> What you don't know is that when you have a pile of money, you turn into a dragon. The goal becomes to sit on the pile of money and make sure it doesn't get smaller, and ideally grows on its own.
Is this universal?
If I had at least a several-million post-tax windfall, I think I'd buy a nice home and maybe a little beach house, put the rest in index funds, and spend my time being healthy, and building particular open source software and hardware.
(Building things without résumé keywords being a consideration; it's almost unimaginable, now.)
I did this / am doing this. It is indeed nice. However, depending on where you want to live and of course how you want to live, “several million post-tax” after buying 2 homes doesn’t necessarily cut it. I think this is what leads to the “dragon” mindset described.
Maths:
- 7MM post tax (let’s say)
- Less 2MM for 2 houses (rates being what they are you’ll likely not mortgage both properties, or even one; if you do your monthly burn is so much higher it comes out in the wash).
- 4% because you read about FIRE
- 200k pre-tax (you tax burden should be low, maybe 15%)
- 170k post tax for your family. If you live anywhere higher than average COL you might find yourself feeling a bit like a large reptile at times.
Yeah it’s nice but it’s way less than DINKs in NYC or SF might spend. Like I said it’s more about how and where you want to live. Also I would not want to live on the “edge” of affordable myself.
You’d never put your whole nut into treasuries unless you wanted to get killed by inflation. You’re looking at a 50 year retirement if you’re in your 30s.
“4%” (Trinity study style I mean) is the pop culture number that accommodates down markets and inflation over 50 years, to a first approximation.
Definitely not, though I was just demonstrating the kind of cashflow you can get from a (default) risk free bond.
The days of buying an index and selling 4%/year being your best strategy are past. At least until/when yields decline again.
If you're strategic and barbell your portfolio somewhat, you can generate around 10% with moderate risk (and this is 10% distributions/dividends, not including any capital gains).
The best outcome for retirees is to build a solid income portfolio and then hope that inflation really does subside and valuation multiples compress again, which would leave you with significant capital gains while portfolio income is preserved.
If inflation resurges or remains moderately high, capital gains will be more limited.
Agreed, this is certainly reasonable. 4% isn’t and shouldn’t be taken as particularly good, it just works and it’s what a lucky retiree might know about.
No, index funds are boring, there's very little to tinker with, and I'd have so much money it doesn't matter whether the market is down for years at a time.
It’s true but it’s still depressing if the market has a bad week and you know that you are down by 6 figures. It bounces back in the end but it’s a source of background stress.
Some people don't think about this, and aren't bothered by it. I'm one of them. If I had a million dollars in index funds, I would check on things maybe once a year.
On the other hand, it's exactly this attitude that's resulted in my spouse handling all of our finances. Maybe she wakes up at 4am fretting about the stock market; if so, she doesn't tell me about it.
Wouldn't those guys inspire some people to spend huge amounts of time researching, stock-picking companies you can understand with moats and good management teams, trying to buy when blood in the water, oddly favor junk food, etc.?
Jack Bogle would have you park it in a balance of broad index funds, and generally don't touch it, nor even think about it:
Yep, and IIRC Buffet suggested S&P for wife's investments. His research-heavy investment, and ideas around stock-picking, seems to be how he wants to spend his time.
So, if trying to steer people away from obsessing about growing/hoarding more money than they'll ever need... maybe just steer away from Buffet altogether, and towards Bogle.
(Bogleheads can also become a time-consuming activity, but more likely to instill the message of just stuffing it in total-market index funds, keep it boring, and don't think about it.)
Taleb talks about this specifically, his advice is to only check stocks occasionally that way you don't get the negative feedback from the down cycles.
His argument is that since stock generally goes up, if you're not constantly checking, when you DO check it will be higher than it was before and you'll feel positive about it.
Like any engineer, I know more than a few instant-millionaires.
The ones who were capable of being happy before money continue to be capable of being happy. They had sources of self-worth outside of money, social connections outside the office or hanging with their startup bros, and interests that are intrinsically satisfying even if they are not profitable.
You don't need all of the above, but you do need at least one. The ones who don't have any of the above will go to dark places.
Almost all of my problems can be immediately solved with large amounts of money. Those that cannot will certainly be made more bearable by the simple fact that I have a lot less to worry about, and that I will have more mental and emotional resources available to deal with them.
Money will _absolutely_ buy happiness. Whoever tells you otherwise is fooling you.
The same thing was said by other famous philosophers, such as A. Grande who publicly declared: "whoever said money can't solve your problems, must not have had enough money to solve them".
Yet there seem to be many other things playing a role in happiness. Besides the famous ones like love, I can cite Ikegai, Wanderlust, Ubuntu, Hygge, Wabi-Sabi (...), and it may be foolish to concentrate on just one of them.
> Money can alleviate hardship and stress, but happiness is more than absence of sadness, hardship, or stress.
Indeed: happiness seems to require a certain degree of introspection to realize other things, such as social status or Ikegai, are needed too - hence the (also) famous corollary "Ain't got enough money to pay me respect; Ain't no budget when I'm on the set; If I like it, then that's what I get, yeah"
I think there's a difference between being sad/unhappy, and having a problem which causes unhappiness.
Other than mental health issues, 99% of the problems that might cause unhappiness can be solved with money (though money not be the only factor).
Problem: Your mother requires an expensive medical treatment to prevent her from dying.
Solution: $$$
Your mother being dead may cause sadness, but that's not from a problem because there is no solution to someone being dead. That type of sadness is a normal, human emotion. It's entirely different to feel sad because of unchangeable realities than because you don't have enough money to fix the thing that's making you sad.
Enough money can buy the health (up to a point) of yourself, your family, your friends, and even your acquaintances. It can give you the breathing room to develop meaningful connections, to go to therapy, to exercise.
You might not be happy with money, but it has the potential to solve all the problems that affect you directly, and affect everyone you know directly.
How many million are we talking about? Because if you cash out for 4 million, 2 million of that is a decent new house in a major city, and not some water front property, but a cookie cutter above average new build. Now you have 2 million left, which, to be honest, if you are just living off of index fund earnings, isn't all that much. Figure 7% growth per year, and you need to set aside 3% of that to grow the fund, you are stuck with 80k a year left to live off of, in a major city, and this is all ignoring taxes.
10 million in the bank and you can start to "be secure".
Though it all depends on what QoL you want in retirement. I know a guy who retired early and happily spends 70% of his time playing video games. He avoids bougie foods and goes on a couple of nice trips every year.
Why do you need substantially more than 80k to live if your house is paid down in cash? Earning 200k is usually about spending half of your net income on mortgages etc.
Not that 80k is the lifestyle of a king, but it is plenty to get by with if all you are buying is insurance, food and entertainment.
We are talking early retirement here, so presumably young enough to still have a family.
Daycare in my area is ~2400 a month (not the super fancy daycares either, they are over 3k a month). If you want to fully fund a 529 college fund, that is 30k a year for 15 years[1].
So right off the bat we have 50k a year in expenses for having a single kid, not counting feeding them and other activities. If you choose public school, then that number drops after the kid is 5, but if you want a private school that is 15k-35k a year.
tl;dr 2 million in the bank isn't enough to raise a single kid w/o supplementary income.
If you retire early you'll have to pay for your own health insurance, a Platinum plan is ~700 a month, not counting any other expenses that you have to pay. 7k a year right there.
Cars cost $ to purchase and maintain. If you retire in Manhattan you can get away with not having a car, maybe Boston if you are lucky. Most other US cities require a car and that is going to average around 10k a year, assuming you have a mid-range car and that somehow you don't need to buy a new car during your retirement.
If all you do is shop at Costco (perfectly doable!) you'll be able to keep food costs down, although you'll have to spend the time and money driving to a Costco.
Outside of Costco, I'm paying around $200-$300 a week for groceries for 3 people. I found this lovely quote
> As far as specific food items go, a dozen eggs and a pound of apples in Seattle costs $3.54 and $2.71, respectively.
Which, while written in August of 2023, is already horribly out of date. (For whatever reason eggs got super expensive recently...)
Figure 1k a month for food, if you never go out to eat, ever. Also no drinking alcohol of any type, that'll blow the budget.
So we are up to 29K a year in expenses so far, just eating and driving around.
No gym membership, no sports or hobbies, no vacations. No streaming services, no cable TV, no internet, no utilities, etc.
Figure another 1k a month for those things and you are now spending 41k a year.
Assuming no kids and a paid off house, 80k is livable, but it'll be somewhat bare bones for a person who "retired with millions in the bank".
Which is kind of messed up, when I graduated college 80k was a really good lifestyle, but inflation did its thing, and so did the rising CoL in Seattle.
[1] The absurd price of college is a huge expense for parents who don't want their kids to be stuck with lots of debt. Having to pony up 30k a year is an obscene necessity driven by the horrid cost of a college degree in America.
Although IMHO daycare has plenty of benefits, and I actually do know of people who send their kids to 1/2 day daycare just for the educational benefits and socialization, so that is still 1k a month or so.
I've also noticed that the stay at home parents tend to enroll their kids in more activities, the cost of which quickly adds up.
Being with a toddler 24/7 is a ton of mental work, especially in modern western societies where we don't have extended support networks of family and friends.
Because that is the estimated cost of college in 18 years. :(
Over the last couple of decades, tuition has gone up 2x inflation, which means figure 6-7% increase in college costs per year. That sadly adds up to around half a million.
If NYC and SF are the only cities you consider “major” then sure. Just speaking from my own experience, for less than 1M you can get a lovely home in a nice neighborhood in Dallas (actually in the city).
It's easily into the 'diminishing returns' category in terms of lifestyle.
You can buy a lovely house, support a family, 80k is still a full salary for most people and will certainly support 'standard day-to-day' living, and if you want a little more money for your holiday in the Caribbean you can always take on some cushy exec/advisory work a couple of days a week.
> It's easily into the 'diminishing returns' category in terms of lifestyle.
It is, but a burger and fries and Five Guys cost me $20 yesterday, and that isn't exactly living it up.
The nice pizza places around me charge nearly $30 for a Pizza.
tl;dr shit is expensive and it is really easy to get excited with an Uber order and realize dinner from an Indian takeout place is going to cost $120. (I've pretty much give up on Uber and I just go pick up the food now, saves a good $20-$30, and some restaurants give sizable discounts for NOT ordering through a food delivery app!)
To me fast food in general is slumming it. I don’t care the place, I can produce similar if not better food at home for a fraction of the price. And I‘d much rather go out to a restaurant with my wife and actually enjoy myself with the atmosphere, the staff, and the food rather than go get some fast food that makes me feel horrid the rest of the day, let alone picking up restaurant food to eat at home where I‘m charged for everything I just mentioned that I don’t get to enjoy.
Having an occasional Indian takeout isn't living it up, but having $120 Indian takeout every night and spending $43,800 a year on dinner is.
We will all have different definitions of living it up, but I would say you can live a good food lifestyle if you can afford HelloFresh/BlueApron or high quality ingredients for cooking and go out 1-2 times a week.
I did this. I cashed out in my 20s, bought a $2m home in the middle of nowhere (that goes a long way out here), and live out my days in my workshop surrounded by singing birds, bees, wildlife, trees and gardens, with views across lakes and plains.
And some cosmopolitan wants to tell me, as they cram another million people into gridlocked high-rises in their smoggy grey hellhole, that we in the country are bad for the environment? Or that the soulless crowds you have to navigate through every morning and evening are friendlier than the neighbours and strangers who wave and chat everywhere I go?
If you're able, get out of the cities. Especially if you have children. You have no idea what you're missing.
> as they cram another million people into gridlocked high-rises in their smoggy grey hellhole, that we in the country are bad for the environment?
Uh yes, if you shove a million people out in the middle of nowhere, you have to cut down all the nature, remove the wetlands, pave a bunch of really wide roads, and now all of a sudden your paradise is a bland soulless sub-urban hellscape that is no longer environmentally friendly.
As for gridlocked, I can walk to multiple bakeries, grocery stores, and parks. The vast majority of my driving is to places that are less than 15 minutes away.
My rural friends talk about taking a quick trip that's only 90 minutes away. 90 minutes there 90 minutes back, shit, that's 2.5hrs extra spent driving compared to my 30 minute round trip commutes. If I go over the last 5 or 6 months I haven't lost a total of 2.5hrs to gridlock.
> Or that the soulless crowds you have to navigate through every morning and evening are friendlier than the neighbours and strangers who wave and chat everywhere I go?
Why do you think people in the city are soulless? Cities are bastion of art and creativity.
I say high to my neighbors all the time, we get together for drinks and we swap baked goods. This is made all the easier by how close we are together.
Indeed, once I moved into the city, meeting people became easier, and the people around me are friendlier. (And I'm in Seattle, literally the worst city for meeting people in!)
If anyone proposed housing a million migrants here, we'd sooner build gallows for the genius with that idea than to break ground on high density housing. It's a wildly controversial idea, but you could just stop letting so many people into your city...
Cruising through the countryside at top speed to a larger town with the windows down and the radio up for an hour on the rare occasion I need something urgently is a pleasure compared to sitting in bumper-to-bumper traffic to and from work, or crammed into a train with everything around me being suspiciously sticky and slightly smelly twice per day. We have what we need. You'd be surprised how little you miss the overwhelming number of choices and conveniences you have in the city. Anyway, I'm not that remote - I do most of my shopping online so everything is delivered to the door (albeit a day or two later than for you).
It's the look in their eye, or their nature and priorities implicit in their choices. Cities are utterly bereft of soul, spirit, meaning, purpose, culture, etc. Whatever they do have in these respects seems to me like a cynical parody of their true form. They will convene a meeting for consultants to identify an urban area in need of beautification, commission an agendered hippie to plonk some monstrous perverted multicolour sculpture there for millions of dollars and boast about it like this isn't an insult to everything pure, and decent, and good in this world.
The baked goods trading sounds really wholesome, I'm genuinely glad you have that.
Still, there's a good reason city-folk come out here for rest and relaxation while I dread going into the big smoke and get the hell out as soon as I'm done doing what I need to do.
What's interesting to me in so many of these discussions is how the core issue turns out to be the commute, more than any other factor. Here we see this happen in a conversation about pros and cons of city living. We also see it in WFH discussions: many staunch WFH proponents focus on doing away with their miserable commute.
All of this is kinda foreign to me, because I've never had a "bad" commute. Right now I'm 14 minutes from work one-way, no traffic in my direction.
This is rambly, and I think you're both making a solid points about something that is fundamentally subjective. So I'll just say that I feel sorry for all of you guys that are hating life during your commute.
Funny thing is I live so much closer to friends in a city than I did in my rural upbringing. I can walk to at least half a dozen friend's places inside 10 minutes right now - in my rural hometown, it was a 20 minute walk to the nearest, and anyone else needed a car.
> If anyone proposed housing a million migrants here,
I never said migrants, I was talking about what happens if a million city dwellers take your advice and decide to move to the country. It'd be an environmental nightmare!
> compared to sitting in bumper-to-bumper traffic to and from work
Again, I rarely have bumper to bumper traffic, when I do, it is for a handful of minutes.
> You'd be surprised how little you miss the overwhelming number of choices and conveniences you have in the city.
In a given week, all less than a 15 minute drive:
Gym class with my son
Swimming classes with my son
BJJ classes
Weekly library visit
Weekly shopping trips with my son
Weekend choices are the Zoo (15 minutes away) Aquarium (an entire 20 minutes away!), or parks (plenty to choose from in walking distance). Heck there is now an indoor ice skating rink (less than 20 minutes away).
All of these are things I do every week. (Except for ice skating, I'd fall on my arse).
Of course there is plenty more. Just because I'm in a city doesn't mean I'm stuck in the city, in under a 2 hours drive I can reach the following:
1. Multiple ski resorts
2. An almost uncountable number of incredible camp sites
3. Countless small ocean side towns
4. Multiple amazing mountain day hikes
A bit further away there is an actual honest to goodness rain forest (3.5hrs) or I can go play on an active volcano (3.5hrs)
Lake Washington is just a handful miles away, everything from renting a boat for the day to seasonal hydroplane races to lake side picnics.
If I'm bored, I can go down to a local comedy club, hit up a poetry reading, multiple books clubs, or just go see a live concert. Seattle of course also has a huge sports scene, not my style, but between Football, Soccer, Baseball, and Ice Hockey, people who do like sports are pretty well entertained.
I was not expecting any of this when I moved to the city. I did not realize how pleasant live is here. I'm not living in Manhattan or London. The city isn't smog covered. If you ever fly into Seattle you can look out the airplane window and see how green everything is.
> Cities are utterly bereft of soul, spirit, meaning, purpose, culture, etc.
I mean, grunge, punk, and even multiple sub-genres of EDM, all sprung from cities. If you want to be incredibly elitist, plenty of classical music (and art, and paintings!) came from urban areas as well.
Saying cities don't have purpose or spirit is silly. I've travelled to multiple world cities, and each one has a completely different spirit. You may not like the spirit of a given city, and that is OK, but saying they don't have spirit isn't being honest. Given the site we are on, we can likely agree that the spirit of the Bay Area is technology at any cost, hustling and selling your ideas and trying to go big or die trying. Someone can say that spirit sucks, but no one can deny that it exists!
> commission an agendered hippie to plonk some monstrous perverted multicolour sculpture there for millions of dollars and boast about it like this isn't an insult to everything pure, and decent, and good in this world.
So ignore the civic stuff? The problem with public art pieces is that they have to not offend anyone, so after every interest group in the world has filed their objections, the artwork often ends up being super boring.
Meanwhile, plenty of cities have entire blocks set aside for street artists to make incredible murals. Local artists have open workshop days where you can come in and talk to them about what they are making. Guerrilla art exists. One time some friends and I stumbled across a tiny gallery hidden in an unlabeled building that was open at 10pm! Just, walking around, boom, art gallery.
> while I dread going into the big smoke and get the hell out as soon as I'm done doing what I need to do.
If you are going to the downtown part of a city, yeah, it is stressful and it sucks. Likewise, if I go into a rural area and head to a rendering plant, or a tire factory, that also sucks, but it wouldn't be fair for me to highlight the worst part of rural living with the best part of rural living!
Or the time I was staying in a NYC AirBnB and I woke up one morning to a food festival outside my door.
The amazing and talented buskers in Mexico City.
The great street food that is available almost everyplace except in American cities (ugh).
And to be with all of this, I'm not saying rural living has no advantages. As a child I used to spend every summer down with family by the Russian River in California, and even to this day I have friends in rural places that I go to visit, dropping in for a day or sometimes a week.
I totally understand what the nice parts of that are, but I didn't understand the nice parts of city living until I moved from suburbia into a city.
Oh I didn't say it was unpleasant. It's bad for the environment. High CO2 cost, requires interfering with the local ecosystem, poor land use etc. I don't see why this upsets people so much. It's just an honest accounting of the costs. Living inside a US National Park would be both lovely and bad for it.
This sort of trade-off between pleasantness and damage is common. For instance, I like traveling the world and in first class you've got half the seat-density of economy so the environmental cost is massive. But it's really nice and there's no way I'd prefer not to do it. It's just also bad for the environment.
My wife and I just returned from a two-week long vacation in Patagonia. It's a stunning place and you'll be surrounded by unbelievable natural beauty. But the same lovely glaciers I mourned the melting of, I contributed to the melting of by flying there. Both things are true.
Some people, like me, prefer the stimulation of cities to the quietness of the countryside. And city dwellers have a lower environmental footprint than rural people (in the West), because of efficiency in transport, recycling/treatment and land use. It's not a mystery, you can find dozens of sources in a second work your favourite search engine.
Exactly. Living comfortably in the middle of nowhere is a luxury and that's why all the rich do it. Everybody else needs to be close to the rat race otherwise they can't afford to eat.
Just want to say, appreciate the discussion about the environment. Never actually thought about what is better towns (rural areas) vs cities.
And I am sure the answer is not as simple as it sounds. But my guess, there are too many people in the world, and living in the house in that sense is a privilege.
Eh, I grew up in one of the most rural parts of the UK. It's overrated. The scenary is nice and it's a safe, quiet place to grow up, but if you had ambitions beyond local teacher it's a maddening place. And it's the filtering effect - the kind of people I get along with don't move to random farming villages in the middle of nowhere, so while I had friends, I never had that uber-close "I get you" thing. Since moving to London, it's happened a lot more.
I put a lot of effort to get out of my rural farming hometown and into a city, why would I give that up? Especially since I could buy a place on the outskirts right next to a tube station and a nature reserve.
Maybe all your friends are there. I don't know why I'd want to be in the middle of nowhere with no socialization especially with no external force like a job motivating that I do so, as in retirement.
Young people. I live in a semi-rural area in the UK and it's starting to feel like the last stop off point before the crematorium. The consensus view seems to be to move further out as you age but I'm starting to wonder if the opposite would be better.
I'd put it all in index funds, but I'm still fairly young and my dream has always been to be able to max out my kids' Roth IRAs from birth somehow. (I'm still working on the "how do you get a baby to have taxable income" angle.)
The normal path is to establish a trust fund, into which you and your spouse contribute the maximum annual exclusion amount. By the time they're grown up, they've got a tidy sum. And when they get married, you and your spouse can give the maximum gift amount to each them and their spouse every year.
Not a saint, just a former tax lawyer. There are more elaborate strategies that allow people to move larger sums, particularly if they have stock in pre-IPO companies. If you find yourself in need of that kind of advice, find a 'private client' lawyer to help you understand and navigate the complex rules.
You tell me, we live in the same world. Humans universally have serious issues with greed, selfishness, and all manner of other ugly things. We are not basically good, we are basically evil.
A twisted man has a sort of twisted Midas touch, so that even if he has natural abilities in managing wealth things become tainted. He may even realize he's a dragon (speaking as a fellow twisted man). C.S. Lewis had some things to say about people who suddenly realize they are dragons in "The Voyage of the Dawn Treader."
It massively depends on the person and stage of life. If you have kids whom you are planning to send to college, figure that's roughly $350k per kid. If your nest egg can take that hit and still spin off enough cash for you to comfortably live off of, then perhaps your plan would work. And if you don't have kids (or they're past college), then that definitely makes sense.
Sadly, yes. The school I went to was about $35k/yr back in the early aughts, and is now over $81k. It is not located in an expensive area, and this includes a meal plan. If your kid is in Boston or NYC, figure they're going to spend thousands more on food and going out. Not everyone does, but if daddy's a retired multimillionaire, they'll probably want to...sigh.
I don't know why people are so negative in the comments or overthinking what the author wanted to say, when it's pretty clear. Running the company is what made him tick, made him feel alive, and ultimately made him happy. He's cashed out, but sitting around thumb twiddling and maintaining the pile of cash might be an ok life, might make some people happy, but it's not making him happy. There's nothing wrong with any of that. The advice you can get from that is, figure out what it is that makes you enjoy life. If it's feeling secure because you have a pile of cash, then you will do the same as him, but be satisfied with the decision.
Yet Person A, who just sold his startup and is sitting on $10M is objectively better off than Person B, who is making $200K a year at a normal job in tech. All other intangible things being equal, Person A's wealth will earn him $2-400K a year just sitting there doing nothing, giving him the choice to go get a normal job if desired, or not, or do anything he wants to do for fun, or not. That startup sale bought him the option to do whatever "makes him tick, makes him feel alive, and ultimately makes him happy" Whereas Person B has no option--if he wants to keep his $200K lifestyle he needs to keep grinding.
You assume you can buy happiness. Person A is not objectively better off, they're financially better off. Happiness isn't determined solely by bank balance.
If what made him tick was a sense of purpose, of seeing the company he founded continue to grow there aren't many options apart from go back to the company, found a new one, or ??? Maybe option 2 is too much work, and without the carrot of a big payoff he'd lack the drive.
You'd happily trade places because you believe money buys happiness. This person has learnt it does not.
Money buys you the option to opt out of the things that don't bring you happiness and to go do whatever it is that does bring you happiness. For this guy, maybe it's "do another startup." Great! With $10M in the bank, he can just go do that! For me, I could quit my job (which does not bring me happiness) and maybe build a sailboat... or travel... or raise a family... Or whatever makes me happy. That's the option that money buys.
The phrase "Mo money, mo problems" didn't come out nowhere. Sure, you can leverage the money to do things that could bring you happiness but you have no idea the long term effects (potentially subliminal) of having more.
> For this guy, maybe it's "do another startup." Great! With $10M in the bank, he can just go do that!
He touches on this in the article, he was interested in starting new projects but they went nowhere. So I am reading this as "no, he cannot just go do that", he is worried he only was able to do it the one time.
Or maybe it's none of those things and when you're busy working at least you have the dream that one day it'll be over and you can somehow be happy. If you actually live the dream you might actually find what you thought would make you happy doesn't cut it, and then you don't even have the dream.
> But I am also without a driving force. It gives me a new appreciation for the athletes or musician who un-retires.
I have a friend who phrased that very well: the problem is "you're waiting for death" because a life without a "driving force" is just waiting for death, as it will eventually do its part.
> I am happy. My life is amazing in terms of health, fitness, diet, family life, where I live, travel etc.
Waiting can be happy, but it's still waiting. Also, how things are during the wait will change: fitness and health aren't perfect forever, likewise family members aren't immortals
No judgement value is implied: that's what retirees do, and what most people aspire to do, so it shouldn't be so bad.
Yet I believe we as human beings need things to do.
I don't think it does need an update, it came across quite clearly in the article that you were pretty happy with life in general but felt that selling the company took away a sense of purpose/identity that you hadn't expected.
Was a really interesting read and gave me a lot to think about as a (hopefully) future founder!
I apologize, I never wanted to imply somebody I don't know is unhappy, guess it kind of came off wrong. Wish you anyway all the best and thanks for a very clear blog post.
When I see or hear advice, I try to understand what the person's context was. Here, I feel like I don't know enough about the founder's situation to know whether any of this would be relevant to me. For example, does he have a family? How old is he? Roughly how much money did he sell for? How much profit was the business generating beforehand, and what was its trajectory?
Without knowing things like this, I can't really tell if his advice would be relevant at all for me.
He gives reasons why it didn’t work for him. He gives 10 pillars of his personality, 4 of these pillars were standing due to his company ownership. You don’t need to have the exact same pillars, but you need to project it upon your own life and see how selling the company would effect your personality. Then consider it for yourself if it’s worth it.
This seems a little 'grass is greener' to me. Not sure if this is glib, but:
You can build the business again from scratch (ok, maybe you have a non compete for a while...)
But you can't magic the $ you just got, out of thin air.
So he's been paid for the hard work he has done, and now if he so chooses he can do the same again, or different.
So seems like Boris is standing on the greener grass right now, to me at least. I think the post-sale reflection is naturally something that will make people question their decisions... It may be possible for Boris to Stoically rearrange his view here. There's definitely a bright shiny alternative to regret/second-guessing.
It looks like Boris created, nurtured and sold something (to safe, loving hands), with nice closure. That to me sounds like something to be very proud of, and something that you can cherish and reflect back on with positive (not bitter-sweet) emotion, and keep in contact with the friends made along the way.
And the freedom and opportunities ahead are also something that might be harnessable? That power... You can generate a 'bubbly school-holidays' emotion from something like that. Apprehension + Excitement + Unknowing + Freedom?... I don't know, 'bubbly school holiday feeling' is what I always come back to in order to describe it.
For some people, they don't have the same drive once they've done it once and were successful. I've got friends who were incredible operators for their first N companies, because they were hungry, but then after a big cashout they started to suck at their N+1st attempts. They make mistakes like being unwilling to start small, feeling like they should be Respected(TM) and that getting in the way of their relationships with potential partners, not being frugal with runway, being too precious about repeating exactly what worked before, etc. I've also seen some completely unable to ever fall in love with an idea the way they did pre-exit, and just bounce around doing projects forever without ever committing to anything.
On the other hand some people get better, much better, on their later tries. So YMMV, probably depending on your personality.
And plus, what's the point? Most people work for money. But that's satisfying our needs. If you already have a cash pile though, you actually need to find a way of making a difference again to keep getting out of bed. I think that's much harder. Some people never find their passion.
I am kind of, have the same flow of thoughts. I have never worked on the project for more than 4 years. Now I have a product that I have built and live on, for the last 7 years. I don't have that much passion about this product anymore. But at the same time it allows me right now to work only 4 hours a week on average, and spend 2 months a year to build new versions of the product. I am making good Google Principal Software Total compensation.
Selling a company means I can probably get 4-6x of my annual income. But I am afraid to become that dragon on the pile of money. Draining money will be terrifying for me. And I am not good with managing money.
At the same time, I am afraid that company can slowly disappear, customers choose alternatives. And maybe 4-6 years that is how much I can get from it. But at the same time I will have opportunity to fix things, adjust my life based on the income.
All good points here. For those reading just the title, the article asks to critically examine what values you hold and whether selling is compatible with those values. For me, I see selling as just another step to growing the hoard, as you state in the article, but I don't think it becomes draconic in practice.
The key in my opinion and experience is making and selling micro projects, not banking on any one taking off. That way, you can have cash flow and a hoard. Throw the hoard into VTI and let it grow while living off the cash flow (and/or reinvesting it into the business), until the investments become enough to live off of entirely, ie the 4% rule. Pieter Levels or Daniel Vassallo are good examples of this.
Just keep trying, don't be saddened by another startup failure, at least you already have one sold which is a lot more than most founders can say.
I'm also in NYC, let me know if you want to chat, as you stated at the end of the post.
I learned that I used it incorrectly in that instance. Why are you so insistent on a simple grammatical mistake? I don't understand why you care whether someone learned or didn't learn.
Sometimes I feel like people who sell their startup for a modest sum (hundreds of thousands to low millions) get put in a box of 'not ambitious enough' and this makes it hard to get new opportunities later as investors are seemingly all looking for unicorn founders who want to become billionaires and then achieve world domination...
I feel like any signal that you are a rational human being with well-defined, limited needs is going to be a huge turn off for investors. I don't think it's rational at all but I guess that's what decades of low interest rates does to them.
You just have to frame it accordingly. If you go to a VC and boast about an exit of hundreds of thousands as if it's be a success to the., that may give a VC pause, because it's be a failure to them. Failure doesn't bother VCs so much as failure to understand that an exit that size isn't what success looks like to them. It's fine to say it was success to you at that point.
But if that is what you want this time too, a VC is wrong for you. If you want a VC investment, you need them to understand you want a big exit this time.
I used to work at a VC, and one of the most frequent reasons we didn't take pitches forward was founders who presented a great pitch that fit what you described.
We rejected them because while it'd be entirely rational for them to want to take an exit that'd make them happy, those goals are fundamentally incompatible with a VC funds risk profile.
Consider that most VC funds invest in high risk startups, and so most of their investments fail. For that reason you need a portion of the survivors to give massive returns. Then it's irrational to cap your potential upside return from the companies that become successful enough to have a shot at providing those returns.
This isn't just greed, but survival: most VCs fail to raise a second fund because they either fail to even return the capital or return too low returns to be worth it. You set yourself up for failure if you put your money in a high risk startups where the founder promises you that your best possible return will be, say, 5x.
And so if you as a founder want "well defined, limited", VC capital isn't for you, and that's fine. There are other investors.
So they choose to invest in high risk scenarios and as a result it becomes a matter of survival, and you're claiming that greed isn't involved? Is that not the reason to invest in high risk as opposed to low risk?
The bar for success is much lower. VCs want a big multiple, so they want you to take risks. If the risks pay off, everyone wins big. But when you're bootstrapping, it can be a 'win' to make a couple hundred grand a year, working part-time. Most people consider that to be a pretty good gig.
The odds of succeeding with VC is even tinier. It’s just that the media hype up the lottery winners so VC continues to have companies wanting their money.
But they already did it once, which massively raises the odds the next time around, which might not be so for VC, whose odds anyway is still tinier than bootstrapping, because you can just make enough to live off of and call that successful.
Part of the reason VC's are more comfortable investing in founders who have had exits already is they know the founder will be less tempted to take a $5M acquisition offer because he already has a decent amount of cash. Founders who have already had one liquidity event are more aligned with the VC's goals: swing for the fences — don't play it safe to make sure you can pay off your house.
Power is a very fundamental motivation, maybe the most fundamental one[1], and I think a lot of people regret selling their companies because they think they want things you're supposed to want, like comfort and leisure, when they really want power.
Phrasing it as power makes it sound negative. As the other comment says, it could be a sense of purpose, or having respect (which is power but in its human form), or just keeping busy.
If I were a millionaire, I know I’d keep my work just to be busy. I know it because I’m a millionaire. And I certainly don’t want all those negative thoughts.
Great post! I've gone through a similar experience after selling a business a few years ago. I especially liked your "offense vs defense" point on cash flows. I'd never thought of it that way but its a very apt description of the change in mindset. All that said, I can't say that I regret the decision. Best of luck
Out of curiosity, how do you now view the concept of success in entrepreneurship, given your experience? Do you think there's a way for founders to prepare themselves emotionally and mentally for the possibility of selling their business?
The lesson here is to never take VC money or any other investor money if you can avoid it. You lose your dream and become the slave to someone else's ideas the moment you sell.
Why does ever seller of a business become an angel investor? And the follow up, I wonder how business seller angels perform compared to your normal angel fund...
One cause is the tax benefits. If you're selling qualified small business stock, you can defer gains by rolling them over into new qualified small business investments, within a certain time window. That's a pretty big tax preference, and it means that even if you don't do an amazing job of angel investing, you might be better off than taking the money, paying tax on the gains, and investing it in real estate or the stock market.
Ah I guess that is true. Keep some of the fun parts without the bad parts. If you are just throwing out 10-100k angel rounds, depending on how much you sold for it's pretty small.
Wonder if you could do the same thing just offering to be an advisor or on the board for startups without the check?
I never understood selling of the company unless you've been working in it for 20 years. Like isn't the idea to be your own boss?
And why sell it, if you don't have the next idea for the next business up and running? I don't know any tech startup entrepreneurs, but I do have relatives who started their own businesses but always had backup plans and diversity.
It all depends on the multiple. If someone is giving you 3 years of profit up-front, that's probably not worth it. If they're giving you 10 years of profit, that could make sense. You avoid having to work for that period of time, and you avoid the risk that something could go wrong (with the company, the economy, the sector) during that time. It also allows you to diversify your assets.
Really? IMO 3x profit is a terrible multiplier. Depending on the business, 3x revenue could be worth it, but that's a completely different calculation. Of course, it also depends on how much work you're doing to sustain that profit. If you're working full-time to make this happen, 3x profit is a more attractive proposition than if you're just cashing the checks.
Depends on the business. I've co-founded businesses we knew going in was just for the hope of an exit as big as possible as fast as possible, and that we knew we'd walk away from whether we failed or succeeded, and I've founded businesses I'd have liked to have kept if they got to a level I was happy with but sold or left because it became clear the potential wasn't there, or circumstances changed.
It's not at all a given that your goal was/is to be your own boss. Or at least not necessarily in any given company.
The article covers this, one can just get tired of it all and want to divest. It's also better to be diverse in your investments rather than putting all your eggs in one basket and hoping it doesn't fail after 20 years, which can definitely happen. Sell, live off the money you made from selling, and take a break until you get your next few ideas.
and I never understood people that want a forever company. Never get married to a position.
The shares I purchase in my brokerage account and the shares I make up on a sheet of paper are treated the same to me.
Why make your identity around running a company. Sell the company and live life. My quickest creation and flip was 3 months and went to party for the next 12. Why not do that
Maybe it's one of those things that is easy to explain but hard to understand if you don't have experiential context.
Some people find activities and experiences fulfilling in a non fungible way. That makes them feel alive, more themselves, and more fulfilled than without them.
Loving ones job is a powerful source of happiness that's hard to replace, once you've had a taste of it. I can make you smile when you get up in the morning excited to start the day, and then you have the pleasure of doing it as long as you can. It can be a way to live life, not an alternative to it
> Maybe it's one of those things that is easy to explain but hard to understand if you don't have experiential context.
Maybe use the word "Ikigai"?
It seems to carries the concept very well across cultures. It's doing what you love, what you are good at, what the world needs, and what you can get paid for!
> because it can just be more opportunities for change/growth/discovery
That was basically going to be my comment, I'm fulfilled by beating the game. Resource acquisition is a Massive Multiplayer game.
I'm fulfilled by the industries I enter to make revenue or sell a company, I'm never doing something grueling and dead end, I feel good about successfully avoiding being in that kind of situation.
I'm fulfilled by enjoying the spoils of success. I'm fulfilled by extending the length of time I can enjoy them. I'm fulfilled by parlaying that into passive income or a nice portfolio, or investing in other high growth assets at my risk or peril.
But making a forever company? Its never appealed to me, and when I look at other's it doesn't make sense to me. There's always something unobjective about it, burdening their family with a reputation to always defend. I dated a woman that grew up on a decently industrial farm, she was interested in Fortune 500 corporate work and excelled at that but having to prove she wasn't an unsophisticated farmer was a common point for her. I asked the father why farming, he said "feeding the people is so fulfilling", it wasn't until I found the grandfather that I got an objective answer. The grandfather was the one with the portfolio of companies and he set one child into the farming one, and another child into the entertainment ones - golf courses specifically. The grandfather was the person I could relate to. Just an example of things I see a lot. Don't get married to a position, don't burden your family with your obsessions.
I love your reply, as it puts the finger on what I felt was missing from this simple answer that was otherwise very compelling!
Like there's exploration and exploitation, ikegai is the #2, but something like wanderlust is the #1: the "change/growth/discovery", or what someone else has called "the happy feeling of anticipation of unknowns that comes from a schooltrip/school vacation bus ride": meeting for the first time people who'll become new friends, seeing new things, and not knowing what may happen, yet having no fear of bad outcomes.
It's not exactly wanderlust or serendipity, but something close to that (I wonder if there's a word for it?) mixing adventure/curiosity/freedom and happiness/excitement/inspiration.
Having too much ikegai may prevent it, as it may be become a burden - like you explained about the burden of having to always defend a reputation.
You may need both this and ikegai, like you need exploration and exploitation - a ying and a yang.
> I'm fulfilled by beating the game. Resource acquisition is a Massive Multiplayer game.
Success (in creating then selling a company etc) seems to be just a basic resource acquisition - but then, what?
Getting fulfilled by beating the game may be like metagaming in board games: it may reduce the enjoyment of the game by putting too much focus on the exploitation part.
However, being your own lifestyle company makes it a game within the game: like doing speedruns, or trying to beat a game with each of the playable characters to see the alternative endings
That's the exploration: trying out new options to see if they lead to better outcomes in the future. Like research vs development: there needs to be risk taking before refinement.
but then what indeed, I think the world caters decently to those that have resources. I’ve dabbled in the socialite circuit, its spaced out across the year in a few select major cities, I could do it until I die in between various investing or hands on opportunities. You meet really interesting people that are also dabbling in that lifestyle.
The Winklevoss twins heard about extremely high tech things early on while partying in Ibiza, for example. So have I
Thanks for the word Ikigai. I might actually remember it because it is related to the Japanese word Ikiru, which is the verb to live. Ikiru is also the title of one of Akira Kurosawa's finest films [1], which deals with the life and death of a Tokyo bureaucrat, and more specifically his discovery of meaning and purpose in life. I cant recommend it enough. It is generally ranked in the top 100 films of all time, a personal favorite, and reliably moves me to tears every time I watch it.
The concept of Ikigai seems to be broader than the professional sphere, so it makes sense that some people may have Ikigai, but it is unrelated to their work, or their work is merely a necessity, to support their passion.
I personally believe happiness is a spectrum, so people may have some level of happiness without Ikigai, but it is not qualitatively or quantitatively the same as that with it.
I have personally found great satisfaction and joy in my work at times in my career, and not at other times. In my experience, alignment of work, your skills, and passion is a glorious experience.
Almost like a drug induced euphoria, it can be an eye opening experience, which you can't help but place other experiences into the context of. It makes sense that those who haven't experienced it dont know- how could they.
My professional work isnt currently aligned with my passion, which severly limits my feeling of ikigai, but getting back there is the goal and destination. After getting a taste of it, life without it is certainly lacking.
Is this universal?
If I had at least a several-million post-tax windfall, I think I'd buy a nice home and maybe a little beach house, put the rest in index funds, and spend my time being healthy, and building particular open source software and hardware.
(Building things without résumé keywords being a consideration; it's almost unimaginable, now.)