Keep Your Napkin IN Your Lap

If napkins were meant to be legal documents, we wouldn’t be using them to wipe our faces, blow our noses, or mop up spilled coffee. Sure, napkins are fine for doodling ideas in a coffee shop, but if you're actually planning on doing business, you’d better swap that napkin for a real agreement. “Good faith,” “goodwill,” and “good intentions” are all just fluff – the verbal equivalent of spitting on a deal. They sound nice, but in the end, they mean nothing without real action behind them. That sweet, dreamy “Google-y talk” often leads straight to a handshake, where everyone acts like they’re signing the next big thing… until they’re not.

For all the use of the word "good will" in early-stage deal-making, there’s one thing that’s conspicuously absent: good luck. Because if you’re planning on sealing a deal with a napkin in your lap, you’re going to need it.

For those who might need a refresher, here’s the basic definition of a partnership:

1. A legal contract between two or more parties, where each agrees to contribute either money, labor, or both, and to share the profits (and losses) in agreed-upon proportions.
   

2. A contractual relationship where mutual cooperation and responsibility are supposed to lead to the betterment of the whole (no guarantees here, though).
   

So why do most entrepreneurs fail to follow this simple framework? Because they can’t imagine planning the divorce while they’re still enjoying the wedding cake. Everyone loves the honeymoon phase: dreamy ideas, shared visions, and a mutual belief that you're about to revolutionize the world. But as with most marriages, reality bites. Greed, stupidity, and a complete lack of foresight start to creep in. Those crisp, clear lines that once defined your napkin vision? Now they’re smudged, blurry, and illegible. Good luck reading that.

I often tell “newlyweds” in business that if they didn’t experience moments of tension or discomfort during negotiations, then the deal never really happened. So, what does make a deal stick?

1. Know who you’re getting into bed with—and expect everyone to be a spy.

Keep your cards close. Share your genius with only those who are locked into the deal. That sweet “let’s change the world” talk won’t cut it if you’re not being smart. Everyone claims to be loyal, but watch your back.

2. Establish the ground rules.

Surprisingly, this part is often ignored. Who’s in charge? What kind of government are you running here? Are you in a Democracy? An Oligarchy? A Dictatorship? Clarify this upfront, or you might end up screaming “Et tu, Brute?” as your deal unravels.

3. Document everything.

Minutes of every brainstorming session? Yep. Who contributed what? Absolutely. From roles and responsibilities to profit-sharing, expenses, and decision-making—if it’s part of your deal, write it down. These details are the Magna Carta of your partnership. When you’re ready to make things official, these notes will help turn your napkin scribble into something binding.

4. Enter the “Good Faith” Agreement.

Ah yes, the semi-legal document where two or more parties agree to be bound by certain terms, but not all terms. It’s like a promise ring – you’re getting closer to the real thing, but there’s still a gaping hole for troublemakers to exploit. Proceed with caution.

5. Operating and Shareholder Agreements.

Now you’re really making progress—assuming you don’t fumble here. Whether it’s an Operating Agreement for an LLC or a Shareholder Agreement for a corporation, these legal docs are where you iron out who does what, who gets what, and when. Get it right, and these agreements will survive the test of time—well, most of the time. After all, “for better or worse” isn’t always a guarantee.

We’ve developed an app—currently in alpha—that could save your partnership, your business, or your sanity. It’s called Napkin 2.0—give it a try and let me know what you think. But remember: just because you close a deal, doesn’t mean it’s a good one. It’s just a deal. Trust your instincts, but for the love of all things holy, get it in writing.