Money Talk with a Tech Startup Co-Founder on the West Coast

Photo Credit: Screenshot from the TV show "Silicon Valley"

Who are you and how old are you?

I am in my early-30s and work as a tech entrepreneur on the West Coast.

Tell me about your background.

I grew up in the Midwest, went to college in the Midwest, worked as a consultant, and then attended a top MBA program. After getting my MBA, I moved out West to start a company with one of my classmates. I am currently working at my startup now, and we are looking to raise our next round of funding.

What does your financial situation look like? If you don’t earn money through a “normal job”, how do you support yourself?

Because I work as an entrepreneur, things are a bit tight money-wise. I get paid a salary at my startup, but the cost of living in the area I'm in is extremely high. My wife also just had a baby so we have to add baby expenses to our already tight budget. When my wife was on maternity leave and not working, the amount I earned was not able to cover my student debt plus daycare plus rent (plus all the other expenses that just come with living). She's back at work now, so we're able to cover those expenses again but I know that something has to change soon. Either I have to get paid more or we have to move out of the area we're currently living in, which I would not like to do because we live in a very desirable rent-controlled place.

My wife is also trying to decide what to do with now - should she stay at home with our child or keep working? I will support her with whatever decision she makes but again, we'll have to make some pretty big life decisions very soon based on our financial situation.

How do you define rich?

Having the freedom to not worry about the everyday things. I got into entrepreneurship because I love creating and working on a product. But at the same time, I don’t want to worry about my child not having a bedroom (our child currently sleeps in our walk-in closet that we've converted into a bedroom) or my wife not wanting to work. I want to be able to provide for them but continue to take professional risks without worrying about personal stuff.

Did you grow up with money? How did your childhood conditions about money affect how you behave?

I grew up in the suburbs as part of a middle class family. My parents are career professionals, and I always had a comfortable life. My parents divorced when I was younger so I grew up with my mom and stepdad. My dad worked as an entrepreneur, but his startup completely failed and he had to declare bankruptcy. I observed all this from a distance, and it taught me a lot about being careful with the risks I take.

I have been using Quicken since college and every Saturday, I log in and look at my personal budget. I can tell you where every penny goes. Suze Orman said to have a personal budget and I stick to that!

Did your parents give you money when you were growing up? What about for school?

I wasn’t given money but I did mow the lawn for money. At the peak of my lawn-mowing career, I would mow 6-10 lawns during a day and get paid $20-$30 per lawn. My parents paid my college tuition for the first two years and I earned scholarships which paid for my last two years.  However, I did have to take out loans for my MBA. I took out the maximum amount from Uncle Sam for each of the two years of business school.

Where did you learn about investing?

I mostly learned about investing from my stepdad. I was also very interested in investing on a personal level. When I was in high school, I constantly checked out the stock price for The Hersey Company. I must have really liked chocolate! I also did some active personal investing before business school but don't have time for that anymore.

What does your family situation look like?

I am married to my wife, and we have a child under a year old.

Do you and your spouse/partner have similar financial habits?

Our habits are pretty similar although she spends more on clothes than I do. Because I work in the tech world, I'm always getting free shirts and hoodies from tech events, so I really can't remember the last time I bought a shirt. I do have to buy shoes though, because they're not handing out free shoes at events. She is not opposed to having a budget for our dining, groceries, etc. We make a good team.

How much do you spend on your children every month? How does that break down?

We spend about $1700 a month on daycare and another $200 on baby checkups, diapers, pads, etc.

Have you started to put money away for their college tuition? If so, how much is it?

Not at this point. If we get any extra money, it goes toward groceries or more immediate matters.

How did your financial lifestyle change when you had children?

My savings has dropped on $0. Everything is now spent on child-related expenses. We rarely eat out and unfortunately can’t go out on annual vacations anymore.

Do you feel like you are living paycheck to paycheck? If so, do you feel that way due to your lifestyle?

Yes, because I am not saving any money at this point in time. I had a decent chunk of savings from my consulting days but I had to use up everything for business school, the baby, etc.

What was your most regrettable purchase?

I don't have any because I don't really buy anything. If anything, they would be really small things, like buying windshield wipers that only last 2-3 months. I'd get mad and wish I had done more research on the best kind of windshield wipers to buy but I just don't have time for that.

What was your best purchase?

My Cannondale bike. It's easy to ride and easy to carry around. I use it everyday to ride to work, and it's much better than my last bike!

Do you feel like you have a financial habit that’s out of the norm (or at least something that others have commented on)?

I'm extremely meticulous in regards to my Quicken usage and know everything about my budget.

Do you feel like your success now has anything to do with luck or being in the right place at the right time?

Yes, definitely. My startup success has to do various government laws that have been put in place and certain technology changes that have been embraced by our culture. I also met my co-founder in business school, the two of us really clicked and work very well together, and we developed our startup idea in business school. The business school I went to was truly amazing, and opened up a lot of doors for me.

Do you actively contribute to a retirement account of any sort?

I have a 401(k) and a rollover IRA.

Do you feel like your lifestyle reflects your income bracket?

Yes, definitely. I am not able to buy certain things (fancy dress clothes) because I just can't afford it at this point in my life. I make do with what we have.

Have you ever jumped income brackets (either going from low to high or vice versa) and how did your lifestyle change?

I first jumped income brackets from being a college student to working in consulting. Consulting is great because not only do you make a lot of money but you travel so much that all your lifestyle expenses are pretty much paid for. My lifestyle didn't really change that much though. I just went from living with a roommate to living in a studio and I saved a ton of money.  I jumped brackets again when I began working at my startup. I make less now than I did my last year of consulting.

Do you talk to your peers and family about money?

I talk to other startup people and my wife, because they are familiar with the startup lifestyle. I don’t talk to my family and consulting friends because if I express any concern about my financials, they'll just question what I’ve done with my career.

Do you splurge on anything? If so, what was the last splurge and how much was it?

I don't splurge on anything now but my wife and I went to Europe the year before she became pregnant with our child. It was an amazing trip! We rented a car, slept in B&Bs, drove around Europe, the works. We probably spent $5000 - $6000 total for the trip.

Do you have a plan to make more money?

None beyond raising more money for my startup and making it more successful. I continue to get recruiting calls to this day from top companies but I would really like to see my startup through and try my best to make that a success.

What would it take for you to feel like you are completely rich?

I would like to own a house that was completely paid for within a good school district in one of the suburbs just outside where I live.

In terms of money, what was something you did in the past that you could do differently?

During the financial crisis back in 2008, ETFs were low and at the bottom of the market. My co-worker bought a ton and encouraged me to buy some as well but I didn't. He then went on to make a ton of money, and that's something that could have happened to me if I had taken his advice.

What is your strategy for moving forward now in regards to your big goals in life?

Other than working hard at my startup, I don’t really have a plan at a moment. If my wife decides to leave her job to stay with our child full-time, we'll most likely have to move.