Downshift to Reach Big Dreams
“Go home with the one who brought you to the dance.” might be fair advice for dating, but in careers, it’s a recipe for burnout, not to mention destroying your health and wealth.
You need to downshift to reach massive dreams.
What got you here, your daily date with hustle, grind, and long hours… That date got you to your first big liquidity event. This same date won’t get you to $100M+
Even after making my billionaire boss $100M, I stayed with the one who brought me to the dance. I was stuck in the Break In phase, too scared to stand in my worth and ask for equity. Now I share my lessons of moving over to Building Equity 15 years after my ideal opportunity passed me by.
Your career, like your life, has phases. I call them the 3 B’s:
Break In
Build Equity
Break Out
The 3 B’s of a high leverage $100M career:
1.Break In:
Get a job in investment banking, management consulting, or investing.
You need to know the path and options early enough to get the grades, to be able to break into investment banking (IB) or management consulting. You can break in later by working at a great startup or getting an MBA and then a job in IB or consulting.
2. Build Equity
Get paid for performance, not based on your salary, but based on the inherent leverage in the business. When managing money (PE/VC/Hedge Fund), equity comes in the form of being paid in carry, ie your share of profits of the funds run by you and/or the firm. In startups, building equity separates your time from money earned.
In the Building Equity phase of your career, you build multiple paths of wealth generation. You earn equity in your full time job. You can invest in other companies. You can scout for a VC firm. You can be on company boards.
If you think this sounds far-fetched, two of my friends who hit $100M by age 50 from diverse backgrounds both live the above model (running companies, on boards, working with VCs).
To make $100M, you need to build equity. You don’t necessarily need to go further. Bill Gurley started as an engineer at Compaq computer, transitioned to an analyst on Wall Street, moved from analyzing computer stocks to internet platforms (by switching jobs), took Amazon public, got a partner role at Benchmark (a VC firm), focusing on internet platforms, invested in Uber, and is worth billions.
3. Break Out
Build your own firm, either a startup or asset management company.
The very wealthiest in the world all Broke Out. Elon Musk. Bill Gates. Warren Buffet. Sarah Blakely. Founders whose startups grew to some of the most valuable companies in the world.
Breaking Out is also the most risky, and the most littered with lost fortunes.
If your goal is $100M or even a billion dollar career, your path may not need to take on the risk of entering the Breaking Out phase. The key is knowing yourself and your options. Pick the best path for you.
To successfully transition from Breaking In to Building Equity, you need to:
Pay attention for opportunities to move to Building Equity
Transition at the right time… not too early or too late
Be able to transition to a new way of working.
This path is simple but far from easy. It requires different skills at each phase. You are working so hard in the Breaking In phase, it’s easy to get caught there.
1.Excel at Breaking In and plan your move to Building Equity
In the Breaking In phase, we are hard at work as investment bankers, management consultants, or startup founders, logging 80-100 hour weeks, sometimes for years at a time. There’s no time to look up and ponder your career strategy.
I realized I was on a path of the 3 B’s: Break In, Build Equity, and Break Out, but I got stuck for 10+ years in the Breaking In phase. I broke in, ran the Nicholas Applegate Global Tech Fund, the #1 Mutual Fund in the world in 1999, earned two of my bosses $24 million (in one year) and $100 million (in one trade).
That was my moment to transition to Building Equity.
Here are some guideposts for paying attention while keeping your head down in grinder mode:
Try to stay in each job 3 years.
Every time I recommend staying in a job for 3 years, all the LinkedIn trolls and haters come for my head! I’m told I am out of touch, old fashioned, and my advice is dated. But math doesn’t lie, and rarely changes.
It takes money to train you, and time for you to become good at any new job. Think 18 months they have broken even on their investment, so give them another 18 months of getting your best work.
The downside of a resume full of 11 month stints is that later on high quality companies that invest in their people will not even consider you. You need to keep a quality resume to get the big opportunities when you move to Building Equity.
Your network is your net worth.
Build and use your own personal CRM, and send yourself automated email reminders to connect with relevant people, even if you are constantly working. Think about who is interesting? Who is doing interesting things? Who might you want to call for a favor in 4 years? This network will let you know of opportunities
Pay attention to patterns.
This might seems illogical, but if I hear about something in quick secession 3 times, I pause and learn a bit about it. This happened with blockchain. Within 5 days, one mentee informed me he was retiring at 29 after having made money trading in crypto, another mentee told me she was starting a crypto hedge fund at age 27 (she was later named Forbes 30 under 30), and a third called to ask if he should raise capital using an Initial Coin Offering.
I stopped everything and learned about crypto and blockchain. I holed up in a hotel room in Hawaii reading books on degenerate “innovators” rather than vacationing with my friends. My newfound obsession helped me transition my career into the space and build equity.
Ignore all but high quality.
The “Hell Yes” test. You are grinding. You are moving up. You’ll get calls from headhunters. Offers from startups. Offers to invest.
The best rule is to ignore everything unless it is a Hell Yes.
My “Hell Yes” moment came in October 1999. My fund was up 493% that year, ranked #1 in the world. I didn’t have time for headhunters. I was focused on the fund. Then came my review.
I made my boss $24 million and he was unwilling to give me a $15K raise.
I went to dinner with a friend who worked at a top hedge fund. She asked how I was doing. I told her about the raise. I met with her boss, the head of the fund, and I got a Hell Yes offer, working for a brilliant man, at multiples of my previous pay. That was my Hell Yes and the best job I ever had.
My past is also littered with “meh” investments of money and time that went nowhere.
I know what leverage looks like in finance, business and life. Yet, I’ve invested in projects and people with zero leverage, because I want the human connection. They are great at sales… at selling me on the connection and then getting me to invest.
Beware of confusing your human needs with good investments. Keep your standards for money and time investment high.
One of my mentees smartly prepared by making a list of those work opportunities he would say yes to. Stay focused on crushing it where you are and making the most of breaking in, until it’s clearly a great opportunity and time to move to Building Equity.
2. Next, perfectly time your transition to Building Equity
Just like the story of the 3 bears, moving to Building Equity too early can stunt your career, and moving too late can limit your financial upside. The optimal path has you gaining enough experience and building a strong network so the quality of the offers is strong.
When deciding to transition to Building Equity, define too early and too late!
Too early:
You’re not getting offered enough value/equity for your time, either not enough equity or not high enough quality opportunities.
Wait until you have a track record of success that makes people recruit you, not because you worked at Goldman for a year, but because of the specific things you did there and people you met over a 3 year period. Yes, if you make it into Goldman, people will chase you like you’re the next big superstar, but building a career of 18 month stints will obliterate all the hard work you did to break in.
Use these first 3 years to build leveragable habits, even while you hustle for 80-100 hour weeks. Examples include building your personal CRM, systematizing many of your tasks, and streamlining everything you can think of. I got my wake-shower-clothes-makeup down to 12 minutes, giving me more time to work, and a bit more sleep while I worked 100 hour weeks!
Just right:
Build the track record, clients, and network to move successfully to Building Equity. If you’re managing money, a 3 year track record is something you can take anywhere, and clients are more likely to follow you.
I mentioned Bill Gurley earlier. He bided his time.
Starting out as an engineer at Compaq (not glamorous), Gurley then got a job covering computers on Wall Street for Credit Suisse. The internet exploded in the late 90s. Bill used that to make a lateral move on Wall Street to covering the Internet for Deutsche Bank. He banked the Amazon IPO.
From there, he went to Benchmark covering internet platforms and marketplaces, and headed the Uber investment. He’s worth over $7 billion, and he got there step by step. He didn’t make employers take a leap of imagination. It was obvious he was the internet platform guy by taking Amazon public before making his move to Venture Capital.
My friend Jenny also did it just right.
She was a doctor. Then worked in management consulting, getting into business. Then she worked at two large biotechs. You’d think her next move would be a biotech startup, but NO, she backfilled her resume, becoming the head of taking new drugs through the FDA approval process for a massive pharma company.
Next, she joined a biotech startup as Chief Medical Officer, and the FDA knew and trusted her. She took her time to build the credibility she needed with the FDA without wasting unnecessary time in jobs that didn’t have equity upside. Her first big exit (appx $80-90 million) was in her early 40s.
Too late:
Peter Thiel is a successful billionaire. But he has regrets.
He did everything the “right” way and now he pays students to quit college and go faster. He went to college, MBA at Stanford, Stanford Law, worked at an investment bank, law firm and consulting firm. Then, 9 years after graduating college, he founded PayPal.
Marc Andreessen, by comparison, built his first company while in college, and IPOed that company 2.5 years after graduating college. While few of us are Elon Musk or Marc Andreessen, the lesson is the same.
Consider Phase 1 is a warm up for the real moves towards your ultimate career and wealth. My olympic horse trainer, Hubertus Schmidt, said this about warmups:
“Warm up as long as necessary and as short as possible.”
Ignore his advice at your peril.
When you’re in Breaking In for too long, it feels like you’ve passed the best time to make the move. You’re stuck, grinding away, underutilized and tired. You see things more strategically than your peers, yet you’re being used for your hustle, not your strategy.
It’s harder to see your own life objectively. It’s easier to see other people’s careers and see that they are stalled out. The trick is to look yourself in the mirror, be honest and kick yourself out of Breaking In, and get moving to Building Equity!
3. Change the way you work from in Building Equity
To compound your career and reach big wealth over the long-run, you must change how you do things. It’s harder, scarier and riskier to change the way you do things, when by definition, what you have been doing has worked so well.
What got you to your first few millions, won’t get you to $100M and beyond.
After you’ve figured out the timing of moving to Building Equity, you have to make the transition.
How to work different in the Building Equity Phase:
a. Leveraged Life + flywheel of money (VC, Startup, BD)
One of the biggest hurdles to a successful transition to Building Equity, is rejecting hustle culture for a leveraged approach. This doesn’t mean you aren’t busy. It means the time you spend is highly valuable and leveraged. Use your brain, experience and connections in a highly strategic way. Everything else can and should be outsourced to an assistant.
One way to lead a leveraged life is to build leverage into the structure of your career. For instance, you can be a partner at a VC firm, operator at a startup, and board director at other companies, all at the same time, earning equity 3 ways, and having each of your roles benefit from your other roles (intros, connections, customers, investors).
Moving to a leveraged life is about saying no to make space and room for strategic thought as well as for new opportunities to emerge. You’ll feel lazy and unproductive. Get comfortable with that white space and watch yourself accelerate through Building Equity.
b. Human connection + Health
Part of rejecting the hustle culture of your earlier years is to reclaim your physical and mental health. Prioritize movement and eating whole foods. And reconnect with friends and family.
It’s not too late. Building Equity is about you increasing the amount of control you have over your calendar. With this you can spend more time with friends and family. It will feel weird, like you need to keep checking your phone. Keep at it!
What if you’ve truly lost touch? You can build back connections one micro-moment at a time. This is the physiology of love. One minute of undivided attention, asking follow up questions, acting as if that person is the only one in the world, acts to build a bridge of connection between you. Add up those moments, and you have rebuilt a connection!
Dr. Barbara Fredricksen, professor at UNC Chapel Hill, and author of Love 2.0 took her own advice. She was busy and her husband would call and chat on the phone. She half-listened. Their feeling of connection and marriage was dwindling.
Then her research showed through brain wave monitoring, that human connection and even love was built one micro-connection at at time.
Small focused efforts meant more than large chunks of time. This was great news for a busy wife worried about having to choose between her career and marriage. She shifted to super focused shorter conversation with her husband, and her marriage healed, moment by moment!
c. Growth mindset, learning, and transformation
This should be fun, right? Moving from grunt hustle culture to strategic thinking. But ALL change is scary. It’s human nature to want to keep doing what we’ve done. I should know.
I stayed stuck in Breaking In for decades longer than I should have. I ran the #1 fund in the world in 1999, and worked as a partner in a top hedge fund for the following 3 years. That was the perfect time to start a fund of my own or move to Silicon Valley and work at an internet startup when valuations were low.
I missed my moment… by 15 years.
I can’t get that back, but you can. Leapt when the time is right.
But you need the right mindset. I was missing a growth mindset. I needed to rededicate myself to constant learning and transformation. Yes, you need to make the right move at the right moment. But your biggest obstacle will be having the wrong mindset. Make sure you are fully ready in every way. This will change the trajectory of your life.
Finally, what about Breaking Out?
Breaking Out is the highest reward and highest risk of the 3 B’s. Bill Gurley became a billionaire staying in the Building Equity phase. What will it take for you to be the next Bill Gates, Warren Buffett, Elon Musk, Sarah Blakely, or Jeff Bezos?
For the short list of billionaires on the Breaking Out list, there’s a much longer list of failed startup founders. In between, there’s a list of founders who made good money, but would have made more staying in the Building Equity phase, riding someone else’s rocketship.
That’s why I focus so much on transitioning from Breaking In to Building Equity. That’s where the most money can be made with the least risk.
Should you move to Breaking Out? Only if you must. You have a burning desire to build. You see the world differently. Your passion for building this future borders on the insane. Look back at the list of billionaire founders. Think about their lucky timing combined with unwavering grit.
But don’t let my risk/reward talk stop you from pursuing your startup dreams.
As my old billionaire hedge fund boss used to say: “It’s gotta be someone, might as well be us.”