How Guaranteed Payment Turned My Best Partner Into My Worst Nightmare

Real talk from a technical founder building AI-powered businesses

Published September 9, 2025 • Based on Founder Reality Episode 14

Also available on: Apple Podcasts • Spotify • YouTube

Yesterday I came back from the office feeling something I rarely experience: genuine disappointment. Not the kind of setback that comes with failed product launches or technical challenges, but the deep frustration that comes from watching someone you trusted completely check out the moment their paycheck became guaranteed.

This is a story about trust, stability, and expensive lessons that every founder learns the hard way.

Let me tell you about David (name changed for obvious reasons) and how guaranteed payment destroyed a five-year partnership.

The Perfect Partnership (Until It Wasn't)

David had been helping SimpleDirect for two years. In our embedded financing business for home improvement contractors, having someone who could speak the language of our target market was invaluable. David was that person.

For five years, our arrangement was simple and performance-based:

• David kept 60% of revenue from customers he brought in
• SimpleDirect took 40%
• No guaranteed payments, just pure revenue share

This was incredibly generous on our end - most affiliate programs pay 10-20%, not 60%. But it worked. David was engaged, responsive, called multiple times per day. He solved real problems and gave us insights into how the industry actually worked.

The results spoke for themselves. David would call his network, close customers, and we'd split the revenue. Everyone won when everyone performed.

The Cracks Begin to Show

Then things started changing. David became increasingly unhappy with the arrangement. There were angry emails on Sunday mornings: "WHERE ARE THE LEADS? WHERE'S MY FREAKING REPORT?" - even though I'd sent everything on Wednesday.

I was confused. Our star performer was becoming increasingly angry, despite getting paid well for successful results. When I suggested we cool things down and remember we're on the same team, he agreed.

Then came the ask: David wanted a guaranteed monthly retainer instead of pure revenue share.

My Expensive Mistake

Here's where I made the critical error. Despite having tried this exact arrangement with David years earlier (which didn't work), I let empathy override business judgment.

After persistent pressure, I agreed in May to formalize a monthly payment arrangement. I told myself: "He loves the work, he's a culture fit, making it official is a no-brainer."

The ink wasn't even dry before everything changed.

Complete Radio Silence

What happened after we signed that agreement? Absolutely nothing.

Not a gradual decline - complete radio silence. Before the contract, David was proactive, checking in, caring about customers and outcomes. After we signed, it was like someone flipped a switch.

In the past 12 weeks, the only emails I've received from David were about compensation status. Not about customers, not about problems, not about improvements. Just: "Hey George, what's the status of my pay?"

When customers called with issues and couldn't reach David, he'd simply tell them: "Go call George or call the support number. I'm not available."

The Hard Truth About Incentives

This wasn't just any contractor - this was someone I'd worked with successfully for years. Someone who'd been paid well and delivered good work. The complete character shift the moment payments became guaranteed was jarring.

Our regular business development calls went to zero. The proactive customer care disappeared. The only communications became paycheck inquiries.

Yesterday, I sent the termination notice. Thirty days as per our contract terms, clean and professional. But I also explained why - because sometimes actions need consequences, even if people don't care about them anymore.

Four Systems Changes I'm Making

1. Mandatory Probation Periods No long-term arrangements unless someone proves they can maintain performance under different compensation structures. Test for 30-90 days first.
2. Delivery-Based Compensation Show me what you've done or there's no payment. No deliverables = no pay. Simple.
3. Regular Check-ins with Clear Expectations No more "we'll figure it out as we go" approach. That never works.
4. Trust But Verify I believe in empathy-first leadership and building trust with team members. But verification systems need to exist alongside that trust.

The Real Lesson: Your Systems Determine Your Results

Here's the hard truth most founders don't want to hear: your systems determine your results.

If your system rewards showing up, that's what you get. If your system rewards results, that's what you get.

I created a system that rewarded David for doing nothing. And that's exactly what he delivered.

The fault is mine as the founder. I designed incentives that pushed people away from behaviors I wanted to see instead of toward them.

Going Forward

This isn't a story about not trusting people. You absolutely need to trust your team - there are incredible people who can take your business from here to $100M+.

This is about structuring agreements that align incentives with success. I wanted to give someone stability and recognition for good work. That intention wasn't wrong, but the execution was terrible.

Real stability comes from consistently delivering value, not from having a signed piece of paper.

Next time, I'm designing systems where the only way to win is actually doing the work. Systems that reward outcomes, actions, and getting things done.

Because at the end of the day, as founders, we determine our own destiny. What you dig is what you get.

This expensive lesson cost me five months of payments and a five-year partnership. But the systems thinking it forced will be worth much more than both.