Momentum Podcast: 76
Jv, Partnership And Affiliate Success
by Alex Charfen
One of the fastest ways to grow your business, and possibly one of the most exciting, is to use joint ventures, partnerships, and affiliate relationships. In all three cases, you shortcut the time it takes you to do something him by finding someone who's already there and partnering with them.
This may be something as simple as a JV partner advertising your product to their list, or as complicated as a full partnership where you join forces with someone. When entered into correctly, these relationships can create massive momentum and help you grow your business faster than you could on your own.
When these relationships are ambiguous and mistakes are made in the setup, rarely does anyone get what they want. Instead they can end in anger, frustration, broken relationships and bad will. There is an easy way to make sure that your joint ventures, partnerships, and affiliate relationships succeed and everyone wins.
Full Audio Transcript
I'm Alex Charfen, and this is the Momentum Podcast, made for empire-builders, game-changers, trailblazers, shot-takers, record-breakers, world-makers, and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny; we define it. We don't understand defeat, because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future, and instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world, because entrepreneurs are the only source of consistent positive human evolution, and we always will be.
I think I nailed that in under a minute. Welcome to today's podcast. This is on JV, partnership, and affiliate success. I'm trying to get that intro down to under a minute, and I think today, I nailed it, and so we're going to do a video of that and put it on Instagram, and use it some other places. But let's get to the topic for today. It's JV, partnership, and affiliate success. So, joint ventures, partnerships, affiliates are all an incredible way to grow your business, and this is a strategy that I've used throughout my entire career. When I was younger, in the consulting industry, what I did was link up joint ventures and partnerships. When Cadey and I worked together in real estate, we did a ton of JV and partnerships and affiliates, and here's why: It's one of the best ways to explode your business. You take the strengths you have, you find somebody else who has strengths where you don't have strengths, combine together, and you can get massive momentum really quickly.
's a huge shortcut. It's grown all my companies. It's exciting, it feels like momentum. But here's the problem. I coach entrepreneurs around the world who are doing these types of deals, and unfortunately, the vast majority of them fall apart, cause problems, end up in conflict, and end up with challenges for both people on both sides of the affiliate program or the JV or the partnership, and it is crushing when this happens. So I've sat down and really went through, like, what does it take to make a JV, a partnership, or an affiliate program successful? And I want to give you my success principles for these types of deals, for these types of opportunities.
And I want to make it clear, I am a huge supporter of doing this, but I'm also a fanatic when it comes to doing it right, because the repercussions of a bad JV, partnership, or affiliate deal are huge. You know, you get into this with somebody because you want to create momentum, and you want to help each other move forward. Then, you start having some challenges. That could affect your status in the market, that could affect their status in the market. You know, nobody gets into one of these deals to have it fail, and the challenge is, when they start going bad, they typically don't get better on their own. And there's a way to set these up at the beginning so you can absolutely crush it, you can stand on the gas pedal, both parties involved, or if there's more than two, can get excited about it and really create momentum.
So I have some simple rules, so, number one: If you're doing a JV, a partnership, or an affiliate deal with anybody, even if it's minor, it's not real if it's not in writing. And I'm not saying you should have a 40-page contract — I'll talk about that in a second — but a one-page agreement that spells out responsibilities on both sides, says "What do you want?" So, first, it's not real if it's not in writing. You have to have clearly stated what you want out of this, and what they want out of this. So, bullet points on what you're going to do and why, bullet points on what they're going to do and why, at a level where both of you understand it, so you know what the exchange is, there's no questions, there's clarity around who's getting what, and you've agreed that the exchange you've created is valid and worth it, but it's very clear.
Because here's what happens to so many people. We get excited about setting these deals up, but we don't get excited about the details. And I don't think you need to have a 40-page contract; in fact, I've done a lot of these on one- or two-page agreements. And so, when you clarify everything in writing, what you want, what they want, the clear exchange so there's no questions, and then the last one is who owns what, and what are the logistics? Because if there's an outcome to this affiliate agreement, you want to know who has ownership of it. Right now in my world, we probably have 10 of these types of deals at different levels with different people, where people are sending us leads, or we have affiliate programs, or we're sending other people leads, we're doing an exchange for services with people.
We do these all the time. It's one of the fastest ways for us to grow our business. But I'm really careful in them, and it's funny, as I'm recording this, I'm realizing that in one of the deals, we don't have enough in writing, so even I miss this. I just want you to know that. I'm going to contact that person right after I get off this podcast. But let me give you an example of one that we did. In 2008, Cadey and I wrote a product for the real estate industry, and it was selling to realtors, and one of the companies we talked to was RE/MAX. I sat down with the executives at RE/MAX, and with Dave Liniger, the CEO and the founder, and we put together a deal, and that deal was probably about 700 words on a page-and-a-half document.
It spelled out what RE/MAX was going to do, it spelled out what we were going to do, how we were going to exchange funds, what they got, what we got, and that page-and-a-half document probably equated to $15 to $20 million in business for Cadey and I, through RE/MAX agents, through RE/MAX referrals, through the continuity products we had with RE/MAX agents. It was an incredible deal, but a page and a half, 20 million bucks, and ... Gross, not in Cadey and I, our pocket, but to our company.
And with another brokerage, who will remain nameless, but it's a national brokerage, competes with RE/MAX, we had a terrible time. We made tons of mistakes. Let me tell you what we did. We got into this deal with them where I was supposed to teach our class to their agents. They set a date for us to start teaching the class, and we didn't have a contract yet, so I kept pushing them for an agreement, I sent over a one- or two-page agreement, they told us that they had a legal department, and it needed to be more robust than a two-page agreement, which ... That kind of made me nervous, because they didn't even want to commit to what I sent over. And I actually had to start teaching our class based on time commitments before we had an agreement with them.
If you are in an affiliate relationship and performing services, and you don't have an agreement, I want you all to know you are exposed, and I knew I was exposed. I was feeling exposed when I was in this deal with them. And here's what eventually happened. I was teaching a class over the course of, I think it was 12 weeks, and about five weeks in, we got what had to be a 40- or 50-page contract with them, and in my initial readthrough, skim-through of this horrible, constraining, ridiculous document, there was an entire section about how anything that I taught to their agents became their property, they owned it, they had a copyright to it.
So they were paying me to teach a class, but what they were really doing is sending us over a document that created a hostile takeover of our content. And I remember sending it back to them and saying, like, "There is no way we're going to sign this, and unless we can come to some sort of an agreement, I'm going to stop teaching the class to your agents, because they ..." And you have to be careful with these agreements, because this one was one where we were sharing our intellectual property, and they had written it so that anything we shared, they became owners of. I'm sure you can imagine, that was not my intention. I wasn't trying to give away my course; I was just trying to teach it.
We didn't have anything like that with RE/MAX, like, not even close. They didn't even try to do that. But what this other brokerage was clearly trying to do was pay us to teach the course once, and then they wanted to own our course, take over our intellectual property. It was so infuriating and frustrating, and I didn't want to stop teaching the course to their agents, because it would make me look bad, but I didn't want to keep teaching not knowing how we were going to be paid, or if we were going to be paid, and it was one of the most frustrating deals I've ever done.
What ended up happening was we ... I kept teaching the course, they paid us, we never signed a real agreement. They just paid us based on what we had originally agreed. We didn't sign an agreement giving up our content; they didn't sign an agreement that said that we had any rights at all. We just got paid, and we walked away from the deal, and we didn't do business with that brokerage anymore. We actually did tons of business with their regionals, their offices, but we didn't go through the head office of the brokerage. In fact, I wouldn't even go to that brokerage again. It was so frustrating dealing with them.
And so, here's the contrast. With RE/MAX, we did tens of millions. We helped thousands of RE/MAX agents understand how to help homeowners out of foreclosure. I was at RE/MAX's annual convention, and Gail Liniger, Dave's wife, was there — so, Dave and Gail are the two principals of RE/MAX — and I remember walking up to her and saying, "Gail, I just wanted to thank you for everything that you and Dave have done for my family, and helping us with our product, and helping us get it out there and get it in front of agents, and helping homeowners avoid foreclosure," and Gail looked at me and she said, "Alex, I just want to thank you for saving RE/MAX."
And she was sincere, because in the foreclosure crisis, every brokerage was scrambling, and RE/MAX leaned in with us, we went out, helped them help their agents. We qualified thousands of agents during that time period, tens of thousands of RE/MAX agents. In fact, our membership was, at one point, over half RE/AMX. And as a result, the agents that worked with that brokerage, with RE/MAX, had incredibly high success rates. They had the highest closing rates of any brokerage in the market. They sold more than any brokerage in the market, and they outperformed every other brokerage, because they had the right information, and we did a really clean deal with them, and we were out supporting them wherever we could. Heck, if I got called on TV, I was mentioning RE/MAX if I could. If I got into an article, I was mentioning RE/MAX if I could, because they were such a huge supporter of ours.
Same goes for Alain Pinel in the Northeast, and Watson Realty in Florida, and Century 21 up in the Northeast ... Sorry, Alain Pinel's in the Northwest, and Century 21 and Realogy up in the Northeast. We did a ton of business with almost every major brokerage, but the brokerage that tried to take advantage of us, we just went around them. We dealt with their offices, we dealt with their regionals, and they got cut out of the deal. So, not only did they not have a deal with us where we supported them, they got cut out of the deal where they didn't get any revenue, they didn't get ... They had zero control, we went around them, and they struggled. They struggled for a long time. In fact, they tried to knock our course off, and it was a complete dud. Like, their own agents wouldn't even show up for it, because we had so much momentum. And it was all over the agreement.
And so, if you're looking at a joint venture, a partnership, an affiliate deal, sit down with the person you're doing this with, and come up with some bullets on a sheet of paper. Like, it's that easy. I think one of the challenges we have as entrepreneurs is we think contract is going to be incredibly difficult, hard, too much time, expensive, involve attorneys, all of those things. And in a lot of cases, it does, but the fact is, for a simple affiliate deal, a one-page agreement gives you most of the protections you need. For a joint venture deal, a one-page agreement gives you most of the protections you need. In a partnership, you're probably going to want to have some other stuff there, since it's binding and you own a business together. But JVs, affiliates, even partnerships start with sitting down and writing out the bullets, the commitments, the exchange that you are making together, and if you do this, affiliate deals, joint ventures, partnerships have an extraordinary rate of success.
Let me just give you some math on how well this worked for Cadey and I. In our first year of selling the Certified Distressed Property Expert Designation, way back in 2008, we sold it on our own. We didn't have affiliates, we went out and just pushed the product, and we sold about 1,500 real estate agents into our product at around $500 each. And we started a movement, and in 2009, early 2009, we made our deal with RE/MAX, and in 2008, we did 1,500 units; in 2009, we did 15,000 units. We had a 10x increase in our business, because we partnered with one of the most powerful brokerages in the country, and when we got RE/MAX, then we got Century 21, then we got Watson, then we got Alain Pinel, then we got ... I could keep going. There was just dozens of brokerages that did a similar deal with us, because we had this really clean deal that was very public with RE/MAX.
That changed the course of our business. It took Cadey and I from bankruptcy in 2007 to millionaire status within 12 months. We had liquid million dollars in the bank, and it was because we put together powerful affiliate deals, powerful partnerships, powerful joint ventures, where we had the content, and we had other people help us with the marketing and the customer acquisition. It was a complete game-changer, and that product, between 2008 and 2013 or 14, did about $70 million in sales. It put us as number 21 on the Inc. 500 list, so we were the 21st fastest growing company in the United States, in our first year of eligibility after bankruptcy.
There is no way we could have done that without having the incredible partnerships and affiliate deals, and ... Really, you know, these become friendships. Dave and Gail became close friends of mine, and the people at Alain Pinel and Watson Realty became really close friends of ours, and Fidelity National Title, from the C-suite down, we knew everybody in their leadership team, because they were one of our big partners and affiliates. And we just kept succeeding, because we created the right types of deals with people, and we had a fair exchange where everybody won.
So if you're in business, and things are going too slow for you, if you're looking at your business and you're wondering how to get some momentum, start thinking about who out there has the other piece of the puzzle that you're creating, and how can you partner with them? Because when we create these types of deals, when we create affiliates and joint ventures and partnerships that work, everything in our world changes, and it can advance the status of our company, the success of our company. We can do in months what might have taken multiple years. But if you don't have it documented, the deal's just not real. Thanks for being here with me. JVs and partnerships and affiliates are huge, and I want all of you to think about where can you take advantage of these. And if you haven't yet, download a copy of The Entrepreneurial Personality Type. Just go to freemomentumbook.com, freemomentumbook.com, and I look forward to seeing you again tomorrow.
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