I have been running my own business full time for over 4 years now. The two main things I do at the moment - Internet radio and Collocation Hosting - had me interacting with many people over the years. Especially on the Internet radio side of things, I get email pitches for things to do or partnerships to get into every single day.

What I have learned in this time is that most people are not very competent, or far from being truly serious in a way that I would expect business-minded people to be. And even fewer tend to follow through on expectations and promises they have fed you.

So for a long time now I have had a rule about managing expectations of people’s pitches, ideas, and promises. Now I am giving it the official title of “Ari Shohat’s Law of Business Commitments” and it is as follows:

For every 10 people who say they will do something: 6 will not do it, and 3 will do it wrong.

So this leaves barely one out of 10 people who will do things right on average. Your mileage will vary one way or another of course depending on the environment you are in. This assumes a healthy dose of new people coming in, such as startups trying to pitch ideas to VCs.  I have had people tell me that my rule is too generous as it is, and the number of flakes out there is even greater.

I am even sure all of us are guilty of this ourselves at one time or another. Who can truly say that they’ve never over-committed themselves and ended up stretching themselves way too thin. As a result we didn’t do things “right.”

So why is there such a large number of flakes out there?

A lot of it has to do with incompetence or lack of will on their part. The reasons are numerous in reality, they could have realized it was a bad idea later, or found better things to do with their time. They could be incompetent themselves. Or they could have relied on too many other variables in good will and assumed most of the things would go their way magically - I would call those both naive and incompetent. Yet there are also very competent people when it comes to their core skills, but they don’t follow through with organizing their strengths for the benefit of their idea or the promises they made.

Avoid Poor Business Commitments:

This brings up a point about how you should be doing business. When people pitch to you, can you spot a fake business commitment before even the other person comes with reality that it was fake or flawed?
Here are a few things to screen for:

• Lack of Motivation:
  Does the person want to work with you purely for the chance to make profit, or is there some other motivation behind it? If you are considering a long term relationship then I very much recommend that you find someone who is motivated by other factors besides profit. Wanting to make money is great, but it shouldn’t be the only reason.

  Look for people who are motivated to get experience in the field, or to get recognition, express their creative side. Any of these things are a good sign. But if you see profit only, especially short term, then chances are you have a future flake on your hands - even if he or she is very talented. 
  

• Poor Communication: 
  If the person communicates poorly,  especially via email, that’s a good bet that he or she will fall into being one of the 9 flakes. The reason I say this is because real business partnerships often assume the other person has to manage other expectations or even other people on their own. If you are put off a bit by the way he or she communicates, you start to get alarm bells going off in your head that this person is bound to put off other people as well, which is like throwing some sand in the gears of the partnership you are considering.

  The only time I do even anything with poor spellers is if they are from abroad and are multi-lingual - people tend to be put off less because they understand the person is actually making a great effort in trying to do business as usual in your language as a courtesy. In this case it says little about their lack of intelligence or education.The other time I would work with poor spellers if the person otherwise is clearly very smart or very skilled in what they do, where it overrides their spelling deficiency (or lack of caring for spelling). I think a good example here would be Shoemoney and his writing on his blog. Jeremy is known to mispell things left and right, and he could care less. I think the guy is an awesome marketer and has an incredible head on his shoulders, and most people would try to move mountains for a chance to work with him.

  But if there are no exceptional qualities, or the people are rude or inconsiderate, then forget about working with them.

• Incorrect Math:
  Many times when I am pitched a collaboration the person pitching tries to make a case of why it’s a good idea. Quite often their own math doesn’t add up right, or more correctly they have gaping holes in their logic and other realities of making money or marketing online. Very often they make it sound like 10 is equal to 10,000 without even realizing that they are getting it wrong (here’s an example of how people pitch you Hits).

  In fact another example of bad math is how the music industry calculates the amount of lost profits due to illegal file sharing. They like to count up all the illegal downloads and apply this to what it would cost in CDs or digital sales, and voila, you get funny math that assumed all those would actually be purchases. So in this case you’d think twice of doing anything with the music industry Oh how I wish I could give this advice to myself 7 years ago, but I digress.

  The only time I would not hold bad math against a person is if they aren’t the person to make that call. In other words they got their math wrong, but you aren’t getting them for the math and your own correct math shows it’s going to work out anyway. An example in my case would be when people pitch to me to launch new radio channels - sometimes they go on to invent the number of listeners they expect would come rushing in. From my experience I can often tell they are unrealistic, but that doesn’t take away from the fact that they can do amazing music programming, which is their core competency in the end.

• Ineffective Marketing:
  A killer idea and competent people behind its execution is not always enough for you to say yes to a partnership. Their product or service may not be very marketable to your audience. Quite simply you can spend your time and resources better collaborating with someone who will be a better fit.Don’t get suckered into having a great phone conversation or the other side’s success within their own vertical. If it doesn’t translate to your market or vertical, then it may just waste a lot of your time.

  Example:a successful online greeting and holiday card store asked if we could make a section on our Internet radio for sending e-cards through us. We would advertise it on our at no cost to the company, and get commissions of any sales through us instead. Both companies were good at what they do within their own verticals, but things didn’t work out. After spending a lot of useful time (even few days is a lot to me) integrating their stuff into our site, making ads, playing ads - the return was really pennies compared to the time we put in. We could have optimized the experience better, but already it was showing that optimization would just bring diminishing returns. We could have used the time for something else.

  While everyone did their part here and didn’t flake out, the partnership in this example was itself a flake. You can’t always know until you try, and you should spend some of your time experimenting with new things. But do learn from your mistakes. If you can spot a flaky project in the way it would be marketed through you, then consider the whole thing a flake and move on.

• Too Many Commitments:
  The person pitching to you may already be involved in too many personal or business projects. As is often the case with most people who start online businesses - the person pitching to you may hold a day job somewhere. That’s not a bad thing, but it requires you to investigate and question this more if you want to minimize your risk of dealing with a future flake.
• Available Resources:
  This one goes hand in hand with the above over-commitment concern. You may have a person or a company who means well and is capable at core competency, but there’s no way in the world they can pull off the idea without additional resources. For example let’s suppose someone pitches to you to bankroll their effort to build a new online service specializing in X.  The idea is solid, developers are solid, and you are confident the team will build it nice and sweet.

  However the pitfall is that once the product is built it does not exist in a vacuum - you need to get the word out to gain market share. And where there’s market share quite often there are competitors out there.So for all the things that would go right, if you don’t have the partners or the money to back up your effort of getting the word out and grabbing market share, the partnership itself can become one big flake.

  So this has less to do with business commitments, but rather having the foresight of understanding that when people pitch to you they may be missing critical requirements to make the partnership a success.

• Poor References:
  If the partnership at hand is very serious to you then do some reference checks on your potential new partners before you commit. If the potential partners have screwed someone before, chances are if you find their past partners they will give you a warning. If you get a warning that’s usually a good sign to look for someone else.

  But people won’t talk crap about well-meaning under-performers. Instead they will not say anything too exceptional about them and try to make them sound average in an attempt at being polite. So, potential flakes there as well.Just watch out for a jealous former partner.

  Sometimes there are legitimate reasons for a broken partnerships, so when you do reference checks keep in mind that one party may be trying to say bad things on purpose. Such is life.

• Conflicts of Interest:
  You will sometimes find that the person wanting to work with you has been around too much for your comfort. That is, they aren’t flakes, but in the worst case you can stand to loose a lot by sharing any potential business practices with such a partner. This happens if you know the person had prior relationships with your competitors, or is just buddies with people who do have such a relationship. If your practices are unique, go with someone who’s fresher to avoid hurting in the future.

People say that the majority of new businesses die off within the first few years, if not even sooner. I would imagine in all of those failures we would find at least some of the points I’ve outlined above. But the real take away is that you should not be surprised to meet so many flakes out there, that’s the way the world is. If you look hard enough, or are willing to pay enough, you will eventually find a few golden nuggets.