Financial Independence is Like a Startup

I’ve worked most of my professional life in small Silicon Valley tech startups.  I’ve been a founder, an early team member, and I even did a stint in management.  I have been lured by tales of fabulous riches just around the next financing on numerous occasions. I’ve spent a fair amount of time fantasizing about the future value of hundreds and thousands of options, only to see the company that issued them fade to nothing, or explode in a glorious fireball.  Despite the disappointments, as a consultant, I still prefer to work with small, scrappy companies pushing the boundaries.

On reflection, I realized that the quest for financial independence is like a startup in a lot of ways.

It’s Visionary and Disruptive

The most successful startups see opportunity where others see only hardship.  Some of our friends have recently expressed confusion (maybe even irritation?) that our wedding doesn’t have a date set yet, but I’m in the midst of purchasing another investment property.  It’s hard to make people understand that to us, saving towards our independence is a bill every bit as important as the mortgage, or our grocery bill.  We see the big picture, and the Soon-to-be Mrs. Vagabond has been patient and wonderful about it.  We’ll get to the wedding in our own time, and we’re not prioritizing money before life, despite what some of our friends might think.

It Takes Single-Minded Focus

Startup workers are familiar with long hours at the office, tight deadlines, and pressure.  At its most extreme, financial goals can require calculated sacrifice, too.  I’ve set some really high standards for our progress this year (purchase three rental properties and save 50% of remaining income to 401(k)), and I am still sorting out just how to earn enough to accomplish those goals.  I’m going to take on extra work, and that will mean some long days ahead.  I just know that if I can accomplish those goals this year, the remaining couple of years before FIRE will be all downhill!

It’s Lonely At Times

Like working at a startup, it can sometimes be a little lonely when you’re working towards financial independence.  You explain the path (to FIRE or startup success) to friends and family who inevitably look at you as though you’ve grown a second head.  All the enthusiasm in the world isn’t enough to show some people the light!

It can be awkward to explain to someone who wants you to join them in spending a bunch of money on an expensive activity why exactly you don’t want to join them.  This is Silicon Valley!  We’re well-paid professionals!  We should be able to let our hair down and reward ourselves!  Trust me: I’ve heard it all.

Now, don’t get me wrong: I actually feel like we live a more full and rich life than most people.  We just have to avoid spending money for spending’s sake!  We weigh each expenditure on the basis of whether or not it will truly make us happy, not on a desire for endorphin-fueled gratification.

The Payoff Is Amazing

Like a hugely successful startup, being financially independent offers us the opportunity to experience the rest of our lives on our own terms.  To work, or not to work.  The reward is less about the money and more about the ability to pursue our hobbies, passions, and contribute to causes dear to us, all without the anchor of a job dragging us down.

Just this week, there was a news story about how someone here in California won the Powerball Lottery with a ticket gifted to her by her employer, a business owner and philanthropist (it was later revealed that the nurse did not in fact win, and that it was a horrible prank played on her by her son!).  My thoughts on the silliness of the lottery notwithstanding, I tried to put myself in the shoes of the employer and think of how I would want to react.  Would I be frustrated that I had given away a piece of paper worth hundreds of millions of dollars?  Then I thought about how the employer had purchased 18,000 tickets and distributed them to all his employees, stating that in the new year, what he felt people most needed was hope.  No, I decided, I’d like to think that I would be thrilled for my employee, because I would realize that I was already rich beyond compare (whether I had a million dollars or a hundred million) simply because what I did with my time was entirely mine to choose.

The Key Difference

There’s one important element that separates FIRE from startup culture:  despite committed teams, long hours, faithful customers, and media attention, more often than not, startups still fail.  The quest for Financial Independence, properly executed, has a very high chance of success.  Sure, you’ll encounter roadblocks and setbacks along the way, but if you can keep your costs down and your income steady, FIRE is a goal that almost anyone can successfully reach.

This is really important to me. When our early retirement journey comes up in conversation with friends here in Silicon Valley, there’s always a mention of the fortunes that we have seen made and lost, and my realization that statistically, we are likely never to hit the lottery (startup or otherwise) ourselves.  Building our retirement income one dollar at a time has an air of certainty that life at a startup has never had.  On that day when we finally call it quits, I’ll have the discipline and the financial know-how to ensure that every moment we have left belongs only to us… and knowing that makes me feel very rich indeed.

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