I helped build a deal worth $3.2 million, and when it closed I was not in it. There was no dramatic betrayal, no villain, no single moment I can point to. There was a sequence of conversations in which everyone agreed, and no document in which anyone had.
For a while I told the story as a lesson about people. That was the wrong lesson, and I think it is the wrong lesson most people take from an experience like this. People are not reliably untrustworthy. They are reliably human, which means their memory of a conversation drifts toward their own interest at about the same rate yours drifts toward yours. Six months later, two honest parties can hold two sincere and incompatible accounts of the same handshake. A handshake is a feeling. A contract is a fact.
So the lesson is about the paper, and it is simpler than it sounds. Document the arrangement while everyone is still friends. Do it before the money is real, because that is the only moment at which the terms are cheap to write. Name who gets what, in which order, under which conditions, and what happens if the conditions are not met. If someone resists putting it in writing, you have not been rude. You have learned what you needed to know, at the lowest price you will ever be offered for it.
This is also why I am unusually patient with the parts of my work that other founders find tedious. Government supply is a business built on documents: operating agreements, representations, certifications, records that must be exact and must be kept. I used to think of that as friction. I now think of it as the industry having learned, over two centuries, the lesson I learned on one deal. The paper is not the obstacle to the relationship. The paper is what lets the relationship survive success.
I do not resent the $3.2 million. It bought something I could not have acquired any other way, which is the reflex to reach for a pen before I reach for a handshake. Every partnership I have entered since has begun with a document, and every one of them is still standing.