Suddenly rich out of primarily luck. What would you do if you were me?

Hi all,

I read and post on WSO occasionally from a different account but created a new account specifically to make this post to protect anonymity. Because of this, I unfortunately must be quite vague.

Some background: I graduated from a semi-target in 2011 with a STEM major. Towards the end of my college-career I got in early on a financially-related start-up doing some modeling/programming work. After I graduated, I continued to work for this firm. An idea my coworker had ended up being extremely lucrative. In a short time, we built the idea and it became extremely lucrative. This past year, I exited the firm with approximately $20M, as I felt that I had nothing more to add. However, in many ways I don't feel like I deserve it.

So much of our success was luck. None of us were particularly brilliant; we had an idea, went with it, and made a ton of money. While the work that I did was critical to our success, most of what I did, anyone with some programming skills could have done. I don't see myself as more qualified than any other recent STEM graduate. I still want to keep working but A) I would feel silly taking a 100k job at a large corporation (which is what I believe I'd be qualified for) and B) I have no idea how to combine my time, energy and money in a productive way.

Monkeys: If suddenly, through a combination of 99% luck and 1% skill, you made a large sum of money but have no ability replicate your results, what would you do? Would you continue to work a corporate job? Start a non-profit? Go to graduate school? Become an angel investor?

I'd love to hear your thoughts.

Thanks!

-D

UPDATE:

I would like to thank all of you for your responses, they have been very helpful! After some consideration I think I have a tentative plan for what I'd like to do in the next few years. Since 'm not currently working, I've already made some commitments to help out with the wedding planning more than I otherwise. I have enough time to work on something on the side, but not quite enough where I'd be able to completely throw myself into anything. So, I have decided to take @"heister"'s advice and learn how to manage my own money effectively. As I have said a few times already, I don't feel like I have any special skills that makes me uniquely valuable. Because of this, I have decided to look into applying to engineering graduate programs. Specifically, I think I'd like to explore biomedical engineering, as I feel like that's an area with really high impact potential right now. I didn't have an amazing GPA in school (~3.5) so hopefully I don't have to make too large of a donation to gain admission. Once again, thank you all for your input.

Comments (155)

May 2, 2014

better not be that 2mm guy

May 3, 2014
kyc133enydc:

better not be that 2mm guy

That is actually quite possible. The 2 mm guy posted his dilemma a few days ago, presumably after a VC closed a round of financing that valued his stakes at the startup at $2mm. And then a couple days later a strategic buyer with monopoly money to burn, e.g. Facebook comes in and offers to buy the whole company out at 10 times the valuation of the VC round. So bang, just like that the OP's $2m just became $20m. This kind of crazy escalation does happen during the waning days of a tech bubble.

May 3, 2014

....those are the moments I wish I'd have pursued a career in tech.

May 5, 2014
kyc133enydc:

better not be that 2mm guy

Not familiar with this. I can tell you that I am not whoever that is.

May 2, 2014

dude, love your humbleness, but never be apologetic for your success, financial or otherwise. Success/Wealth is a bad word these days, and it shouldn't be. As far as your question, I can't answer for you, but I'd probably go to grad school and dabble in angel investing on the side. Congrats

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May 5, 2014
Ipso facto:

dude, love your humbleness, but never be apologetic for your success, financial or otherwise. Success/Wealth is a bad word these days, and it shouldn't be. As far as your question, I can't answer for you, but I'd probably go to grad school and dabble in angel investing on the side. Congrats

If the glove don't fit, you must acquit!

May 5, 2014
Ipso facto:

dude, love your humbleness, but never be apologetic for your success, financial or otherwise. Success/Wealth is a bad word these days, and it shouldn't be. As far as your question, I can't answer for you, but I'd probably go to grad school and dabble in angel investing on the side. Congrats

Same. Educate/learn and then angel invest. For sure.

May 2, 2014

http://www.wallstreetoasis.com/forums/need-to-spen...

read that for financial advice and hire a professional (like me!)

if it were me, I'd figure out if I could retire on that sum of money (quit my day job). if I got 20mm, I'd probably still do what I do in some capacity, but wouldn't kill myself over the work. at a conservative 4% withdrawal rate, that's 800k a year in income. if you say you're going to some charitable work then ratchet that down a bit.

why would I still work? I love the markets and the beauty of my industry is the flexibility and the autonomy. if I had that kind of money I'd probably use my free time to travel all over the world and get much better at surfing. I used to be good enough to teach lessons but work demands and being a long drive from the nearest beach has lowered my skill level. 20mm isn't enough to change the world, but it's enough to have the freedom to do whatever you want with. just make sure you invest wisely and don't over-withdraw.

edit: I echo the above poster's comments about being unapologetic, and for clients that were in that same predicament (usually heirs of a large family estate), charitable giving will help.

    • 3
May 2, 2014

Top 1% problems

Best Response
May 2, 2014

Only on WSO do you have to figure out if you can retire with $20MM.

    • 10
May 3, 2014

Exactly that. To OP: if you can't figure out what to do now, put 19.5mm in the bank and travel the world from the other 0.5mm. You will find your path, I guarantee it (please insert meme here).

May 2, 2014

if you have the means, you should start a trust fund/scholarship for individuals with similar background like you, maybe a scholarship for STEM majors in your alma mater.

the rest of your money can be invested in passive income generators, like with @"thebrofessor" or into property. equities that have a high dividend yield might be a good option. money isn't the be all end all. it just gave you the freedom to do what you like from this point onwards!

May 2, 2014

Why not find a startup that gets you excited? If there isn't one out there, why not start one yourself? Angel investing would probably be fun but most likely be a very expensive hobby. I believe you need a very, very strong network to be successful, which, given your age, you most likely do not have.

That is if you want to work and not just chill on a beach, play golf, party, travel, read books, write about your interest etc. I think I could spend a very significant amount of time doing that.

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May 2, 2014

I definitely would not go work some corporate job, that would be miserable. Personally, I would round up some of your and your co-worker's money and be the seed/anchor investors in the funds of start up asset managers. If you can give an asset manager $25 million, that's enough for them to get on their feet and enough for you to get an ongoing piece of the revenue of the firm. Worst case scenario, you get the returns of the manager for 2-3 years, best case is that you have a very valuable option that you paid very little for (just higher than average administrative fees). I don't know if you have the contacts to do this though. It's something that will keep you interested, but would require a minimal amount of time once you get it going.

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May 2, 2014

30yr government secured bonds currently around 3.4% would bring you in 680K a year before taxes.

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May 2, 2014

"While the work that I did was critical to our success, most of what I did, anyone with some programming skills could have done."

Yeah many people can program but not everyone has the guts to take an idea and run with it, and startup work isn't easy.

If you have a lot of interest in an area of stem, trying a phd might be cool. You're not going to be living on ramen or desperate to graduate, and there's not really any downside in leaving if it's not for you.

May 2, 2014

I don't quite see where he's being apologetic. I think humility is especially appropriate in times of success, as luck really does determine much of our lives. Those who work harder are luckier, and that's all anyone can say.

Secondly, OP: I wouldn't stop doing what you're doing. If you got into tech because it was something you were passionate about, stay there. Figure out how much you want to devote to a new pursuit (angel investing, etc) and use the rest of your money as an income for yourself*. If you started off as a software dev writing code, keep being that software dev writing code and keep honing your skills. Your success is more than just money; you have experiences, skills, and contacts that make you unique and in some cases better than the average MBA or kid with an app. Look at this holistically and it's pretty obvious that what you've got are a lot of choices, and your work now is to simply not make the wrong ones (blowing all your money on strippers and coke - though some might argue otherwise).

*: I think it would be a good life exercise for you to find a financial adviser for high net worth clients (who might have insight not available on Investopedia, unlike regular advisors) and figure what's best for you. You could live off this forever with even a conservative investment strategy, and assuming you take appropriate risks you could balloon that sum into way more cash.

Lastly, congratulations.

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May 2, 2014

You don't even have to start your own NPO. I bet you would be surprised at how fulfilled you might feel if you donated your time to teaching the underprivileged how to program, or even just to write resumes correctly.

May 2, 2014

I so wish I was facing this conundrum.

In the short term, I'd probably travel and party a lot.

In the long term (as in my life), I'd try to put into motion a family dynasty situation. Like, I'd get involved in some business that is super sustainable, build it up, and pass it on to my kids. I'd also have kids with as many physically and mentally superior women as possible in order to diversify my hereditary portfolio.

Or maybe I'd go the Asset Management route. It's honestly pretty hard to fuck up in the long term. And with $20MM, you wouldn't even have to be a closet indexer. Or probably a HF because of dat der lack of regulation. Bet on fixed horse races...

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

May 2, 2014
GoldenCinderblock:

I'd try to put into motion a family dynasty situation.

All things considered, this is the most sensible thing to do. Invest wisely, lead a humble life, and bam: you're now the paternal figure of a wealthy family. You'll need to have ~7 kids to start an empire, though.

May 4, 2014

ha until your kids and your kids kids blow all the money

WSO's COO (Chief Operating Orangutan) | My Linkedin

May 2, 2014

Identify what you want to do and adjust your strategy from there. Use a PWM from a BB or high-end wealth manager because they will offer you access to funds that smaller, less sophisticated wealth managers can't.

On $18mm invested you should get at least $1mm in income (probably 1.5-2 depending on markets), invest the other $1.5-2mm in angel or whatever projects interest you. Then continue to use that $1mm in income for lifestyle / other expenses.

May 2, 2014

Use the $20MM to buy some good real estate assets. You should be growing your net worth each year. Don't blow your money. Keep an income stream going from these investments. You now have the ability to pursue any passion you have and if it blows up in your face, you'll have this income stream to fall back on.

May 2, 2014

Congrats! Nothing to be ashamed of at all. All success takes a bit of luck. Good for you! Plenty of PWM folks here that would love to chat about getting your business and helping you enjoy the fruits of your labor!

May 2, 2014

Easiest and safest thing to do would be to just grab some high grade corporate/municipal/large cap equity investments, collect the 5% coupon/dividend yield which should be like 800k per year after tax, and go sit on a beach somewhere. Travel the world, eat and drink the finest, make some new lady friends, maybe write a book, etc.

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May 2, 2014

To be honest, I'd stay involved in some way. Personally, I'd do some charity work, travel and then, invest my money in solid dividend paying companies and ensure that I have some income stream flowing in through them.

I'm not an expert though. That's just my thought process at this time.

May 2, 2014

If you're going to be wildly successful, you could at least not be so grounded and likable. Sheesh. Seriously though, you earned it, good on you.

Like most commenters here, I'd probably choose something in the realm of Angel investing, real estate, bonds, etc. But I would spend at least a week living like Charlie Sheen before making more sensible choices.

May 2, 2014
Scott Irish:

If you're going to be wildly successful, you could at least not be so grounded and likable. Sheesh. Seriously though, you earned it, good on you.

Like most commenters here, I'd probably choose something in the realm of Angel investing, real estate, bonds, etc. But I would spend at least a week living like Charlie Sheen before making more sensible choices.

To @"Scott Irish"'s point, go spend a couple hundred grand on some wild trip with a lot of beautiful women, drugs, and insane experience you won't remember. Get it out of your system.

May 2, 2014
CorpFinanceGuy:
Scott Irish:

If you're going to be wildly successful, you could at least not be so grounded and likable. Sheesh. Seriously though, you earned it, good on you.

Like most commenters here, I'd probably choose something in the realm of Angel investing, real estate, bonds, etc. But I would spend at least a week living like Charlie Sheen before making more sensible choices.

To @Scott Irish's point, go spend a couple hundred grand on some wild trip with a lot of beautiful women, drugs, and insane experiences you won't remember. Get it out of your system.

May 5, 2014
CorpFinanceGuy:

@Scott Irish's point, go spend a couple hundred grand on some wild trip with a lot of beautiful women, drugs, and insane experience you won't remember. Get it out of your system.

I will definitely go on some wild trips in the next year. Maybe drugs... But as for women, I will probably be traveling with some of my close friends from college and my fiance who I recently proposed to :)

May 2, 2014

How did you make the exit? Did your startup get acquired and you got a good chunk of the $20m in shares of the acquirer or did you sell your shares of the startup via a medium like TheSecondMarket? Were you able to exit in full at once in cash or do the shares vest over time?

May 5, 2014
brandon st randy:

How did you make the exit? Did your startup get acquired and you got a good chunk of the $20m in shares of the acquirer or did you sell your shares of the startup via a medium like TheSecondMarket? Were you able to exit in full at once in cash or do the shares vest over time?

At this point, I would prefer not to discuss the details of my exit. What I can tell you is that my exit was amicable. The reasoning behind why I chose to exit the firm was because I did not feel like my skill-set was a match for continuing to grow the firm. I helped create some of the initial development but I don't think I'm the right person to help bring the firm to the next level.

May 5, 2014
RichButLucky:
brandon st randy:

How did you make the exit? Did your startup get acquired and you got a good chunk of the $20m in shares of the acquirer or did you sell your shares of the startup via a medium like TheSecondMarket? Were you able to exit in full at once in cash or do the shares vest over time?

At this point, I would prefer not to discuss the details of my exit. What I can tell you is that my exit was amicable. The reasoning behind why I chose to exit the firm was because I did not feel like my skill-set was a match for continuing to grow the firm. I helped create some of the initial development but I don't think I'm the right person to help bring the firm to the next level.

By amicable you mean the firm bought out your equity stake in an all cash transaction? Depending on where you live $20m post tax would mean up to $30m pre-tax.
I am curious how this works as I don't think any startup would have this kind of cash laying around to buy out founding employees. Even if they did, there is no way their investors would allow this kind of use of capital.

May 2, 2014

Congrats dude! Great to hear a success story from someone who doesn't jack off to themselves every night.

I wouldn't take the corporate finance job. I could see option a.) investing in dividend stocks that give you a steady stream and you take it easy, or, option b.) you save a good portion of that money and just immerse yourself back into the start-off culture (angel/programmer/etc .. it sounds like you'd be attractive applicant) and kick some more ass.

I think a good metaphor is the Tiki Barber argument. You can either retire (option a above) or continue playing and deal with the risk/reward (option b above). Tiki ended up retiring and is doing just fine.

Best of luck with whatever you do!

May 2, 2014

Plenty of good advice here. As someone alluded to, first make sure the cash is in the bank - if you just got unvested equity in a growth company, don't count your chickens just yet. But then suggest you invest very conservatively while still evaluating your long-term goals - you have plenty of time to be more aggressive once you know what you want to do. Resist the temptation to throw money at your friends' startups. Throwing money at your friends' investment advisory businesses might be a little more rational.

The value of money is it buys you freedom of choice. Philanthropy and angel investing and graduate school are all great options for rich people, but don't feel obligated to go down one of those paths if they're not your passion. Want to work at a $100k corporate job because you like the people or the work? Why not? Pick the route that supports your own goals in life, not necessarily what others daydream about.

May 3, 2014

Congratulations. You no longer have to work for and with assholes, which is incredibly liberating. Definitely do not hang it up and sit on the beach / golf all day. It sounds much better than it actually is. Most of us are driven and ambitious so that path works for about a month. Bide your time, travel for a few months, figure out who you like/trust and want to work with, what your passionate about, etc. and then go do it. The freedom and o ptionality that new wealth provides are great but the situation can also be overwhelming from the perspective of what the heck do I do next. Congrats and good luck.

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May 3, 2014
junkbondswap:

You no longer have to work for and with assholes, which is incredibly liberating.

The dream!

May 3, 2014

Also, is it a liquid 20? Gross or net of taxes? Enjoy!

May 5, 2014
junkbondswap:

Also, is it a liquid 20? Gross or net of taxes? Enjoy!

It is a liquid 20, all after tax.

May 6, 2014

fuck you brah

    • 1
May 3, 2014

I would buy myself a job in VC/PE/HF. Invest into a good fund on the condition I get to work on the deals. Put the rest into vanguard world or something.

May 4, 2014

1. Find woman.
2. Buy cabin in woods.
3. Get hammered.
4. Never leave.

"Strength does not come from physical capacity. It comes from an indomitable will."

May 4, 2014

I would call up RC&G to see if they'd take my money into the Sequoia Fund (I know it's closed, but you never know...). Alternatively, I would echo the advice above and get into some solid, boutique funds. I wouldn't be concerned about current income as you are still young and have decades of successful, fulfilling work ahead of you. Use the income when you're older and actually need it.

You should never assume lightning will strike twice, but you should work like it will. If your money is with someone safe, you can refocus on building another successful company. While you may not think you have something special, I can promise you that you do. You're in the top 1% of tech startups and that is VERY valuable. Leverage your experience with other startups and you will be well rewarded personally, professionally, and financially. And, you may get luck a second time.

    • 1
May 4, 2014

Assuming net of taxes I would:

1. Take 1MM, and party your ass off for a year.
2. Take 1MM and use for living expenses for the next decade.
3. Take 18MM and start making phonecalls to solid PE funds who are fundraising. Hope for a solid return and forget about it.
4. Go work for a professional sports franchise for next to nothing, just to get my foot in the door.

    • 1
May 4, 2014

Ummm yeah, a poster came upon 20 mn and is asking for advice about finances and career.

I got a bridge to sell you...

    • 1
May 4, 2014

I would probably put my money in some equity investments, ETFs, and stick a small % in something pre-diversified and less conservative like a hedge fund. Then I'd travel the world, lay on a beach somewhere, party, find some ladies, and then maybe write a book. And then I'd spend my days responsibly playing high-stakes poker live, and likely eventually pursue other start-ups or tech opportunities when I get bored.

May 4, 2014

"Invest in experiences not materialistic belongings".

May 4, 2014

Do women count as experiences or materialistic belongings?

May 6, 2014
NickW1:

Do women count as experiences or materialistic belongings?

I don't read WSO very often these days, but this is exactly the kind of post that keeps me coming back.

OP: Get a PWM, draw down $500k/yr in passive income.Do whatever you feel like.

May 5, 2014

Angel Invest
Real Estate Invest
Party
Work at a golf course 20 hours a week

May 5, 2014

So I'm pretty sure that OP is buying everyone a round at the next Happy Hour event!

May 5, 2014

Fuck charity work. Seriously don't do it. The non profit industry will bleed you dry with constant guilt trips about how its only 10k and you have plenty of money, not to mention you donated to XYZ charities before. Build a company or companies. Even if you fail miserably you will have tried. Take at least 25% and put it into a long term cash flowing investment class such as real estate. Depending on where you live this should be enough for your long term cash flow needs provided you make even marginally good investment choices.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

May 5, 2014

-10m into Asset Management to preserve the wealth and generate income
-5m into real estate to generate more income
-2m into buying a couple of McDonald's franchises
-3m into the chequing account

go do an MBA and take more time to think about what you want to do

Don't listen to anyone, everybody is scared.

May 5, 2014

The guy that fit me for my golf clubs was in a situation much like yours. Worked at a start up, cashed out big, had no idea what to do with his life afterwards. Long story short, he is a better than scratch golfer and decided that he just wanted to golf so he became the shop pro at the local course and now just teaches lesson/does custom fittings etc. Pretty sweet gig.

If I was in your situation, I would figure out a way to get some decent income from the cash and spend my time snowboarding all winter and golfing all summer. As others have stated 4%/year is 800K... I could live off 800K/year

May 5, 2014

I would take that opportunity to do what you've always wanted to do. Travel, start your own business, etc etc.

May 5, 2014

Wow, thank you for all the responses! I was traveling and wasn't checking this. I'll answer any questions as soon as I can.

May 5, 2014

Buy a bar on a Caribbean Island and enjoy life, don't live lavishly and the money could last your life.

If you want to keep working don't do the corporate job, you'll hate it and quit quickly. Find VC's and start talking to them about joining. VC's primarily like guys who have start up and exit experience and don't sell yourself short because you feel like it was luck. Most financial success in life has to do with a combo of talent and luck (finding yourself in the right place at the right time) and you can parlay your experience into VC investing and a fund would like you because you don't really need to draw a salary and you can invest in the deals the fund invests in. I know more than a few guys who have made big hits, but not Zuckerberg big, in tech in their 20's/30's and they've gone this route. You'll probably have to find yourself in the areas where VC's and start up's are concentrated-the Bay Area, Boston, NYC, which unfortunately are high priced areas to live.

Like others have said, find a good financial adviser that has experience with young people who have made a big score-you don't just want any HNW adviser because they're more accustomed to working with people later in life who have made money, not someone who has 50+ potential years left on earth.

May 5, 2014

First of all congrats, I don't think I can offer too much insightful advice as to what to do with your life, but heres what I would do if it were me in your situation.

-Take 6 months and travel around the world, spend ~100k partying/doing drugs/having sex and seeing all the places and people in the world I haven't had time to visit due to being incredibly busy. I would definitely have to get this out of my system, but I know after a while I would feel the need to do something more productive/rewarding.

-After that I would try to get involved with a reputable VC fund, who typically value people of your background

-Continue to play >100 rounds of golf a year until I die

-Think about what you enjoy most and try to get involved at some level, even if just philanthropically. Personally for me, I would love to own a small vineyard or to take a management role in a professional sports team(probably start at the minor league level)

-Talk to successful people that you admire most and ask them what they would do with your money

I know you don't feel like you did anything extraordinary to make your money but I assure you there was more value added than you give yourself credit for. Take pride in it and enjoy it.

May 5, 2014

If you are seriously considering angel investing, PM me. I may have an opportunity you might be interested in. Think Education+ SaaS.

May 5, 2014
porsche959:

If you are seriously considering angel investing, PM me. I may have an opportunity you might be interested in. Think Education+ SaaS.

And so it begins..

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

    • 1
May 5, 2014

At first, I was going to say that pre-nups should be the default and you should need to sign something to invalidate it because half of marriages end in divorce.

But then, I thought to myself, "Why even get married?" The whole point is that you're forming a union: emotional, financial, everything...

What's your wife do for a living? What are her plans career-wise? My uncle in Ukraine was in your situation 20 years ago and bought his wife a beauty salon so she'd have something to do.

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

May 5, 2014
GoldenCinderblock:

At first, I was going to say that pre-nups should be the default and you should need to sign something to invalidate it because half of marriages end in divorce.

But then, I thought to myself, "Why even get married?" The whole point is that you're forming a union: emotional, financial, everything...

What's your wife do for a living? What are her plans career-wise? My uncle in Ukraine was in your situation 20 years ago and bought his wife a beauty salon so she'd have something to do.

My fiancee operates and has equity ownership in a small education company (revenue less than 1mm but growing). She has extremely high ambitions and aspirations. She's much more of an entrepreneur than I am. I was just in the right place at the right time with the right skill-set.

May 5, 2014

Don't listen to these guys. Their points are valid, but don't sign a pre-nup, especially since you guys were together long before this pay out. If it ends poorly, it'll be a costly mistake but oh well. IMHO, it sets the wrong precedent for the marriage, regardless of how "dumb" not signing a pre-nup may be.

May 5, 2014

Set out to recreate every single Dan Bilzerian picture and become Instafamous. He seems to be doing alright for himself.

http://instagram.com/danbilzerian

May 5, 2014
Carlos Danger:

Set out to recreate every single Dan Bilzerian picture and become Instafamous. He seems to be doing alright for himself.

http://instagram.com/danbilzerian

He has a lot more then $20m, and it's all daddies money.

May 14, 2014
timpson:
Carlos Danger:

Set out to recreate every single Dan Bilzerian picture and become Instafamous. He seems to be doing alright for himself.

http://instagram.com/danbilzerian

He has a lot more then $20m, and it's all daddies money.

How do you know what he has? And, let's be honest, he can probably thank his grandparents for that money, not his dad (see "assets of $15,805" http://www.sptimes.com/News/010501/Business/Ex_cor... and "Harry and Lois Steffen, the parents of Bilzerian's wife" http://www.sptimes.com/2006/04/14/Hillsborough/Bil... ).

May 6, 2014
Carlos Danger:

Set out to recreate every single Dan Bilzerian picture and become Instafamous. He seems to be doing alright for himself.

http://instagram.com/danbilzerian

That guy's trust fund is way over $20MM.

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

May 9, 2014

That dudes balling out. I'm just gonna drop outta school and become one of his playgirls. Where can I sign up?

May 5, 2014

Grad School. then Open a P/E or Hedge Fund.

May 5, 2014

Take a snapshot of your bank statement or you're full of shit.

    • 1
May 5, 2014

Depends on what you're into and depending on the city it might not be possible on $20M, but buying a large house in your favorite city and throwing events for whatever local artists you are into would be tops. At least in my book.

May 5, 2014

Don't do the pre-nup, but do plan as if you have $10m.

If you want to still have "incentive" to be succesful in life there are many ways to structure this, like buying some kind of annuity with penalties for early withdrawal.

May 5, 2014

Congrats on your success! Brush your shoulders off and rejoice (do it at least for all us here who are still on the daily grind)

You should really travel the world to get inspired if you don't already know what motivates you/sparks your interest

Try every single random thing you have ever wanted to dabble in for ex. in my case it would be how to play a couple of instruments, play poker, read all those books you never did get a chance to, take an art class, etc.

Lots of celebrities also buy up real estate and make a side business doing that just to keep themselves occupied and end up making a good profit when they sell as well...just an idea since rates are still somewhat low

If you don't want to make money on real estate but still want to make a difference, you could always buy up real estate and then make them into Section 8 housing (there are thousands of people on waitlists since there is a shortage of units available). You could also open up homeless shelters or fund after-school programs.

However, while you do that, listen to the advice some have offered and invest it in the meanwhile (munis would be the way to go).

If you haven't attended graduate school and learning is something that you enjoy, do it!

Having already gone to graduate school, I would spend my time learning more about finance/valuations and then become an angel investor for companies that focus on issues I care deeply about and of course have the potential to succeed.

P.S. if you know she's the one for you, then go with it. I think mostly everyone here just wants you to be careful because some say love is blind.

Consider yourself to be extremely lucky to have found the one and be in this financial situation.

May 5, 2014

I'd go angel/Asset Management/ non-profit. Read about the Chandler brothers. You've probable never heard of them, but take some time to read about them. There was an amazing profile in Institutional Investor.

Nevertheless, no need to apologize for your wealth. You are in an amazing and unique position to enjoy some amazing things. Don't blow it on the ostentatious indulgences, which judging by your humbleness isn't likely to be a problem. Experience new things, travel and find meaning. You can make a difference.

And don't ever forget, "Chance favors a prepared mind." You did something right to end up where you did. And you had commitment and follow through that few have. Be proud of that and live the life you dreamed.

May 5, 2014

I would do whatever I wanted to do with money not being a consideration. Start up something new, write a book ...whatever...travel a bit and let inspiration strike. Luck is always involved but most people with good ideas don't even take the chance and execute. That alone sets you apart. Give yourself some credit and know that you probably have a lot more to contribute to the world.

May 5, 2014

Why settle for $20mm? Invest most of it, with a fraction into higher risk vehicles and try doubling or tripling that figure. Keep a job that can sustain your lifestyle, and look to cash out in some 10-15 years. $20mm will look quite measly at that point

May 5, 2014

Most importantly, I would take investing advice here with a grain of salt ;).
Not everyone here works at Goldman PWM after all (http://www.wallstreetoasis.com/blog/hilarious-bank...).

You must speak with some Financial Planners asap to better understand your situation. FPs essentially help you plan out your finances for the rest of your life (they assume every imaginable future expense: everyday spending, house, children, summer camp, vacations, education/college, retirement needs).
Then, after you have a plan, consider investing.

While 20 MM seems like a lot now, you need a proper plan to keep that nest egg cooking for the rest of your life. Consider that in 20 years, your 20 MM will need to grow to 32 MM just to keep up with 2.5% inflation. And nearly 69 MM in 50 years from now.

May 5, 2014

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May 6, 2014

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May 5, 2014

1. Travel the world and start your own blog/vlog.

2. Turn into Dan Bilzerian v2.0.

May 5, 2014

My vote...get the pre-nup. Money will change people and if she ever leaves you its a free ride for her.

Get it done.

Also, travel some. There are 100 day long cruises...I would do one of those. Then fly/go back to places you liked because you'll see a ton of places on the 100 or 180 day cruises.

May 6, 2014

Do a bunch of unpaid internships in fields of work that interest you until you find something you feel like you could do for the long haul. Maybe add some humanitarian work for the life experience and to develop your own character. Even though it sounds like you have a good head on your shoulders, you'll see $20MM differently when you see how people living on less than a $1/day are still happy.

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May 6, 2014

That's amazing, congrats! Any chance you'd be willing to do an AMA? I think a lot of people would love to hear your story!

May 6, 2014
micromegas:

That's amazing, congrats! Any chance you'd be willing to do an AMA? I think a lot of people would love to hear your story!

Possibly in the future but I don't think I would be able to truly answer a lot of the questions that people are interested in at this point.

May 6, 2014

If I hear another person sprout about the absolute necessity of a PWM I am going to throw my computer off of my balcony. Can they do great things? Yes, will they most likely do as well or shittier than an index fund? Yes. What they are really good for is estate planning. But who the fuck needs that in their early 20s. You will be far better served learning how to manage your money on your own. You will need good grasps on how taxes really work, how you can shelter your capital gains and other similar things. Can a PWM do these kinds of things for you? Yes, however I have a feeling you wont just be putting your money in a market fund but likely into private companies. You will need to know how to evaluate financials on your own. Or else you will likely end up getting screwed out of money like most professional sports stars do. I don't have any of my money with asset managers. I'm not of the crowd that they take their fiduciary responsibility all that seriously. Are they all out to screw you? No, but a lot of them have little qualms about putting you into investment vehicles that generate the most commission for themselves.

Shoot me a PM if you want some insight into how I manage my money and what I invest in.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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May 6, 2014
heister:

Or else you will likely end up getting screwed out of money like most professional sports stars do. I don't have any of my money with asset managers. I'm not of the crowd that they take their fiduciary responsibility all that seriously. Are they all out to screw you? No, but a lot of them have little qualms about putting you into investment vehicles that generate the most commission for themselves.

Shoot me a PM if you want some insight into how I manage my money and what I invest in.

heister brings up some good points and while I staunchly disagree with your points as they relate to my practice, there are a lot of bad apples with the same FINRA licenses that I have, and since our industry doesn't allow for testimonials, research is tough. I agree with heister that you need to know principles of investing, how stocks work, how bonds work etc., and if you have the interest in investing your own money, by all means do it, and you'll never be anyone's client.

However, if you decide you have neither the interest/time to dedicate to managing your family's finances, you should seek qualified counsel. I'm not here to say PWM is the ONLY way to be financially well rounded, I'm just saying that for those who wish to not do it themselves or who've done it themselves and done poorly, we provide a service that (in our case) the value exceeds the cost.

things to do when evaluating someone like me:

1. make sure you get a face to face if you're in their metro area. I'm a big believer in the sniff test. your gut will tell you if someone's honest or if they're a slimeball

2. any time they promise communication, check to see if they did it when they said they would (I'll send you an email by EOD), see if they do it. see if they call you when they say they will. if not, you don't want to work with them (less extenuating circumstances). someone who can't be found when times are good will run for the hills after our next correction.

3. ask what the fees are. while some advisors cannot quote an exact fee before doing a proposal (myself included), they should be able to clearly articulate how they are compensated, what the terms of any contract are, etc.

4. ask how much of their own money is in what they're recommending you. if they don't eat their own cooking, you should dine somewhere else.

PM me if you want more, but I think the bigger question here is do you want to invest for yourself, there's no right or wrong answer. given heister's points, a strong argument can be made either way, but in the end it's whatever you're most comfortable with.

May 9, 2014
heister:

Or else you will likely end up getting screwed out of money like most professional sports stars do. I don't have any of my money with asset managers. I'm not of the crowd that they take their fiduciary responsibility all that seriously. Are they all out to screw you? No, but a lot of them have little qualms about putting you into investment vehicles that generate the most commission for themselves.

Shoot me a PM if you want some insight into how I manage my money and what I invest in.

Most asset managers charge a flat fee ranging from 75 - 150 basis points.

This fee will cover their time & expertise in addition to the firms pooled resources in devising your long-term goals.

Many individuals have the misconception that just because "I have the ability to invest", means that "I will be successful". Money managers, especially the ones that have been through the dot-com bubble, real estate crash, will most likely preach a safe, stable investment portfolio that will look to generate 6-7% a year (on a 20 year outlook).

This could be achieved through a mix a stocks / bonds / treasuries etc ...

The last thing you want to do with 20 million is day trade it away.

If you want any investment advice right now: don't buy a single thing. Markets are at all time highs, and putting your eggs into too few baskets could set you up for disaster during the next down turn.

May 6, 2014

I would save an amount for rainy days and invest in my friends and people who have supported me along the way by making their dreams come true. Hey, maybe they will have great investment ideas and capital is all they need.

Chaos is a ladder and the climb is real

May 6, 2014

Does real estate interest you? Start small. It will keep you very busy and you might fall in love.

May 6, 2014
Onetwobit:

Does real estate interest you? Start small. It will keep you very busy and you might fall in love.

I don't think I would be interested in real estate for investment purposes, but I'm probably going to buy a house for my fiancee and myself soon.

May 8, 2014

No such thing as "luck." You are either (1) prepared and have an opportunity, or (2) not.

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May 9, 2014

I disagree. I was with the right people, with the right skills at the right time. Many others if found in my position could have easily achieved the same level of success as I did.

May 11, 2014

You illustrated my point. You had skills = prepared. You were with the right people = the opportunity. Well done. Carpe diem.

May 9, 2014

What an uncanny post! I'm in same situation as you except I made a bit more off a very lucky internet startup where my idea just took off like crazy and I sold out.. I was founder but in no way do I want to delude myself that it was skill vs luck. I did this about 4 years ago and I have tried a few small businesses here and there but basically have been spinning my wheels/breaking even/losing to inflation in the meantime.

I totally sympathize with your position. It really depends on what part of the world you live in. If you live in major world city, $20m is not enough to retire if you have kids and a family. If you live somewhere else, it probably is.

May 9, 2014

If I came across 20M...first thing im doing is going to my financial advisor. I would buy myself an new car (jeep), pay off my families student loans, give my mom 1M. Take the rest and invest it.

Continue working because you dont want to marry someone who knows you have that kind of money to mess around with. Withdraw it when im like 50ish and chill

May 9, 2014

Putting it into a VC fund is a poor way to go. Most investments go belly up, or provide minimal returns. If you're a small LP, you're not clearing THAT much on an exit once you do the waterfall analysis, unless its just an out-of-the park home run (and those don't come around often). Right now, India's banks are giving strong returns on the dollar, as the rupee is seen as undervalued. If I had a few million to play with, that is where my $ would go. Put in $5M there, and live off the interest.

May 9, 2014

Congratulations! First of all, you earned that $20 Million. It was not luck, it was being creative, having the drive and determination to make the idea a reality, which takes hard work on all parties involved, and the grace of GOD! You are not lucky, you are blessed!

Second, if it were me, I would definitely pay cash for a house because I already have a family, then I would invest some of it and make it grow. Finally, I would definitely become an angel investor and get all the money multiplied...Focus on investing and retirement while you have the money. Then, become an angel investor and travel the world looking for creative and hungry entrepreneurs like myself to invest in!

You can be an angel and start your own programming company, or any other business that interests you! I would also invest in rental properties like small 5-10 unit apartment buildings to create a monthly cash flow so you will never have to work again (unless you really want to)!

Again, congratulations! I love hearing stories like this because I know it is possible for me to make it too! Stories like yours keep me motivated...that is why I always watch shows like Shark Tank. I am not a wall street banker, but hopefully I will be one day or make it in real estate.

Congratulations and remember, its not luck, GOD blessed you!

May 9, 2014
Joseph-Harris III:

Congratulations! First of all, you earned that $20 Million. It was not luck, it was being creative, having the drive and determination to make the idea a reality, which takes hard work on all parties involved, and the grace of GOD! You are not lucky, you are blessed!

Congratulations and remember, its not luck, GOD blessed you!

This is hilarious

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May 9, 2014

You my friend, are one of the luckiest among men. Nothing to feel bad about. You had an idea, followed it through and now enjoy the rewards. That is the very basis of our economic system and our way of life, even though "wealth" can be a bit of a dirty word these days, mostly as a result of pundits who would change their tune faster than you can blink if they could build the sort of wealth you have.

if it was me, I would take $2M to use for angel/venture investing ideas and put the rest to work in a market index fund or some other low cost alternative with a similar return narrative and live off the interest while pursuing an advanced degree in economics (my passion) and traveling around the world as much as possible while still building a network through which to put my $2M venture fund to work.

May 9, 2014

you seem to be a very thoughtful person- people have a tendency to over attribute success to themselves even if it was largely idiosyncratic. If I were you, I would not ask people on this blog, but ask your close friends- hopefully, you have a diverse and supportive network of solid friends that know you well from before the times you were suddenly wealthy s well s now. Also, look at other people in your situation- Sergey Brin, for instance, but there are others on a scale similar to yours- anything they did you'd like to follow through with in some capacity? Finally, in the end, none knows better what you want better than you- you now have the flexibility o decide what it is that would really excite you and put your energy into that. and that may change with time- the beauty of so much money is that it gives you greater flexibility to change as long as your not psychologically bound to it. Also, like some suggest here, figure out how much you should put away for a lifestyle you want to enjoy over the years- another good reason to think about things you value and want from your life. Good problems to have overall- good luck!

May 9, 2014

Congrats on your proposal to your bride-to-be. Treat her well and she will do the same for you. [And aside from all of the "practical" advice you've gotten on a prenup, a good lawyer can push right through it because she was with you from the start, supporting you (even if only emotionally, but certainly if you live together and share costs), and therefore she would then be due some portion of it.]

IMHO, I think the best pieces of advice you've gotten from this board are the ones that tell you to take some time to figure it out. If that includes doing an MBA (either full-time or exec) so that you have something of a financial toolset to evaluate some of those steps, great. Or maybe you'd be into public health, or something else -- doesn't really matter: it's never a bad idea to improve yourself personally. If it suits your personality, go teach -- or get your Ph.D. and become a college professor if that floats your boat.

And yeah, on the side, angel investing is a lot of fun, and you can be as much or as little involved as you want to be. I've been doing so for a few years, and absolutely love it.

Good luck!

May 9, 2014

give back to the world

May 9, 2014

I hear a lot of people here mentioning real estate .... I highly suggest you STAY AWAY from that route.

Investing in real estate can reap some great returns, but the market for real estate is back at all time highs and property and/or home value appreciation from this point forward is going to be slow. Additionally, real estate investing means your assets are no longer liquid.

If you're concerned about returns in the long-run, put 10 million away with an asset manager. Make sure you have a personal relationship with the manager and explain you want this money to be safe "windfall" cash 40 years in the future.

The remaining money, fund a scholarship, maybe go back to school for a PhD to teach? Teaching at college levels is very fulfilling (or so they say). Maybe even begin angel investing in some new & similar start-ups.

My only advice to you is act like you have only made 10M and live like you're only worth 2M.

EDIT - someone suggested paying CASH for a house. DON'T DO THAT. With the $$ you have, you should be able to lock in some really low interest rates. Assuming you can average investment returns greater than those rates, you're making money on cash that would have been tied up in your home. Additionally, if your home appreciates in value, you will recognize those gains too. There are also tax advantages to having a mortgage & writing off your interest.

You realize that the majority of your future income will be taxed (or should be taxed) at the cap gain rate of 15%. Something to keep in mind.

If you do plan on "investing" as a VC or angel why not start your own firm ( I'm serious ). This will help you keep your sanity (by going to work on a daily basis) and give you a sense of purpose. You'll also be able to mentor start ups and other employees.

May 9, 2014

May 9, 2014

I'm pretty young, but I've thought about this before. I think I would just find a good combination of Municipal Debt and TIPS (30 yr - 1.11% - ~244,000/yr) and play a tax minimization strategy. Then with your new salary do what you want to do. I would suggest start out by traveling and getting to know the world then maybe jumping into a few non-profits and matching your skills/passions with the needs of a greater good.

I think after a big inflow that you have received though the most important thing to do is reflect and stay humble. People can lose themselves when they make that much money. Frankly, I wouldn't tell anyone that I made any money because people will look at you differently. Many people have said this, but to me it sounds like you've received a great blessing and now it might be time to figure out how you can return the favor.

Just some ideas. Sounds like you're thinking about it which is good and I'm sure you will make the right choice for yourself.

Goodluck!

May 9, 2014

So they paid 20+ million for a startup with a financial modelling software, BUT developed by novice programmers??

Seems shady to me, gotta watch out for the IRS.

May 9, 2014

I totally understand what you're getting at @"riomma-bjj". It does sound a little shady considering I'm not an expert software engineer. We had some great ideas based upon sound mathematics and computer science principals and applied those ideas in a valuable way. What you're saying is one of the EXACT reasons I left the firm. I'm not a seasoned software engineer who is an expert in the entire development cycle. In terms of expanding the functionality of our software, I am simply not the right person for that job.

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May 10, 2014

Your decision to quit was sound then buddy, nobody could be sure wether asset laundering/tax evasion is involved in transactions as huge as that.

May 9, 2014

I inherited a good sum, though still a fraction of what you got, through family death. It's enough that I don't have to do anything, I could sit around and go eat out everyday and do whatever and not work. Honestly, I'd go stir crazy doing that so I keep myself busy and try to get better at trading. I work all the time, even on weekends, because I couldn't have it any other way. My Plan B is to take the money I have and open a small business like a franchise (though that is full-time, hard work running a store). If I had TWENTY million, I would probably go buy real estate, become a small angel investor or try to build startups, and get into small business where there seemed to be an opportunity.

May 9, 2014

Do what you want! Start something else of your own, travel, maybe do something in VC.

May 9, 2014

I started writing a list of what should be done, but realized that none of it would matter.

So, all on black.

May 9, 2014

I would spend time mentoring and traveling. Time is something we cannot buy and neither is wisdom! Good luck... but I guess you already have some!

May 10, 2014

I feel like 90+% of ppl who think retiring early would be the best shit ever, would themselves go absolutely insane within a few months of doing it. The grass is always greener, and while work may suck at times- never discount how important direction and structure is for sanity. Floating in an abyss of never having anything to do/ anywhere to be, will wear you thin in a hurry.

If I were you, I'd throw it all into a low risk/ low return investment that would require minimal to no monitoring. Then I'd set out to find some passion and dive into it with both feet. Do you like golf? Become the best golfer you can be. Do you like working out? Sign up for a marathon or triathlon. You get the point. It's hard to give advice when you don't know someone, but if you're a motivated type this will keep you sane while allowing you to live off the riskless (or nearly riskless) investments you've made.

May 10, 2014

1) Be cautious with your investment decisions, whether real estate, stocks, funds etc. and decide how aggressively you want it to grow. I'd say the best way before signing any cheques would be to surround yourself with people who have done this before and get some contacts. Even if you're rich, you still have to network.

2) Don't go into charity/philanthropy just for the sake of it, what many others deem as selfless and "giving back" can be a huge waste of time, you will know when the right time is when you have a cause you feel strongly about and you will want to do something about it by setting up some kind of foundation/mechanism to support such causes whatever that might be

3) Never stop investing in yourself even if you're set financially. Many previous posts here were skewed towards using your time to manage your nest egg, grow it or whatnot but your most valuable asset now is time. A good starting point might be to go to school again, take any and all sorts of classes, be as diverse in your knowledge base as in your investment portfolio. I'd say now would be a good time to re-evaluate your values and meaning system (not that those before were bad or misguided but philosophically, you are on another level compared to others due to you not having to worry about surviving).

With your situation, if you yearn for "success" or fulfilment in the things that you do after this, it will be very narrow in that only you and you yourself can define, not what others want or how other people would imagine it. By that I mean, it would be dangerous to look for vindication (from your family, your community, society etc) in whatever you pursue. Depending on your character and the kind of person that you are, you can feel empty and sometimes second guessing yourself. If you're brilliant, you're brilliant; if you're talented, you might be able to contribute to the bottom line of whatever the rest of us are doing. If you're not, don't sweat it, most of us are pretty much full time hedonists anyway.

May 10, 2014

Congrats. I'll reel off a few pieces of advice in a moment. I'm a private wealth manager, well-known firm, top ivy undergrad, top 3 MBA, CFA, roughly $2 bln under management in our team, fiduciary, invest directly.

Since you're resistant to a pre-nup, please, please, please, consult a lawyer and segregate part of the money and do not touch it. If you co-mingle post-marital assets with pre-marital assets, then in a divorce a judge cannot readily determine what were pre-marital assets. Set $10 mm aside, ideally in a trust, and draw only enough to pay taxes on the trust itself.

Also, get an umbrella insurance policy. You're rich and a target now, so if you end up in a minor vehicle accident, or some unbonded person working on your house get's injured, you and your $20 mm can quickly be separated.

As for investments, there's a big debate about whether 4% withdrawal rates are sustainable in this low interest rate environment, or something lower (maybe 3%). Munis yield very little unless you go out far in duration and you don't want to incur a ton of taxes on the taxable bond side (or with hedge funds, other tax-inefficient vehicles, etc.). For a taxable investor with a very low withdrawal rate, stocks at least offer the opportunity to control your gains, and you can loss harvest individual securities as well, so a hefty allocation to stocks makes sense in the long run. There are some great tax-advantaged high quality preferreds, paying rates than put munis to shame, but you have to know the ins-and-outs of these.

If you're interested in chatting, PM me. I'd be happy to lend my expertise. Given your knowledge, you can probably do a lot of this on your own, but paying someone to manage part of the money in exchange for some good advice might make sense.

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May 11, 2014

2 things:
- if you enjoyed programming, go become great at it. Since you have financial security, you don't care what you are paid. Learn cutting edge stuff, FRP, GPU machine learning, languages like Idris, etc. Work on FOSS. Might be hard to find the motivation.
- the fundraising environment plain sucks if you're only doing a medium sized play right now. Once you get a good feel for where the cool work is happening in FOSS and who the most interesting minds are (it REALLY doesn't correlate with real world fame), because you're working with them, you can finance them.

Personally, if I had 7-8 digit cash in the bank, I'd quit my job and execute 5-10 ideas, probably in parallel seeding each with 150k. There's plenty of talent around and plenty of B2C opportunities where you can do a pure tech play without too much "business guy" time and effort. Worth noting my risk appetite is extremely high. Got 40-60 years life left statistically, probably less. Better live it.

May 11, 2014

Plan sounds great, the only thing I would caution against is trying to manage 20m on your own. It's a large sum of money (contrary to what many people on wso think), and I've seen countless people get burned trying to manage their own accounts. Personally I would give it to a manager for a couple of reasons:

1. Fixed income (bonds and stuff): You aren't able to get institutional pricing with only 20m so you are likely charged markups for the bonds you buy. This can be extremely expensive at about 5% markup.
2. Alternatives (hedge funds, etc), with 20m you should be investing in alternative. With thousands of different options it becomes hard to weed out of best from the rest.
3. Equities: I flip flop on this one, i would say you can just keep equities in a couple mutual funds. The two problems with that are mutual funds will charge you up you a**hole in fee's. You could go with and an indexing strategy but that won't get the tax benefits of owning individual securities.

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May 11, 2014

banana for cashing out of silk road before the fed seizure!

May 11, 2014

Wow, good for you.

I'd parlay your entrepreneurial success to start/do a new project. While you know how much you really had to do with the success of the venture, the silicon valley world is generally pretty lemming-like. The early 20's guy who made tens of millions of dollars it the darling in that world and I would venture to say that you could try to replicate the same success you had above on a new venture with much more upside and a far higher likelihood of success given that you'll (a) have a much easier time getting traction with investors; (b) will have a lot more resources available to you in terms of expertise from VCs and the like; and (c) are now credentialed enough to even join promising but not particularly sophisticated start-up in a leadership role. I wouldn't roll anymore than 10% of your net worth into it though.

May 12, 2014
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