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Joint ventures, partnerships, and the numbers

I was out in the blogosphere when I came across the blog of the very well known and talented Jane Mark. I took particular interest to a post she had written titled "If You Want To Do JV’s, Run The Numbers" (forgive the fact she uses empower network, she really is smart and talented). Most of the things she said in her post were very accurate, but there was a major flaw and something that was missing from her post. The flaw I am referring to is the fact we are marketers not corporations and she explained joint ventures as if marketers should act like corporations. Perhaps Jane is at the hundred million dollar level and does in fact consider herself a corporation, however I don't think most people reading her blog fall into that category.

When dealing with potential joint ventures one has to take a lot of things into account including the reputation of the individual requesting a venture. More often than not joint ventures are with brand new sites that have no sales coming in. One has to take other things into consideration. I wonder if Jane thinks about how big of a mailing list a person may have before evaluating a websites potential worth.

In her article she talks about having recently evaluated a potential jv website as having the potential to bring in one hunderd $50 a month clients. Perhaps her evaluation is accurate, but she didn’t leave enough details in her post to really explain a fair evaluation.

For example did the person requesting the jv with her have a mailing list of over a million people? If so then logically they are going to bring in more than her evaluated 100 monthly clients. Perhaps they have run other sites in the past? If so then you must also take into consideration the success of those other sites. If they have hundreds of thousands of social connections, one should also consider that.

There are many things outside the scope of money one needs to evaluate before considering the value of a website.

She also didn’t explain when evaluation is needed vs when it is not.

Now using Jane’s logic, the farmers cooperative never would have existed. The first time one farmer got with another farmer and said “hey I want you to give your crops to an upcoming cooperative and we will sell them for you” the reply would have been “no thanks you don’t have any customers yet so you are asking me to devalue my food before you even get me clients”. If that had been the attitude of those partnering together for such a cooperative, the worlds largest cooperative never would have existed.

Is it a Joint Venture or a Partnership?

This brings me to my next point, the type of business in question as well as the type of partnership offered also must be taken into consideration. Based on a individuals business often determines whether one is requesting a partnership or a joint venture.

Typically there are two types of join ventures. First and the most popular is the affiliate joint venture. In this type of joint venture a business owner offers a special membership which includes a commission based incentive to bring more people. Thats the entire point. One person benefits by getting above normal commissions, and the other benefits by the added signups.

Another type of joint venture is when two websites work together for the equal success of both sites. For example if one person adds a special page in their members area referring people to another website, and that other website does the same in return, this is a joint venture. Each party equally benefits only via mutual sharing of each others sites.

However a partnership is different from a joint venture. In a partnership, two or more people work together for the success of one single website. Lets take a look at the marketers cooperative for an example of what I mean. At the marketers cooperative, I have many partnerships. Partners offer me upgrades on their marketing websites. Partners give me exclusive advertising spots and marketing spots. Partners give me upgrades on their marketing sites and social networks so I am able to give these upgrades to my paying members.

My partners offer me these things, because the more I have to offer my paying members, the more I am going to sell to my members, and the more I sell to my members the more profits are going out to my partners – as they are the ones who get the profits from it (its a private revshare partnership).

My point to today’s post is that not everything in the world of marketing is as simple as “whats the value”. Unless you can see inside someones head and understand what they envision for the future of their company, you can’t possibly know what the value will be in the future. You must take a lot of things into consideration.

Keep in mind when dealing with joint ventures and partnerships, this isn’t shark tank and the person asking for the venture or partnership isn’t asking you for a $100.000 loan.

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