Partnering On Membership Sites?

coopreme

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What’s up all. Looking for opinions, hopefully to learn from your experiences on the methods for partnering on membership sites.

I would manage all the hosting, technical development, setup, marketing, and all the advice on how to make this work.

they provide all content (videos), bring their social presence, and do some marketing.

the niche and the social presence has a pretty good following, the content maker has people willing to pay.

how would you guys approach this? I’m thinking a percentage of gross revenue?
 

secretagentdad

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The guy bringing the network effects has all the cards.

You’re worth what ever you can negotiate.

Percentage of gross revenue is great.

Big key item. Make sure contract says you get a cut of any liquidity event.

Network effect bizes can end up with really high strategic valuations especially if you can successfully create a community effect and start getting your customers to interact with each other.
 

coopreme

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The guy bringing the network effects has all the cards.

You’re worth what ever you can negotiate.

Percentage of gross revenue is great.

Big key item. Make sure contract says you get a cut of any liquidity event.

Network effect bizes can end up with really high strategic valuations especially if you can successfully create a community effect and start getting your customers to interact with each other.

Great advice, thank you. It is heavily based on this personsocial media presence, and influence over those that want the service/information.

what I’m bringing to the table is all of the technology, and business side. specifically, how to do this as a business instead of for donations. A lot of that is the tech, setting up CMS, marketing and integrations. also, the experience.

generally I would just charge upfront, but I think there’s a lot of room for growth in this niche. And a percent of revenue would be a better long-term decision. any Recommendations on percentage?
 

secretagentdad

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You didn’t provide enough givens to figure that out.

Calculate your implementation cost and ongoing overhead.

Give us some details on the general vertical and the size of the following.
 

Ryuzaki

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It depends on the confidence you have in it working. If you think the guy will flop on his side or not take it seriously but he's motivated now, then charge up front and wash your hands of it later.

If you think the two of you can work well together and neither side will slack, then definitely get a piece of the pie for ongoing revenue and a liquidation event later. The amount of money that can come out of stuff like this in native advertising campaigns across tons of channels and sponsorships and even display ad and video ad revenue can be astronomical.

Regarding how much you should argue you're worth, take into account on both sides the amount of previous experience that you're bringing. Building out the foundation on the tech side may all be front-loaded work for the most part (besides some maintenance and added features down the line), but without it there's nothing. Same goes for the other guy and his pre-built audience. That's an "Exposure Engine" as @Tavin calls it and is the difference between waiting on revenue or having it right out of the gates.

Once you get past that, you both seem like you have tasks: marketing on your side, content and personality on his side.

50/50 sounds fair. Realistically the fan base ought to be doing a lot of your marketing for you, or at least amplifying the marketing you start seeding around the net. But it can go much further than that, like you creating collaboration events, guest appearances in other people's videos, etc. You can also be outreaching to potential sponsors, etc... 50/50 sounds good if you're actually hustling, basically acting as his manager / marketer / developer. You can spin up merchandise too.

As always, get it all in a contract and talk about re-couping costs, liquidation events, etc. Everything needs to be in the contract, all the way down to each specific tasks you'll both be doing, what happens if one of you drops the ball or wants to walk away, buy out options, all that.
 
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What @secretagentdad said is right. He is the one bringing the clout. You are not. You're doing the tech work. He might not value the tech work, as I've seen many people in the "guru" niche think that tech work is something they can pay as little as they want for, and some low self-esteem geek/nerd will do the work for practically nothing.

Don't fall for that.

There's actually many unanswered questions. Who's contributing the capital? No one? If they're just contributing their followers and you're contributing your labor, the cut should be dependent upon who is responsible for the management of the company. If they are making the final business decisions, they should get majority share. If you will be making the business decisions, you should get majority share.

If one of you is making a capital contribution and they are not, the one making the contribution should get 70%, as he's risking the most.

So, yeah, it really depends on who's paying for the servers, dev work, contractors, etc. You should do the legally; so, you should create an LLC or S-Corp for this new company, open a new bank account, create an operating agreement and so forth. The legalization process costs a few hundred or a thousand dollar on its own.

If I were you, I'd ask for them to contribute the capital and put in some myself (up to 25%) so that they can know that I have skin in the game too, call myself CTO, and be in charge of the tech work for 49% of the company's equity. That's not a bad move IMO.

The CTO position in a tech company has a lot of power, if you don't realize this. Basically, without a CTO, a tech company is not a tech company.

The roles you listed in the OP are all CTO stuff, except for the marketing. That's the CMO's role. If you're doing both, you should get majority share. They're just the face of the company and your site can always add more gurus on it's list, that is if you make a really good platform and contact other gurus to use it :smile:\

Best regards.