I spent most of my adult life preparing to become wealthy.
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Or at least I thought I was.

Like most founders, I learned how to raise capital, hire employees, pitch investors, negotiate acquisitions, survive payroll, and convince customers to buy products from companies that had barely existed long enough to print business cards. I read startup books. I attended conferences. I surrounded myself with people who knew how companies were built.

What nobody ever taught me was what to do if I actually succeeded.

I learned that lesson during the dot-com boom when my third company was acquired. The deal created $45 million in paper value for me, subject to a twelve-month lockup. At the time, that number was so far beyond anything I had ever contemplated that it barely felt real. To have happened a mere 18 months after inception of the company required a suspension of disbelief (as did dot-com valuations in general). In hindsight, that may have been part of the problem.
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The transaction itself was almost absurdly timed. I negotiated the acquisition deal terms in the Red Carpet Club at Portland International Airport. Not in a law office. Not in a conference room. Not in some dramatic scene from a movie about entrepreneurs. An airport lounge. The acquisition happened in the narrow window between my wedding and a wedding reception my in-laws were hosting in Minnesota. The buyers wanted to close immediately and, in the manic environment of the dot-com era, nobody seemed particularly interested in delaying the transaction simply because I had just gotten married.
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The morning after the deal was closed and made the headlines in the Portland Business Journal, I walked into my office and found twenty-three FedEx envelopes sitting on my desk.
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Goldman Sachs.

J.P. Morgan.

Merrill Lynch.

Morgan Stanley.

A collection of private banks, family offices, and wealth management firms whose names I vaguely recognized but had never paid much attention to.

Apparently everyone knew I needed a wealth manager.

Everyone except me.

I wasn't being humble. I literally didn't know what a wealth manager was. Until that point in my life, wealth management had seemed like one of those things rich people worried about. I was a startup founder. We were living entirely on my wife's income and what I affectionately called VISA Venture Capital. The company had just made its last payroll. My net worth had spent most of its life oscillating between zero and negative.
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We had raised only $1M in angel money just nine months earlier. Meanwhile I had competitors picking up $50M+ rounds in the Valley. Getting bizjet and mansion wealthy was the last thing in my imagination at the time - it was all about day to day survival. At the time I figured that nine months out we'd either be VC backed or bankrupt, but either way it would be a safe time to schedule a wedding and honeymoon. Hah!
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As I began interviewing firms, the conversations became progressively more uncomfortable.

Every wealth manager asked whether I had a prenuptial agreement.

No.

They they asked about my estate plan.

Also no.

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Did I have a will?

No.

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Trust structures?

No.

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Family limited partnerships?

No.

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An IRA? 

You're kidding me. No.

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At thirty-six years old, despite suddenly finding myself responsible for a very large pile of paper wealth, I had the personal financial infrastructure of a typical founder: the used value of my car and worthless stock certificates from previous startups I created or joined.
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What I gradually discovered over the following months was that the most valuable wealth planning opportunities available to entrepreneurs often exist before the entrepreneur has any wealth at all. In fact, many of them exist when the company's stock is worth essentially nothing. Ahem... while it is still "unappreciated."
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That realization was maddening.
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By the time the acquisition occurred, most of the interesting moves were already behind me. The company had value. The stock had appreciated. The IRS had formed opinions in courier font letters. Lawyers and accountants could still help, but they were now helping me optimize around decisions that had already been made years earlier, often without me realizing those decisions existed.
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The most expensive lesson involved Alternative Minimum Tax. Like many founders, I was utterly clueless about that AMT line on my 1040 until I had a reason to understand it. By then it was less an educational experience and more a financial one. Looking back, there were a handful of relatively simple actions I could have taken near incorporation, before the first meaningful appreciation in the stock, that would have saved millions of dollars.
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Not hundreds of thousands. Millions. F&^%ing millions.
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My wife and I still joke that we personally financed the repaving of a section of Highway 26. Ironically, this all happened 26 years ago as of this writing. It still burns.

The frustrating thing is that none of this required predicting the future. I didn't need to know that the company would be successful. I didn't need a crystal ball. What I needed was an understanding that if success arrived, there were certain decisions that become dramatically harder once the company has value than when it doesn't.

That lesson fundamentally changed how I mentor founders. I encourage them all to start interviewing wealth managers today, even if this next startup isn't the one that hits. Something will likely hit in the future, and the same planning steps apply. Find a manager that knows how to work with startup founders, understands 83b tax elections, QSBS, how to bracket a public company stock when your own shares are still restricted, and how to set up programmed selling of your shares over time.

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Find a wealth manager that you (and your spouse) like and relate to. Don't hire the first one you meet, even if they agree to take your penniless ass as a client today for the prospect of your future potential wealth.

Talking with your family now about the things that matter to you - what charities you would support, and what kind of lifestyle you'd like to live - can actually add more motivation to succeed. It's not just about whether you'd want a Bombardier Global 8000 or Pilatus PC-24 in the hangar, it goes to your core values. How you see your future life, how you want to educate your children and relate to your distant friends and family members - some of whom will reappear after years of absence when they hear the news, and some of whom will disappear because you just changed economic classes on them.

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As much as getting a real exit can be a life changing event, it's important to figure out what parts of your life you want to maintain unaltered, and what your new responsibilities will be with that newfound wealth.

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