F%^$ You Money

Posted by Jeff Carter
on October 15th, 2012

Historic Microsoft photo of Paul Allen (left) ...

Paul Allen (left) and Bill Gates (respectively) on October 19, 1981 (Photo credit: Wikipedia)

How much is enough? When it was dull in the trading pit, a friend of mine used to say, “Is there a better hotel room? Is there a faster jet? Is there a bigger boat?”. How much do you need?

When you are an entrepreneur, it’s important to get into the business because you love the idea. You aim to change the world. Money is just a byproduct of what you are doing. When Bill Gates and Paul Allen started Microsoft, they didn’t say, “We’re going to start a company and make a lot of money.” They said, ““We had dreams about the impact it could have. We talked about a computer on every desk and in every home.” Huge difference.

When I talk to entrepreneurs, if they focus on how much money we are all going to make I know I am in trouble. That means instead of running their business to satisfy customers, they are going to run their business to satisfy their quest to get wealthy. We may get lucky, but the odds are better if you buy a lotto ticket.

Of course, we all invest in businesses to make money. Start ups and the stock market are not any different. Investors expect a return on the cash they have invested. Money is one measurement of success. It also is the most obvious. It’s ego satisfying. It affords you some breathing room so you can worry less about covering basic fixed expenses. But, having it can cause massive problems. Ask the lotto winners and pro athletes that went broke.

When you are trading, the quest for money gets in the way. Traders measure themselves every day by how their statement looks the next day. Make money, you feel like a hero. Lose a little, chagrined. Lose a little more, panic. Eventually your emotion over the money gets in the way and it’s impossible to make money.

Entrepreneurship is different. Money isn’t so immediate because it takes so long to make. I have been passionate about entrepreneurship ever since I learned how to spell the word. In 2007, I co-founded Hyde Park Angels in Chicago and I haven’t taken one dime from the organization yet. But I have had the opportunity to meet some great people, and invest in some terrific entrepreneurs. Eventually the money will come to me because I am confident that the people I invested in will build tremendous businesses. They are out to change the world.

The other thing about money is as your life changes, the goal changes. The hook that got me in the pits trading was my friend telling me, “I’ll have you making $100,000 per year in three months.”. But what kept me there wasn’t the money. Hackman-Oldham Theory should have told me that! (Greg Oldham was one of my profs as an undergrad) What kept me there was consistently matching wits against the market, and other people in my pit. What kept me there was self determination. I set my own hours. It was me against the world. The reason I got up in the morning wasn’t just the money-it was because I felt like I was a part of something bigger than myself.

When I first started, one trader told me that if you had $4M in cash, invested it in T-bills at 5%, you could live fat and happy the rest of your life. To him, that was f%^$ you money. Another trader told me $10M. It seemed everyone has a different idea of what that number is. That’s one of the reasons all this talk about income disparity and fairness is total bullshit. Everyone takes different risks, and has different preferences.

The other thing that I have learned is that when you are selling your business idea, you better start with having a passion for it. If you aren’t totally passionate about it you will quit when the going gets rough. I guarantee that the going will get really rough. Businesses and markets have a way of chasing the weak hands out. Passion will make your business sustainable. Everyone you talk to knows that one of your goals is to make money. But it’s the passion you display and infect them with that inspires them to follow you. The money will take care of itself.

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tip of the hat to Abnormal Returns.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.