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I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and

I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million.

jasode 11y ago
>you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million. You misunderstood what I'm saying if you think $10 million to $9.7 million is some kind of reduction in self-esteem. That's not the point. It's not the absolute $ amount. It's a subjective sense of the magnitude of payment in relation to what I get in return. The calculus includes the mental state. In my 20s, I spent $500k on a music studio thinking it would earn multiples of that. Things didn't pan out that way but I'm still young enough not to be gun shy about spending large amounts of money. I'm just a little wiser now and won't be throwing money away at such endeavors. Today, if I came across a web startup I believed in and they need $900,000 (3x the $300k of Ferrari), I'd feel compelled to reduce my bank account to $9.1 million to see if my angel investment will work. With the Ferrari, the ownership of it also includes many headaches in addition to whatever pleasures I could derive from it. The pleasures are seriously curtailed in my city where I couldn't floor it and race it above 80mph. On the other hand, with the killer web startup, I would lose sleep at night if I missed the chance to invest so in that situation, I must spend $900k just to have some piece of mind. Mathematically, I'm "poorer" at $9.1 instead of $9.7 but I feel better. Maybe the startup will crash & burn but I spent the money hoping they could change the world. Here's the crazy thing: it's very possible for someone else to think of the Ferrari as the "sure reward" and the web startup investment to be a fool's game. We all have different risk profiles.
- allendoerfer 11y ago
  Okay, so you are just not into Ferraris. I would not buy one, either. I saw it as an example for something expensive, that you buy just for fun. A single unhedged angel investment is such a thing, too. In the first comment you argued differently. You said, that that even most millionaires can not afford to buy a sports car. I would say, that a single startup investment outside of any investment plan is an even higher luxury. It is comparable to spending thousands of dollars in Vegas. A Ferrari loses some of its value, in exchange you get fun. A startup will most likely fail completely. Additionally a Ferrari is much easier to liquidate again.

I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million.

jasode 11y ago

>you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million. You misunderstood what I'm saying if you think $10 million to $9.7 million is some kind of reduction in self-esteem. That's not the point. It's not the absolute $ amount. It's a subjective sense of the magnitude of payment in relation to what I get in return. The calculus includes the mental state. In my 20s, I spent $500k on a music studio thinking it would earn multiples of that. Things didn't pan out that way but I'm still young enough not to be gun shy about spending large amounts of money. I'm just a little wiser now and won't be throwing money away at such endeavors. Today, if I came across a web startup I believed in and they need $900,000 (3x the $300k of Ferrari), I'd feel compelled to reduce my bank account to $9.1 million to see if my angel investment will work. With the Ferrari, the ownership of it also includes many headaches in addition to whatever pleasures I could derive from it. The pleasures are seriously curtailed in my city where I couldn't floor it and race it above 80mph. On the other hand, with the killer web startup, I would lose sleep at night if I missed the chance to invest so in that situation, I must spend $900k just to have some piece of mind. Mathematically, I'm "poorer" at $9.1 instead of $9.7 but I feel better. Maybe the startup will crash & burn but I spent the money hoping they could change the world. Here's the crazy thing: it's very possible for someone else to think of the Ferrari as the "sure reward" and the web startup investment to be a fool's game. We all have different risk profiles.

allendoerfer 11y ago
Okay, so you are just not into Ferraris. I would not buy one, either. I saw it as an example for something expensive, that you buy just for fun. A single unhedged angel investment is such a thing, too. In the first comment you argued differently. You said, that that even most millionaires can not afford to buy a sports car. I would say, that a single startup investment outside of any investment plan is an even higher luxury. It is comparable to spending thousands of dollars in Vegas. A Ferrari loses some of its value, in exchange you get fun. A startup will most likely fail completely. Additionally a Ferrari is much easier to liquidate again.