I Built a $9M Company And Got Nothing
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Kevin Bartchlett built a $9 million compost toilet company over six years with a 76-year-old business partner, expecting to walk away with at least 15% of the sale proceeds—over a million dollars. Instead, he received nothing due to a handshake agreement that was never documented. (00:55) Despite contributing product development, manufacturing expertise, customer relationships, and 70-80 hour work weeks, Kevin had no legal recourse when his partner reneged on their verbal agreement. (03:35) The business sold for approximately $9.5 million, but Kevin's lack of written contracts left him with zero equity and no payout. Now he's starting fresh with a flying car prototype, determined to prove he can succeed entirely on his own terms. (29:58)
- Main Theme: The critical importance of documenting business agreements and the devastating consequences of relying solely on handshake deals, even with trusted partners.
Speakers
Kevin Bartchlett
Kevin is an entrepreneur who built a successful compost toilet manufacturing company from the ground up, handling everything from product development and injection molding to customer relationships and operations management. He dropped out of college to focus on the business after being approached by his partner in high school following a local newspaper article about an app he created. Kevin is now working on his next venture involving flying cars and light sport aircraft certification.
Harry Morton
Harry Morton is the founder of Lower Street, a podcast production company that helps brands launch and grow top-tier podcasts. He hosts the Moneywise podcast, which is made for the Hampton community of high-net-worth founders and focuses on the financial and emotional journeys of entrepreneurs in the trenches.
Key Takeaways
Always Get Equity Agreements in Writing
Kevin's biggest mistake was trusting a verbal "sweat equity" promise without any documentation. (03:35) Despite multiple advisors, accountants, and peers warning him to "get things in writing," Kevin believed his partner's good intentions were enough. When the business sold for $9.5 million, Kevin discovered that verbal agreements have zero legal standing. His lawyers confirmed he had "no leg to stand on" without written contracts, text messages, or email trails. (09:45) This costly lesson demonstrates that trust and good intentions aren't sufficient protection in business partnerships, regardless of personal relationships or past history.
Avoid Overinvestment Without Ownership
Kevin invested far beyond his compensation, paying for hotels, tools, and company equipment out of his own pocket because he believed the business would eventually be his. (17:35) He even considered buying a company van with his own money, wrapping it in company branding. This overinvestment mentality led him to work 70-80 hour weeks for just $60,000-$125,000 annually while generating millions in revenue. The lesson is clear: match your investment level to your actual ownership stake, not your anticipated future ownership.
Set Clear Compensation Boundaries Early
Kevin accepted below-market compensation for years, believing it would be worth it when the business sold. (21:38) He made $60,000 for the first few years working extreme hours, eventually reaching $125,000 only when a new hire was brought in at $120,000. This demonstrates the importance of negotiating fair current compensation rather than banking everything on uncertain future payouts. Founders should ensure they're paid appropriately for their current contributions, not just promised future rewards.
Document Decision-Making Authority
Kevin found himself increasingly frustrated in the final year because he couldn't make key business decisions despite running day-to-day operations. (24:25) His partner maintained control over strategic decisions while Kevin handled execution, creating operational paralysis. When the business was being sold, Kevin was completely cut out of due diligence conversations. Clear agreements about decision-making authority, especially as businesses grow and evolve, are essential to prevent operational conflicts and ensure all partners understand their roles.
Have an Exit Strategy Before You Need One
Kevin attempted to buy out the business but discovered new SBA loan requirements that made financing impossible. (07:37) He learned about critical rule changes through a TikTok video, highlighting how external factors can derail exit plans. The seller financing requirements changed, making his buyout financially unfeasible. Smart entrepreneurs should research and plan multiple exit scenarios well before they're needed, understanding financing requirements, valuation methods, and potential regulatory changes that could impact their plans.
Statistics & Facts
- The compost toilet business sold for approximately $9.5 million after six years of operation. (02:45) Kevin had expected to receive 15% of this sale price, which would have been over $1 million, but received nothing due to lack of written agreements.
- Kevin worked 70-80 hour weeks while earning just $60,000-$125,000 annually throughout the business's growth. (21:38) Despite the company shipping 600+ toilets worldwide and operating from a 30,000 square foot facility with 15 employees, his compensation remained relatively modest.
- The business partner was 76 years old and had been previously screwed over by others in business deals. (10:00) This context helps explain his reluctance to formalize agreements and his eventual decision to protect his own interests above Kevin's.
