker. They can’t handle the stress and the changes. Often their peers who haven’t “made it” become resentful and so they’ve just lost their social circle.

They didn’t expect the other side to have downsides, and they go nuts. This is a big reason that we withdrew from the industry a few years ago. Some of our peers became sharks, and some of our peers went off the rails. The sharks changed their brands to ones that weren’t compatible with ours. The ones that went of the rails became people we just wanted to stay away from.

Birds of a feather, and all. Remember that you’re judged by the company you keep.

Some people do a JV, plan to get rich and don’t, and THAT makes them go crazy. BUT THE INTERNET PROMISED ME THIS WOULD WORK! We’ve seen people abandon projects mid-way through, and I’ll talk about that in a bit. We’ve also seen people take some extremely embarrassing actions when they didn’t get what they wanted out of the JV.

Some people just get bored and existential later and just do crazy stuff. Maybe their JV was successful, and they start thinking they’re a bigger deal than they are and go off in all kinds of “creative” directions. Maybe their JV wasn’t successful and they decide to become interpretive dancers.

I don’t begrudge them either, but if you do a JV with someone and later they start going a little bit wacky because they don’t know what will give their life meaning, remember that during the JV you probably spent a lot of time saying how close you were to this person. If they start becoming eccentric, you’re strongly connected with them. If they make really poor marketing and branding decisions, you’re still strongly connected with them.

JVs can affect brands long after the JV is over. Keep that in mind.

5. Evaluate the potential that they’ll quit.

Some people bite off more than they can chew when they do a JV. Some people go a bit crazy and bail in the process. If you’re bringing the content, and they’re bringing the marketing, if they quit during the process, you’re hosed in a very public way.

One way to protect yourself against this is to look at past performance. If someone has successfully completed multiple projects or multiple JVs, then the risk is mitigated.

I was once approached for a JV by a substantial player in the industry when I was just a small fry. I asked why he wanted to do a JV with me, and he said “You complete projects. I know you’ll follow through.” That’s what you want to look for.

That said, I’m glad I didn’t pursue it. I could see the signs of brand issues, and I stayed away. Five years later, he is still a substantial industry player, but his brand has suffered a lot of dilution and damage because of what look to be really weird and eccentric marketing activities. You can tell the empire is in its decline and that his products aren’t selling. Cautionary tale.

6. Evaluate the potential that “short term blinders” are on.

JVs are typically approached as a way to get fast money or fast growth NOW. That’s short-term thinking. They can certainly be a way to accelerate the process of growing your business, but you have to be able to look at it as a strategic part of supporting the long-term goal.

Otherwise it’s like marrying someone you just met. Of course it seems like a good idea at the time.

You want to make sure this isn’t a case of “I was young, I needed the money.” You need to make sure of it in yourself, as well as in others. The more evidence you see that your potential JV partner has been doing consistent, deliberate things to grow their business, and that those things are working, and that they are doing the JV because it will enhance their long-term plan, the lower your risk is.

With all that said …

If I were willing to do a JV these days, I’d look for someone who didn’t NEED to do a JV. Someone who was trucking along just fine, and who I could trust to be stable and committed to the long-term preservation of their brand. If someone got excited about a JV, I’d take that as a warning sign. I’d want someone who knew enough to understand that they’re a lot more work than excitement.

It’s like how banks used to give out loans to people who didn’t need them. If you can prove you’re managing your money just fine, and have been for long enough, they can trust you to manage a loan.

Another cautionary tale: The banks stopped using that criteria, and we all know what happened there.

So, my opinion? You’l go a lot farther not doing JVs because you’ll put more of your own muscle into building your own business, and you won’t dilute your brand with other people’s brands.

But if you are thinking of doing one? Here’s a helpful rule of thumb:

Only join up with someone you’d let your daughter marry.

I hope that helps. Great question.

All my best,
Dave

About the author: Dave Navarro joined IttyBiz in 2011, and is in charge of doing the stuff nobody else knows how to do. Learn more about him here.