May 20th, 2020 | By: Wil Schroter
Fresh from graduating at the bottom of my class in high school, I packed my $800 orange Datsun and moved to some weird place I'd never heard of before called "Ohio" to go to college. Back then the Internet didn't exist as we now know it, so when you left the state (unless you called someone on their home line) — you no longer existed.
I went ghost for almost 4 years — no trips home, no holidays — nothing. I lost touch with most of my friends and family. But while they were wondering what prison I was incarcerated at, I was busy building one of the first Internet companies.
The company did well, and when I returned, I was a millionaire. Little did I know that from that point on none of my relationships would ever be the same. Here are the hard lessons I learned.
It's foolish to pretend people won't notice the money, or treat us differently. When Mark Cuban walks into a restaurant he gets treated differently. Not because he's so pleasant (he's not), but because everyone knows he has something they want.
That change will reflect in almost all of our relationships. It will hang like a weight on our shoulders for the rest of our lives, constantly wondering how much of it is the real "issue." We can pretend the dynamic doesn't exist, but that doesn't change how other people will feel.
When I first started making money, a good friend whose family was billionaire-wealthy told me something that stuck with me forever:
"Never tell people how much money you have. There will only be two outcomes — they will either use it to size you up, or try to find a way to extract it from you. Neither has any benefit."
That rule couldn't be more true. You know what happens when a young athlete signs a pro sports contract? Everyone knows how much money they have. So now anyone who wants some can always say, "You just made $10 million, loaning me $20k is nothing!" The last thing we want is people counting our money.
Nothing is more awkward than lending money to someone we know. The offer is always the same ("Can I borrow money?" vs. "I want some of your money") and most of the time even has the best intentions attached to it. But the reality is, lending money to people we care about creates an artificial strain on the relationship.
Best case we're in "collections mode" for some period of time extracting money our loved one probably doesn't have. Worst case we don't collect at all and the problem creates a whole new awful rift in the relationship. Welcome to the world’s most awful family get-togethers — forever.
If someone is in need, the only real option is just to give the money away. If they feel so strongly about paying it back — consider it a bonus. Just remember that the cost of lending money to people we care about isn't the cash, it's the relationship.
Creating wealth is consequently one of the hardest problems to "achieve" and the easiest problems to solve (we can always give it away). Yet the balance in between is where we will spend the rest of our lives trying to equalize. It's way harder than most people realize, but having been on both sides of wealth, I'll take this one.
How Much Should I Invest in My Startup? We often wonder whether every dollar of our personal savings should be going toward our startup, or toward our safety.
How Much is an Idea Alone Worth? There's some bizarre mythology that's been created in the startup realm that ideas themselves have an incredible monetary value. Spoiler alert: they don’t.
Is a $0 Salary a Badge of Honor? (podcast) The $0 salary: is it the cool and honorable thing to do, or is it completely and utterly ridiculous?
Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.