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Wow, we're already at the end of the $10M FounderIV Indoc! Today we're gonna talk about personal wealth and how to build it consistently.
I was a 24-year-old early-stage entrepreneur building my first company (an eComm health supplement store) when another founder who had just sold his business for $100M+ advised me to "just focus on your business and the wealth will eventually come."
Prior to selling his company this guy had mortgaged his home to start his company, paid himself the bare minimum over the years, and didn't care much about making smart personal investment decisions along the way.
Did it work out for him?
Yes. But that doesn't mean it's the right strategy for you.
We often hear success stories and try to apply them to our own lives when it's almost always more effective to learn from failures. Why? Determining what created success by looking backward is very hard, especially when timing is such an important factor. It's much easier to understand why something failed than why something succeeded.
Important Note: It's absolutely true that building equity in your business is a great strategy. Unlike income, business equity is not taxed. Thus, you can take advantage of non-taxable, compounding growth year after year as long as your business continues to become more valuable.
Furthermore, business equity makes up ~⅓ of all non-financial assets in America according to the Financial Reserve. Most of the new rich today get rich through business ownership.
This is why I encourage virtually everyone I know who has any entrepreneurial drive to start their own business—it's an essential piece of any wealth-building strategy.
But we also have to look at the other side of the equation.
½ of businesses don't make it 5 years. 35% of companies that receive Series B funding—these are successful growth companies that have typically received 3-4 rounds of venture funding—eventually fail with the founders making nothing.
This isn't even considering all of the "successful" companies that exit where the founders make little to no money due to their preference stack (a lot of the stories you hear re: successful company exits out there aren't necessarily wins for the founding team, but they never advertise that).
This is why as both a founder and a professional investor, I always strongly encourage founders to create and nurture a personal wealth nest egg along the way. Such as:
💰 Pay Yourself First: This means subtracting your monthly salary from your cash position prior to paying non-essential business expenses. Otherwise, it becomes easy to "take no pay" (entrepreneurs brag about this but it's not meant to be a trophy—nobody cares) in favor of paying for stuff your business could actually do without.
📈 Distribute Quarterly Profits: Distribute yourself a % of profits every quarter and re-invest the rest into the business (the amount depends on stage). Perhaps this is only 10% to be held in a public equities account that can be tapped in the future if absolutely needed. The key is that it becomes a practice.
💸 Invest Savings Automatically: Automatically invest a % of your savings into an investment account that compounds over time, even if this amount is initially super small. The key, once again, is developing the process and seeing this investment account grow over time.
🏡 Leverage Success for Stability: Upon achieving some semblance of success, sell some of your stock in a secondary transaction to buy a home, create a meaningful stock/crypto portfolio, and no longer fear "if this business fails I am ruined" (which after the early days is not a good fear to have—it only stifles creativity, leadership, and innovation).
🤝 Invest in Other Founders: Investing in other founders, even with small checks. This means paying attention to what founders are doing around you and investing with those you know well who are special AND are building something special (this "access" you get to invest in others and diversify your "portfolio" is one of the best things about being in the founder ecosystem and has paid massive dividends to me over the years).
Because the fact is that you never know what's going to happen. And I'm living proof.
One of our businesses, SnackNation (which had raised a Series B round), grew to $30M in recurring annual revenue with a $100M valuation. Then the biz got absolutely crushed by the COVID pandemic—completely out of our control—washing $30M ARR and $100M of enterprise value down the drain. Ouch.
 Sh*t happens in business and in life. And it happens to everyone. And while you may never have a black swan event that crushes your business (I hope you don't), I want to make sure that you're well prepared and protected if you do. I'm certainly glad that I didn't have all of my eggs in one basket. While SnackNation getting crushed was akin to being roundhouse kicked to the face multiple times…it was financially survivable due to financial decisions I'd made along the way. I only wish I had made these decisions sooner! The sooner you begin—even with small amounts—the more financially secure you will become. And believe it or not, you can actually reach financial freedom without hitting it big with a nine-figure exit as an entrepreneur. You simply have to set up the right systems and protocols to ensure your non-business wealth is growing nicely year over year. In the FounderIV community, we're committed to helping founders create 1% businesses AND 1% lives. Personal wealth is a big part of this. As a part of out community, we explore many of our tried & true wealth-building tactics week-over-week so that you can become better financially educated while still focusing most of your time on building your biz. Topics include: 🛡️ Set Up an Optimal Tax & Retirement Structure: Learn how to prevent predators, maximize savings, and create significant leverage. (I know I wish I set up a Defined Benefits Plan and Backdoor Mega Roth sooner.) Want to skip the wait and learn about creating a Backdoor Mega Roth right now? Check out this thread I wrote laying it all out. 💼 Invest in Unique Asset Classes & Private Equity: Understand how to optimally invest in each asset class and gain unique access to private equity deals that can yield above-average returns. (You don't have to wait to invest in private equity, real estate, and crypto—you just need the access, education, and confidence to do so.) 📊 Design an Easy-to-Maintain Investment Portfolio: Create a portfolio that aligns with your financial goals and risk tolerance. (We bring in pros to help you design the right portfolio so you can achieve financial sophistication before your exit & retirement.) You're at least partially (if not primarily) in business to make money. Our goal is to help you keep that money and turn it into wealth. | 
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