this is a tough lesson to learn, but let it be known that any and all information asymmetry available can and will be used against you. needless to say, it's critical you become as informed as your adversar- err, colleagues, when spending years towards building someone else's (to include investors') dream.
Unfortunately most people do not have a clue at what financial literacy really is. Even fewer people are willing to admit they are financially illiterate, and of those only a tiny amount will put in the effort to educate themselves.
I am financially illiterate, fully aware of it, suffering some anxiety because of it, I'll be 41 years old in a few days, and I have no clue where to even start (never tried though, it's just recently that I started thinking about it).
Do you have links to approachable and beginner-friendly educational material?
Cut the problem down into smaller sections. Focus on either investments, or raising capital or how to structure offerings for a new company at various seed rounds. Get the basics and fundamentals down and then the ancillary knowledge will fill in the gaps
I'm saying you cant eat an elephant at once so start with the first bite. This will be a decades long journey since it's probably the problem man spends the most time thinking about. Don't worry about where you are, just try to break it down in to topics of relevance. Like there are some financial principles that apply more universally than others and I'm suggesting starting with topics most useful for the initial creation of wealth. Then as your nest egg grows, you can learn more refined tricks to keep more of what you earn.
But... I don't even know HOW do you increase your wealth. I suppose speculation but outside of that I have zero clue. I am aware that people "buy low, sell high" but beyond that, nothing. Plus, there's a ton more out there compared to the normal stocks, no?
Where can I learn about various entry-level wealth increase techniques?
i am just a random internet person and definitely not a financial advisor. i did find this really helpful when i didn't know much about wealth over long time horizons.
I once owned 1% of a company that was 22 minutes away from its IPO and then it got pulled. Then we merged with a Big Brand Name company and there were years and years of lawsuits.
They've got a three article then give you grief policy it seems. Delete their cookies and try again? I turned off bypass paywalls out of curiosity to see.
"Ownership is not the most important thing. It is the only thing that counts.
Nothing else counts in the getting of money. Shareholder thanks do not count. A good salary and a company car and health plan and pension don’t count. Most share options (usually nothing more than the promise of chickenfeed to salaried employees, and a promise broken half the time, too), don’t count. The gratitude of colleagues doesn’t count.
Nothing counts but what you own in the race to get rich. If you haven’t much skill, or much wit, or much talent, or much luck, and yet you insist on owning more than your fair share of any start-up or acquisition, then you can become rich. If you take what you’re given, you will probably not get rich."
- "How to Get Rich" by Felix Dennis (late billionaire publisher)
If you want compensation, insist on it. Don't accept third-class steerage shares that are 100% of nothing.
Remember, a meritocracy means that the best at ‘X’ rise to the top and continue to duke it out while leaving the 99.9% behind.
When you are interacting with VCs, remember that their goal is to capture as much value in $ as possible. Our entire system rewards those who have money by giving them the resources to hire the best to help them get more money.
That is why wealth distribution follows a Pareto distribution.
Ergo, unless you are the founder, assume your shares are worth zero, realize your skills are worth double what you think they are, and put your extra negotiated salary in compounding investment accounts (after enough time, you may join the 1% too!).
My story is similar to this, but with a slightly better result. VP Eng at a startup, ~1.5% equity, etc. It was during that time that a startup I'd left many years before finally sold, and net value of those options was also $0.
When my current startup sold, total value of my 1.5% stake was also worth $0. While I didn't get a severn figure payout for the stock, I did at least get a cash bonus from the investor (part of the executive contract) and a decent retention package from the acquiring company.
I understand the person is bitter, but owning 2% of a failed company that sells for scraps doesn’t net you anything.
Remember when you raise money, that’s not just free money that you suddenly own a percentage of. Unless you manage to make the company worth more than the investments put into the company you don’t get anything, no matter how much the company sells for.
That’s both reasonable and should be expected.
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[ 2.0 ms ] story [ 49.2 ms ] threadDo you have links to approachable and beginner-friendly educational material?
What does "focus on investments" even mean?...
Like, imagine being me. Just a hard-working guy all his life. ZERO CLUE about financial markets. Null. Nil. Void.
How do you start them up?
But... I don't even know HOW do you increase your wealth. I suppose speculation but outside of that I have zero clue. I am aware that people "buy low, sell high" but beyond that, nothing. Plus, there's a ton more out there compared to the normal stocks, no?
Where can I learn about various entry-level wealth increase techniques?
https://jlcollinsnh.com/manifesto/ - skim this, see if it's interesting to you
follow up with https://jlcollinsnh.com/stock-series/ if so
Once you understand the basics of assets, liabilities and cash flow it will be much easier to understand other concepts.
From there think about what would interest you and dive in.
If it's stocks then the ASX has some excellent PDFs explaining how it all works.
Oh, the memories...
Isn't the simplest explanation that the options where not in the money, the strike price was higher than the selling price?
Nothing else counts in the getting of money. Shareholder thanks do not count. A good salary and a company car and health plan and pension don’t count. Most share options (usually nothing more than the promise of chickenfeed to salaried employees, and a promise broken half the time, too), don’t count. The gratitude of colleagues doesn’t count.
Nothing counts but what you own in the race to get rich. If you haven’t much skill, or much wit, or much talent, or much luck, and yet you insist on owning more than your fair share of any start-up or acquisition, then you can become rich. If you take what you’re given, you will probably not get rich."
- "How to Get Rich" by Felix Dennis (late billionaire publisher)
If you want compensation, insist on it. Don't accept third-class steerage shares that are 100% of nothing.
When you are interacting with VCs, remember that their goal is to capture as much value in $ as possible. Our entire system rewards those who have money by giving them the resources to hire the best to help them get more money.
That is why wealth distribution follows a Pareto distribution.
Ergo, unless you are the founder, assume your shares are worth zero, realize your skills are worth double what you think they are, and put your extra negotiated salary in compounding investment accounts (after enough time, you may join the 1% too!).
When my current startup sold, total value of my 1.5% stake was also worth $0. While I didn't get a severn figure payout for the stock, I did at least get a cash bonus from the investor (part of the executive contract) and a decent retention package from the acquiring company.
Remember when you raise money, that’s not just free money that you suddenly own a percentage of. Unless you manage to make the company worth more than the investments put into the company you don’t get anything, no matter how much the company sells for. That’s both reasonable and should be expected.