Selling a tech startup for $30m sounds like a dream.
This happened to an anonymous Quora user. When he got the big payday, it put him in a new class.
He couldn’t talk to his average friends because complaining about all his money would piss them off.
So he could only talk to a small circle of rich friends.
That means from the day he got rich he lost roughly 80% of his friends. At least he still had the rich 20% … or so he thought.
He found it hard to motivate his wife and kids. With all that money there was no need for them to work or go to school. Just be a bum. Then he faced all the complexity around taxes and estate planning.
He also had zero motivation to work.
That might not seem bad but it gets worse. Because he was always at home and didn’t want to work, he had no one to talk to. All his friends were at work, so even if he could play golf, he could only play by himself. Boring. He says being rich felt isolating.
Here’s the biggest surprise he shared: Being rich made him feel like an outcast in society.
Here are a few other reasons to think twice about getting rich.
Money creates scarcity and that has enormous value
The problem with getting rich is money becomes abundant.
This means you can buy most things that you desire. That might seem cool but it lacks one thing: scarcity.
When you’re not rich you have to carefully curate what you will and won’t spend money on. Money creates a form of curation lens through which you see the world. An experience has to be worth it to spend the money.
Whereas when you’re rich you’ll spend money on anything and waste a lot of time on stuff that could have been filtered out by the scarcity money provides.
When we have too much of something it becomes a burden. Money is no different.
Getting rich can limit family time
When I was a kid we had a neighbor called “The Smiths.”
They ate at McDonald’s 2–3 times a week. My family gave them crap for it. “Who’d eat that cheap garbage every night?”
Or, “They should stop eating like poor people and spoil themselves more. Why are they such tightarses?”
I fell for it.
We were only slightly more well-off than The Smiths. And we could afford at that time to eat better takeaway food than McDonald’s.
Often, I’d be stuck at home eating takeaway restaurant food by myself while my family was off doing things. The Smiths would be together as a family at McDonald’s. That’s when I realized they weren’t poor for eating there.
No.
I was poor for eating nice food at home all by myself with no family to share it with. I’ll say it again: more money often means more loneliness.
Getting rich messes with your social circle
Daniel Elk founded Spotify.
Most people know him for that huge success. What they don’t know is he grew up poor. He grew up learning to code. In the 90s he got gigs creating webpages for people.
Daniel began to get rich, fast. A little too fast.
The dot com bubble burst in the 2000s and he nearly went back to poverty. His clients often couldn’t pay him cash, so they gave him equity instead. It looked like a bad deal.
Later, when markets recovered, that equity he got made him a fortune long before Spotify. He was 22.
His experience of getting rich is fascinating (hat-tilt Jack Raines):
“But no one actually talks about what happens when you get there (rich).
Instead, you’re just hearing from these rich people that money doesn’t mean that much. Well, it certainly does if you have none, I can tell you that.
And they don’t teach you what to do and what actually matters, so it feels like a foreign concept where you think they are saying that from a false humility to disguise that they’re actually happy about having that money…
And I thought to myself, “I made it. This is the life. I can access really cool nightclubs. I can get all of the girls that I couldn’t get beforehand. I’ll be one of the cool people.” And I thought for a while that this would make me happy.
So I spent a bunch of time doing just that. I sprayed champagne on people in central Stockholm, I tried to hook up with the girls that I couldn’t get before…
But I realized they didn’t want me for me. They wanted me for the status that it provided… And I realized that many of these people wouldn’t be there unless I had money. And that made me pretty depressed.”
What a huge lesson!
The people you attract when you get rich want you for your status, not necessarily for who you are.
When I lost $1.2M in a day a while back, I learned a similar lesson. Most of my friends were nowhere to be found. They wanted to hear about and be attached to my success, not my demise.
One friend went above and beyond to support me. I realized he wasn’t just a work colleague. No. He was a friend. A best friend.
Work without money should be rewarding in itself
People who get rich often don’t work anymore because the work was only ever there to make them money. Now they have it, the work is pointless.
That’s no way to live.
We shouldn’t choose work based on how much money it’ll make us. We should choose work based on an underlying obsession we have for something. An inner drive. A desire to serve others.
If we don’t, and we become rich, we risk losing our entire identity.
Riches bring about another huge problem
The problem isn’t getting rich, it’s staying sane — Charlie Munger
All the riches you end up with lead to mental illness.
What happens is you go from spending your time to create riches, to spending your time protecting your riches.
It can easily feel like everyone is out to get your money. The antidote is not to desire all this money in the first place. And if you inherit a lot of cash or win the lottery, don’t focus on keeping it all.
Focus on using the money to do something impactful that’ll outlive you.
Being rich is a way to paper over personal problems
This idea has stuck with me:
The desire to look wealthy comes from a place of insecurity — Ayodeji Awosika
Rather than sort out our personal problems, it’s often easier to go chase riches and fame instead.
Instead of fixing our personal relationships, it’s easier to use luxury items as a kind of flex that secretly says “F U everybody.”
But you take you with you everywhere you go. If you become rich you become more of who you already were. And if you were insecure before money, you’ll still be insecure once you’re rich.
Now you know why 99% of Instagram photos look the way they do. It’s insecurity and, perhaps, mental illness in disguise.
There’s joy in working hard to buy stuff
Finance writer Morgan Housel says “The joy of spending can diminish as income rises because there’s less struggle, sacrifice, and sweat represented in purchases.
That’s how I feel. Earlier this year I bought my first house. It’s a shack but it’s mine. I had to struggle for it. I had to fight for it at auctions.
When I got the keys to the house I felt a sense of pride. My hard work meant something. And I gave my daughter a home to play in.
If the home was just given to me by rich parents or a distant relative, I never would have got any of that joy.
The journey to buy stuff we want is better than the purchase itself.
Final Thought
Feeling rich is mostly a mental game — Mr Stingy
That’s what this all boils down to. You don’t feel the desire to get financially rich and show off when you already feel like you have enough.
So as cheesy as it sounds, maybe the solution to the rich virus is to be more grateful every day for what you do have. Desire less to have more.
