“I’m not going to work this hard for a lousy nickel million.” My client was 27 when he said this.
“So? What’s your number? How much wealth does it take for you to work this hard?”
“Before or after taxes?” I ask.
“After taxes,” he says.
“O.k.” I agree.
And after the IPO he had $30 million liquid, available.
I always ask, early in my consulting relationships, what is my client’s wealth number. It allows us to focus our strategies on that wealth creation. I also ask what my client wants that wealth for, and the answers are fascinating. My client with the $30M wanted to build a couple more companies with similar exits, so he could build a significant charity foundation. Other clients want to be free of financial considerations to pursue their other innovative ideas. Still others want to incubate or invest in other startups.
Earlier this week, in a similar conversation, and after relating the story about the nickel million, the entrepreneur across from me said, “I’m happy with $5 million – the nickel is good for me. Even after taxes.” And he smiled. “It’s enough for my family to live safely, added to the savings we already have. I have lots of neat ideas I want to work on.”
I keep a large file of reprints (in paper for the old ones, and electronically for the new ones) called “Thinking.” Trained in philosophy, I’ve been gathering these articles since my university days, on topics that I want to think about over evolving years and decades. You know, like a Favorites tag for Big Ideas.
This morning, I came across an article by Phillip Moffitt, then Publisher of Esquire, in its May 1989 issue, entitled “When $2 million isn’t enough.” The sidebar reads, “Two million dollars isn’t enough. A new magic number has to be created. Now people want to become ‘nickel millionaires.’” This was published before the dot com boom (and bust), and focused on how the 1980s had changed the context of wealth. The notion of a “nickel million” entered into the common lexicon. My conversation about the $20 million took place nearly 10 years later, in 1997 or 1998, as the dot com boom was just beginning.
It doesn’t matter what number each decade believes is an appropriate entrepreneurial reward. It matters that you know your number, and why you want that number and what you mean to do once you gain your financial freedom. We need this concept, and the goal it represents, to keep our focus on what life we want, what we are willing to trade to get that life, and what legacy we would like to leave behind. This number isn’t a dream or a wish – it is an anchor to the real world, a concept that keeps us grounded in our strategies, our choices, our exits (or our lifestyle-annuity businesses) and our real lives.
So, what is your number, and what do you want to do with it, once you get it?