Surviving Bad Clients and Bad Partners

This week, Shawn Busse and Paul Downs talk about what they’ve learned from their worst client experiences. Shawn, for example, tells us that he’s come to think about taking on a client much the way he thinks about hiring an employee. And Paul stresses the importance of watching what he says about difficult clients to his employees, because he doesn’t want to encourage a cynical attitude. From bad clients, our conversation shifts to bad partnerships. Even though their own partnerships ended poorly, both Shawn and Paul emphasize that having a partner can be invaluable in getting a business off the ground. In fact, Paul says he might even consider taking on a partner again. Plus, both Shawn and Paul explain why all the talk of recession is not giving them second thoughts about their ambitious marketing plans.

— Loren Feldman

Guests:

Shawn Busse is CEO of Kinesis.

Paul Downs is CEO of Paul Downs Cabinetmakers.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Shawn and Paul. It’s great to have you guys here. How are you doing? What’s going on? Paul?

Paul Downs:
It’s hot. [Laughter]

Loren Feldman:
How hot is it?

Paul Downs:
Well, it’s gonna be like 100 today, and my shop floor is not air conditioned. And the people are out there working hard. And it’s just hard. We do let them take breaks whenever they want.

Loren Feldman:
That’s good. [Laughter]

Paul Downs:
Well, that doesn’t happen in every place.

Loren Feldman:
I’m sure you’re right.

Paul Downs:
We have a fairly air conditioned office, and they can come in and be in here and get cold water, but it’s just not much fun to be doing physical work on a day like today.

Loren Feldman:
Do you know how hot it gets on the floor? Or do you not want to know?

Paul Downs:
Mid-90s. I mean, part of it is possibly self-inflicted. We have these huge fans that we installed that blow a lot of air into the shop. And if I were running the shop, what I would do would be run them at night and turn them off in the morning. And I’ve explained this to my people, but they don’t seem to really buy into that theory. So they run it all day too and blow 100-degree air right into the shop. And I’ve given up on trying to control that, because they’re out there, so they get to live with it.

Loren Feldman:
Paul, you said, “If I were running the shop.” Aren’t you kind of running the shop?

Paul Downs:
No, I’m not kind of running the shop. I have a shop manager who runs the shop. And I don’t believe in me running around trying to micromanage the team, so I let him run the shop. And then there are 20-some people out there. I mean, they can make decisions themselves about whether to have a fan on or not. I don’t think I need to get involved with that. I’ve made my theories clear. They’ve rejected them. They’re living with the results. They get to stand there in the hot air. It’s not me. So no, I’m not going to overrule them.

Loren Feldman:
How are you doing, Shawn?

Shawn Busse:
We’re doing all right. Yeah, we’ve had a heatwave here too. But it’s finally cooling off a little bit before another one. Yeah, I don’t have air conditioning in my shop either. But it’s got pretty good insulation, and I adhere to Paul’s strategy: Turn on the fan at night; turn it off during the day. It works. It really does. I can be a testimonial for your team, although they probably won’t listen to me either.

Paul Downs:
I’ll fly you in. You can bark at them all day. [Laughter] You’ll see you’ll see what happens, which is nothing.

Loren Feldman:
All right. So today, I want to talk about difficult clients. I know you’ve both had experience in this area. Paul, I think you’ve had one in particular of late. Want to tell us about it?

Paul Downs:
Well, I’m going to tell you in broad terms. I actually don’t really want to focus on this particular person, other than to say that I’ve done a lot of jobs, and I’ve been in this business for a lot of years. And one of the people on this client’s team is, without a doubt, the single worst and most difficult person we’ve ever had to deal with—a woman who won’t make a decision when needed to make a decision, and lies and prevaricates and passes blame. And it’s been a real problem all the way through.

And I will back it off a little bit and say that if you do a thousand jobs, one of them is going to be the best, and one of them is going to be the worst. And one of the things that I’ve noticed about the ones that are the worst is that they kind of drag you down with them. So here we have a very difficult client who is kind of resisting our efforts to operate the way we operate. And that’s thrown us off our game. And then also, of a thousand jobs, one’s going to have good luck and one’s going to have bad luck. And I’ve noticed that there’s a connection between bad clients, bad decisions, and bad luck. So some things that have happened on this job weren’t a result of a decision by anybody—just bad luck. And it happened to land in this job because this one’s already in the toilet.

And that, I think, is the most frustrating thing to deal with as a business owner, when you’re trying your best to get out of a bad situation and then some lightning strike just makes everything worse. And you’re trying to explain to the client all the things you did, but you can’t really explain why the bad luck arrived, other than to say, “Well, okay, so that happened.”

I’ll tell you what it was, in this case. One part of this job was a desk for a CEO, and the desk had a piece of marble as the top. We were delivering the job, and when we opened up the truck, when we got to the job site, the marble had just cracked in half—a $6,000 piece of stone. And it had been packed correctly. We’ve moved marble hundreds of times. There’s no reason on Earth this thing should have broken in half. But then when we opened up the truck and needed to pull it out and put it in his office, “Oh, we’re sorry. It’s broken in half.”

Like, who could even expect that? But I don’t know, Shawn, have you ever had that, where something starts to go wrong, and then it seems to attract even more bad luck? And it just gets worse? And you can’t get out of it?

Shawn Busse:
Yeah, I mean, it’s sort of like in my world where… a good example is building a website. Like where you’ve built hundreds of websites and you’ve got things figured out: You have a process, you do things, and then something happens. The Russians decide they want to put malware on the thing, right as you’re launching it. Yes, there’s some correlation between difficult clients and bad things happening to you. I’ve seen it.

Paul Downs:
Yeah, and the opposite doesn’t happen either. You get bad clients, and then it’s never suddenly like you stumble on a box full of $100 bills or something while you’re doing the delivery. There’s never good luck that comes along and saves you. That never happens. I mean, there’s good luck in a lot of ways. And there are good clients who can swing with the punches. But when things go over the edge, in my experience, it’s just a disaster.

Loren Feldman:
Paul, can you give us a better sense of what would make a job the worst job of all that you’ve done, or the worst client of all that you’ve had? And how do you try to deal with it?

Paul Downs:
We try to identify people who we think need extra attention as early as possible in the process. It’s very unusual for us to just reject a client before a sale. Like to say, “Oh, you’re impossible. Go away.” We just don’t do that. And in this case, we went through a fairly long process with this client, and we knew it was difficult. And the things that we have done that contributed to the problems have mostly been the result of bad luck or trying to get ahead of decisions that needed to be made that the client would not make.

Like, they want this stuff at the end of the day, but there’s somebody holding up the process. And so we would edge into making decisions that we would normally leave to a client. And that caused problems. And then this particular client also did something which I’ve never seen before, which is we send samples out of finishes and say, “Here, this is what it’s going to be. Approve it, don’t approve it, whatever. And if you don’t like any of them, we’ll make more.” Well, this client approved a sample of a very complicated finish. And then when we delivered it, she said, “Oh, I don’t like this. Take it back.” And, “Well, wait, you approved it.” She said, “I just approved it because I wanted to see it. I didn’t really like it.” Can you believe that?

Loren Feldman:
You’re saying that this happened after you delivered the finished product?

Paul Downs:
Well, just to make this better, this is the other half of the desk that the top had cracked in half. Those two conversations happened within 10 minutes of each other.

Loren Feldman:
Ouch.

Shawn Busse:
Oh, God. I like how you started out saying, I don’t want to get into the specifics.

Paul Downs:
Well…

Shawn Busse:
The specifics are the best part.

Paul Downs:
The specifics are pretty bad, in this case. And there’s just tremendous expense involved in trying to do this. So that’s my horror story. And now I will say that the number of bad clients to the number of good clients is something like one to 900. We deal with all kinds of people, and a lot of them we never meet face-to-face. And I would say the vast majority of our clients are wonderful to work with, trying very hard to make a success of the project.

And one of the things that I find, as a business owner, I have to constantly watch myself to not complain about the bad clients to the team and let that poison the approach to people and get away from that trusting environment. Because, yeah, there are bad people, but we have to go into every project with an open mind and a good attitude, and this is going to be fine, and these people are going to be good. And all of the evidence suggests that’s true.

But there’s something about human nature that makes you want to bitch about the worst people and sort of spread that poison around. And I believe that if the employees see the boss doing that, they start to get a more cynical attitude. And it becomes a cancer. And it’s really easy to let it go, because as a business owner, you understand not only just the frustration of the situation, but you understand what it’s costing you, too. And it’s really hard to not let it fly. And when you’ve reached your limit, and you can’t explain it to the wife and kids, the people who are in the shop with you know everything that’s going on. They understand. But I still have to keep myself from going overboard on complaints, because I don’t want to poison the atmosphere. I don’t know, Shawn, have you ever run into anything like that?

Shawn Busse:
I think that’s really good advice, because you lose a lot of sleep, as an owner, when you run into these situations. As I’ve gotten older, these situations happen less and less and less. And I think part of that is a function of, as you get better at—like you said, you identify clients early on who need more hand-holding or more help or are more risky. I think one of those intangible values of becoming a more experienced business owner is seeing that earlier and not being surprised by it.

Loren Feldman:
Paul, you said that there were some red flags that this was going to be a difficult client. What would you do differently, if you had it to do over?

Paul Downs:
I would keep my team from trying to get ahead of the decisions that the client should have made. That was the thing that was self inflicted, that caused certain problems.

Loren Feldman:
You made those decisions, because you wanted to keep the project on track.

Paul Downs:
We wanted to keep the job moving along. But, I mean, I didn’t make the decisions I’m talking about. This was project managers saying, “Okay, they’re going to choose this or that, and let’s just get started on it.” And one of the things that we did, actually a few years ago—not in response to this client—we started to really formalize the idea that certain jobs need what we call “enhanced review.”

And so in our ERP software, where you’re looking at the whole list of jobs, there are several that are very clearly flagged as enhanced review. And then right next to that little flag, there’s a notes thing that says what the problem might be. And sometimes the client is fine, and it’s just that it’s a situation where it’s technically difficult, or it’s something new, or whatever. And we can just put that in there as enhanced review. And sometimes it’s a straightforward warning: “This client is trouble. Make sure that everything is perfect. Just be on your guard at all moments.” We have another one that we’re doing right now where the client is troublesome, and we’ve sort of made that clear to the team.

Part of it is: How big is the job? So the current troublesome guy is a $10,000 job. So if worse came to worse, I would just hand him all his money back and say, “Here, go away.” The previous one—the one I started off talking about—is about a $120,000 job. So it’s a big job. We want to do it. But then there’s also more financial risk. I can’t get out of it so easily.

Loren Feldman:
You couldn’t get out of it because you’ve purchased materials, or did you have a deposit?

Paul Downs:
We got a deposit. I’ve been paid about 40 grand of the 100-some. I mean, there’s a lot more to this story that I don’t want to go into, but collecting on that is going to be a project, too, given the way things have gone. So I can’t just ignore it. It’s too much.

Shawn Busse:
Paul, you talk about this enhanced review. Do you adjust your price when you run into these situations?

Paul Downs:
No. Possibly. The guys who are setting the price on the individual items we sell, the two design engineers, have two incentives. One, they get a commission on what they sell, so they want to raise the price as much as possible. But they also don’t want to lose jobs, so they have a sense of when they can push it and when not. This particular client wasn’t what I would call “price sensitive,” given what they were paying for, the things we were making. It was complex stuff, and it was expensive.

But it’s not like someone who would say, “Oh, I’m going to buy a car, and I would never consider anything past a Chevrolet.” This guy would buy a Lamborghini if he felt like it. And so that’s part of the equation. But we don’t do trouble pricing unless we want someone seriously to go away immediately. Like then you can have a budget discussion right at the beginning and get them to go away, if you feel like it. Just like I don’t run the shop floor, I don’t actually do that day-by-day. If my guys asked me, “Hey, what do you think we should do here?” I’ll certainly chime in. But I try to give them responsibility to make those decisions themselves.

Loren Feldman:
Do you think there was a point where you should have walked away from this client?

Paul Downs:
It really can’t happen. It’s too much money. We haven’t covered ourselves in glory so far, and we’ve just got to get out of it. We’ve got to get it done. I mean, I’ve been waiting to book this revenue now for almost a year, and we’ve put a lot of work into it. And I want to get it done so I can book it as accrued revenue, and then it’ll help me with my overall revenue goals. So there’s no real easy way to get out of this one.

Shawn Busse:
Sometimes, jobs, Loren, the person you’re selling to, there are consequences way beyond the job itself. So, there can be a situation where like, “Oh, I could just make this go away by refunding him or her their money.” But that generally creates a sense of negative, well, non-goodwill, I guess. They can be an influential person. These things can be really, really complicated. At least that’s been my experience.

Paul Downs:
Yeah, in general, I think you’ve got to keep your karma bank full by making every effort to always do the right thing. If we make mistakes, we own it. They clustered around this job, but there were things that we could have done differently that would have saved me some money. But we did those things. You know, he asked for furniture, and at the end of the day, we gotta give him furniture that he’s going to be happy with. Otherwise, then it’s on me. I’ve had the good fortune to have jobs go really well and I made a ton of money. And the flip side has to be expected. You’re just gonna take a few in the face now and then.

Loren Feldman:
You’ve been generous in acknowledging that you haven’t done everything perfectly on this job. It sounds like if you could do one thing differently, you wouldn’t make decisions for the client and move the project along before they were ready. That just makes me wonder, if the same situation were to happen again, maybe this client wouldn’t turn out to be the client you consider the worst you’ve ever had. Is it possible?

Paul Downs:
No, this one woman is just like a grenade in the middle of the whole project. She presented a huge level of difficulty, no matter what we did. We could have executed perfectly, and it still would have been difficult because of her.

Loren Feldman:
Did you try to get away from dealing with her?

Paul Downs:
At the end of the day, after nearly a year and a lot of trouble, I reached out to her boss and I said, “Listen, I need to get this done. You don’t have the stuff you ordered. You and I have got to deal with this, you and me. And I can’t have this woman in the middle of this. So please leave her out of it.” And that got the ball moving again. That was not much fun. I don’t know what the relationship is between her and him—whether it’s a good relationship, or a bad relationship, or a personal relationship, or a work relationship. There’s no way for me to tell what’s going on there. But to have to ask someone to not have someone on their team, who they designated to run the project, run the project—that can’t have been welcome news. But it did get the ball moving again.

Loren Feldman:
Paul, Shawn mentioned the reputational aspect of this. Do you worry about people in a situation like this leaving bad online reviews somewhere?

Paul Downs:
Sure, why wouldn’t I? I mean, we live in a world where someone can crap all over you anytime they feel like it. Now, we have a strong record of success. And I can pull out all kinds of other evidence that we basically know what we’re doing. I actually knew a manufacturer who said to me one day that, “If you don’t have 5 percent of your customers complaining about quality, you’re actually spending too much on manufacturing.”

Loren Feldman:
That’s an interesting philosophy.

Paul Downs:
Well, his company was consumer-oriented, and he grew it very fast. And he did a reasonable job for most of his clients. And I think that part of his thinking was that, if you’re dealing with 100,000 people a year, some of them are going to leave a bad review no matter what you do. So why chase perfection when there is a serious cost to that? You’re just not going to be perfect, and even if you were, some people wouldn’t believe it anyway. So that’s a point of view. I don’t ascribe to that, because we’re not that kind of business. But is every meal that McDonald’s makes perfect? No. And do they live with getting slammed in reviews? Sure. And I think that every business owner just has to make a decision about what’s appropriate for their own situation.

Loren Feldman:
Shawn, is there anything in particular you’ve learned through the years dealing with bad clients? You said that as you’ve gotten older, it’s a less frequent occurrence. Why do you think that is?

Shawn Busse:
Our business relationships with clients are long, especially the really good ones. We have clients who have worked with us for a decade. I treat client selection a lot like hiring an employee. It’s pretty rigorous, in terms of wanting to get to know them really well, trying to understand if the problems they have are problems we can actually solve, or if they’re realistic about what those problems are. So I do a lot of vetting in the sales process to make sure that I think that they can go the distance.

So that’s changed, right? In your early days, when you’re hungry and you don’t really know how to discern good from bad clients, you just sort of take anybody and everybody who has a checkbook. And then over time, you start to see the consequence of that. Just like with employees. You know, you’re eager to hire. You hire the first guy who walks in the door, and then he creates mayhem throughout the organization. You’re like, “Oh, shit, I’m never doing that again.” You just get better. I think you get better at that. And since we’re a service company, I have a lot more flexibility with that than, say, maybe somebody who’s selling e-commerce or sells products. I also don’t have an external investor telling me, “You’ve got to grow by a certain amount, and you have to get this many new customers.” So I have more flexibility there. That’s, I think, a big lesson in, over time, selling to the right customers instead of just any customer.

Loren Feldman:
Did you have that pressure earlier on where there was somebody else who was driving you toward—

Shawn Busse:
No, but I have seen businesses that have that dynamic. And I see it both in the decisions they make, in terms of customers that they accept, and I also see it in terms of the decisions they make, just in general. They tend to be more short-term, more visible results-oriented versus you’re doing something today that pays off in three years. And so I’m really fortunate in that regard. And I don’t ever want to be in that position where I would have to accept a customer that I knew would be harmful to the organization, because I want to produce some sort of financial metric. So that’s pretty meaningful.

I’d also say, to Paul’s point about his trouble-client flag, I think process can really help mitigate things. So as an example, we built a process where I’ll do the sales. I’ll often do the sales with a partner in that process, my director of strategy these days. We’ll do it together. It’ll typically end up where we’re not servicing the client. So we have a little flag that, after a certain period of time, one of us reaches out to the client and takes them out to lunch, just has a meaningful conversation, say, “Hey, how are things going? Are you happy with the way things are working out?” And that, honestly, has been a real game-changer, because the client and how they interact with the team is one way, but you coming from outside of that process to ask if they’re getting what they thought they were gonna get, if there are things we can do to improve, that’s pretty meaningful.

And I think that that process, kind of like Paul’s flag, has improved that a lot. It’s allowed us to kind of get ahead of things. And it’s also helped us see when, “Actually, I don’t think this client is going to go the distance. So let’s figure out a way to make sure they have a great experience and that when they say goodbye, we’re saying goodbye, and everybody’s happy.” So those have been some meaningful changes we’ve made.

Loren Feldman:
Well, so long as we’re talking about difficult relationships, it just so happens, you’ve both have had interesting experiences with partners in your businesses. And ‘d love to explore that, too, from the same perspective of: What did you learn going through that that others might learn from? Shawn, could you tell us a little about your partnership experience?

Shawn Busse:
Yeah, sure. I mean, I’ve had a number of partners. I started the business at the age of 28. So I didn’t know, really, what I was doing. I had no experience in business. I went to art school—two art schools—so I was really good at making art. I was pretty insecure, in terms of what it took to run a business. So I had one partner who was much more experienced. And I kind of leaned on her, but I didn’t really ask questions like, “Do I like this person? Or do we have the same values? Or do you want to create the same thing for the company?”

Loren Feldman:
How did you come to be partners with this person?

Shawn Busse:
So my girlfriend at the time had been doing business with this other person, as consultants. And so the three of us—yeah, there’s another one, starting a business with a romantic partner—so I had a romantic partner, and then I had a third partner who I didn’t really know very well, and the three of us started this thing.

Loren Feldman:
What could go wrong?

Shawn Busse:
What could go wrong? Yeah, like we had no predetermined agreements. We didn’t do the calculation of, “Well, this is what I bring to the table. And this is what you bring to the table. And this is what this is valued at. And this is what your duties will be, and my duties.” It was just like, “Let’s try to run a business! It’s going to be great!” You know, like so many people do. And after about two years, she decided she didn’t want to be in it anymore. That was my first buyout: super contentious, had to hire a mediator, ridiculous because the business was worth nothing. And we fought a lot over it. So, so, so, so stupid. So then I was down to one partner.

Loren Feldman:
The romantic partner.

Shawn Busse:
The romantic partner. We broke up. We broke up in the middle of the negotiation with the other partner. Super messy, so messy, but it was kind of funny. It’s sort of like, adversity brings people together. So even though our romantic partnership was ending, we were both so pissed at our other partner. We were like, “We’re gonna make this work!” So we did. And actually, we stayed business partners for another, I don’t know, 15 years or so. And for about, I don’t know, 12 of those 15 years, it was pretty good. And then it was terrible. Yeah, I can get into that, if you want.

Loren Feldman:
Well, tell me this: There are a lot of people who give the advice, “Just don’t ever have a partner. It’s a mistake. It never works.” And that’s easy to say, but there are a lot of 28-year-old people out there who know art and who want to start a business, and partnerships sometimes do make sense, I think. And I’m curious, if you had it to do over, do you now know what you could have done differently that would have made a difference?

Shawn Busse:
Yeah, I mean, the first thing, I think it’s really important to recognize that getting the wheels off the ground is the hardest part of business in the early days: Getting those first customers and learning how to run the thing. And I don’t know if I could have done that without that more experienced partner. She had clients who paid us money. That’s a big deal. And so as much as that was frustrating and tumultuous…

There’s a really interesting study that I found back in 2012 that looked at about 5,000 small businesses and compared them across lots of different dimensions. But one of the dimensions that was really interesting was partnerships. In general, those early-stage businesses did better when there were partners than the ones that were run by themselves.

And yet, at the same time, I’ve worked with a lot of businesses, and I’ve seen almost all partnerships dissolve. So I think there’s a weird paradox where, if you have a partner in the early days, it’s actually tremendously beneficial, especially because in a good partnership, you offset each other’s weaknesses. For example, I was good at the creative stuff. I was good at the vision stuff, but I wasn’t necessarily good, at that time, at selling. And to have those complementary skills is ridiculously advantageous, especially if you don’t have outside money to build infrastructure. If you’re bootstrapping it, it makes a difference.

Loren Feldman:
Well, if you do have outside money, that’s another partnership that can go bad.

Shawn Busse:
Yeah, that’s true. But I think what happens over time is that as the business matures and changes, does that partnership evolve and change to fit that kind of new state? And that’s what happened for us, is 17 years into the business or so, it was like, “Wow, this is a different business today. And we’re not aligned. You want something different than I want. And you aren’t willing to do the things that are necessary for the business.” And so then you get into ego. And, ugh.

Loren Feldman:
So if you had had a good agreement in place that gave a set way to resolve an unresolvable difference and allow you to go your separate ways, would that have solved the problem?

Shawn Busse:
I don’t know. We had a shitty agreement, because we had a shitty lawyer.

Loren Feldman:
What made it a bad agreement?

Shawn Busse:
It was totally unclear. There was no, “Well, what happens if a partner stops performing?” which was the problem I was having, right? I had a business partner who was becoming more and more disengaged, and from just a pure performance perspective, wasn’t holding up her end of the deal. And so what do you do? You know, you’re 50/50. I, as the CEO, would say to her, “Hey, look, the metrics show this isn’t working. Would you like to become a shareholder and we hire somebody? Or do you want to change your job?” But at the end of the day, you have equal power. And so the shitty shareholder agreement had no way to resolve that, other than breaking up the company.

And, in hindsight, that shitty shareholder agreement was awesome for me, like really good.

Loren Feldman:
Why is that?

Shawn Busse:
Because I had built all of the employee relationships. I had hired everybody. I was coaching everybody. I was in the trenches with the entire team. They knew the business as me. And also, I had sold every single client. And so the customers knew me, the employees knew me. And so, essentially, it made it so that I could be like, “All right, let’s dissolve the company. And then I’ll just start a new one, and I don’t have to pay you anything.” And that’s not my way of rolling in the world. I do believe karma matters. But to have that kind of leverage was crazy.

You could argue, “Well, I did all the fucking work”—I’m starting to swear, because I’m pretty emotional about this. But yeah, in hindsight, I’m really glad the shareholder agreement didn’t have a provision that would calculate valuation and force payments or shotgun clauses, because at the end of the day, it was better for me to be able to just break it up and go my way, because I could build it again.

Loren Feldman:
Paul, you’ve talked about your experience with your partner previously here. And you wrote about it at The New York Times as well. Could you give us a quick recap of what happened with you?

Paul Downs:
Okay, yeah. So I had been in business, let’s say ‘86 to 2002—whatever that is—16 years before I was approached by one of my clients, someone I had just done a job for. And he had recently sold out of a manufacturing business he owned. And he was in his early 60s at that point. He was looking for something to keep himself occupied. And he liked the way I had done the job for him. And he liked me and I liked him, too. He was a good guy. I liked his wife. And he made an offer to buy into the company. I was 40. I was looking at all the things that I had not been able to accomplish, because I just didn’t have the skills and the experience and the network to do it. And it seemed like this was an opportunity to sort of get me out of my rut and to get the company to the next level.

And it turned out that that is what happened. Although it was not an easy path, because we had in mind to grow the existing business that I was in, which was making residential furniture. And shortly after the partnership started, we had this opportunity to make boardroom tables dropped in our lap by Google, and the business just became a different business. And in general, his ideas on how to run a business were very… I would say not a good fit for how I wanted to run it. But I didn’t really know any better. Like, here’s an older guy with money and manufacturing experience, and I was just listening to him because I didn’t have any other source of advice at the moment. And I hadn’t really figured out that you can get all kinds of free advice on the internet. We just weren’t there in 2002, so it seemed like a good chance for me to get to a place that I wasn’t getting on my own.

And I talked with him extensively and talked to his kids and talked to other people. And I got the standard advice: “Don’t do it. Don’t ever take a partner. You’ll regret it.” And I ignored that. And even though we had a lot of bumps in the road, and we ended up dissolving the partnership in 2010, I’m not at all sorry I did it. Because it did put me in a different place, and he did bring a different set of resources and a different point of view to the operation. We were able to get to the next level. And then we got stuck there, but that’s a different story. We ran into the recession. We ran all kinds of things. But I would not be where I am today without Larry’s help—and I will say this for him—I was very fortunate that he was just a really solid, good person, and that when we had troubles, we didn’t let it get out of hand and get too personal.

And there was a moment when he was set to lose quite a large amount of money and decided that he was just going to take that shot and not bankrupt the company and sort of destroy my life. Because he was well aware of the entanglement I have between my business and my personal issues and an autistic son. He just was like, “I don’t want to put this guy on the street. I could do it, but what’s the point?” And he just backed off at that point, took his loss, and got out of the business. So I was very, very fortunate that I had a solid, sensible person with a wide streak of humanity in him.

Would I take a partner again, today? I probably would. Again, I’m at a place where I’ve kind of done everything I can do with this business. And I feel like it would really be a good thing to have an injection of energy and money and different kinds of expertise than I have. I think that if you’re thinking about, “Oh, I want to take a partner,” just make a list of all the things that the business needs, and then how many, honestly, that you are good at, and how many that you aren’t good at that the partner is good at. And then the basic question: Is this a decent honest person I can get along with? That’s pretty important, too.

Shawn Busse:
To me, that’s the number one thing. If you have strong values alignment—to Paul’s example—you can weather the difficult times. If you don’t, then those difficult times are just going to be the tipping point that just throws you over the edge. One of the things I’ve noticed is that some of the best partnership clients we’ve had have actually been married couples, which is really interesting, because you think, “Wow, you spend your day working together and your nights living together,” and that’s a lot of time.

Paul Downs:
I’ll add that for my partner, a big part of the appeal was that, in his previous businesses, his wife had worked with him in the business. And he was sort of the big idea, big personality, friendly leader type. And she was a certified public accountant, and she was the get-down-and-dirty-in-the-details-and-make-it-work type. And they had been very successful together. And I think I’ve told this before, but what happened is after we formed the partnership, and I was working actually closely with the wife, she came in and sort of started to clean up my books and show me how to keep them and blah, blah, blah. And then she died. She died in her sleep about a month after we started working together. And it was a huge shock to everybody, a really unfortunate situation. She was like 54 years old, and she just had a heart attack and didn’t wake up.

Loren Feldman:
I think you’ve given her a lot of credit for, in that short period of time, being tremendously helpful, in terms of setting up your processes.

Paul Downs:
Well, she started me on the right road. And then what happened subsequent to that—and this is not a general lesson for anybody, because like so many business things, it’s just particular to the situation. What happened after that was my partner got his daughter to come and work in my company. She had been living across the country, and he wanted her back in Philadelphia, just to sort of help him through this terrible shock. And she came, and she started working for me.

And she turned out to be just a tremendously capable person who contributed enormous value to my company. And I really liked her. I will say that one of the biggest things about having a partner, having not had one for 16 years, was just that there was somebody else at my level in the building who I could talk to about what was going on, and be dealing with not just an employee, not just someone who I can hire and fire. I mean, she was technically an employee, but this is obviously a different status. But just someone who was willing to think at the level I was thinking.

And she wrote our whole ERP system that we still use today. And it was such a breath of fresh air to have someone day-to-day who I enjoyed being with who was at my level intellectually and had goals for the business. And we’ve maintained a good relationship. As a matter of fact, I had her over for dinner a couple of weeks ago, and it was just great. I just really wish she worked for me, or with me, again, but it didn’t work out that way.

Loren Feldman:
Her father, your partner, passed away a few years ago.

Paul Downs:
He passed away two or three years ago, and we would see each other every now and then. But I think the most valuable thing, to me, was getting me to the next level but just having someone to share the burden with—having a partner. Just like, in my life, having a wife has been a tremendous thing, because challenges have come along, and the two of us deal with it as a team, and I never had that in the business till I had a partner. And I don’t really have that right now. And I miss it, because I like having that feeling that you’re not alone dealing with all the challenges.

Loren Feldman:
That’s what we’re here for, Paul.

Paul Downs:
Well, you’re good, but you’re not… It’s not quite the same. It’s okay, but it’s not as good.

Loren Feldman:
Paul, were you and your partner 50/50 partners?

Paul Downs:
Yes, and we had the same deal, it sounds like, with Shawn, where we had to agree. Neither of us could outvote the other. And that worked until a couple of moments when it didn’t work. But at the end of the day, we figured out a way around it.

Loren Feldman:
Was that the right way to do it, do you think—50/50?

Paul Downs:
It was right for me at the time. I think that it can go wrong in a million ways. I think that’s probably true of any partnership structure, that if the partners don’t want to be partners, nothing’s gonna work. But yeah, it left me exposed to things that Larry didn’t choose to go down every road he could have. And I’m very fortunate about that.

Loren Feldman:
If you had it to do over, are there things you would want in that agreement that you didn’t have?

Paul Downs:
Probably.

Loren Feldman:
Anything you could imagine that would work as advice for somebody contemplating a partnership now?

Paul Downs:
No. A) it was a long time ago, and I don’t even know what’s in the agreement, frankly. But B) I think that my experience was, again, one I wouldn’t want to hold up as a model for anybody, other than to say that you shouldn’t reject the idea of a partner out of hand. That would be my takeaway.

Shawn Busse:
I think the number one mistake folks make is they confuse being a shareholder with being an employee in the company. And I think that in my case, I had a partner who, for many years, was very engaged in the work and actually did a lot of great things to help us grow. And then what happened is, fundamentally, just like employees: Some employees are amazing for years, and then they start to lose the passion for the work or their priorities shift or maybe something happens to them. They have a health crisis, whatever. And they are no longer as valuable as they once were.

And when they’re an employee, you can work toward increasing their performance. You can coach them. And you can also let them go. You can say, “Hey, it doesn’t seem like you’re in it to win it anymore. Your performance is flagging. Here are the metrics that show this. It’s time for us to part ways.” The problem when you have a partner who’s performing a role in the company is, if that starts to happen—and so this gets to the agreement part—if you don’t have a strong values alignment, and you don’t have a course of action for when that problem happens, that’s when you get into the really nasty areas. At least that’s what I’ve observed.

Loren Feldman:
All right, we are just about out of time. One more thing I wanted to ask you both about: You have both talked openly recently about rethinking your marketing, and I guess I’m especially curious about this. We’re now at this moment with the economy where things are… Nobody quite knows what to make of it. Is the macroeconomic situation having any impact at all on your marketing thoughts? Paul, how about you?

Paul Downs:
No, I’ve always done well by going on offense when everybody else is shrinking back. In 2009, I made a significant investment in upgrading my website. And we are sort of in the beginning of this process of a targeted marketing effort, and I’m going to continue it. Because when the going gets tough, there’s still work out there. And it’s just a question and going and getting it.

Loren Feldman:
Paul, I’ve got to stop you there. I didn’t realize you upgraded your website in 2009. And it surprises me, because I think that was also the year that you reached out to me and asked me if I would be interested in having you write about what it was like for your business going through bankruptcy, which fortunately, didn’t actually happen.

Paul Downs:
There you go.

Loren Feldman:
Do you connect those dots? Is that right?

Paul Downs:
I do. Yeah, I do. Because what happened was, you’re coming through the beginning of 2009, it’s pretty clear that the disaster has arrived, and what do you do? And our existing website at that time was not SEO-friendly. And I thought, “Okay, if we’re gonna get through this, it’s going to be because people find me on Google.” There were a lot of things I didn’t like about that site. And I was just like, “Okay, I’ve got to do it.”

I’ve told the story as taking the kids’ college fund. It’s actually worse than that. We received a settlement from the local school board in response to a suit having to do with my autistic son’s education. And that money was intended to be used to reimburse us for some private school tuition we’d paid for a couple of years. So I took that money. I took the money out of the hands of my disabled child and blew it on a website, but it saved the day. That was just one of those things, like, “Where am I going to find 30,000 bucks? Well, it’s sitting right there. I’ve just got to…”

Loren Feldman:
It worked, right?

Paul Downs:
It did work. And I mean, I think we’re in the same thing. When times get tough, if you just shrink your head and hope it’s going to blow over, how are the customers who are left going to find you? And so I believe in counter-attacking. I mean, I’ve been through enough recessions now, you don’t just sit around and wait to die. That’s my feeling. Do something. So I’m going full speed ahead with my marketing.

Loren Feldman:
How about you, Shawn? Is the macroeconomic situation having any impact on your thinking?

Shawn Busse:
I’m in Paul’s boat on this one. You can’t stop just because the headlines are bad. I just don’t believe in this kind of retreat mentality. I mean, I’m about to write several really large checks for our small business conference in November, and there’s all kinds of uncertainty. It’s like, “Oh, COVID’s still a thing. And, oh, the economy and wars and terror and Taiwan, blah, blah, blah, blah.” But I’m just like, “Yeah, we’re gonna go ahead, and we’re going to push hard.”

Loren Feldman:
And you’re planning on redoing your website, too, right?

Shawn Busse:
Oh, yeah, we’re gonna scrap the fucking thing. I’m swearing a lot today. It’s super frustrating. We made some bets going in. Well, actually, we didn’t know the pandemic was coming. But we made some bets, and the timing of those bets was just really bad. But I wrote about this on LinkedIn the other day. It was a really short post. It’s like, “If it’s crap, say it and move on, and make a new one.” So, yeah, that’s where we’re at—spending a lot of money.

Loren Feldman:
My thanks to Shawn Busse and Paul Downs. As always, thanks for sharing.