What’s next after a successful startup exit that provides you with $1M-$2M?

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JASON LEMKIN

Let’s break it down.

First, $1m-$2m is the most important amount of money to make. Period. Because you can’t retire on that, not usually, not really. But. You never have to work for The Man ever again. This is glorious.

So congratulations — you have the most precious type of freedom in the workplace there is. Never having to work for The Man. And in the U.S., in the Bay Area, you need about this much money for that really to be true, usually.

Second, don’t spend more than 5% of it. Save the rest, at least for now. You will never recover if you lose it all on stupid investments like restaurants, start-ups you barely know, real estate investments you don’t understand, etc. Put the rest into VTI or something similar. Buy a new car, even a Tesla if you want, but stop there. Buy a house — it’s a not a terrible investment. Just buy one you can afford. Don’t change your lifestyle too much, don’t change your personal burn rate too much.

Now. What next?

Take a break. Start there. Yes, go on vacation for a year if you want. I did after I sold my first start-up. And after I sold my second one.

Then, start another one — if you really have it in you. This time, you probably need to do 10x better. Can you do a $10m exit (to you) next time? If you believe it, go for it. If not, don’t. Starting something from scratch is too hard otherwise.

If you don’t have another one in you, take your time to find something you are passionate about. With $1-$2m in the bank, you still need current income. But it doesn’t matter exactly how much you make, or when, or how. Take the path that comes to you. Love it. Join a friend as a co-founder. Go work at Facebook, just to see what it’s like. Follow your dreams.

Because now, you really can.

View original question on quora

Published on July 8, 2016
  • Ted

    Wish I would have had Jason’s advice 10 years ago. (BTW: I love what you are doing here with SaaStr, Jason. Thank you for everything that has gone into this great resource)
    This post is great for those that have just gotten their liquidity and were lucky enough to read the post before making a move… But for those on the other side of a bunch of bad decisions, lick your wounds and then remember you have a huge educational advantage going forward.
    I did exactly what Jason warns about and lost $4M+ in stupid investments and a terrible recession. But somehow I was still alive when all was said and done. And now I’ve done it twice and am on to my 3rd.
    I wouldn’t say you’ll “never” recover… we humans can’t cope with the finality of “never” … more like, you “may never” recover if you don’t pull up your pants and get back into the game.
    It is incredibly hard to do it again. To go all in again. But what else is there for most of us entrepreneur types? You HAVE to do it. It’s in your DNA! You may be at ground zero, but you are coming in with one hell of an education. Overall you will be much better prepared to jump into the fray.
    As a side note, for myself, the thought of working at facebook with $1M or $2M in the bank sounds like pure hell. Can’t imagine being in a position where I couldn’t make needed changes or install people and processes as required. Maybe I’m missing the point, Jason. But have you even met a true entrepreneur that has wanted to stay with an acquirer beyond the lockup? The personality that gives us the ability to do what we do as entrepreneurs also makes working in environments we can’t significantly impact feel absolutely meaningless. My 2 cents.

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