Do You Feel Like You Deserve It?

With all the IPOs and SPACs, employees of those companies are suddenly finding the stock they were given as a part of their employment has made them wealthy.  My friend Brian Lund linked to this article and I read it this morning.  It’s interesting to me.

A lot of people would ridicule the feelings of the author of this article but I wouldn’t.

However, the question the author asks is “Do I deserve this?”

There is a lot wrapped up in that question depending on a lot of variables, not the least of which is what sort of psychological baggage you had when you started the tech job that made you some money.  It is not uncommon to feel some guilt when you have success and your friends do not.  After all, they went to the same high school, college, grew up in the same neighborhood etc right?

I share the author’s thoughts about many wealth managers.  Warren Buffett isn’t a fan either.  She will find that when you are sitting on a pile of gold, lots of people want a piece of it.  Wait until development people find out!

I go back to the beginning of the article.  This is the crux of what you should focus on if you are in a similar situation.  The author writes:

When I joined my company, I theoretically knew there were only two exit paths — an acquisition or an IPO. And a third, where the company implodes, like WeWork, but you’re hoping for one of the first two. I didn’t really think about it when I signed on. I thought that I’d make a little bit from an IPO, maybe $200,000. You don’t think much about $200,000; it’s not life-changing. After I joined, people would say things like, “I think I’ll retire off this money.” I thought they were delusional. Then, last year, a friend called and said, “Are you ready to be a millionaire? Check the news.” That’s how I learned my company was IPO-ing. I had no idea. I would be making north of $6 million.

It’s not purely a celebratory time. It’s a stressful time, too, because of the constant decisions. The amount of money is so large that if I make a 5 percent fuckup, that’s hundreds of thousands of dollars.

Ask yourself some questions.

• How many people would have joined that startup at that time given the binary odds of success?  Success always has backward accounting.  Today, 100% of the people would say they would do the same thing.  However, they didn’t.
• Think about the sacrifices you made.  Living in SF is not pleasurable. It’s hyper-expensive.  It’s dirty and full of homeless.
• How many hours did you work a day?  My guess is this wasn’t a 9-5 gig.
• Did you have gold-plated health insurance?  A gold-plated retirement plan?  My guess is you had substandard health insurance and no real retirement plan.
• Did you get the job because you were qualified? Or because of something else?

I disagree with the author’s premise that they happened to be in the right place at the right time.  That implies the whole episode was 100% luck and based on chance.  It’s just not true.

Somehow the author was in a position to put herself in the right place at the right time.  She had a network, or some talent that the company needed when she was available.  Before she took the job, what were the processes she used to analyze if she should take the job or not?  Where their alternative companies to work for?

I can remember trading and making money.  I took a lot of risks.  So, because I took a lot of risks, there were no psychological problems feeling like I had earned it.  When CME IPO’ed, I never thought twice about it.  Sure, it was a lot of money and the moves in my stock market portfolio were significantly larger than the moves in my trading account.  There was some psychological baggage to deal with there.

However, I centered on one thing I had done.  In 1998, the rumors and chatterboxes were saying old-line exchanges like CME were going out of business.  Boarded up.  The price of memberships plummeted as members sold their seats.  Clearing firms that had merged found themselves with excess seats and started methodically dumping them.  My seat that I had paid $580K for was trading near $300k.  I bought another one.  Turns out, I bought the stone-cold low in one membership class.  I think in all my years of trading I bought the low or sold the high about exactly 1-5 times.

After I bought it, I remember standing by the place where we got our trading jackets.  There was a commotion near the escalator.  A good friend of mine whose intellect I respected was running, not walking, not strolling, but outright running to the membership department to sell his seat.  I have to admit, my heart and stomach fluttered a little bit.

If the exchange goes busto, I go busto.  The only thing I could hang my hat on was that I could go into the pit every day and grind out some money.

Four years later when we IPO’ed, I had no regrets.  Friends of mine had sold their seats.  Let them have regrets.  The author of the article should carry no guilt.  It’s not some cross to be borne.  She did something that I bet very few of her friends would have done at the time.

The author also brings into her calculus societal things that she cannot control.  Sure, society has been through a lot.  But the truth of the matter is at any point in time you can always find societal ills out of your control that would allow you to think that everyone has been through a lot and somehow you were lucky.  The reverse way to think about it is despite all the crap that was going on, you were able to sift through information and make a good risk/reward judgment that allowed you to benefit.

Many times I have spoken with people about wanting to invest in, or go work for startups.  I always ask the investor types if they have ever given a large sum of money to someone, had no control over it, and had it all go away.  If they haven’t, I tell them to do that a few times and see if they really want to be an investor.

If someone wants to be an employee of a startup, I ask them other things.  Can you afford to live with no salary if the startup runs out of money and can’t raise the next round?  Can you live with substandard health insurance and no retirement benefits?  How about your ego-can you be okay with telling people you are working for a company that when they find out the core idea of what the company does they will be sure it will fail our you are crazy?  Truth be told, the startups that make it big are the ones that look like really cool ideas that are stupid, but if they worked wouldn’t it be great?

The other thing to remember is no company IPOs that isn’t making life better for its customers.  The value that is given to the company often is less than the actual utility it creates for its customers.  Hence, you are “doing good” simply by showing up and working at the company.  That’s true even if you are doing something simple that isn’t changing the direction of the human race in any meaningful way.  If you IPO, somebody somewhere is deriving pleasure and satisfaction from your effort.

The author of the article needs to ask herself, what if the company failed? Of course, if her guilt is super strong, she can always give it all away and go back to what she was doing before.

Sometimes trying to figure out how you’d feel about your decision in failure when you have had success will help you realize that you earned your success.  Joining a startup is often riskier than founding a startup.  Celebrate the fact you took that risk and were rewarded for it.

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