Startup vs FIRE

My last startup, Venyu, failed. We failed to raise money, build an amazing product, or find customers that would help us bootstrap. Unfortunately, this failure coincided with getting a new visa and moving apartments. The latter of which we knew would require a salary. Initially, we had planned to pay rent upfront for a year using our pre-seed funding, but with the company shuttered, I had to do the unthinkable and find a job.

When I realised I couldn’t work on what I wanted to anymore, it sucked. I felt like I was killing my identity. I had always been an entrepreneur, I wasn’t someone who worked for anyone else. I clearly wasn’t smart or hard-working enough to avoid this one-way door. I was leaving the minority who “never had a real job” and I was joining the masses and becoming… an employee.

So in order to avoid a crisis, I had to convince myself that finding a job was the right move to get back on track.

That’s when I stumbled across Mr Money Mustache (MMM) on the YC podcast. He had spent 10 years as a Software Engineer then retired early by optimising his savings rate (take home pay - expenses) and investing into broad-based equity index funds. His reasoning was simple and clear. If you hit a savings rate of 100% annually you are effectively retired – you can do whatever you want. 0% and you will never retire. Every value between 0 → 100% has a date associated with your retirement. The function he constructs takes very conservative assumptions to say, for instance, if you hit a 65% saving rate, you can retire in 10.7 years.

I was instantly hooked. This was the perfect way to rationalise getting a job. I wasn’t quitting startups… I was indefinitely extending my ability to do whatever I want, just a few of years down the road!

But then, I started to feel like I was wrong to believe in startups at all. The goal was to make enough money to be free right? Why not just optimise for that? If it takes 12 years that’s fine, because its near guaranteed, unlike startups which are super risky. MMM’s mindset was so intoxicating because it quantified my time in terms of money. Every incremental savings rate bump was a month or so of my future time that I did not have to work for. My job could be an engine for buying time. I bought into this mindset so much I began to view startups as having a massive opportunity cost against this new savings rate oriented future.

So when I started getting a salary I dove in head first. I happily traded doing what I want, for money and more importantly for future time.

But there are a couple of caveats to the MMM philosophy I wish I had considered before committing to it.

First, transitioning from entrepreneurship to 9-5 is not fulfilling. When you spend 9 hours a day acknowledging that you are not doing what you are meant to be doing with your life but making a long-term calculated trade, hurts a lot. It feels like admitting defeat to the universe. It drains your creativity, ambition, and most importantly energy. The energy drain hurts the most because it has second-order affects on your relationships, your health, and your vision of your life in the future. I think, to live a fulfilled life you want, it needs to feel in reach. For me a life of fulfilment is as far away from a bog-standard 9-5 as possible.

Secondly, MMM has a unfinished definition of retirement and fails to clarify the long-run costs of the path you choose to get there. He defines the state of retirement as 100% savings rate / all expenses covered by investment income. But there are a couple of other variables at play here to make this a happy retirement.

I believe a happy retirement is one where you spent time at work, on the whole , that you did not regret, and did more than just work to get there. So two other variables, free time during your savings era (freedom rate), and how much of your time you feel was wasted (worthiness rate). When saving, your freedom rate needs to be high enough that you have a life to live, and not all your time is split between this long-term trade and sleep. The worthiness rate has to be high enough to ensure time, your only non-fungible resource, is not being completely squandered. Feeling like you wasted all your time at your job is never a good trade. No matter how high your savings rate can get I believe this will certainly result in an unhappy retirement.

Finally, it’s easy to fall in love with the idea of always playing for the long term. So much advice is floating around telling you to focus on the long term games with long term people. I think all that advice is amazing when they refer to concepts like equity, long-run innovation, relationships, education etc. But I would think carefully before playing that game with time you KNOW you’ll regret spending. I believe, you should guard your time extremely selfishly in the short-term, because time in the future is less guaranteed.

So can you even do MMM’s philosophy justice? Yes! First off I think not everyone is meant to going to have the same problems with their employment, so their attitude on the above will be vastly different. I think for those not transitioning from entrepreneurship, MMM’s philosophy would suit your existing lifestyle well!

However, for previous entrepreneurs I think it’s a bit harder. First, I think you have to shift the definition of retirement from expenses covered/100% savings rate to not regretting your time at work. You have to show up every day and be happy with how you’re going to spend that 9-5 (or longer). My bar for a that kind of job is high. Liveable pay, high transparency, valuable mission, high equity, high autonomy, low politics, hard problems, and working with friends. Sound familiar?

I’ve gone full circle – because I just described the life at an early stage startup. Joining a start-up can give me everything I want if I pick right. You work for equity (which can hit big) and a mission that buoys you up throughout the day instead of crushing you. But most importantly it’s something I’m sure I’ll never regret. I’ll never regret trying to help a start up change the world or starting my own. It will always be time well spent, and in that sense, I can retire today.