The CEO Model

As you build a team, there’s two ways to structure it – as a partnership or as a CEO model. One of these is significantly better than the other (hint: it’s not a partnership). Discover why one person needs to hold the majority and the fatal mistakes that can be made by forming partnerships!

The CEO Model

There’s two models you need to know¬†about and I want to warn you against one of them. One of them is just dangerous. And too many people think that this is the route that they’re going to go and I promise you if you’re heading down this road, it’s going to be a mistake. I encourage you to hit the pause button, slow it down and we’re going to look at why here in just a second.

So the first one, the one that I want you to avoid, is this: partnerships. The absolute worst model for building a team is a partnership. 100% worst model. Now are there exceptions to every rule? Yes. The exceptions are if you’re related to each other. But even then, I want you to be very, very careful because I know a lot of spouses that go into business together and that’s the beginning of the end.

Why? Because in partnerships, everybody is just fighting for control. Everybody wants to have the control of the business. And so they go “oh, this is great! They’re a good producing agent, I’m a good producing agent! What’s better than one well producing agent and one well producing agent?! Two who are 50/50 partners!(…And can’t make a decision.)

At some point you’re going to disagree. The question is who wins? A business needs a winner to lead the team. Somebody has to be in control. Somebody has to be the one who says “if we can’t agree, I win.” And people don’t like that. Great, you shouldn’t be in a partnership. You’re not ready for it.

You can have a 50/50 equity partnership, but you need to have somebody who is a 51% dominant person. The CEO of that partnership. So that when you can’t agree, you have to trust them enough to go “look, if we can’t agree, you need to make the call. And I trust you to do that. I trust you to listen to me, to take my advice, but if we can’t agree, somebody has got to make that call.

People think that sounds difficult, and guess what? It is. It’s why 4 out of 5 partnerships fail within the first 3 years. Partnerships are a terrible plan.

Now if you’re still convinced that you can make it work, here’s what I want you to do. If you’re thinking you want a partnership, write the divorce papers (because you’re going to get divorced) before you write the partnership papers. Agree on how it’s going to end. Say “when we fail, here’s who’s going to get these leads, and here’s who’s going to get those leads. Here’s how we’re going to deal with the listings. Here’s how we’re going to deal with the clients and admins and all of this.

Every time I tell people to do that, you know what happens? I get calls, texts, emails…etc. and people say “we were 30 minutes into this and realized it was a terrible idea.” It’s true,¬†because you can’t agree while you like each other. Try writing the divorce papers while you like each other. And if you can get through that, then you’re going to be okay when you don’t like each other. But at the end, when the business is falling apart, you’re not going to like each other. You think you’re going to agree on how to split leads? Good luck. It’s not going to happen. Write the end at the beginning if you want to go the partnership route.

What do we recommend? The CEO model. The CEO model is the model that is most likely to succeed in this industry. This is the model that we see the most successful teams running. There is one person at the top and it’s a pyramid down. Everybody has a level below them, but there’s one CEO. There’s one person who controls it all.

On a DISC profile, I’m a high D, high I. I’m a 99/100 D, 99/100 I. I’m super high energy and I’m a control freak. That’s me. I run a benevolent dictatorship. At the end of the day, I’ll take advice, I’ll take input, but it’s my call, my business. I own it. I run it. I operate it. It’s my call.

And it needs to be your call. You have to be the person that says “here’s where we’re going. I set the vision. This is where we’re headed. This is where we’re going. And it’s my call.” If you do that, if you’re ready for that, if you’re prepared for that, you can succeed at running a team.

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