How Founders Blow Their Fortunes

Congratulations — you just sold your company! Time to sit back and see the decimal places on your bank account sprint to the right!

Now you've got the means to do whatever you want with your newfound wealth. You've worked so hard to get here — what could possibly go wrong?

Everything. Everything can go wrong. And for many Founders it really does.

Whenever a Founder I know has a wealth event, the first thing I do is get in front of them and give them a very specific speech. I've been giving this speech for over 30 years, and I'd like to share it with you today.

I've lovingly titled the speech "Congrats, now don't fuck it up!"

Never Tell Anyone How Much Money You Have

Early in my career a good friend of mine, whose father was a billionaire, gave me some invaluable advice about becoming wealthy. He said "Never tell anyone how much money you have. There are only two outcomes — either they will use it to judge you, or they'll try to take it from you — neither of which benefit you whatsoever."

I was 22 when I got that advice and frankly, I didn't understand it yet. So I did what most idiots do, and I told everyone how much money I had! And wouldn't you know it, everything my friend said came true. All of a sudden expectations got set on how people would interact with me. When the check came at dinner, everyone looked at me. When someone needed a "loan," they called me. Everyone "evaluated" me on my bank account.

I basically put up a sign that read "I have some money, please come take it." And that's exactly what people did. It's not about "hiding" wealth, it's about not promoting your bank account. The fewer people that are trying to extract those hard earned dollars, the greater the chance that you'll keep it!

All You Can do is Lose

The hardest part about this transition for many Founders is we often get more of a windfall of money all at once. In our minds, we're still playing offense, where we only win by making more. For the first time in our life (and depending on how much money we have) we have more to lose than we do to gain.

Think about that for a minute.

The marginal benefit we'll gain by risking what we have is tiny, but the cost of losing it all is massive. That means our behaviors have to completely change. Risk no longer solely brings reward, it has a true, irreplaceable cost.

We didn't get here by playing defense, but we won't likely stay here if we keep risking it all with offense. Playing to "not lose" doesn't feel sexy, but it keeps our cash in our account so that we can make calculated bets without going backward.

You Only Need to Win Once

The problem with gamblers like us is that we love to win. So the idea of not winning again like we just did is foreign to us. We start making up reasons why we need to bet it all again. We make up dumb shit like "I don't want anyone to think I'm a "one hit wonder" — I want to prove I can do it again!"

Except the whole point is that we don't have to — ever. We don't have to prove a damn thing, because our bank account just did that for us. That'd be like winning the Powerball lottery and using it all to buy more lottery tickets. The whole goal here was to win, and now that we've won, we don't need to keep doing it.

But... that's not how Founders are built. The irony is that the same people who are willing to risk it all and make outsized returns tend to be the same people who can't stand the thought of just sitting back and enjoying it. I'm absolutely one of those people, 9 startups later.

One Shot to Get it Wrong

The point to the speech is this — you get one shot at getting this wrong. I compare it to being at the blackjack table at a casino. You can keep winning indefinitely, but once you lose it all — it's gone. You don't get it back, and statistically, you never will again.

The speech is intended to strike a little fear in the Founders mind at a time when they are feeling the most invincible — which incidentally is when they are most vulnerable.

I want you to enjoy your hard-earned exit. I want to have it create all the rewards that I think Founders absolutely deserve. But I want to make sure every day that win keeps paying off.

You've worked this hard to get the trophy, work just as hard to keep it.

In Case You Missed It

What We "Lose" When We Sell Our Startup There’s a huge emotional toll on Founders when they sell their business — but is there any way to prepare to become an ‘exited’ Founder?

How to Establish Traction When you’re trying to convince the world that your idea has merit, the proof of your ability as an entrepreneur to be successful is in the traction you generate for your business. Here’s how to do it.

4 Easy (but powerful!) Startup Idea Validation Techniques When startups fail, it’s often because they built something that the market didn’t want. Don’t be like that. Validate your idea first.