Does a focusing on the headline number come with onerous terms?
Last week, famed Venture Capitalist Bill Gurley wrote a heavily circulated piece called “On the Road to Recap: Why The Unicorn Financing Market Just Became Dangerous for All of Us.” The gist of the story was that certain founders (and their VCs) were striving for high headline valuation numbers (i.e. Unicorns, or companies worth over $1 Bn) at the expense of much more onerous terms buried deeper in the document. This “Dirty Term Sheet” would give the illusion that everything was swimmingly awesome but the ensuing complexity could come back and haunt the company.
When I left the corporate world a year ago (wow!) I would share the following “goal” with anyone who would listen:
“I’d like to build and sell a company for at least $50 mm. Not because I want the money, but just to know that I could do it.”
What a stupid fucking statement. Let’s unpack this hot mess:
- 50 is pretty arbitrary — even in startup land. Why? (If I had to guess — it was enough to never have to “work again” but low enough to show that I was “humble”)
- 50 is meaningless without more context. If this ImaginaryCo raised $45 mm the founder would barely pocket anything
- “Just to know I could do it.” Seriously?????? I’m all for BHAG(1) but what would the knowledge of this goal really bring me. (or my ego?)
- I don’t want to “retire,” ever (health, permitting). I want to be challenged, make my dent in the world, with amazing people, while providing for and being a good father/husband. None of these were considered in the proclamation.
This also reminded me of a concept amongst finance professionals, “The Number.” For the unfamiliar, it’s the nebulous balance of one’s bank account where you then drop everything and live the life you’ve always dreamed of living. Life is too complex to measure it using one number and even attempting to do so can constrain us with the Dirty Life Term Sheet.
The “number” is non-stationary!
For non-statistics geeks, it moves around. Duh — kids, interest rates, health, individual preferences, inflation, real estate… I know you’re thinking, “well it always goes up,” and I disagree. The drift is definitely upwards, but we all have choices that we can make, especially how we spend our time and money. For me, a big realization was that Lisa and I don’t want lots of “stuff.” We love experiences and travel, will spend lots of money on our daughter’s education but we won’t buy lots of stuff. To be specific, below are two items that many financiers strive for:
I’m not passing judgement on those with nice cars, but your Number is less impacted when you wear an $8 watch and have $200 car payments. My point is that we all have much more choice than we give ourselves credit for.
A wise friend of mine shared the following insight:
“We spend our 20s trying to establish ourselves, our 30s trying to acquire stuff (homes, second homes, status). Then in our 40s we realize that the “stuff” doesn’t matter and in some ways is a hindrance in enjoying the moments in life.”
Ask yourself, is my “stuff” making my contributing to Dirty Life Term Sheet?
Design Success On Your Own Terms
Just like a Unicorn’s Headline valuation masks and misrepresents some of the underlying terms, we often default to the Lazy definition of Success — Money and Recognition. But as Alain de Botton says:
“The next time you see somebody driving a Ferrari, don’t think, ‘This is somebody who’s greedy.’ Think, ‘This is somebody who is incredibly vulnerable and in need of love.’”
It’s very likely that the aforementioned Ferrari owner is subject that they are subject to a Dirty Life Term Sheet. Furthermore, it’s a misconception that the happiness in our lives are driven by big singular events, be it professional or personal (notwithstanding births, deaths, and marriage, but even then it’s the ensuing impact of said event) that I’ve personally come to realize in the past year. And these are extremely personal choices and intentions, but to me they are my attempt at a Clean Life Term Sheet.
Personally, I’ve a few small choices I’ve made had a deeply impacted my happiness:
- Meditating 2 x 20 mins a day
- Spending 1.5 hours in the AM with my daughter (after having exercised and worked for 2.5 hours prior)
- Wearing Air Maxes almost every day
- Having dinner as a family four nights a week
- Not checking my phone for 1 hour before bed
These are small wins, and work for our family today, but if I’m consistent about them, they add up over time.
It’s the journey, not the goal
When you fixate on the Headline number, you lose sight of the journey. But the journey is the only thing we have — it is what we pursue day in and day out. Now, I’m not suggesting that we eliminate all goals, but that we really ask ourselves why we are striving for them. In my $50 mm example, it was predominantly ego with a few sprinkles of building something and challenging myself. Dump the ego and keep the parts of building and challenging.
Furthermore, we also don’t want to live a “deferred life plan,” where we are always looking ahead for the next “big win.” During my twenties, I would read a book thinking about the next one or think about dessert as I ate my appetizer. Dan Harris has a great quote about our fear of the present moment:
“With one foot in the past and the other in the future, we’re pissing on the present.”
The present moments are the ones to savor, the journey is the gift. Robert J. Hastings said it so beautifully in his poem, The Station:
So stop pacing the aisles and counting the miles.
Instead, climb more mountains, eat more ice cream, go barefoot more often,
swim more rivers, watch more sunsets, laugh more, cry less.
Life must be lived as we go along.
So — clean up that Life Term Sheet, avoid a life of comparison, design success on your own terms, and remember:
The true joy of life is the trip.
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— Khe Hy (@khemaridh) February 22, 2016