12 Items You Should Never Forget To Include in a Partnership Agreement

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What should you absolutely not forget to include in a business partnership agreement?

1. What Will Happen if it Doesn’t Work Out 

Sharam Fouladgar-MercerThis should be a given, but let’s talk about it for the sake of reiterating its importance. Any business partnership agreement should clearly outline what steps will be taken should the partnership go astray. People despise discussing this, but the reality is that we live in a world where disagreement happens and it’s best to have a plan in place in case it does occur.

– Sharam Fouladgar-MercerAirPR 


2. Equity Valuation and Buy-Sells 

Chris SmithNames, ownership equity, and how the business is going to be operated are always must-haves. However, most problems arise when there’s not a clear method for valuing the equity down the road, or when there’s no buy-sell agreement included. Always know how equity is valued should it need to be sold to or purchased by another partner, and don’t forget to properly fund your buy-sell agreement.

– Chris SmithSuperius Ventures, LLC and Smith Simmons, PLLC 


3. Legal Inclusions 

Peggy ShellWhile it’s important to include standard legal items, such as non-solicitation of your employees, confidentiality, and ownership of work product, one important thing to never forget is clarifying the business relationship. The Department of Labor errs against employers in situations where a business partner might be considered an employee, so including clarifying language is key.

– Peggy ShellCreative Alignments 


4. A Vesting Schedule 

Chris BrissonOne of the biggest mistakes I made in my company early on was the fact that my partners and I vested immediately. The was a problem after one year when my partner decided to stop working and took another job. I was left holding the bag to grow the company while he still had shares in the business. A typical vesting schedule has a four-year cliff. Be sure to set this up in the beginning.

– Chris BrissonCall Loop 


5. How a Buy-Out Will Be Paid 

Elle KaplanIn the event that a partner splits, it’s vital to determine how they’ll receive their fair share of the business. If this isn’t in writing, they could request all of their payout at once, and feasibly bankrupt the business. By determining a payout structure, you can ensure a clean, positive break-up.

– Elle KaplanLexION Capital 


6. Roles and Responsibilities 

Murray NewlandsRoles and responsibilities should be clearly delineated from the beginning and in writing so there is no confusion, and to minimize or even eliminate conflict. It keeps everyone on the same page from the start and lets each partner go out and get done what they need to without question.

– Murray NewlandsDue.com 


7. Operating Agreements 

Tommy MelloThis is the foundation of the business that handles everything from A to Z. In most agreements, you should discuss what happens if one partner has health issues or wants out. Also, take consideration of voting rights and who is on the hook for what. All the key elements should be discussed and documented in the operating agreement. This is the prenuptial agreement for business partners.

– Tommy MelloA1 Garage Door Service 


8. Expectations for Hours, Vacation and Company Budget 

James McDonoughEveryone has very different expectations for how many hours they should put in, how much vacation, and generally on what and where the precious company budget should be spent. Sit down with your partner and draw out what a year would look like for all expenses and time commitment with best/worst case scenarios. You will uncover some interesting discussion areas.

– James McDonoughSEE Forge creators of FAT FINGER 


9. How Costs Will Be Shared 

Cody McLainMost individuals enter into partnerships based on the fact that there could be a high return in the form of equity. Equity is fantastic, but the reality in accounting terms is that the individual who shoulders the most costs will in effect be the one with the greater equity. Cost sharing is an important part of equity sharing, and it informs how the pendulum of equity will swing over time.

– Cody McLainSupportNinja 


10. What if a Partner Is Injured or Dies? 

Cassandra BaileyYou have to think about a business partnership agreement as if it’s a prenuptial agreement. Even if you hope nothing bad will happen, you still have to prepare for the worst. Have steps in place in case an acquisition or a merger occurs. If a partner is injured or if the partner dies, there needs to be a solution in the agreement.

– Cassandra BaileySlice Communications 


11. Non-Compete / Non-Disparagement Clauses 

Kristopher JonesUnfortunately, business partnerships don’t always work out. In fact, sometimes business partnerships can go wrong and a former partner can abruptly quit only to start a competing business. The partner may also say nasty things about you or your business. Therefore, it’s very important to include a non-compete and non-disparagement clause in a partnership agreement to eliminate issues later.

– Kristopher JonesLSEO.com 


12. General Expectations 

Ismael WrixenUnexpressed expectations are equal to premeditated resentment. Although you can include conduct and expectations in a separate document, it should be a part of your partnership agreement. Otherwise, you could end up resenting your partner, and that’s not good for business. You need to be on the same page in terms of the goals you’re trying to achieve, even if you have your differences.

– Ismael WrixenFE International 

Strategies for Bootstrapping When One Co-Founder Has Greater Financial Assets Than the Other

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is your best advice to startup co-founders who plan to bootstrap their business, but one has greater financial assets to contribute than the other?


1. Offset Cash Contributions With Additional Labor 

Charles MoscoeI’ve entered into founder agreements where different founders offer a different level of capital contribution, but that can be offset by additional responsibilities. For instance, for a startup that I am involved in now, I am financing the majority of the capital spend with the understanding that I will recoup my investment first, but my time commitment as a result is substantially less. – Charles MoscoeSkinCare.net 


2. Draft an Operating Agreement and Plan for the Worst 

jeff epsteinYou should draft an operating agreement that accounts for all the assets (and time plus energy) contributed to the business. The reality is many partnerships don’t last — planning for the worst (a breakup) will allow all parties to have full transparency on the range of outcomes and a full understanding of how to calculate the value of their contributions. – Jeff EpsteinAmbassador 


3. Keep It Equal 

Jared BrownIt doesn’t matter whether one founder has a million to invest and the other just has ,000. If the business can succeed with just ,000 from each founder, keep it equal. It makes things much simpler and is better for overall accountability. If the business needs more funding, the extra money should be considered a loan, not an investment. – Jared BrownHubstaff 


4. Distribute Equity Fairly, Not Equally 

Nicole MunozThis may be counterintuitive, but splitting equity 50/50 isn’t the best solution for co-founders. Because each founder brings a unique set of skills, resources and assets to the table, equity should be divided based on those attributes rather than equally. Careful consideration now about how to divide the company fairly will eliminate many headaches and unnecessary battles down the road. – Nicole MunozStart Ranking Now 


5. Put Together a Spreadsheet 

Andy KaruzaYou need to put together a spreadsheet that adds weight to each person’s contribution. We devised a spreadsheet that places weighted values on how much a founder brings to the company in terms of cash, hours, intangibles, ideas, resources and unique management processes/documentation created. Agree to the value of these inputs collectively; then use it to determine fair equity compensation. – Andy KaruzaFenSens 


6. Balance Equity 

john ramptonBalance equity and cash put into the business. If one person is putting in equal time but more money he should get more of the pie over the other person. Paul Graham put together a very simple equation for startup founders bootstrapping. 1/(1 – n). In the general case, if n is the fraction of the company you’re giving up, the deal is a good one if it makes the company worth more than 1/(1 – n). – John RamptonDue 


7. Think in the Opposite Direction 

Blair ThomasWhether one founder has more capital than the other shouldn’t matter as much as what does the business actually require? If a founder can invest 10 times more than another, that doesn’t mean they should. Find the lowest capital commitment required to get the business off the ground so that founders can garner equity equal to the expectations they had in place while bootstrapping the company. – Blair ThomasFirst American Merchant 


8. Differentiate Between Financial Capital and Sweat Equity 

Ross BeyelerWhen posed with a situation where one partner can contribute more (financially) than another, consider creating two classes of stock and treating financial investments in the company different than ‘sweat’ investments. Split the business as desired based on your partnership structure, and then treat whatever investment is made by one partner the same as you would an external investor. – Ross BeyelerGrowth Spark 


9. Hire a Lawyer 

Kristy SammisUse whatever extra assets one of you has to hire a very good lawyer. In all seriousness, expert legal guidance is critical and always worth it in the long run. No one ever said, “Gee, I wish our working agreement had been less clear.” Whatever arrangement you come to, it’s not enough to get an agreement in writing; get a fantastic, ironclad agreement in writing. – Kristy SammisClever Girls Collective, Inc. 


10. Allot 20 Percent to Each Area: Finance, Operations, Sales/Marketing, Founder and Product 

Erik HubermanSplit equity according to which aspect(s) each co-founder contributes. If you can’t have a fair conversation on equity, don’t go into business together. If one finances the entire thing, that 20 percent is his. Split the percent for Founder evenly. It comes down to why you’re partners. Who’s the “product person?” Who’s got sales? How do you divide the work? – Erik HubermanHawke Media 


11. Have Active and Passive Roles 

- Engelo RumoraOver the years I have seen (and been involved in myself) way too many business relationships that go south due to someone not pulling their weight. The best way to go about this is to always have one person doing all of the work and the other person being more passive but investing most if not all of the funds. This keeps things simple with everyone knowing what is needed from them. – Engelo RumoraList’n Sell Realty 


12. Deferr Payouts 

Dan GoldenIf you’re keen on keeping a 50-50 split amongst co-founders, consider a deferred payout for the co-founder with greater financial assets. This lets one of the co-founders take larger draws upfront, and then even out the payouts once the company has grown beyond the early bootstrapping days. Sure, there’s some risk, but startups need cash to hire and scale. – Dan GoldenBe Found Online 


13. Be Balanced and Fair 

Julian MillerJust because a contribution isn’t financial, doesn’t mean it isn’t valuable. I was at a well-paid corporate job and my co-founder was five years into a Ph.D. when we met. His contribution was potentially giving up five years of work to bet on our company. Because we aligned on what it meant to contribute from where we were, it was easy to build a solid, equitable base for our company. – Julian MillerLearnmetrics 


14. Have Skin in The Game 

Bryanne LawlessMake sure both partners have skin in the game, whatever it may be. If both partners aren’t equally invested into the company, where both need to be held accountable, the partnership will be uneven and the work-relationship could end poorly. – Bryanne LawlessBLND Public Relations 

11 Sabotaging Startup Mistakes New Founders Make When Managing Cash Flow

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is a common mistake new founders make when managing cash flow that can easily jeopardize the future of their startup?


1. Not Having a Line of Credit

Kenny NguyenIt’s great if you have sales that are going to be very profitable for your company. However, if you have to buy a lot of materials/time upfront to execute the sales or sell to companies that mainly have longer paying invoices, you may run into a cash flow problem. Getting a line of credit with a bank can make or break your business. I always tell founders to get one before they need it. – Kenny NguyenBig Fish Presentations 

2. Trying to Buy Growth

Jonathan ShokrianA lot of founders think of their bankroll as a never-ending gobstopper, that burning absurds amounts of cash to grow overnight is healthy, and funding is always available. However, it’s important to remember that growth doesn’t always equal a healthy business, and money can and will run out eventually. Building a brand takes time. Healthy businesses are grown organically and slowly. – Jonathan ShokrianMeUndies Inc 

3. Locking in Real Estate

Kim KaupeNew founders tend to get overly ambitious when it comes to building their company — they need employees, an office, furniture, the works! However, locking into a long-term office contract can create a huge hole for your cash to flow out of every month. Even worse, if the business isn’t churning out enough in profits, there is no way to extract yourself from the payments to your landlord. – Kim KaupeZinePak 


4. Not Reinvesting Back Into The Company

Anthony PezzottiMost business owners will start out by pocketing whatever the business earns, acknowledging any company profit to be their salary. However, if you don’t reinvest back into the business, you’re essentially starving the company’s growth. It can be bothersome to put your well-deserved dollars back into the company, but in the long run, your business will be better for it. – Anthony PezzottiKnowzo.com 


5. Not Having a Reserve

Elle KaplanOften, startup owners will operate on a thin margin and spend almost every dollar as soon as they get it. This “grow or die” mentality can be great during good periods of business, but can prove disastrous when you have unexpected expenses or a slow period. Similar to a personal emergency fund, startups should always have some money reserved for surprises, even when everything is going well. – Elle KaplanLexION Capital 

6. Letting Tax Time Be a Surprise

Laura RoederToo many business owners forget about taxes when looking at their profitability. It’s easy to just count the money in the bank, forgetting that a significant chunk of it is going to need to be handed to the government. Don’t just assume that you’ll have cash leftover when tax time comes. Budget for your yearly tax bill every month so that you can stay on top of your real cash flow situation. – Laura RoederMeetEdgar.com 

7. Mindless debt, Salaries and Spending

Alisha NavarroI come from a background of bootstrapping and grassroots. Mindful debt, well-planned out debt, debt that increases sales all are examples good debt. Thinking you should make a huge salary just because you are the CEO is dangerous. Think of your company as a long-term investment; you don’t want to take the money out before it matures. You want to reinvest generously. – Alisha Navarro2 Hounds Design 


8. Accepting Sales With Bad Payment Terms 

Chris GowardMost new entrepreneurs don’t realize they can negotiate terms and get access to much more cash than they imagined. Consider the difference between a typical Net 45 payment upon completion compared with a 50 percent up-front deposit and Net 15 on completion. The difference could mean thousands of dollars in saved interest. You can set the expectation for how soon and how often you’re paid. – Chris GowardWiderFunnel 

9. Not Keeping Updated Records or Books

Andrew O'ConnorBecause most founders lack the financial knowledge or accounting acumen, they may not realize the need to keep books and financial records as updated as possible to understand the current cash flow and what is still outstanding. A good automated accounting system can provide a way to avoid this mistake. – Andrew O’ConnorAmerican Addiction Centers 


10. Assuming One or Two Good Months Is the New Normal 

Adam SteeleIt’s great when things start to really pick up for your business, but it’s dangerous to assume that you’ve arrived because you met your goals for a short period. Make sure you’re on steady ground before you increase spending to match new levels of income. It may not last for very long. – Adam SteeleThe Magistrate 



11. Looking at Analytics Platforms Instead of Quickbooks

Carter ThomasFounders often look at the analytics platform being used inside their company to gauge success. They may see a certain number in Google Analytics E-Commerce data, but that doesn’t account for returns, credit card fees, chargebacks and failed payments. Your P&L statement, however, is the ultimate mirror for your financial health. – Carter ThomasBluecloud Solutions 

What You Need to Know About the New SEC Crowdfunding Rules

“Bureaucracy defends the status quo long past the time when the quo has lost its status.”  — Dr. Laurence J. Peter

When Congress passed the JOBS Act it mandated that the Securities and Exchange Commission finalize new crowdfunding rules within nine months. Well, the SEC missed the deadline by nearly three years, but on October 30, 2015, it finally approved the new rules. They “go live” April 2016 and there are some details you really ought to know…

What You Need to Know about SEC Crowdfunding Rules

Verge regulars know that last year Indiana passed its own, intra-state crowdfunding law (see my prior Verge article). While the Indiana-specific rules are now likely to gather dust because they limit your pool of potential investors to only Hoosiers, the federal rules may prove to be a robust marketplace for small-scale capital raises. Here’s a quick snapshot of the SEC’s final rules.

But First, Why New Rules?

As most know, selling securities is a highly regulated activity. Securities must be sold on public exchanges, unless there’s an exception.

The exception most familiar to entrepreneurs is the 506(b) safe harbor, which allows companies to sell securities to accredited investors in a private placement. Accredited investors include, among others, banks, high net worth individuals and trusts, and the issuer’s officers and directors; that is, those with sufficient knowledge and resources to “know better” and to absorb any losses from risky investments. Sites like CircleUp and AngelList have used crowdfunding for a few years, but they limit access to accredited investors.

verge startup pitches at the hi-fiOf course, there’s potential upside to investing in startups, and the “99%” who lack the income to qualify as accredited investors are presently shut out from investing in early and mid-stage companies.

Crowdfunding solves that problem by creating a new safe harbor where start-ups can raise money off of the public exchanges.

5 New SEC Crowdfunding Rules for Companies

Here are a few key rules for companies crowdfunding under the new SEC guidelines:

  1. Max Raise. A company may raise up to $1 million in a 12-month period from the crowd. (Note: under Indiana’s law, a company that provides Hoosiers with audited financials may raise up to $2 million).
  2. Portal. The company must conduct the raise through a registered third party “funding portal.”
  3. Target/Deadline. Through the portal, the company must set a target offering amount and a deadline to reach that amount, and it must allow investors to back out of any commitment up to forty-eight hours before the deadline.
  4. Investor Disclosures. The company must disclose certain company information to investors. The amount of disclosure required is similar to what start-ups are accustomed to disclosing to accredited investors: risk factors, business plans, financial statements (balance sheets, income statements, and cash flows), governance, and the like. You’ll want an experienced lawyer’s assistance.
  5. Annual Reporting. The company must file annual reports with the SEC, but with nowhere near the depth required of publicly-traded companies. Failure to comply with this or other SEC rules could strip you of your exemption. Not good.

Ding Dong the Wicked Audit is Dead (Sort Of)

New SEC Crowdfunding Rules For financial disclosures, the SEC’s proposed rules had called for audited financial statements for all raises above $500,000. There was tremendous push-back due to costs; for instance, Slava Rubin, Indiegogo co- founder and CEO, called audits, “a massive deal breaker.” Fortunately, the SEC slackened the requirement for first-time crowdfunders. The new rules require:

  1. For offerings of $100,000 or less, financial statements must be certified by the company’s CEO.
  2. For offerings between $100,000 – $500,000, financial statements must be reviewed by an independent auditor.
  3. For offerings greater than $500,000, financial statements must be reviewed by an independent auditor for first time crowdfunders, but for any follow-on crowdfund campaign the financial statements must be audited.

4 Crowdfunding Rules for Investors

Individuals will be allowed to invest based on annual income or net worth. Under the new rules, an individual may:

  1. If annual income or net worth is less than $100,000, invest the greater of $2,000 or 5% of the lesser of annual income or net worth.
  2. If annual income or net worth is $100,000 or more, invest 10% of the lesser of annual income or net worth.
  3. Invest not more than $100,000 per annum aggregate in crowdfunding offerings.
  4. Sell the securities, but only after holding them for one year.

Importantly, funding portals may rely on the investor’s representations concerning annual income, net worth, and the amount of the investor’s other crowdfunding investments, unless the portal has reasonable basis to question the investor’s representations. That is, there’s no affirmative obligation on the company or the portals to prod into investor’s private financial affairs to verify the investor’s representations.

Outlook for Investors and Entrepreneurs with the New SEC Crowdfunding Rules

Crowdfunding Rules for InvestorsVenture capitalists aren’t sweating. At $1 million a crowdfunded project is small even for a seed round, where average deal size hovers around $4 million and which constituted a mere 1% of 2014 VC dollars ($719 million of $48.3 billion).

On the other hand, one commentator noted that if U.S. families invested 1% of their assets in start-ups via crowdfunding, it would unleash $300 billion annually. The success of state-specific crowdfunding rules and of non-equity platforms such as KickStarter, Go Fund Me, and Kiva indicate there’s a sizable market for small denomination equity investments. And there’s certainly no dearth of start-ups looking for capital.

Ongoing SEC rules and reporting requirements will always be a deterrent to start-ups and will hamper crowdfunding’s potential, but as quality funding portals develop and the public acclimates to the new investing landscape, crowdfunding may become a useful tool for small-scale capital raises.

How will these rules change how you grow your business? Will you invest using the new Crowdfunding rules? Let us know in the comments below.

© 2015 Faegre Baker Daniels. All rights reserved.

How to Create a Life of Greatness with Lewis Howes

I could barely contain my enthusiasm as I walked into the well-furnished penthouse overlooking the Hollywood hills. But my excitement was justifiable. I was about to have a one of the most real conversations of my life with an ex-pro athlete who turned his life around to become serial entrepreneur, speaker, and author.

Lewis Howes on GreatnessLewis Howes has the ability to connect with anybody. His hit podcast The School of Greatness gets a million downloads a month and is consistently ranked in the Top 100 on itunes overall, and even the Top 5 in the Health and Fitness category. As we took a seat in his home office, Lewis slid an advance copy of his new book across the table to me. I’ve since underlined his book, also named The School of Greatness, dozens of times over and dogeared it front to back —a sign of a book containing true greatness.

Maybe it’s because I’m a frequent listener to The School of Greatness podcast, or maybe it’s Howes’s sheer charisma and ability to connect, but our conversation that afternoon went deeper than I had anticipated. I sat there for nearly an hour, entranced in conversation and surrounded by hundreds of his personal collection of books. I recognize most of the authors—former guests of of his show—including billionaire business leaders, best-selling authors, and professional athletes. With only the room of best-selling paperback as our audience, we dove in…


In this interview, Lewis and I talk about some interesting topics like growing profitable businesses online, writing best-selling books, and performance psychology. But my favorite part of this interview is when we get personal and real about some of the challenge of building a life of greatness while building a business.

You’re going to love this…

Listen to Lewis Howes on Greatness:

Selected Links from the Interview:

Show Notes:

  • On starting his first company while living on his sister’s couch [3:40]
  • How to take action and stay motivated [5:15]
  • What to do when you don’t see eye-to-eye with your business partner (and insight into selling your company) [8:05]
  • How to use Periscope to make money and grow your audience [9:00]
  • Creating a unique and differentiated podcast [11:32]
  • How to prepare for any big event with Lewis’s “grounding” technique [13:05]
  • Why you should have a business coach [15:03]
  • What qualities to look for in a good business coach [16:15]
  • The important role of emotions in business [18:10]
  • Dealing with breakups and other emotional trauma while growing your business [21:35]
  • How to feel deeply and remain open to the world [23:00]
  • The journey to writing a best-selling book [26:00]
  • Why it’s important to write a book [31:20]
  • Lewis Howes’s new book The School of Greatness (plus how to get your free copy) [33:00]
  • What does the Greatness mean, and how can we achieve it? [34:15]

More About Lewis Howes:

People Mentioned:

You may also like these interviews:

Did you like this podcast?

What is your motivating force? What’s your purpose and inspiration? Drop a comment below and let us know what you learned from the interview with Lewis Howes.

The first 10 comments will get a free copy of Lewis Howes’s new book, The School of Greatness. PLUS we’ll include you on a private Verge-only call with Lewis, so you can learn from from Lewis live and ask him YOUR questions about greatness.

And hey, I’m feeling generous. Even if you’re not one of the first 10 people to comment, but you still comment within the first week of this post, I’ll hook you up with access to the call if you go out and buy your own copy of the The School of Greatness (just email your receipt to matt [at] VergeHQ [dot] com) Yes, that’s my direct line.

While you’re at it, I would LOVE to know what you thought about this podcast-eque format. It’s something we’re playing with here at Verge and we have some pretty killer interviews lined up. But maybe you prefer a different format. Maybe you prefer a different type of guest. Let me know!


Why Startups Should Celebrate Big Wins: The Psychology of Celebration in Entrepreneurship

Frank Gruber bootstrapped Tech.co (formerly Tech Cocktail) to grow organically and profitably. Since raising $2.5 million from Tony Hsieh and moving headquarters to downtown Las Vegas, Tech.co has reached millions of people.

Gruber has interviewed some of the world’s most exceptional entrepreneurs, including Jason Fried of Basecamp, Uber’s Travis Kalanick, and Matt Mullenweg of WordPress. He’s even written a book (Startup Mixology) to capture the most powerful lessons learned along the way. But I recently had a chance to talk with Gruber to dive deep into a couple of counter-intuitive concepts for high-impact entrepreneurship.

Watch (or listen) to the full conversation with Tech.co CEO Frank Gruber below:

Here’s the full audio with Frank Gruber for on-the-go and audiophile Verge friends:

Watch or listen to the full interview to learn:

  • Why entrepreneurs need to celebrate their wins with their team (and families!)
  • Strategies for bootstrapping to a scalable business
  • Stories from the tenches from Tech.co startups around the world

frank gruber tech cocktailFrank Gruber and I also talk about Tech.co’s annual startup conference—Celebrate. I’ll be joining them this year to moderate a powerhouse panel of investors.

Want to join me?

Drop a comment below for a chance to get a FREE pass to Celebrate 2015. Let me know one thing you’ve accomplished in your startup over the past month. We’ll pick our favorite 3, and give an all-access pass to Celebrate 2015.

So… what should you and your startup team celebrate?

How a Winning Psychology Fueled a $20-million Profitable Tech Company

John Qualls grew up on the West side of Indianapolis—on the wrong side of the tracks, so to speak.

“I felt like I was in this situation and I needed to find a way out,” John recalls. “I was a straight-F student in high school and around 15 or 16, I realized I was going absolutely nowhere.”

john-qualls-eleven-fiftyBut in the following years, John would prove to himself that he isn’t the kind of guy who sits around waiting for something to happen. He has a winning psychology. John’s quest has taken him literally around the world and led to him starting a technology company that would end up reaching profitability and $20 million in revenue within its first three years.

In this candid interview with John Qualls, you’ll learn:

  • how he made a million dollars in sales selling out of a bookstore,
  • how John started one of the first cloud hosting companies (BlueLock), and
  • why he’s now leading the charge in software development education at Eleven Fifty
  • …and more!

I was lucky enough to work closely with Qualls at his first startup and can tell you that there’s more substance and life experience in John’s pinky finger than there is in the average startup founder. I’m confident you’ll learn something by watching the full interview here:

On the go? Listen to the whole Winning Psychology Interview Here:

Why a Winning Psychology Drives Success in Startups

I rode shotgun with John Qualls in the early days of BlueLock as we scaled annual revenues north of the million-dollar mark. It was there, riding between sales calls, that I was able to witness first-hand John’s remarkable psychology.

I credit his consecutive successes to three core traits, which you can see from watching our conversation:

Winning Psychology Trait #1: Let Gratitude Give Life to Your Dreams

Winning Psychology

John’s childhood on the West side of Indianapolis didn’t give him a clear path for growth. But despite his limiting circumstances, something told him that there was something more out there, beyond his immediate reality.

This belief in abundance led Qualls to join the Marine Corps, which would establish a strong foundation of skills and habits while exposing him to other areas of the world.

“Living in Japan, I had this tremendous appreciation for what we had in the United States,” John says. As I’ve worked with John through the past five years, it’s become clear to me that his attitude of gratitude has fueled a powerful abundance mentality. These qualities have become John’s startup superpowers to weather the storm of entrepreneurship while allowing him to see opportunity where others do not.

Winning Psychology Trait #2: Let Go of Excuses

“I’ve seen it kill so many companies and so many people’s career,” says Qualls. The cancer that has killed so many ambitious dreams is something that John calls the “Can’t, sir.”

As in, “I’m sorry, I can’t, sir.

John Qualls - Winning PsychologyAnd John doesn’t let any such language infect his mind. That’s because this kind of self talk limits creativity, ambition and ultimately, potential.

“Why can’t you do that?” was John’s attitude while making moves in his first professional role after returning to the United States. And while John humbly credits his success to naivete, it’s clear that it’s the lack of perceived limits that allowed John to think big—and swing big.

By letting go of excuses, John found early success in sales, selling more than a million dollars in contracts out of a bookstore by simply approaching people who picked up books from the “computers and programming” section of the shelves. That same lack of limits gave John the ambition to pursue an RFP in the early days of BlueLock, which would turn out to be a pivotal multi-million-dollar contract with Lehman Brothers.

Winning Psychology Trait #3: Stop Playing to Not Lose. Play to Win!

“It literally about killed me. I was sleeping 8 hours total each week for about 8 months straight,” John recalls of the days following the signing of the Lehman Brothers contract at BlueLock.

And John credits his success to this focus on moving towards a goal, as opposed to focusing on avoiding negative results. He calls this paradigm shift playing not to lose vs. playing to win.

This relentless pursuit of positive goals has empowered Qualls to make difficult decisions, like replacing himself as CEO of his own company after three years of consistent growth. But it continues to drive his efforts today, as John continues to elevate the level of talent in his home state of Indiana.

“It’s about finding your passions and getting involved with people,” John says. As the President of Eleven Fifty Coding Academy, Qualls is working to help people learn to code. He’s attracting and training the best people and companies to grow their tech businesses in Indiana—something he refers to as “brain gain.”

(Tweet this story, or your own growth story with the hashtag #BrainGainIN)

How can you invest in these three psychological traits for yourself? We all have these qualities within ourselves. The question is…

Will you continue to invest in them? Will you continue to invest in you?


From Broke to Breakthrough: Peter Voogd and 6 Months to 6 Figures

I recently listened to the audiobook of 6 Months to 6 Figures by Peter Voogd, and his perspective really resonated with me. And not just because we have a shared past of door-to-door sales (I sold vacuum cleaners, he sold Cutco knives). Voogd went from broke to a game changer who practically defines the word “hustle.” In his book, and in this interview, he shares keys to success for fellow entrepreneurs.

“You only know how strong you really are until being strong is the only option you have. ”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figure

Watch the full interview with Peter Voogd:

On the go? Listen to the whole interview here:

Inspiration vs. Habits.

A lot of us entrepreneurs are inspired, which helps us drive action, but Voogd emphasized the importance of productive habits: “Inspiration is short-term and feels good in the moment, but it’s hard to sustain because you don’t have the habits.” One recipe for success he described was the habit of asking himself “What did I do well? What can I do better?” after every single meeting or presentation.

Circle of Influence.

Voogd further explained how taking it upon yourself to figure out these effective habits is unnecessary: “It takes people so much longer to get to an end result than they would’ve got if they actually reached out to people that are already playing the game at a higher level. They will tell you what the best habits are.” Identify the top five people in your industry and reach out to them. Stop making excuses and, as Nike advises, just do it. You’ll probably be surprised by how easy it is to get a hold of even famous people, who can then help you drastically shorten your learning curve. Watch Voogd explain his circle of influence epiphany →

“You have to realize that everyone who has a network now once didn’t. The first step is increasing your level of certainty that you can connect with people like that, whether you have anything to offer or not.”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figures

“The Unrequired Things.”

6monthsto6figuresAlong with establishing effective habits, Voogd spoke about how going above and beyond is the key. One way to go the extra mile is having utter confidence in selling yourself: “You have to believe wholeheartedly that the product is better for [your customer], and they are better off having it than if they don’t.”

The second unrequired thing is writing down the internal reasons that drive you to do what you do. You might come up with 20 to 30 reasons, then boil them down to four or five core ones. Voogd underscored that reasons come first, results come second: “Too many people just go after results, without having strong enough reasons, and if they go through challenges, they don’t have any reasons to pull them through the challenge.”

The Million Dollar Question.

A great story Voogd shared was from when he was a sales manager in his early 20s, striving to hit a $1 million sales goal that was thought to be unattainable. You can probably guess the outcome, but don’t miss how he did it →

“Anything is possible to those who value their goals, their dreams, and their visions over their current excuses or reality.”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figure

The One-Page Productivity Planner

Voogd shared the details of his one-page productivity planner. The exercise here is to simplify and focus on what really matters. Get the gist below, download his template here, or watch him explain it 

  1. Brief vision-statement. What’s your ideal outcome in six months?
  2. Your BIG 5 Goals for the next 12 months.
  3. Your Top Five Reasons, the most powerful ones that drive you the most.
  4. Your Key Values, to connect to what’s most important to you. For example, a few of Voogd’s are are flexibility, autonomy, and impact.

Download the 1-Page Productivity Sheet >>

Talk about impact! The Game Changers Academy Voogd founded has trained and inspired over 4,500 entrepreneurs, and his podcasts, videos, websites and social media reach over 200,000 people monthly.

Want to learn even more from outstanding young entrepreneurs?

On July 30th, I’ll take the stage with Santiago Jaramillo, one of Inc Magazine’s “30 Under 30” for a special launch event in the brand new offices of his growing mobile tech company, Bluebridge. Get your tickets now!

Peter Voogd Interview Transcript show

Entrepreneurial Tips from a CPA CEO: Neil Berman on Founding, Leaving, Returning to and Growing Delivra

When the stereotypical entrepreneur is a 20-something with a sales or marketing background shooting for the moon, Neil Berman stands apart. He had a career in accounting before founding Delivra, an email marketing service provider that’s a “unicorn” in its own way.
The company itself is a rarity in the software world: it’s profitable. I spoke with the CEO about the advantages his accounting background gave him and what’s in store for Delivra.

Watch the full interview with Neil Berman here:

Dot-com Boom Beginnings

The year was 1999. Adoption of the Internet was rising rapidly, and Berman wanted in on “what I felt was a really big thing.” A former employer had once told him that if he could find a business that met three criteria – faster, better, and cheaper – he should go for it. Berman’s wife was working for the postal service at that time, and when he compared email communication to regular mail, Berman felt it met all three: “I stuck my stake in the ground and went from there.”

Entrepreneurship, CPA-Style.

Until then, Berman was an accountant: “I still belong to the Indiana CPA Society.” Working on the public side of accounting, he gained an inner look at many companies and what made them successful… or not. When starting his own company, Berman just didn’t buy into the classic entrepreneurial model of raising money, growing as fast as possible, and selling out. Between his conservative mindset and desire for independence, he opted to not seek investors and instead grew organically, initially starting Delivra out of his own home.

“I’ve seen entrepreneurs with great ideas, but the faster they grow, the more money they lose. Then their business collapses, and they don’t really understand why.”

-Neil Berman, Founder and CEO of Delivra

To this day, the company is opening a new regional office every three months without having to raise money or get a bank loan. When mentoring others about entrepreneurial finances, Berman said, “I find that either their eyes glaze over or they’re afraid to ask questions because they don’t want to appear stupid.” He emphasized that it’s vital to understand your business’s key performance indicators, especially what you have to do to break even. “If you’re in school today, take some of those accounting classes that you hate,” he advised wryly. “I didn’t like them either, but it’ll be useful information someday.”

On Walking Away…

NeilBermanLike fellow CEOs Steve Jobs and Howard Schultz, Berman left his own company and returned, but for a very different reason. Six years ago, Berman’s wife became ill and passed away very suddenly. Devastated, he hired a team of five to run the company’s functional departments in his stead and traveled the world: “I didn’t know if Delivra was going to be my future. I had to get grounded again.”

…And Coming Back.

Two years ago, Berman did return: “Coming back home to email software felt comfortable for me. I loved the software business and wanted to take it to the next level.” However, while the company was still profitable, competition had considerably heated up during his absence, and sales had flattened: “What we were doing previously had stopped working.” Berman jumped back into the saddle and set about determining Delivra’s future.

On Consultants and Dirty Laundry.

Since he knew the business, the market, and the competition, Berman had a vision for Delivra’s path forward but hired consultants to help him make a more informed decision. After “doing what consultants do” – surveying and interviewing customers, staff, and people both inside and outside of the industry – they presented a recommendation that aligned with Berman’s hunch but was better defined and more actionable. When working with consultants, Berman stressed transparency: “You need to be communicative about everything. Air the dirty laundry.”

“The Magic Differentiator.”

DelivraToday’s email marketing industry is competitive, but Delivra is investing a lot of money in product development to offer clients a robust marketing solution. But perhaps its biggest differentiator is its focus on building relationships with clients via its expanding network of regional offices and offering them product enablement help up front: “We find that to be a magic differentiator. Although it costs more, we’re going to close more sales, and that’s how we’re going to grow the business.”

A Crash Course on Email Deliverability.

Delivra takes pride in helping its customers’ emails reach inboxes the right way: “Today, delivering email with the blizzard of spam that’s out there is challenging. It’s part science and it’s part art.” Watch Berman’s crash course on email deliverability and list hygiene →

How do you try to apply a financial mindset to your entrepreneurial venture? Comment below!

See Delivra for Yourself on May 14th!

It’s pretty awesome to see what Delivra has built in Indianapolis, Indiana. We use Delivra at Verge and I’m blown away by the people at this company. Come meet them for yourself at Delivra’s open house on May 14th. Hope to see you there! Click here to RSVP →

Transcript: show

Entrepreneurs Answer: What’s the Best Startup Lesson You Learned?

What did I learn from that?

This question is a powerful follow-up to every major action you take building a new product or business. But it’s not often that we slow down enough to ask this of ourselves.

We recently asked a handful of entrepreneurs in the Verge community what was the most important lesson they learned in the last year. Luckily, they were able to slow their roll enough to share some thoughtful responses:

It’s a tough question to answer because it often requires humbling introspection. It means giving ourselves a good hard look in the mirror and taking ownership of where we are with our business. And we may not always like what we see.

The lessons are there, but they’re often shrouded by emotion and ego. So, here’s strategy for cutting through the head trash and getting to the good stuff:

1.) List your wins.

What did your business do that you are really proud of? It’s OK to brag here. This exercise is just for you. Make a list. (pro tip: caffeine, moderate alcohol, or even physical activity can be a productive catalyst here).

2.) List what’s wounded.

What did your business do that you are ashamed of or embarrassed by? Oh, c’mon… humble yourself here. You know your business screwed some things up this past year. Find your battle scars and business wounds, and make a nice long list. (pro tip: if you are prone to depression, maybe don’t drink alcohol while you do this). Get through it, and then move on to the next step . . .

Why Start a Business

3.) Ask yourself a simple question.

What was the main decision that led to this outcome? This question works for both wounds and wins. What you’re searching for here is the immediate action that led to the wound or win outcome.

Depending on how large your business is, this may not have been your direct action. Trace it back to the exact who and what of the action that produced your specific outcome.

4.) Keep asking that question.

Now that you’ve identified the direct action that produced your outcome, trace that momentum back a step further. What action or thought process was made by your business that produced your final outcome-producing action? When you find the answer, ask the question again:

What was the main decision that led to this outcome? Boil it down until you trace your steps back to your original entrepreneurial decision.

5.) Write down your answers.

You can map this thought process in a mind map. Or you can write it down as a short story, narrative, or whatever really brings this to life for you. But write the full sequence or strategy down for each big outcome. This ensures that you soak up and synthesize the knowledge that’s been lurking beneath the hustle and bustle of running your business.

When you get all of this out of your head and onto paper, it’s easier to remove the ego and emotion from your business wins and wounds. That’s an important step because emotion and ego have a tendency to distort your perception and prevent you from understanding the larger forces at play.

Once you have your winning strategies and wounding sequences identified, you can take action on your new insight. Develop new habits and business systems that based on these strategies and sequences. Like the entrepreneurs who shared their big wins and wounds from the past year, you can leverage your experiences to build a stronger business.

Make this next year the best one yet!