I became a millionaire at 33.
Now reflecting back at 43, here are 10 things I’ve learned that I wish I knew ten years ago.
1. Cash is king.
It’s not about what you make, or what you keep – it’s about what you can access. It’s a myth that you need to invest in illiquid assets to grow your wealth. For years, I took the money I made in my primary business and turned around and invested in illiquid, high risk-high reward ventures. And it makes sense, because when we are in startup mode, we are always managing cash flow. Out of necessity, we get comfortable with big swings and an empty bank account, always waiting for the proverbial check in the mail. So of course it makes sense that this mindset bleeds over to our personal finances. Now, I think about managing wealth much differently.
2. You don’t need to take big risks to make big returns.
Often, superior returns come from boring, liquid investments. I didn’t know the first thing about fixed income back then. I certainly didn’t consider that these types of assets had a place in my portfolio. I was swinging for the fences. Unfortunately, when compared to the power of compounding, the math just doesn’t pencil. Bottom line: I could have made a whole lot more money with a whole lot less heartache.
3. The best investment you can make is in your own business.
One of my biggest regrets is taking cash from my highly profitable business and investing in areas where I wasn’t an expert. Between 2014-2017, I extracted $2 million from my energy investment firm (where I was an expert) and gallantly dove into the startup investing world. I’ve had some big wins, and plenty of losses, but none of them compare to what I would have made if I was solely focused on reinvesting in my business.
4. You can’t out-earn a poor relationship with money.
Perhaps because I made so much so quickly, I had a very laissez faire attitude when it came to protecting my wealth. As I dove into my own psychology, I learned that I was addicted to risk and the rush of a big payout. After all, that’s how I had made it in the first place. But this style equates to little more than professional gambling. Now I’ve learned to become a much better steward of my wealth.
5. A million dollars just isn’t that much money anymore.
When I made my first million, I felt like a king. But after paying taxes, a downpayment on a house, paying off some debt, and keeping some operating capital for the business, just like that, it was gone. It was shocking how fast it went. Not to discourage anyone who is on their way to their first 7-figure payout; it’s still a huge accomplishment. But the feeling was a lot more fleeting than I would have ever anticipated.
6. The good times won’t last forever.
We started an oil and gas business at the beginning of a massive boom cycle. Now, I acknowledge that we made very good decisions and put ourselves in a position to capitalize on our good fortune. But we were also very much in the right place at the right time, and as they say, a rising tide lifts all boats. They also say when the tide goes out, that’s when we see who isn’t wearing any pants.
7. Your business will never outgrow your personal limitations.
I’m proud of what we built, but I regret not pushing harder when we were in the midst of the feeding frenzy. We declined to raise capital because we said we wanted to keep our lifestyle and not be beholden to investors, but if I’m honest with myself it’s because a part of me was afraid to play full out. I have compassion for that young bright-eyed entrepreneur, but sometimes I can’t help but wonder what if.
8. Just because someone is rich doesn’t mean they are necessarily smart (or a good person.)
Early on in my career, I trusted a lot of people that I shouldn’t have because I thought they must be smarter than me since they were wealthier. I was wrong. People see a rising star and they want to hitch their wagon to a good deal. Often this comes disguised as “help”. I definitely had some benevolent and generous mentors, but looking back there are times when all I needed was to trust myself.
9. Business is a long game.
Chalk it up to the energy of the boom and the excitement of living in the trenches, but I rarely thought further than the next deal and certainly didn’t craft a long-term (5 yr+) vision. Thinking back, that’s probably pretty common at 33. Now, I try to orient all of my major decisions to long term goals. This helps to cut out the noise and creates a tremendous amount of clarity.
10. Your network may be your net worth, but deep meaningful connections are priceless.
I felt like I didn’t have much in common with most of the oil bros, so my early years as an entrepreneur were often lonely. The entrepreneur path is hard, and the swings can be debilitating. Once I found my tribe and went all in, the returns on that investment were priceless.
Nowadays, I can recognize and appreciate the fact that I was doing the best I could with the information that I had at the time. I have deep compassion and am grateful to the younger version of myself who kept going during all of the times when things got tough.
Hopefully, though, a few of these lessons resonate and just maybe you won’t have to learn them the hard way.
To all the younger selves,
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