51% / 49% and Fairness
Published 2 years ago, mid-July under Business
The Rocketboom break-up is now ancient history, but I’m still left wondering if the situation could have been avoided altogether. For the uninformed, Amanda Congdon, the now ex-hostess of the popular video blog Rocketboom left the show after failed negotiations with the show’s producer, Andrew Baron. Amanda felt she was fired, while Andrew says she gave up on contract negotiations and he would gladly welcome her back. Regardless of the he-said / she-said game that played out, I’m convinced the entire fiasco was the result of a poor decision the pair made – namely their 49% / 51% split of the company.
Admittedly, I’m not the most avid Rocketboom fan. I never found much interest in the show’s content and suspect its main attraction has been Amanda’s hotness. Regardless, I find the story of the Rocketboom breakup all too familiar.
A partnership is an interesting business arrangement. When properly realized, a partnership can bring about great interdependence between partners, leading to a result neither partner could produce on their own. But partnerships can also lead to conflict if consensus cannot be regularly met. If one partner is clearly contributing more, an easy solution is simply to put that person in charge. This allows for meaningful collaboration while preventing un-productive impasses should conflict arise. But that split needs to be well defined - this is why I think Rocketboom blew up.
A 51% / 49% split is contrivance designed to place one person in control (in Rocketboom’s case, Andrew), while still appearing to be an equal partnership. A 51/49 split can’t possibly reflect the reality of the situation - it just seems impossible to determine that one party is 2% more valuable to the company than the other. There’s nothing wrong with an uneven split – but it’s important that ownership percentages reflect reality. If one partner contributes more, the percentages should reflect that. There’s also nothing wrong with a 50/50 split – it just means you’ll have to be adults and work your problems out should they arise.