5 ms·

Recently I made the oldest startup mistake in the book: Exercising too many ISOs and incurring the AMT to the tune of $350,000. I have talked to probably a do

Recently I made the oldest startup mistake in the book: Exercising too many ISOs and incurring the AMT to the tune of $350,000. I have talked to probably a dozen various professionals - accountants, lawyers, wealth managers, liquidity providers, etc - and they all give the exact same advice: 1. Borrow from family or friends. 2. Leverage existing assets (mortgage, stocks) to pay it. Every one of them has mentioned those 2 ways are how "most people" in my situation deal with it. Neither are an option for me. To put it another way: already be rich. Whether personally or by proxy. Paul Graham also neglected the necessity of the wealthy in creating new wealth because he is one of those gatekeepers. Whether they're the VCs benevolently funding your startup, or the "rich uncle" floating you a 1% loan for a year to pay AMT: it's much easier to become wealthy if you're already wealthy or have access to wealth. You need the wealth to fund your startup. You need the wealth to exercise your ISOs. You need the wealth to cover your AMT obligations. All of this is after you've managed to get the capital for a good education and everything else that goes into joining startups. Oh and the wealthy get a cut every step of the way. The AMT may be flawed, but the wealthy also tax the rest of us. Not only that, but if we do get rich, since they've done you so many favors, now they have a new wealthy friend in their network to fall back on or raise capital from or obtain liquidity from. So many people who get rich from startups give their money right back to VCs to join funds. It's almost seen as an obligation to help out others. It's not. There's plenty of capital out there. Let the VCs risk their own, not yours. Build affordable housing or bootstrap your next thing; don't effectively give VCs their money back. And let me be clear: if I do become wealthy from these lottery tickets I'm jumping through hoops to attain: it will be luck. I'm just one of hundreds of people who have built this startup, and if we do exit: the value will be as much more a factor of external market dynamics than intrinsic value created by the company and its labor. It's luck. It's lottery tickets. Don't let anyone fool you otherwise. A good product is one tiny piece of it.

raspasov 5y ago
"it's much easier to become wealthy if you're already wealthy or have access to wealth" If this was true in reality, then why are there so many new wealthy people that didn't come from wealth? [1] How do you define "access to wealth"? [1] My definition of wealth: having more money than you can spend in a lifetime.
- RHSeeger 5y ago
  You seem to be making the assumption that "A is easier if B" implies "A is impossible without B", which is not what is being said. I guess the question is, of the new wealthy, how many came from a situation of already having access to wealth (either directly or by proxy)?
  - raspasov 5y ago
    I didn't make such an assumption. I ask again: How do you define "access to wealth"?
    - irq 5y ago
      Based on what you wrote, I agree with RHSeeger that you did indeed make that assumption. That you can’t see it speaks volumes about your analysis not matching the facts.
      - raspasov 5y ago
        Still no answer to my question about definition of "access to wealth". It's like "access to God", for what I know.
        irq 5y ago
        I don’t see how your unanswered question relates to RHSeeger’s statement, but your transparent attempt to deflect by continuing to bring it up, again, says more about the flaws in your thought process than it achieves your aim.
        raspasov 5y ago
        The unanswered question is half of the statement. One part: "wealth", another part: "access to wealth".
    - RHSeeger 5y ago
      > If this was true in reality, then why are there so many new wealthy people that didn't come from wealth? The way I am reading this is you are saying > It is easier to become wealthy if you're already wealthy or have access to wealth is disproven by the fact that > There exist people that became wealthy without already <being wealthy or having access to wealth> I do not see any other way to take your statement. If you meant it some other way, please explain. Since the original statement is "it's easier with" not "it's impossible without", it is not disproven by the second item. As to how I define "access to wealth", I mean you either have wealth yourself or are in a position to get it (borrow it from a bank or family, etc). To take an extreme example, a penniless, homeless person with no friends or family has 0 access to wealth; they do not have their own money available, nor can they borrow from a bank or family. Everything between that and "has 200 million under a mattress" is a matter of scale in between; and the definition of what counts as "wealth" depends on the context.

raspasov 5y ago

"it's much easier to become wealthy if you're already wealthy or have access to wealth" If this was true in reality, then why are there so many new wealthy people that didn't come from wealth? [1] How do you define "access to wealth"? [1] My definition of wealth: having more money than you can spend in a lifetime.

RHSeeger 5y ago
You seem to be making the assumption that "A is easier if B" implies "A is impossible without B", which is not what is being said. I guess the question is, of the new wealthy, how many came from a situation of already having access to wealth (either directly or by proxy)?
- raspasov 5y ago
  I didn't make such an assumption. I ask again: How do you define "access to wealth"?
  - irq 5y ago
    Based on what you wrote, I agree with RHSeeger that you did indeed make that assumption. That you can’t see it speaks volumes about your analysis not matching the facts.
    - raspasov 5y ago
      Still no answer to my question about definition of "access to wealth". It's like "access to God", for what I know.
      - irq 5y ago
        I don’t see how your unanswered question relates to RHSeeger’s statement, but your transparent attempt to deflect by continuing to bring it up, again, says more about the flaws in your thought process than it achieves your aim.
      - raspasov 5y ago
        The unanswered question is half of the statement. One part: "wealth", another part: "access to wealth".
  - RHSeeger 5y ago
    > If this was true in reality, then why are there so many new wealthy people that didn't come from wealth? The way I am reading this is you are saying > It is easier to become wealthy if you're already wealthy or have access to wealth is disproven by the fact that > There exist people that became wealthy without already <being wealthy or having access to wealth> I do not see any other way to take your statement. If you meant it some other way, please explain. Since the original statement is "it's easier with" not "it's impossible without", it is not disproven by the second item. As to how I define "access to wealth", I mean you either have wealth yourself or are in a position to get it (borrow it from a bank or family, etc). To take an extreme example, a penniless, homeless person with no friends or family has 0 access to wealth; they do not have their own money available, nor can they borrow from a bank or family. Everything between that and "has 200 million under a mattress" is a matter of scale in between; and the definition of what counts as "wealth" depends on the context.