The Art and Science of Mutual Value Creation
“The best deals create value for everyone involved.” — Fab’s Approach
In the high-altitude world of mountaineering, there are two ways to climb. The first is “extractive performance”: the goal is solely the summit. The mountain is an obstacle to be conquered, the guide or the Sherpa is a tool to be utilised, and the experience is merely content to be captured for external validation. It is a transactional exchange—commodity for prestige.
The second way is the “partnership of the rope.” Here, the mountain is a dynamic environment we navigate together. The safety and success of one climber are inextricably linked to the other. We do not consume the experience; we co-create it.
In my career, I have found that the business world suffers from a severe case of the former. We treat deals as zero-sum extractions. This essay argues that true longevity and exponential growth are found only when we reject transactional extraction in favor of generative partnership.
I. The Trap of Extractive Performance
A transaction is finite. It has a start and an end. It answers the question, “What can I get from you right now?”
In the outdoor industry, I observed “extractive performance” where connection becomes a commodity. Brands extracting value from athletes, athletes extracting validation from landscapes. When applied to business, this mindset creates a “Winner’s Curse.” If you negotiate a deal so aggressively that your partner leaves the table feeling defeated, you have not won; you have planted the seeds of future friction.
A transactional partner minimises input to maximise output. This creates a drag on the system. When a supplier feels squeezed, they cut corners on quality. When a distributor feels undervalued, they stop prioritising your product. The value of the ecosystem shrinks.
The Transaction vs. Partnership Continuum
We must visualise the shift from a transactional vendor relationship to a strategic alliance.
- Transactional (Level 1): Focus on Price. “I pay, you deliver.” High interchangeability.
- Cooperative (Level 2): Focus on Process. “We coordinate to be efficient.”
- Strategic Partnership (Level 3): Focus on Shared Value. “We innovate together to grow the pie.”
II. The Science of Synergy: Why Math Favors Collaboration
This principle is not just ethical; it is mathematical. It is supported by game theory and modern economic research.
1. The Iterated Prisoner’s Dilemma
In Game Theory, the “Prisoner’s Dilemma” suggests that two rational individuals might not cooperate, even if it appears that it is in their best interest to do so. However, Robert Axelrod’s evolution of cooperation shows that in an iterated game (where interactions are repeated over time), cooperation is the dominant strategy.
In business, we play an infinite game. A “transaction” treats the interaction as a single round (Defect/Cheat-to-win). A “partnership” recognises the infinite rounds ahead. By sacrificing short-term extraction for long-term trust, we optimise the total payout over time.
2. The Vested Methodology
The University of Tennessee’s “Vested” methodology introduces the concept of “What’s in it for We” (WIIFWe). Traditional deals are based on rigid SLAs (Service Level Agreements) that punish failure. Vested partnerships use Desired Outcome-based models where incentives are aligned.
According to McKinsey & Company (2019), successful partnerships are distinguished not by the contract, but by the governance of the relationship—driven by open, regular, and transparent communication. Companies that master this realize a “partnership premium,” often exceeding the value of the individual assets involved. (Source: McKinsey & Company, “Improving the Management of Complex Business Partnerships”, 2019)
III. Fab’s Law: The Mathematics of Generosity
One of the greatest barriers to partnership is the fear of dilution or receiving a smaller slice of the pie. This requires a fundamental shift in mindset, encapsulated in the rule:
“40% of €100M beats 50% of €0”
This is the equity restructuring mindset. Early-stage founders and negotiators often hold tight to ownership or margin, fearing that giving away too much creates vulnerability. In reality, clutching 100% of a stagnant asset is the ultimate vulnerability.
The “Pie-Growing” Mechanism: When you restructure a deal to be highly favorable to a partner (giving them “skin in the game”), you are not losing 10%; you are purchasing their highest level of commitment.
- Scenario A (Transactional): You pay a vendor a fixed fee. They do exactly what is asked, no more. If you fail, they still keep the fee.
- Scenario B (Partnership): You offer the partner equity or revenue share. If you fail, they lose. If you win, they win big. They now have an incentive to innovate, cut costs proactively, and open their own network to you.
IV. Actionable Implementation
How do we operationalize this philosophy? We move from abstract agreement to concrete structuring.
1. The Partnership Canvas
Before drafting a contract, use a visual tool to map the ecosystem. Do not just map what you get; map what you give.
The Canvas should answer:
- Value In: What assets (capital, IP, network, trust) does the partner bring?
- Value Out: What unique value do we provide to them (beyond money)?
- Friction Points: Where are our incentives misaligned?
- The Third Entity: What is the “new thing” created by the combination of A + B?
2. Equity-for-Infrastructure Models
This is a sophisticated application of “Partnerships Over Transactions.” In a traditional setup, a startup raises capital to pay for infrastructure (manufacturing, software development, logistics). This is capital-intensive and risky.
In a Partnership setup, you negotiate Equity-for-Infrastructure.
- Example: Instead of paying a software agency €400k to build your platform, you offer them €50k + 5% equity.
- Result: They assign their best engineers because the value of their 5% depends on the quality of the code. You reduce your capital requirements (CaPex) while deepening their commitment.
3. The “360-Degree Value Flow” Check
Before any partnership discussion, conduct a pre-mortem using the 360-degree method. Ask: If this deal succeeds wildly, is my partner happy?
If the answer is “No, they will feel underpaid,” you have a ticking time bomb. You must structure the deal so that upside volatility benefits both parties. This might look like tiered royalties, performance bonuses, or equity kickers.
Conclusion
The outdoor world teaches us that you cannot cheat the mountain. No amount of marketing or negotiation changes the weather or the incline. The only way to survive and thrive is to prepare, to respect the environment, and to trust your partner on the other end of the rope.
Business is no different. “Extractive performance” works for quarterly reports, but it fails for generational legacies. By prioritizing Partnerships Over Transactions, we move from a scarcity mindset to an abundance mindset. We accept the “risk” of generosity to secure the certainty of shared success.
The best deals don’t just transfer value. They generate it.