Think of this as investing in your company. If your company fails, your options will be worthless.
If your company does well, exercising too late will be costly.
THREAD:
Wealth tips for founders & early employees...
• Secondaries
• Tax benefits
• Hiring a CPA / Financial Advisor
• Diversifying
• Tools I use
• and more...
Think of this as investing in your company. If your company fails, your options will be worthless.
If your company does well, exercising too late will be costly.
Secondary transactions typically first occur at the Series B [although if your numbers are up and to the right & there's demand for allocation -- it can happen at the A].
Take a small % off the table to de-risk yourself financially (rent, food, transportation, etc)
This way it keeps your cap table clean and gives your investor slightly more allocation.
Look over your ROFR/Co-sale agreements and chat with your co-founders and/or investors.
Make sure you negotiate the discount on the Preferred share price and not Common.
5-20% is considered normal.
FF Preferred Stock is essentially common stock with a twist that allows it to be converted to preferred stock.
If you’re currently incorporating, talk to your counsel about this.
This will save you time & energy when selling secondaries.
Secondary transactions usually result in a big tax event (short/long term cap gains, etc).
Reach out to a CPA that specializes in this.
If you're in the middle of a secondary sale, DM me and I'll be happy to connect you with mine.
When selling qualified stock, you can exclude gains of up to $10 million in federal (and sometimes state) tax.
A few requirements to qualify:
• C Corporation
• Total gross assets are < $50 million at time of incorporation
• Have held onto the stock for at least 5 years
FL, NV, TX, WA, and others don't impose an income tax.
Depending on your transaction size, this can be a sizable amount of savings.
But don't move solely for the purpose of saving on taxes.
Live where you enjoy waking up each morning.
Contribute the maximum amount annually ($6-7k).
The gains from this account will be tax free when you retire.
Self-directed IRAs are useful as they give you more flexibility in choosing your investments.
This is a tax incentive to encourage those with capital gains to invest in low-income communities.
(1) Investment held for 5 yrs → 10% tax reduction; 7 years → 15%
(2) Tax on reinvested cap gains in an OZ fund held for 10 years is permanently forgiven
(3) Reinvested cap gains are deferred until the OZ fund is disposed or Dec 31, 2026
Reach out to your immediate network & ask who they use.
Interview a ton of people.
I *highly* recommend hiring someone who has direct experience in handling founder/employee liquidity (vs a generalist CPA).
It'll save you money & headaches in the future.
Lean on your network and investors for intros.
Don't be afraid to fire your advisor if they aren't producing results.
Fees can have a wide range based on your total AUM.
~1% is typical, but fees add up overtime.
"Concentration is how you get rich, diversification is how you stay rich"
Invest in asset classes based on your risk level, but don't invest in a million different things:
• Commodity futures
• Crypto lending
• Collectibles
• Real Estate
• Volatility
• Lending
• Kubera: Portfolio tracker
• Interactive Brokers: Brokerage Acct / Margin line
• Robinhood: Stocks & Crypto portfolio
• Notion: Deal Memos
• AngelList: SPV, Fund, and Angel Investing
• Reddit: /r/fatfire for others stories
More from Life
1/ Some initial thoughts on personal moats:
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
I'm increasingly interested in the idea of "personal moats" in the context of careers.
— Erik Torenberg (@eriktorenberg) November 22, 2018
Moats should be:
- Hard to learn and hard to do (but perhaps easier for you)
- Skills that are rare and valuable
- Legible
- Compounding over time
- Unique to your own talents & interests https://t.co/bB3k1YcH5b
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
People talk about \u201cpassive income\u201d a lot but not about \u201cpassive social capital\u201d or \u201cpassive networking\u201d or \u201cpassive knowledge gaining\u201d but that\u2019s what you can architect if you have a thing and it grows over time without intensive constant effort to sustain it
— Andrew Chen (@andrewchen) November 22, 2018
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
Things that look like moats but likely aren\u2019t or may fade:
— Erik Torenberg (@eriktorenberg) November 22, 2018
- Proprietary networks
- Being something other than one of the best at any tournament style-game
- Many "awards"
- Twitter followers or general reach without "respect"
- Anything that depends on information asymmetry https://t.co/abjxesVIh9
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
You May Also Like
The UN just voted to condemn Israel 9 times, and the rest of the world 0.
View the resolutions and voting results here:
The resolution titled "The occupied Syrian Golan," which condemns Israel for "repressive measures" against Syrian citizens in the Golan Heights, was adopted by a vote of 151 - 2 - 14.
Israel and the U.S. voted 'No' https://t.co/HoO7oz0dwr
The resolution titled "Israeli practices affecting the human rights of the Palestinian people..." was adopted by a vote of 153 - 6 - 9.
Australia, Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No' https://t.co/1Ntpi7Vqab
The resolution titled "Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan" was adopted by a vote of 153 – 5 – 10.
Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/REumYgyRuF
The resolution titled "Applicability of the Geneva Convention... to the
Occupied Palestinian Territory..." was adopted by a vote of 154 - 5 - 8.
Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/xDAeS9K1kW
View the resolutions and voting results here:
The resolution titled "The occupied Syrian Golan," which condemns Israel for "repressive measures" against Syrian citizens in the Golan Heights, was adopted by a vote of 151 - 2 - 14.
Israel and the U.S. voted 'No' https://t.co/HoO7oz0dwr
The resolution titled "Israeli practices affecting the human rights of the Palestinian people..." was adopted by a vote of 153 - 6 - 9.
Australia, Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No' https://t.co/1Ntpi7Vqab
The resolution titled "Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan" was adopted by a vote of 153 – 5 – 10.
Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/REumYgyRuF
The resolution titled "Applicability of the Geneva Convention... to the
Occupied Palestinian Territory..." was adopted by a vote of 154 - 5 - 8.
Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/xDAeS9K1kW