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St. Patrick wants you to find the gold at the end of the rainbow. So do I. For most everyone in the startup trade this means the TechCrunch/Wall Street Journal write-up of your great, grand exit. But why wait for your would-be treasure? I say you can experience a little piece of it everyday. That’s right leprechaun, I’m going to demystify your concept of “treasure.” It’s not only found in an IPO. So put down the green beer, and take in my 12 tips for finding your founders’ gold.
1. Know that your “treasure” is closer than you think. Think Don Quixote. Author Paul Coelho (The Alchemist). Founder Garrett Camp of StumbleUpon. All three characters traveled the world, but ultimately found treasure mere yards from their feet. In out networked “knowledge age” it has never been more true that the fortune you seek can likely be found right in front of you.
2. “Midas Touch” yourself. It’s possible to generate your own “treasure” if you apply the 70-20-10-Rule for managing your money. This is where you: you use 70% of your resources; save or invest another 20%; and give away or donate the last 10%. Karma can be tracked, channeled and measured (sorta). See BigDucky.Yelp.com, and believe me, good karma is treasure you can’t bury!
3. The Leprechaun Law. Stress happens where your Money Out > Money In. Stress starves creativity and entrepreneurship — kills the little green guy guidin you toward your rainbow. Happiness is when Money In > Money Out.
For more, check out my sources of plagiarized material:
The Bible: do you know what the most referenced word in the Good Book is? It’s ain’t Jesus. The Holy Trinity but: Money, money, money! Richest Man in Babylon; The Sedona Method; Rich Dad Poor Dad; Chicken Soup for the Millionaire Soul (pre-release copy); What They Don’t Teach You At Stanford Business School (pre-release copy, based on this post); What They Don’t Teach You At Harvard Business School (1984); Ultimate Credit Handbook; Creative Visualization; Artists Way
4. Ditch your “Yuppie Nuremberg Defense.” Ever heard of the Nuremberg Defense? Better yet, remember PayPal cofounder David Sacks’ film, Thank You for Smoking? Well, as they say in the movie, you wanna avoid the Yuppie Nuremburg Defense. For founder wana-bes who never get off the sidelines this is the “I did it for the mortgage” excuse. That is a horrible way to experience life.
The solution.: Set aside your short-term need for treasure. For example, Google and Confinity/PayPal had a landlord willing to delay immediate treasure collection (read: cash flow in the form of rent) in lieu of long-term treasure (read; equity.) The result for the landlord was a 90x return. On a smaller scale, I still drive Buster, my ’92 BMW. I’ve never had a payment. My zero desire for short-term treasure lets me be mid-term rich.
5. Remember that you’re delivering “treasure” every day! If you’re selling a product that solves a problem or generates a cost-savings for your customer, that’s treasure in his pocket. The revenue you generate is your share.
6. Time management parallels treasure management. Allocate your time by the 70-20-10 Rule of Gold: 70% to your job; 20% to your family/personal life; 10% should be donated. I don’t know how to measure the time you donate (you’re not supposed to have to “measure” that one it, I guess) but if you go below 20% with your daughter, says Chris Rock, “she’ll end up on a stripper pole.” I believe him, and the same thing will happen with your startup employees — but they’ll be lap-dancing for your competitors instead.
7. Ask Yourself the Treasure Question. What is the deal that you can make this year that would change your life? If you can answer this, it will be very empowering. Once you can, focus you 70% time and effort on it.
8. Avoid people giving advice that is clouded by their own lust for treasure. SoftTech VC founder Jeff Clavier says, “revenue is ‘noise.” Jeff is flat wrong. Revenue is the lifeblood at your company. I’ve written about it here.
Remember VCs are like your father-in-law: You’re married to him, but he gets his money first, next comes his family (the rest of his fund!) and then you. No surprise that you don’t get the treasure at the end of that rainbow.
9. Treasure is a tool for war, too. When you get big enough to threaten
another business, their gloves will come off. I’ve done battle with Oak Brook Bank (for not paying commission), Fair Isaac (for threatening to sue because my company, duck9 credit educates people about FICO), and others. Founders with no treasure war chest will cow-tow to every legal threat. Me? I’m 9 for 9 in court. I plan on batting 1.000 thanks to my “treasure
10. Pull some treasure off the table when you can. Every Friday is a mini-liquidity event for me and Baxter. I take $, and eat it somewhere yummy, like Madison and 5th (in Palo Alto, Calif.) and Baxter gets a treat. We celebrate right in the Bank of America lobby.
11. Manage your cost of treasure. In the U.S.A., cost of funds is directly dependent on a 1970 technology called FICO. The higher your FICO score, the lower your interest. Read this post for more on how to manage your startup Credit rating: Hack Your Startup Credit Rating.
12. The ultimate app of the Leprechaun Law: Playing with house money. This is your goal, founders. House money ain’t VC funds. House money is the windfall from your last startup, or the code your wrote at your last job that you’re “reapplying” for your own gig. Or app/product that was cast aside that you see merit in. It’s easier to bet big — and win big — when you start out ahead. I’m obnoxious ‘cuz all of my money is windfall, it’s house money I’m playing with. Also I see it as stewarding God’s money. This produces 5 fringe benefits:
* removes emotionality of money
* taps into universal creative forces of abundance
* obeys my 70-20-10 rule
* leverages about 80 books I’ve read on money (including the Bible).
“I ‘effen love money,” just like Ricky Bobby from Taladega Nights.
Contest — for the Ricky Bobby in all of us!:
In the comments field, list your money-generating strategies, money-saving tips and other treasure techniques for founders below. Winners get a doggie kiss from Baxter, and we’ll all get a little richer.
Larry Chiang is the founder of duck9 and a frequent contributor to Found|READ. Two of his most popular posts are: 9 VCs You’re Gonna Want To Avoid, and 9 Things Stanford B-School Won’t Teach You, which he is turning into a book.