Episode 21: Creating a Successful Partnership
In Episode 21 of Durable Value, Joe & Ryan discuss their partnership and how they've made it work by playing to their individual strengths.
Start transcript:
Ryan Swehla:
People often say, "Oh, partnerships never work. And people say marriages never work," but does that mean that you don't endeavor to make them work? And there's a reason why partnerships exist and here is a long history of partnerships that have been incredibly successful, but it takes a lot of work.
Speaker 2:
This is Durable Value, get investing and business insights from industry experts and successful entrepreneurs every week. Like and subscribe now.
Ryan Swehla:
So today we're talking about partnerships. Obviously we've been at it for a little while now.
Joe Muratore:
Check my watch. Yep. It's been...
Ryan Swehla:
1987.
Joe Muratore:
Yeah.
Ryan Swehla:
And so we thought we'd spend a little bit of time talking about how they work, why they work.
Joe Muratore:
Why they don't work.
Ryan Swehla:
Exactly. What a successful partnership can look like and what some of the challenges with partnership are.
Joe Muratore:
Yeah. I'd start by saying our partnership, secondarily only to my marriage has been the most joyful relationship of my entire life and helps make work worth doing and life worth doing. And given that we spend so many hours working and building this business, it is wonderful to have a partnership that is a friendship and a mentorship and a camaraderie and a someone's got your back. There's a mutual respect. All those things are, are foundational to what has been built here.
Ryan Swehla:
Yeah. And we have to ask ourselves, "Why? Why did we decide to go into partnership together?" Obviously it started a long time ago as friends, but there's a common adage that if you're a friend, maybe you shouldn't be partners because that can soil the friendship and other negative consequences.
Ryan Swehla:
For us, it really started very early on with being a sounding board in business. We worked in companies together. We also worked-
Joe Muratore:
Two other previous companies together.
Ryan Swehla:
Yeah. And having that team, the two of us together, trying to digest things, trying to navigate things. It was very natural.
Joe Muratore:
Yeah. I always feel little more confident when I'm working with you. It's like we balance each other out. Your aptitudes are different from mine. Sometimes, I can go a little higher and fall a little lower and it helps balance me out. And it gives me confidence that what we're pursuing is we... Any idea we've we balanced it against each other. I've said my part, you said your part, we've gotten the better conclusions, Any negotiation that we're in we think through it in advance, "Well, what's that person going to say? What's this person going to say?" And we get two better outcomes. We think through scenarios better.
Joe Muratore:
I would say also business can be a hard and lonely place, especially when you're starting and as you're building a business every day, there are competitors out to eat our lunch, so to speak. And it can be difficult. It just grinds on the morale every day. But to have a partner and to have someone who's on your side. It's like whatever's about to happen, good, bad, or otherwise, there's nobody, I'd rather be in the trenches with than you. You face that way. I'll face this way. We got this.
Ryan Swehla:
And it's a lot like marriage, too. You have that common alignment in this case, it's the alignment of a business enterprise. And we each have different approaches, different ways of looking at things. But we find value in the other person's perspective. I think people who are in partnerships or who have been in partnerships also maybe come from a mind-frame that is more open to new ideas because when you're in a partnership, you have to, for it to be successful, you have to be able to be open to new ideas. You have to be, "Oh, I am so certain this is the route we need to go. And that dang partner of mine doesn't agree with me." And now I got to get his buy-in and I have to figure out why I have to be able to articulate why I want to go that route. And then he pushes back. And at the end of the day, in certain situations, his pushback is right. And in other situations, my resolve is right.
Ryan Swehla:
But having the openness... I look at entrepreneurs that are sole proprietors and it's not only lonely, but it also makes you very open to the pitfalls of echo chamber of not having people to bounce ideas off of.
Joe Muratore:
Hubris, blind spots.
Ryan Swehla:
People being able to poke holes in, because if it's only your direct reports that can poke holes into what you're saying, you can always say, "Well, they don't know what they're saying." When it's your business partner, you have to listen.
Joe Muratore:
And all that sort of speaks to the downside risk but there's this massive upside risk, which is that you and I are by nature, joyful, competitive, hard charging people that want to move the world in some way. And we sort of challenge each other to greater things. Our whole lives there's been a competitiveness of like, "Oh, you did that. I'm going to try to do this." And when you, when you take that piece of competitiveness, and this is where gets tricky, Harness it with respect and low ego and an abundance mindset and prudent risk management, it can be extremely powerful.
Ryan Swehla:
Absolutely. I think we regularly say that the outcome that we end at after the two of us have fleshed through something is always better than that. Even if it's 2% better, 5% better, sometimes it's 50% better. But that, it's the mastermind idea that the more minds there are at the table, thinking about something, the more likely you are to come up with a better ultimate result.
Joe Muratore:
I can think of so many property and negotiations we've had where, negotiation started to happen and of course it's like, "Oh, seen this one before. Oh, saw that one before." And then, and then we talk through and it's like, "Okay, they're going to come at it this way. And then they're going to do this. So if we do this and then this we're better off." But if there's one person in their echo chamber of their head, they could get angry or they could get mad or they could get they're emotions could cloud what they're doing. But if there's a joy to it, and if there's a partnership to it, it's like, "Okay, we got this. Go left then right." And that, that always makes for better outcomes.
Joe Muratore:
I love the long term approach. Both of us, since the start of this partnership have said, we're in this for the long haul. We can be more successful together than we can apart. There's more than enough money, opportunity, whatever. We can share that, we can do that together. And we can not just live an abundance with each other, but create that in the world, create that in our buildings, create that in our company and approach life with an open handed mindset, both in our partnership and as company owners and managers and building owners and managers. And I think that's a big deal.
Ryan Swehla:
And that abundance mindset is important because at the end of the day, you don't go into a business partnership because you got a buddy and you like hanging out. You go into business partnership because you want to do something. But what can happen along the way is you're very focused on what is the value that that person is bringing to me. And that's never going to work.
Joe Muratore:
[crosstalk 00:07:53] risky.
Ryan Swehla:
When a person starts with, "What is that person's value to me and have they met that value?" Because instead of it being a mind-frame that says we're going to have a better result by the two of us charging at this. It's the mind-frame of what have you done for me? What have you done for me? What have you done for me? And just like, again, using the marriage analogy, doesn't go very far when you go into a marriage saying, "What have you done for me?" Obviously, there's a reason why you're in a partnership. It's not just, "Hey, we like hanging out together." But when you come from that mind frame that I'm going to get a better result. We are going to get a better result by us as partners attacking it.
Joe Muratore:
Personally, I feel a burden to lead with value. I never want to, and this is probably my personal psychology, but I never want to be the dead wood. I never want to be the dead weight. I always want to be like, "Oh, all right, you brought that on a Monday morning. Okay. I see that. All right. That's how we're going to start." That's the partner I endeavor to be here.
Ryan Swehla:
Absolutely, absolutely.
Joe Muratore:
I see that in you too.
Ryan Swehla:
Oh, absolutely. There's a little bit of that killer instinct and the killer instinct of, "Oh, yeah. You can do that. Well, I can do this." And I think that does touch on another important thing, which is we do each have our kind of silos or areas of responsibility. And I think that's a key part that works for us is that you're involved on the opportunity side. I'm involved on the capital side. We both interact on those other sides, but it does also allow to have that really friendly competitiveness of can you find the opportunities that keep up with the capital and can I find the capital that keeps up with the opportunities. And so we regularly have that interplay.
Joe Muratore:
Yeah. We were in a meeting the other day with someone we didn't know that well and we're kind of joking around and someone said something like, "Who's the boss?" It's kind of like the question, who's the alpha? In every group, leaders emerge. It's just human societal function or whatever. But what's interesting about our partnership is that we both feel the freedom to be Alpha's in our areas. And we have both learned to be deferential in the overlap that hasn't always happened perfectly. And I'm the first to say, I've screwed that up a few times.
Ryan Swehla:
Same here.
Joe Muratore:
But over 15 years doling that out I've learned to stay, to be an alpha in my lane and to be deferential in the middle. And my biggest thing I'm rolling with these days is roll at half, 50% of ego. Whatever ego I feel like I'm entitled to, I go at 50% of that and that's a safe zone. Maybe we just did a giant deal and it worked out great and everyone's thrilled. And I think I'm special. I'm not. And if I roll like I'm special, I endanger our partnership. I endanger the company. I endanger decision making. And to approach life at 50% of the ego you feel you deserve is a much safer position.
Ryan Swehla:
Absolutely. And I think you touch on a important point where I believe partnerships fail is kind of two areas. One is failure or difficulty and the other is success. And of course, that's the two-
Joe Muratore:
We've seen both.
Ryan Swehla:
But on the failure side or the difficulty side, you see when times are tough, you hear people talk about their true colors, that that's where their true colors can come out. And that can be really challenging, especially if you don't know that person well. So a caution that I would have to people is you have to have ways to see how a person operates under stress. Fortunately, we've been around each other long enough that we each kind of know how and we see the signs of when someone is stressed and that sort of thing. And so that's been beneficial.
Joe Muratore:
I love that book, The Tough Things About Tough Things, where they talk about wartime CEOs and peace time CEOs and these are not the same person. And we play different roles and support each other in different ways, but we went through the 2008 recession. Through 2012, 2015. I mean, there were plenty of times I really appreciated in some of those darker days you're resolve.And I felt like your methodical approach to, to diligently solving problems in order. I respected that. It brought stability to the organization. And I feel like we both bring different parts in that regard.
Ryan Swehla:
Yeah. And you couldn't climb a mountain without passion. And I think one of the things that that you bring very strongly to our partnership is that passion and that drive because we can do things in life. But if we're doing them kind of because we feel like that's what we're supposed to do, we're not going to get the same outcome as that passion of, "I'm charging up a mountain." And throughout our partnership, one of the things that I feel like you've brought on very strongly is that passion for why we're doing and what we're doing.
Ryan Swehla:
Going back a little bit though, I guess the foibles of partnership, one of the other areas is success and success breeds ego. And we've, you already talked about it. And we all in life, as we become successful, we naturally think, "Oh, I'm pretty hot stuff."
Joe Muratore:
I got this figured out.
Ryan Swehla:
I got this figured out. And on the hand, that's where partnerships can falter because all of a sudden we're focused on self and how great I am and how I know it all. Where partnerships can have strength in times of success is keeping those egos in check because how often do we see where a sole entrepreneur just slowly rises to become too big for their britches because there's not someone there keeping them in check and helping... One of the areas that we've talked about is this idea of a Johari Window. Which is, it's a matrix of the things I know about myself, the things I don't know about myself.
Joe Muratore:
And the things I don't know that I don't know.
Ryan Swehla:
And the things that other people know about myself and the things that other people don't know. And this idea that other people can shed light onto our strengths and our weaknesses. And if you don't have that as a sole operator, it becomes very challenging, very difficult to have someone authentically be able to shed that light.
Joe Muratore:
Yeah. Another, I think of Greg Campbell, a mentor of ours and also a business coach of ours. He was the chief operating officer of-
Ryan Swehla:
Coldwell Banker.
Joe Muratore:
... Coldwell banker.
Ryan Swehla:
Yeah.
Joe Muratore:
And an owner of it. But the point being is he's been a coach of ours for five or six years. And once a week, we spend an hour on the phone, he says, "Tell me, what's going on." And there's been plenty of times. We say, well, we tell him what's going on, but it, why I bring that up is people thinking about partnerships, there needs to be a safe third spot where conflict can be put on the table. Recently we had a little bit of conflict about an item, and Greg said, "I know you guys have worked it out, but I sense there's still some animosity there," and it was a week later, and it was like, "I think you're right." And we talked through it. Ultimately, we got to a great spot but if he hadn't have said that it might have just stayed in the back of our brains a little bit longer, and that creates risk. So.
Ryan Swehla:
And if we hadn't had the candor and humility to say, "Yeah, that's still a problem or that's still something we need to hash through." Because partnerships will not succeed without utter and caring transparency. It's that right balance of not being a jerk, but also not not saying things. We have to strike that right balance of approaching each other in a caring manner, but at the same time a very authentic and not holding back.
Joe Muratore:
But to be clear, I think partners should get help. They should go to partner counseling. They should have a safe spot to talk through things.
Ryan Swehla:
And a sole operator, too. Even more so.
Joe Muratore:
Even more so, even more so.
Ryan Swehla:
Because they have nobody to bounce off. But partnerships they need therapy, too.
Joe Muratore:
Every day there are forces in the world acting on the partnership and the company. And it's important to navigate those. See your blind spots. I recently listened to a TED talk. I think it was Howard Stevenson from Harvard Business School. And he said, "Entrepreneurship is the pursuit of opportunity beyond our current resources." This is the idea that one plus one makes five or even better the idea that one plus one equals a hundred. The idea that something exceptional or astounding could come out of something small. It's taking a few pieces and making something much bigger. And the act of that sort of creation takes incredible will. I don't think I could do it as a sole operator. I really enjoy doing it in a partnership setting.
Ryan Swehla:
I agree.
Joe Muratore:
It's an incredible burden.
Ryan Swehla:
Sadly, I look at successful entrepreneurs and number one, I think it's amazing that they were able to accomplish that on their own to do so without a partnership, I feel like we have a extra tool. A huge, it's not even an extra tool. It's like a whole war chest just by the fact that we're both attacking something. And we're both operating together in a unified front. And on the one hand, I look at sole proprietors as just amazing that they've been able to accomplish what they have. But I also think, "Man, that's tough. It's not an environment that I would want. People often say, "Oh, partnerships never work." And people say marriages never work but does that mean that you don't endeavor to make them work? And there's a reason why partnerships exist and there is a long history of partnerships that have been incredibly successful but it takes a lot of work.
Joe Muratore:
And nowhere else in our company is there a peer to peer relationship. We have extremely strong relationships with our executive team and our managers but that's still not a peer to peer relationship. And when you approach things in that way, or when you have a person like that in your life they have the freedom to be more candid maybe than other people would naturally want to be. And that's challenging. Sometimes people don't, sometimes I don't like that, but I'm thankful for it. We created something because of it.
Ryan Swehla:
At times it's frustrating and annoying. But what we have learned through time is that our end result is always better when we're both working at it.
Joe Muratore:
Yeah. I think most importantly, we stand here today or sit here today almost 15 years into this partnership. And I think of you as, it sounds weird, my best friend. But I spend so much time with you and we've been through so many things and...
Ryan Swehla:
Including getting in a fight together with each other.
Joe Muratore:
Oh yeah. I forgot about that.
Ryan Swehla:
In seventh grade.
Joe Muratore:
That was my shining moment.
Ryan Swehla:
The day you won.
Joe Muratore:
I think I paid for it ever since.
Ryan Swehla:
But we have framed in our office here a suspension slip from seventh grade when Joe and I, you and I were fighting together, against each other over stupid-
Ryan Swehla:
You weren't fighting much to be clear.
Joe Muratore:
No, I really wasn't. I was defending, but part of the reason that we have that up and a photo of us in third grade is to remind us first and foremost, but also everyone in the company, the longevity of our relationship and the fact that conflicts happen. And that's a part of business, but learning how to navigate those and do it in the right way is an essential trait.
Ryan Swehla:
Yeah.
Speaker 2:
Thank you for listening to Durable Value, an investor's podcast, where we demystify commercial real estate with safe, sound, investment strategies to help you balance your portfolio. If you enjoyed this podcast, be sure to rate it on iTunes or wherever you get your podcasts. To learn more, visit graceadapartners.com, where you'll find more information, investors, tools, case studies, and, and more this podcast is hosted by Joe Muratore and Ryan Swehla. It's produced, edited and mixed by Melodic with intro music by Ian Post. Thanks again for listening. And we'll see you next time.