De-risking concentration
Understanding your concentration
Why nearly all your net worth sitting in one company is the real risk to your family.
My company is doing great. Why should I worry about concentration?
Because a great company and a diversified life are not the same thing. If 90 percent of your net worth is equity in one private company, you are ma...
How much of my net worth in my startup should feel like too much?
There is no clean number, but the useful test is not a percentage, it is a question: if your equity went to zero tomorrow, would your family still ...
What actually happens to my family if my startup fails and it is most of our net worth?
If your startup is most of what your family owns, a bad outcome is not just a career setback, it is a hit to their security. The money you would ne...
Are my salary, my house, and my ESOPs all riding on the same company?
For most founders, yes, and that is what makes it risky. Your salary comes from the company, a large chunk of your net worth is its equity, and if ...
My net worth is almost all startup equity on paper. Is that real wealth or not?
Startup equity on paper is real in the sense that it may be worth a lot someday, but you cannot spend it, and its value is a guess until there is a...
Everyone says go all-in on my startup. Isn't taking money off the table a sign I don't believe in it?
Believing in your company and protecting your family are not in conflict, and treating them as the same thing is how founders get hurt. Taking a li...
Is concentration risk different for a bootstrapped founder than a VC-funded one?
The shape of the risk differs, but the concentration is real either way. A VC-funded founder often has a smaller ownership percentage with a shot a...
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