A career-changing moment or experience
Deal or No Deal
Before I became president
of NSA in the late 1980s, I
received a phone call from
a trusted colleague about a
man in another state who
needed a spokesperson for
a new learning technology. At her insistence, I decided to meet with him and
found his system very fascinating. Though the new company represented a profound
change in my business model,
it was a wonderful opportunity for me to introduce this
new technology. It also would
allow me to build a business
that did not hinge on me as
a speaker, and it could ultimately be sold.
Phone a Friend
I contacted a handful of my most
trusted advisers, who flew in to meet
with the prospective partner and me. I
asked them to candidly assess the technology’s potential and the proposed
business arrangement. Unfortunately,
I didn’t disclose the details of the deal
Dubious Circumstances
I should have heeded the
red flags waving all over the
place. My prospective partner, however, made a compelling case for his suggested
business arrangement, and I
was sold. I didn’t necessarily
need him because my speaking business was thriving,
but he needed me to take the
product to the marketplace.
His business proposal contained the following caveats:
• He wanted me to invest right away
because there was a big tax bill com-ing due.
• He offered to sell me 20 percent of
the company, which he fully owned.
• Our agreement would be structured
around seminar revenues and company profits rather than all revenues.
• To invest at his desired level, I would
have to take out a loan on my home.
Over the next three years, I
invested all my resources into the
company’s growth. I developed a new
keynote, published recordings and
articles in a large number of distin-
guished media, called in all of my con-
tacts to sample or buy the new prod-
ucts, and created a four-day training
program. Hundreds of hours
were spent authoring and edit-
ing the product and collabo-
rating with our research team.
We signed many clients,
basked in tons of publicity,
enrolled executives and trainers
in the program, and began to
sell the new products quite successfully. Everything was going
great until I realized I was
producing 100 percent of the
company’s revenue. I was generating all the sales, yet I was
not participating in the profits earned from our product
sales. I received a commission
but not a royalty, despite coauthoring the product. Finally, I
decided it was time to confront
my partner.
“Jim, you need to realize that I didn’t
make a bad deal here. I got what
I wanted. It’s you who made a bad
deal, and that’s not my problem.”
(only 20 percent equity and his full
control over declaring profits). At the
time, I didn’t realize how dysfunctional
the agreement was. Tony Alessandra,
my good friend and former partner,
urged me to decline the offer. But I was
so intrigued by the new technology,
I really wanted to close the deal. My
other advisers also were impressed and
gave me the thumbs up.
Can of Worms
When I approached my partner
about the error of our formula,
I was completely devastated by
his response: “Jim, you need to realize
that I didn’t make a bad deal here. I got
what I wanted. It’s you who made a bad
deal, and that’s not my problem.”
I felt betrayed, abused and exploited.
In the following weeks, we had a series
of unpleasant discussions—with and
without lawyers—and finally agreed to
terminate our business relationship. I
walked away with nothing. No revenue,
