VC Part 2: Fuck-off Money
danielharan.com
VC Part 2: Fuck-off Money
1–10 of 35 posts
Re: VC Part 2: Fuck-off Money
#2Isn't it "fuck you" money not fuck-off money? 500K is barely fuck you money, more like "screw you I'm working slightly less each year money"
Re: VC Part 2: Fuck-off Money
#3Isn't it "fuck you" money not fuck-off money? 500K is barely fuck you money, more like "screw you I'm working slightly less each year money"
I've always heard it as fuck-you money. Meaning you can afford to say, "fuck-you" to anyone you want (boss, your competition, a cop, etc...) and not have to worry about paying your bills tomorrow.
Re: VC Part 2: Fuck-off Money
#4$1M or so would allow you to live a nice lifestyle while working part-time at a fun job (like coffee shop clerk, or book-shelver at a bookstore). Then spend some free time hacking together stuff that might eventually make money. All us tech guys would be doing that anyway, or at least working on something programming related.
Even if you can't spend the rest of your life like this, and eventually have to get back to making money, you could easily go 10 years or so.
Re: VC Part 2: Fuck-off Money
#5The point he makes is good, but the calculation seems wrong. He's using odds interchangeably with percent ownership, when the two are clearly different.
50% odds of making $1 million = you have a 50/50 chance of walking away from the company with $1 million at some point -- not that you're guaranteed to walk away with $500K. You could just as easily walk away with $0.
So if your two options are: 1) 50% odds of making $1 million 2) 20% odds of making $20 million
...then you're more than twice as likely to make money on the first deal than on the second.
Re: VC Part 2: Fuck-off Money
#6Isn't it "fuck you" money not fuck-off money? 500K is barely fuck you money, more like "screw you I'm working slightly less each year money"
I've always heard it as fuck-you money. Meaning you can afford to say, "fuck-you" to anyone you want (boss, your competition, a cop, etc...) and not have to worry about paying your bills tomorrow.
On this topic, I've only ever heard people who don't have fuck-you money call it fuck-you money.
Re: VC Part 2: Fuck-off Money
#7to answer the article's question:
$440k. done.
here's the rationale:
$200k pays off all the debt i have: mortgage, car, everything, and should leave me with $50K in a working capital cushion. i would continue to work on something, because i'd go crazy if i didn't, but it'd likely be another startup idea of some sort. maybe work on student incubation.
$240k goes in a ladder of 1 year certificates of deposit at $20k each. at around ~4% interest, each one will yield an income of ~$800/month. i can leave that in the bank, or take it out as income. given that we're at record low interest rates, that rate can be expected to go up. it's not the best rate that could be earned, but it's a guaranteed rate.
my monthly expenses once housing and car payment are removed are right at $300. $800/month leaves me $500 for food and incidentals, assuming i don't have other income. no, it's not lavish, but it works. and every single penny i make from paying work i can then blow on hats.
of course, if i just keep rolling the yield back into the CD by retirement age (i'm thinking 55) each CD will be worth $70K, yielding 2800/month.
so in short, if my fuck-off-you money is $440k, i'm in pretty good shape for the rest of my life.
Re: VC Part 2: Fuck-off Money
#8The point he makes is good, but the calculation seems wrong. He's using odds interchangeably with percent ownership , when the two are clearly different. 50% odds of making $1 million = you have a 50/50 chance of walking away from the company with $1 million at some point -- not that you're guaranteed to walk away with $500K. You could just as easily walk away with $0. So if your two options are: 1) 50% odds of makin…
there are two sets of percentages in the article, they just happen to be the same. 50% ownership in a company with a 50% chance of making $1 million, versus 20% ownership in a company with a 20% chance of making $20 million.
using the same percentages for both thing is maybe a little confusing, and it's not explained terribly well. the numbers are really immaterial to his point -- going for short money on good odds is better than going for ridiculous money on long odds. keeneland teaches me the same thing every spring and fall at the meets.
Re: VC Part 2: Fuck-off Money
#9The point he makes is good, but the calculation seems wrong. He's using odds interchangeably with percent ownership , when the two are clearly different. 50% odds of making $1 million = you have a 50/50 chance of walking away from the company with $1 million at some point -- not that you're guaranteed to walk away with $500K. You could just as easily walk away with $0. So if your two options are: 1) 50% odds of makin…
I think his point was that individuals who aren't already wealthy have to make their decisions based on the odds of payout on that deal, while investors can simply engage in more deals, thereby reducing the "odds" to a simple payout multiplier.
Re: VC Part 2: Fuck-off Money
#10The point he makes is good, but the calculation seems wrong. He's using odds interchangeably with percent ownership , when the two are clearly different. 50% odds of making $1 million = you have a 50/50 chance of walking away from the company with $1 million at some point -- not that you're guaranteed to walk away with $500K. You could just as easily walk away with $0. So if your two options are: 1) 50% odds of makin…
Reading it again, I see where the confusion lies - but I didn't even want to get into the issue of ownership.
The $500k is only the "expected value". You have a 50% chance of making $1M, 50% of walking away with $0.
"then you're more than twice as likely to make money on the first deal than on the second."
And that's why I'd choose the first deal, even though the economically 'rational' thing to do is to go for the second, which has higher expected value.