Do you know what's fun and free? Dreaming BIG! A while ago, I thought: Can Financial Samurai be the next billion dollar financial technology company? After all, all my writing is from firsthand experience. Further, you are seeing a lot of personal finance sites grow with a bunch of inexperienced freelances.
As kids, we use to daydream all the time. I fantasized about being a professional tennis player who'd compete in tournaments around the world via a private jet until I realized I couldn't even make it to All-State, just All-District. It was only until the age of 32 did I start dreaming again.
You can also go the easy way and invest in the Fundrise Innovation Fund. The fund invests in private growth companies in AI, property tech, data infrastructure, and fintech that one day might become billion or multi-billion dollar businesses. AI is an investment I'm really interested in now.
The Next Billion Dollar Company
When Ariana Huffington sold The Huffington Post to AOL for $315 million in 2013, The Smoking Gun, and several other sites reported that Ariana only received $21 million, or ~6.6% from the sale. $21 million isn't chump change, but that's a far cry from the original sale price.
Meanwhile, Michael Arrington, founder of TechCrunch sold his site to AOL in 2010 for only $40 million (includes incentives). 2010 was a bad time to sell anything – stocks, real estate, businesses, you name it. But because he owned an estimated ~80% of the site, Mike walked away with around $32 million, or 50% more than Ariana even though TechCrunch sold for 85% less than HuffPo!
It's amazing how two vastly different sales prices can result in two surprisingly different windfalls due to company ownership structures. It often takes an army of employees and capital to build something massive. I'm not looking for fame, but I'm starting to wonder whether it's time to once again rekindle the dreams of great fortune.
Whether you know it or not, you the FS community, is instrumental in the continued content production here. I struggled for years not wanting to do anything but travel and play because years ago I finally found “enough.” But thanks to your continued support and encouragement, I've kept on going. People keep asking whether I will ever run out of material to write. The answer is always “never,” because there's an endless amount of things to talk about. If you can speak forever, you can write forever.
Lifestyle Business Or The Next Billion Dollar Company
Back in October, 2010 I was already beginning to burn out from my finance job after 11 consecutive years (plus another two years at a previous firm in the same position in NYC).
I penned the post, The Comfortable Lifestyle Business Or The Big Payout?, as a way to gut-check my feelings about taking work down a notch with the community. I asked the following question to a bunch of poker buddies and to all of you:
Would you rather make $15-000-$30,000 a month and work only 2-4 hours a day? Or, would you rather make minimum wage working 12-18 hours a day for two years with a 25% chance of selling your business for $100 million dollars and netting yourself a cool $25 million? If you don’t, all you are left with are your experiences.
The large majority of you chose option #1, the lifestyle business making $180,000 – $360,000 a year working up to 28 hours a week. And you know what? That was exactly the answer I wanted to hear as I left a $250,000 – $1,000,000 a year job in finance 2012 to pursue such a lifestyle. In retrospect, leaving so much money on the table at 34 was crazy. But, without taking some risk, I knew my life wouldn't change one bit.
The great irony is that for the first year, I was probably working just as hard, but I was enjoying every minute of it because there was a 100% correlation with effort. My old job had dissolved into a somewhat communistic structure where high performers or high performing departments subsidized low performers or low performing departments. It's a team sport in the rocky world of finance, but I wanted to see what I could do on my own.
What About Now?
It's been almost 11 years since I first asked the lifestyle business question, and By The Power Of Greyskull, the dream turned true. Who would have thought discussing an idea while waiting for a good poker hand could turn into something life changing? Who would have thought, simply one day registering a name online would ever lead to anything?
Ever since middle school, I've thought in four or five year blocks because that's the typical duration of high school and college. The last five years have been terrifyingly wonderful.
Given the lifestyle business goal was met by the end of 2013, one and a half years after I left Corporate America, I decided to utilize my free time consulting for financial tech startups that I believed could revolutionize the industry for the better. I thought how cool it would be to bring Silicon Valley insights to the FS community living here in San Francisco. Fintech was a chance to pivot into something new.
Why Not Build A Billion Dollar Company Too?
During the year and a half of consulting for financial tech startups I learned a ton about Silicon Valley tech culture, compensation structure, fundraising, growth metrics, venture capital, product creation, pitfalls of working at a startup, and various ways people exit for big and small money.
Since November 2, 2013, I've spent over 1,600 hours consulting for Personal Capital. During this period, the company raised a series D funding round led by USAA, BBVA, and Corsair. And I've spent over 300 hours with Motif Investing, who during this time raised a Series E round led by Renren of China, a company I ironically helped take public years ago.
Over the next 10 years, there's a good chance the founders of these companies will personally walk away with eight-figure paychecks. The value propositions Personal Capital and Motif Investing have created are just too compelling for big finance companies and consumers to ignore. I use and enjoy their products, which is why I wanted to be part of their team.
Starting in 2015, the feeling of why not me too began rising in my underbelly again. I haven't felt this way since I began to seriously think about leaving my corporate job at the end of 2011. But life has a funny way of pulling you OUT of satisfaction.
FOMO For More
When I read an article by FastCompany this past January about the 10 most innovative companies in personal finance, it got me all excited!
FastCompany is a leading entrepreneur's magazine. If you click the article you'll see that Motif Investing is ranked the #1 most innovative personal finance company, and it's hard for me to disagree. I couldn't fully comprehend the full value proposition until I built my own motif. Their user interface is slick and the ability to build a diversified portfolio for only $9.95 blows away the competition. How neat it is to be able to consult with a company that has such recognition.
Then I started reading about every other company on the list, until I stumbled across LearnVest at #10, a company founded in 2009 like Financial Samurai, but a company I never thought was that innovative because they are basically a larger version of Financial Samurai, but with a lot less personality, experience, and firsthand knowledge.
Not Much Innovation At Financial Samurai
My only innovation is coming up with new financial metrics like FS-DAIR for paying down debt or investing, FS-FR Score for measuring fiscal responsibility, the 1/10th rule for car buying in order to save you from yourself, and the Average Net Worth For The Above Average Person to provide people some financial targets.
LearnVest started off helping women with their personal finances, and has since expanded to be a large lead generator for financial advisors with media heavy content. For $299, one of LearnVest’s 50-plus planners will speak with a client on the phone, draw up a financial plan, and then walk the client through it. For $19 per month, users get continued support via email, plus access to premium educational tips. A referral + subscription business based on content is pretty standard, and something I could easily do.
Proving I Can Create A Business Too
Financial Samurai has similar content, but my content is written by me, someone who painstakingly writes 1,000 – 4,000 word articles based on my experiences investing in stocks, bonds, real estate, private equity, getting out of the rat race, saving for retirement, and so forth.
LearnVest hires a team of freelancers, who may or may not have the experience, to write its financial content.
Since early 2010 when I started the Yakezie blogging network, I've come to deeply understand the world of freelance writing because I'm friends with freelance writers, hire freelance writers for my consulting clients, and researched how the industry works from an SEO and business perspective. Personal finance is just too important a topic for people to accept pontification rather than first-hand experience.
The greatest peculiarity I've found online is how there can be so many people out there giving financial advice when they have no experience. (See: Is Fake It ‘Til You Make It The Reason Why We Are All Screwed?) The online media world is filled with people who produce content under a recognizable brand, yet lack expertise. Yet, it doesn't matter so much because readers automatically associate authority based on the platform i.e. if an article is published under Forbes, then it must be good.
What an opportunity to change the way financial content is published! I know hoards of highly qualified professionals with 15+ years experience who are just dying to do something new with their lives.
My “A-Ha” Moment
LearnVest raised around $75 million in funding over six rounds since 2009. On the other hand, Financial Samurai has raised a total of maybe a dozen draft beers and a couple cheeseburgers, with zero equity exchanged when I sat around a bar with friends discussing my idea before leaving Corporate America.
FastCompany reports LearnVest draws 1.5 million visits per month with their large staff of writers, executives, and operational personnel. Financial Samurai draws roughly half of LearnVest's traffic with my team of ten fingers, best friend, and father who frequently reviews my posts for edits (thanks guys!).
In terms of revenue, multiple sources have said the company generates “way less than $10 million a year.” Based on their latest regulatory filing, they've got 45 employees and 3,700 paying clients. They charge $19/month and a $299 “setup” fee. The recurring revenue is therefore $19X12 X 3700 = $843,600 a year. Add on the $299 X 3700 and that's $1,106,300 in one-time revenue.
Hiring Help
With 45 employees, and even more contractors and financial providers to pay, offices to rent in NYC, lawyers, accountants, advisors, and so forth, it's obvious that LearnVest is deeply loss-making. Let's say my basic calculation on their revenue is wrong, and they actually make $10 million in revenue a year. I still can't imagine them being very profitable.
When LearnVest raised $16.5 million in Series C funding in mid-2013, it was valued at roughly $100 million ($40 million total funding to date). With its $28 million Series D funding in April, 2014, I'm assuming the company was valued at around $200 million. (A double in one year is commonplace in the bubble land of private equity) What surprised me is that during the time I spent developing this post, LearnVest was sold to Northwestern Mutual for a reported $250 million (probably includes lots of target hurdles) on March 25, 2015!
Why would LearnVest sell for $250 million after raising almost $75 million in total funding, and $28 million just a year ago? Let's not worry about capital returns, cash burn, the inability to raise money at higher valuations, and LearnVest's employees getting blind-sided.
They were bought by a cash-rich giant who already invested in previous rounds and is relatively price insensitive. Everybody is ensured of a job at least (not the main goal of a startup employee making below market rate to just work for survival). Furthermore, let's say the Founder and CEO owns 10% of the company, that's a cool $25 million for her. Not too shabby, but probably not very exciting for many others except for the first three employees.
My ah-ha moment is this:
If LearnVest only grew to 1.5 – 2 million in monthly visitors and has less than 10,000 paying subscribers after raising ~$75 million dollars and being barely profitable, if at all, imagine what Financial Samurai could do raising just $1 – $2 million dollars? I was able to generate a third to one half the amount of visitors as LearnVest with zero budget, and zero publicity. Meanwhile, Financial Samurai is very profitable and growing!
Maybe all I have to do is become a more public figure and get on Bloomberg or CNBC to talk about escaping the rat race, entrepreneurial life in Silicon valley, negotiating a severance package, retirement planning, or the myriad of personal finance topics to surpass LearnVest's traffic. Speaking to big media costs nothing, except for my time. In the past, I've turned down multiple interviews as I enjoy privacy.
What To Do With $75 Million?
Hire the best writers:
With $75 million, I could hire some of the most experienced personal finance authority figures to write the best personal finance content on the web. My writers would all write from experience, instead of pontification. I'd have Samurai Marisa, Samurai Mark, Samurai Steven, and Samurai Sally all write and manage different tracks of personal finance columns to build a thriving community. The writers would all have 10+ years of experience working in wealth management, investing, insurance, estate planning, taxes, and real estate.
Create a free Financial Samurai app:
Then I'd hire a developer or three to build a free Financial Samurai app that helps people grow their finances based on the ratios me and my colleagues believe should be followed. For example, users can answer a series of questions and the app will the spit out a FS ratio for each, compare you to the average, and then compare you to the ideal figure based on your financial goals. Once the inputs are in place for savings, investments, spending, retirement, housing and so forth, the app will pull your data and track your progress towards financial freedom! We can even gamify the app to make your finances as fun as possible.
Build a subscription based business:
In addition to building a wonderful free app to propel you towards financial independence, I'll have a couple engineers build a financial subscription business where people who want more direct help can sign up on a monthly, or yearly basis. The beautiful interface will focus on connecting those who value professional advice to a team of the most qualified financial advisers, estate planners, tax attorneys, and career coaches. We would only highlight the most qualified people and leverage video meetings over your phone or laptop.
Develop corporate partnerships:
After the free app and subscription business is built out, then I'll build partnerships with the largest financial institutions in America to create value-added extensions to their exiting customer base. The enterprise model can be a fee based on customer, or a revolving subscription fee.
What makes you think you can do it?
My “unfair advantage” as VC Chris Sacca likes to ask is that I've got 16 years of experience in the finance world, an already established perpetual stream of incoming traffic on Financial Samurai due to high search rankings in coveted keywords, and relationships with meaningful players with deep pockets.
Furthermore, I have no business debt, strong cash flow, six years of experience building a profitable online business, and over a couple thousand hours working in startups from Series Seed to Series D.
What's The Problem? Build A Billion Dollar Business Already!
My problem is that I don't crave the limelight. I'm also content. I'll gladly meet up with readers and clients when I'm free, but I'm not a promotional machine. I'm of the old school where I want the writing to speak for itself in a meritocratic manner. But as we know in many of my career building articles, doing good work can only take you so far. You must self promote!
Those who rise to the top are masters of self-promotion. Building a big business is about having a “big ego,” as my venture debt friend told me. I've definitely got an ego, but it's not yet big enough to take incessant amount of selfies to post online, share vacation pics on Facebook, write memes with my picture on it, and drive around in a fancy car.
You see none of that on Financial Samurai. Meanwhile, I drive around in a Honda Fit, which does nothing to boost confidence, just driving range. Self-promotion just feels a little off.
My other issue is that I love the speed in which decisions are made at Financial Samurai.
Here's how it may go: 1) Wake up at 5am and remember an idea from a dream, 2) Write from 5:30am – 7:30am while the idea is still fresh, 3) Take a break by doing five sit-ups to keep my one-pack toned, 4) Eat breakfast and get on a call, go to a consulting client at 9am, or work on some business development opportunities, 5) Come back from work and respond to e-mails and comments, 6) Ping a freelancer to work on a project, 7) Spend time with friends and family, 7) Go travel for four weeks somewhere, and 8) repeat.
There's never a need to have a meeting about a meeting to hear yourself speak. Sitting in too many meetings crushes my soul because that time could be spent doing something productive. A 30 – 60 minute meeting once a week is fine. Or a 15 minute meeting once a day works too. But I've noticed there are endless in the startup world.
Finally, there is complete autonomy with running my online media business. “Sam, you like the idea?” “Why yes, I do. Let's do it!” Voila! So easy! Once you take money from investors, you've now got to report to other people, even if they don't make the final decision. There will be increased pressure to hit targets and perform, and knowing me, I will stress significantly to try and always over-deliver.
“Sam, I've got a thousand bosses. There's something to be said about being your own.” – CEO of a $3.5 billion public tech company.
One Billion Dollar Company Pipe Dream
Selling Financial Samurai for one billion dollars is probably never going to happen. But selling Financial Samurai for $100 million in five years is a real possibility. During my due diligence, I talked to the following people:
* A VC who invested in Lending Club and Mint.com
* A CEO/entrepreneur who is worth hundreds of millions of dollars
* An Angel who has invested in both AirBnB and Uber
* A CFO of a Series E company
* A CEO of a Y Combinator seed stage startup
* A Venture Debt partner
* A failed entrepreneur after 10 years of trying
* My parents and my best friend
Here's how I could turn Financial Samurai into a $100 million dollar company.
1) Put together a pitch book with details of my organic growth, revenue projections, business plan, and use of proceeds. Highlight the various new products and business lines planned with cost figures and timelin. Compare Financial Samurai with the likes of LearnVest and other similar companies to show that there is demand for innovation in the multi-trillion dollar financial wealth management industry.
2) Hire a respected technical first employee or co-founder given funding is easier with a team.
3) Establish an existing valuation of $10 million – $20 million. If pre-product, pre-revenue companies (i.e. loss making, just idea stage) can be valued for $10 – $20 million, why can't Financial Samurai, which is highly profitable, has six years of existence, can pay a nice dividend if it wants to, has way less risk than all these new startups, and can grow revenue by triple digits every year with promotion, be worth a similar range?
4) Sell 10% of the company for $1 million – $2 million to a consortium of passive investors who understand the space and can provide connections and expertise.
5) Spend $ 1- $2 million on hiring content producers and engineers to develop the products I've outlined above. The $1 – $2 million can theoretically last forever because I don't need the money to grow. But, I will spend the money for growth in a prudent way. If Financial Samurai can grow to 1 million pageviews a month with no big media appearances, no forum, and no marketing spend, I have no doubt I can grow even bigger and quicker with an actual budget. I have literally not put any money back into my company as a lifestyle business, except for ongoing maintenance.
6) In five years, I'm confident I'll be able to grow to three to five million visitors a month, gain more than 10,000 paying subscribers, and boost revenue 20X due to a fantastic app, a new subscription business model, more advertising revenue, and new partnerships. Let's say revenue grows to $10 – $20 million, with 60% operating profit margins in five years. Why can't I sell the company for $100 million based on a 5 – 10X revenue multiple when comparable startups are being valued at 15 – 25X revenue? OK, it's not a billion dollar company, but still. Remember, LearnVest was generating $10 million or less in revenue a year, was loss-making, and got sold for $250 million!
So there you have it. That's how I can grow Financial Samurai to a $100 million business if I actually get down to trying. The private equity market is absurdly hot right now as too many dollars are chasing too few deals. Vox Media just purchased Re/Code after just 1.5 years of existence. Buzzfeed is looking to go public with over a $1 billion valuation. Tech publishing site GigaOm shut down after raising an estimated $40 million because they took on debt and were burning $400,000 a month (!). It just goes to show how much money is out there. And who knows, maybe I'll pivot the business model at some point after a couple years so it can scale to a billion dollar company.
All I know is that after speaking to some highly respected people, researching what other companies are doing with massive funding, and analyzing what I've done on my own, I think I've got a much higher chance of a $100 million exit than the average new startup. Half the battle is survival, and given Financial Samurai doesn't need funding to grow, it can survive into perpetuity.
So let me ask you dear readers, as I asked you back in 2010 with some new figures:
Would you rather 1) continue building a lifestyle business that provides all the freedom in the world with $500,000+ a year in revenue and 50% – 70% operating profit margins? 2) Go for glory and try and build the next billion dollar company over the next 5 years with a 25% chance of walking away with $60 – $100 million dollars? 3) Follow a hybrid route by finally plowing back earnings into growing the company instead of using the money to fund a lifestyle while joining another promising startup? 4) Sell everything now for $5 – $8 million based on current offers and start another site.
Seven Second Resume To Build A Billion Dollar Company
* Was a consistent top 3 producer in the brutally competitive finance industry for 10 years in a row.
* Built Financial Samurai from the ground up over the past six years into a recognizable brand and a highly profitable business with no marketing spend and zero PR.
* Spent 1.5 years and 3,000 hours consulting at leading financial tech firms.
* Understand the importance of scale and profitability.
* Will not fail due to a lack of effort. Calculated risk-taker.
* Can be intensely competitive as a current athlete if needed e.g. beat the founder of one roboadvisor company 6-0, 6-1 without remorse or regard for future consulting business opportunities. But can also be a good politician who can build collaboration.
* Connected to people who can “flip the switch” and expedite the business.
* Weaknesses: already content, lack patience for inefficiency, already helping folks with their financial problems by publishing posts and answer questions, more of the happy-go-lucky type.
Invest In Potential Billion Dollar Businesses Instead
Instead of building a billion dollar business, it's much easier to invest in businesses that could potentially grow to a billion dollars or more. Check out the Fundrise Innovation Fund. The fund invests in private growth companies in AI, property tech, data infrastructure, and fintech.
What's great about the fund is that the investment minimum is only $10 and you get to see the portfolio composition before making an investment.
You can also listen to my hour-long conversation with Ben Miller, CEO of Fundrise, about venture capital and why he's so bullish on artificial intelligence and more.
Start Your Own Website, Be Your Own Boss.
You can try to start your own massive billion dollar company, or you can do what I'm doing and run a lifestyle business online. But nothing will happen if you don't start your own site to begin with. At least own your brand online and earn extra income on the side.
Why should LinkedIn, FB, and Twitter pop up when someone Google's your name? With your own website you can connect with potentially millions of people online, sell a product, sell some else's product, make passive income and find a lot of new consulting and FT work opportunities. Here's my step-by-step guide on how to start your own website today.
Financial Samurai started as a personal journal to make sense of the financial crisis in 2009. By early 2012, it started making a livable income stream so I decided to negotiate a severance package.
Years later, FS now makes more than I did as an Executive Director at a major bulge bracket firm with 90% less work and 100% more fun. Follow my step-by-step guide to starting your own website today in under 30 minutes. Once you own your platform online, you can now potentially reach 3 billion+ people! You never know where the journey will take you!
Updated for 2021 and beyond. I'm loving the lifestyle business lifestyle. No investors. No shareholders. 100% freedom to do whatever I want is priceless. A billion dollar company is ice, but I really enjoy the autonomy of my lifestyle business.
Related posts:
This is an incredible post. I love the break down of everything and the insight you have make me envious. Keep up the amazing work and go make your $100million dollar company already!
[…] passion with the ultimate end goal: living a better life. Killing myself for the next 10 years to try to make something huge in order to live a nice life sounds a little backwards. Why not live a nice life […]
[…] publishing, Can Financial Samurai Be The Next Billion Dollar FinTech, I got a lot of feedback from readers about what I should do. After checking out the poll results […]
Hello Sam –
This is really great to read this type of ‘thinking out loud’ articles that bring us into your ideas and give us the opportunity to participate in the decision process.
As mentioned in other comments, this is what makes me come back to your site regularly because it brings the kind of value that I can’t find anywhere else.
Of course, as a reader, I wouldn’t want that to change.
Eight years ago, I had a Nokia cellphone and I thought it was pretty awesome. I didn’t need it to change, I was happy with what it was. Then Apple announced it was making a phone. Every one laughed. It was a huge success. Such a success that Apple still makes most of its money off of it 8 years later. What if Apple had asked its customers if the cellphone market needed a change?
I like your style and the “voice” of FS but I might also like other staff writer’s voices, particularly if they are writing with the same passion, experience and that we can feel they are an integral part of the “Team FS”. That might be scary for all of us who’ve been following you for some time.
But what if it was even better?
Nick
PS – I picked #2 :) Regret on the death bed is not on my bucket list. Making the world a better place is. If you could grow your business to 100M$, you would impact so many more people. And imagine how much this adventure would inspire your readers!
Thanks for sharing your thoughts Nick! I don’t see why I can’t assemble a great team of passionate, experienced writers who can entertain and educate, while building a FS app/product as well.
Let’s see what happens. Everything just takes time, more time, and money!
Go big and let us little guys provide some of the capital instead of big PE companies that are going to force their ‘vision’ of what the company should be. While I really like Personal Capital, it has its short falls. With reader(investor) input you could create a superior, much more broad app that really allows users to fully manage all aspects of their finances. This along with your excellent articles are worth their weight in gold. I’m in if you go that route!
I stumbled upon your website while googling for some financial reading. I am currently working for this company (iBosses Pte Ltd) that specializes in helping entrepreneurs develop and bring their businesses to the top of the ladder. I don’t earn anything from this (in fact I’m merely a temp staff!), but after reading your post, I gathered that the biggest thing you’re worrying about is whether its worth to put in all the additional effort for a huge IF, especially when you are already content with what you have at the moment. I’m always an advocate of the YOLO concept and I believe that its always better to have tried and failed than not tried at all. Not for the glory of the outcome, but more for the personal satisfaction of knowing how far you can go. I believe that perhaps this company can help you develop a more hands-off approach?
Apologies if you think this is unnecessary, given your own experiences and all, but I just thought to share. However, as a reader, I hope you never sell Financial Samurai. It just wouldn’t be the same :(
“Take advantage of large private company valuations and sell 100% of FS for ~$5 – $8 million now before the exuberance fades. Then take a vacation, U/G to a Honda Civic, and work on something new.”
Is what I voted. I don’t know a lot about this subject, but let me tell you what I do. Let’s look at large valuations over the last 30 years; the tech job bubble with crazy bonuses, the tech startup valuation bubble, the housing bubble. Each of the 3 had a decade or 15 years to build up to such a large valuation, since in the start they all had small valuations. Once the bubbles had popped, there is no longer a bubble today for tech jobs but tech jobs with pretty high wages are in demand, some of today’s billion-dollar startup valuations are justified provided the company or two companies can corner the entire market themselves, and idk about future housing predictions.
Since you truly understand the financial tech valuations better than lots of us, it’s up to you to decide how many years this excess is for. Otherwise if you do nothing, you’ll end up missing an opportunity in your area of expertise and waiting another 15 years from now for the next opportunity in your specific field.
Airbnb just announced it is fundraising at a $24 billion valuation from $10 billion in 2014. Wow! But, their revenues have also surged to $900 million estimate this year too. But still, 26x revenue multiple!
It seems like this party goes on for three more years.
[…] while brands continue to get stronger. If you’ve built a good community, then you may want to consider building a bigger company by creating […]
The “early retirement” meme is relatively new and has really exploded in popularity over the past few years. I’ve had many different friends independently tell me in the last year to save 50% of my income to retire early based on reading Mr. Money Mustache and other blogs like yours. This trend may have been inspired by the financial crash, I think similar ideas of increasing saving rates were popular after the great depression. This may continue or may fizzle out if the economy starts booming again and people refocus on consumption. But in the short term, I think this meme has serious tailwind (at least in Canada). If you can sell this blog today for $8M that would be very tempting to me. That’s an earning multiple of 22x, which seems very generous and could quickly collapse if your monthly visitors ever stops growing. A 4% withdrawal rate on $6M after tax is $240k/year, your ideal income level. Although at this point you don’t need more money so you might as well keep writing to keep you occupied. Reading between the lines though, it seems you only want to go big after getting greedy after seeing other big successes. Is that really going to be a motivator if the market turns and the chance of a big exit disappears? You might be might be better off keeping some dry powder to be “greedy when others are fearful” when the private equity bubble deflates. One plus side of raising money is given your Goldman experience, you would have an easier time raising money at better terms.
Is it greed or is it being baffled by how little some companies have succeeded after raising so much money? $70-75 million to be only double or triple my size is a lot of money spent. I think I could do way better.
Raising money is creating more dry powder, not less. Spending more money on the business is reducing dry powder.
you are provoking some interesting thoughts here. here’s my opinion about how and where you should take Financial Samurai.
For you, I can understand the appeal of going big. I can definitely understand making FS a billion dollar company. And I actually think you stand a good chance of doing so, based on the few things you listed as a future direction. I would even invest money for you to grow your business because I think you have a recipe for satisfying the market. Your contents are useful in both good times and bad for the economy, and I really think you have a good shot with expanding FS whether you hit the billion dollar mark or not.
Having said all day, I don’t think the new FS would be relevant for me. I come here to read your take on things personal finance related or in the financial world. Sometimes I agree with your idea, sometimes I don’t. The beauty of it is that your articles provoke me to do some thinking about the particular topic you are writing about. I could care less about “the best writer” you can hire, because I don’t come here for the best writers’ opinion on things, I come here to see what Sam has to say. Just like the fact that I don’t care for the guest writers here.
So basically
new billion dollar FS: Not for me, but I think it can be a success for many others
existing FS: the reason why I’m here.
If I were you I’d go big and chase the money.
Thanks for your thoughts! The best writers by very definition will be the ones you find interesting. There’s a formula for creating compelling content that readers will care about, even though I’m humbled you just care for me :)
The guest posts on FS have actually done extraordinarily well. Check out this one, for instance:
Confessions Of A Spoiled Rich Kid
It went nuts in Canada with 10,000+ e-mails etc.
There will always be a segment of the “NewCo” which will have my posts. The idea is to offer product, and so much more on top of the tailwind I’ve created.
I didn’t mean to be so harsh. I guess all I’m saying is right now your content is 100% exclusive. When you have more people doing the writing, no matter how good they are, its not the same.
Sorta like going to my favorite sushi restaurant. I go there specifically for one of the sushi chef. I am sure all the other sushi chefs are fantastic in their own way, but my tie is with that one guy.
But it makes perfect sense that the restaurant have more than chef. So let’s just say I am as conflicted as you are, the more I think about it.
Or haircuts. I see the same guy who cut my hair for the last couple of decades. My tie isn’t with the establishment itself.
This is the only article I’ve read on your site (and I’ve been here 30 minutes) but I know I’m going to become a fan. Personally, I’d say go big. You need to be the best you can be without any regrets in life. The fact that you are asking the question is proof enough. You’ve got it all mapped out and all that is left is execution. I’m just a young 26 yr old guy from Ghana who wants to build a lifestyle business like yours, escape the poverty here and live the dream. So obviously, I don’t have that much life experience as you but that’s just my 2 cents.
I’d also recommend you reach out to Ramit Sethi because he talked about something similar on his blog recently. He’d be in a much better position to advise you. Wish you all the best.
100 million. Sounds tough. Not too many blogs have sold for 100 million. Tech crunch sold for like 30 mil 10 years ago. I think you would need to totally revamp the site and have a proprietary totally custom site built from the ground up. It can’t be like a word press template. Huff Po, Tech Crunch, and motley fool all had that proprietary aspect around the sites they built. You’ll also need lots of writers. You could also choose to take it a different direction beyond just blogging. All of which requires capital.
Another, thing to consider would be keeping the blog the way it is today and instead Quitting your consulting gigs. You could then use the freed up time from quitting consulting to start something totally different seperate but maybe related to FS.
Anyway, good luck. It should be a nice journey and all of the above is at least worth deep consideration.
If $100 million was easy, I think everybody would do it :)
I wouldn’t sell a blog. I’d create products with the blog helping serve as a supporting content marketing arm.
Two main things for raising money: Building a team who builds a product, and getting that product distributed and known.
Seems like you want to take a step in some direction. That means you’ll have to. :)
But whatever happens, please, please, PLEASE don’t sell it to some group who’ll hire cheap just-out-of-college kids and bored housewives to write about student debt, how to save money on shoes, and how to make money on Etsy. For the love of all that is good and holy, don’t ever let anyone ever do that to your empire!
I vote turn FS into a $100m business. If you find it no longer brings you happiness after you’ve cashed in, you can always start all over again doing something new that you love! Go big!
It will probably take 5-10 years to build the business to $100 million. What if you are already happy?
In my opinion, if you’re happy then leave everything as is and enjoy your already wonderful life! But if you have think you want to do this and the process will be exciting and rewarding, plus you are concerned that if you don’t do it you’ll live with regrets, then isn’t it worth the effort?! I suppose you’re in the position where you can do no wrong, so just pick whatever will bring the greatest amount of happiness and the least amount of regrets.
I would vote for continuing to build the business behind the scenes and maintain your privacy. I dont think you can overvalue the worth of your privacy. Im sure many celebrities would pay millions to get their privacy back.
Thanks Jeremy. It may be a chicken or the egg thing though. Many celebrities wouldn’t have gotten to their millions without being all out there!
I just wanted to say that I will be a fan either way you go. It is amazing that you are able to do all of this by yourself. The quality and depth you put into each article is nuts. One flaw in the plan though is you. You are FS and if you are gone will the quality remain. Kevin on shark tank would say what happens if you get hit by a bus.
The quality will be bursting at the seams! So if I die, all will be good. There are so many people who want to get out of finance and do something new. They know their stuff, can write, can market, can create. They just don’t know how to get there.
It’s a dream for many professionals to leave Corporate America and work on a startup or something new. It’s just the golden handcuffs and the inability to understand how to escape that keeps them trapped.
Mark Zuckerberg was offered a job at AOL, sell FB to yahoo for $1 bil, he turned both down. And now his net worth is >$ 24B :)
Why sell when you can be the chairman and hire someone to be CEO like Alibaba’s boss does it :)
You can turn FS to motley fools. in 2005-2006 they were nothing. Look where they are now?
One broke paparazzi name Lopez only focus on writting craps about Britney Spears back then, and making millions why not FS with great contents and further build out.
I’d keep coming back to see the changes you’ll make.
I wonder about Motley Fool. They’ve been around forever, yet still no major windfall. They’ve had a lot of ups, and then some downs when I think Yahoo cut out its syndication partnership. I’ll be curious to know if anybody else has insights on the company, as that is one loooong road they’ve taken!
I was pretty startled to hear those million dollar numbers you’re throwing around. It makes sense when you spell it out like you have with those other benchmarks, but still a little mind-blowing that a blog which isn’t hugely focused on selling products to readers could be worth so much already (no disrespect to the excellent content you write here of course!).
I voted pretty firmly to keep the lifestyle business, or perhaps add some new products or ideas here and there at your leisure. But that’s because right now my dream is to make only a fraction of what you’re doing, and is hard to imagine wanting more. But it’s also hard to imagine what it’s like in your shoes now, with FS as your current ‘baseline’. Your quote about life ‘pulling you out of satisfaction’ rings true to me. I think we all picture some future milestone where life will be perfect, and we’ll never want again, but it never lasts long until you start itching to do something else exciting and new.
I’m sure you’ve spent plenty of time reflecting on this, but I think there must be so many other avenues for you to challenge yourself and achieve your potential. But if this is the path that means most to you, then go for it!
Cheers,
Jason
Kinda funny, isn’t it? You never know what will happen if you one day register a site, build a brand, and produce something of value or of interest to enough people. The thing is, so many people just don’t bother TRYING. It’s either they don’t believe in themselves, or their idea, or know how. But, once you see someone do it, it becomes infinitely easier b/c you no longer have this self-defeating mental block to hold you down.
One of the best compliments I can get from a reader is when they ask whether I make any money off this site. A lot of times, readers will reach out and want to donate money to see if they can support me. I’m touched, and it makes me happy.
Now I wonder what if I actually started building a business with products and services to sell and scale online. Surely revenue would tick up, no? Just got to build something that people want. It seems obvious to me there are millions of people out there who need some excellent financial advice that suits them, at a reasonable price. The market is big enough for many players.
Large banks need to be disrupted b/c lending is so onerous nowadays, as I experienced w/ my own recent mortgage finance rejection. Financial advisory can still be more readily accessible to the public. Financial education is still lacking in schools. The opportunities seem endless! Too bad, one only has so much attention and energy.
Don’t get sucked back in FinSam. You left because you didn’t want to be in the racket anymore! Never go back! You can’t take it with you when you are gone! FREEDOM IS YOUR SALVATION!
Noted, Peter! What is the point of money, if you don’t have your FREEDOM?
I knew this would be a fascinating article! Thanks for sharing your thoughts about what to do next. I cannot help having Peter Thiel’s voice in my head right now, know why? Because he focused on monopoly capitalism, and the importance for being a company doing something truly unique — rather than competing over scraps and lessening the price of the product over time. That’s a powerful point he makes in his book “Zero to One.” And while you do have a unique voice, community, and intelligence, I wonder if that can be sold to someone else. I’d be buying you if I made an investment — not the product.
Haven’t read the book, but perhaps I should!
Small world, my close colleagues used to cover Peter Thiel’s Clarium Capital before it kinda blew up. I lived in the same neighborhood as he did.
Sam – This article is why I keep coming back to FS – great insight, candid, quantified, etc. Short story that may help with your decision: I have a buddy (Aaron) who plans his TH/FRI/SAT nights to the moment; a party here, a drink there, etc., etc. Every time I go out with Aaron we spend more than 50% of the evening driving/cabbing to the next place. One night I was out with Aaron at some bar I got to talking to this guy (Mike?) about where Aaron and I were going next. The bar we were at was packed, cuties everywhere, etc. – Mike put his hands up and asked, “Chris, why are you leaving this good time to go searching for another good time?” Solid question! The point is you’ve got it great with base hits (FS site, rentals, consulting gigs, etc) so what would you gain by swinging for the fence…. other than a boatload of headaches?? Look forward to reading your stuff and hearing wutev you decide to do.
Now that’s a great analogy!
Are you saying that it’s not going to be fun dealing with investors, lawyers, regulators, along with multiple employees with their own dreams, issues, and desires?! Sounds like a walk in the park! :)
You’ve only got one life to live. You should ask yourself: if I don’t take the dive in, will I regret this when I’m a grandparent?
You have the expertise, you have a nice nest egg to fall back on, you have experience in the market, you have a clear plan with fall back options, you have a solid network to get top shelf advice.
It doesn’t get much more risk-friendly than that in entrepreneurship!
Judging by your comments though, it already sounds like you’re 90% of the way there.
Good luck from the 808!
Mahalo! What are you doing in Hawaii? I’ve often thought about just running the lifestyle business from there. But, there’s just so much action going on in San Francisco now, it’s hard to permanently remove myself from this place for longer than two or three months at a time.
I guess I should’ve said “Good luck from your brother from the 808.” I was Radford HS c/o ’09.
I’m actually in the Bay Area (Palo Alto) for all the same reasons you are. I started a design/innovation consultancy (simplicitylabs.co) and all the work is in the Bay / Mainland.
I wish I could be back home in Hawaii, but the opportunity cost is just too high! I visit as often as I can though; my whole filipino fam is back there.
Cheers :)
In that kind of decision, there’s always one answer your gut tells you to pick. I think you’ve already made your choice…
Gut says enjoy life. Statistics are not kind to startup successes. Furthermore, you could have a largely valued startup now and end up going bust, or become a zombie company that just gets buy with never a large windfall.
That said, I haven’t made up my choice yet. I’m looking for a sign over the next couple of months.
All viable options! Question is what YOU want to do. I’d keep building and potentially consider taking a passive investment to monetize some of the business now and/or use for growth. That’s probably not the super ambitious path though.
Made me think of this too-> https://startupclass.samaltman.com/courses/lec01/
Have you thought of tax implications of the different exit paths? That could be a post for others with businesses
Thanks for the link! I’ll watch the video tonight. Do you know if Sam Altman has started and sold his own startup?
I know what I want to do every day. It’s different from what I should probably due. I’m constantly conflicted by this “don’t waste your opportunity” type feeling.
Ever get that feeling?
https://allthingsd.com/20120309/green-dot-buys-location-app-loopt-for-43-4m/
Before YC, Altman founded + sold Loopt. I think it was more of an acquihire though, it doesn’t seem like he got “f you” rich.
(Although now with his network in the Valley, he probably gets in the best angel deals and is doing just fine.)
I think everybody get’s that feeling. I liked how Steve Jobs said it where if you’re not getting up and doing exactly what you want to be doing for too many days in a row, that you should really think about making a change. I don’t think he necessarily meant this will make you the most financial wealth, but it’s weird how things have a way of working out when you’re doing what you love.
What I found thought provoking too re: that link is how large the reward could be by being the 100th guy at Facebook or wherever with just 10bps of equity.
Hey Sam,
This was a great and very thought out post as usual.
Given your traffic and loyal readership, you really don’t need to take outside investment to level up Financial Samurai.
I think you could easily add 7 figures plus to your sites revenue by adding a premium course. Investing a little money in a site re-design and start aggressively growing your email list and leveraging it way more than you currently do. You have two eBooks you could potentially use as lead magnets.
You have information that others need and value.
But it all depends on how much extra time you want to put into growing the business.
A great example of what’s possible is what John Lee Dumas has done over at EOFIRE.com.
He started his site and podcast back in 2012 and is now making $300K to $400K a month with his girlfriend and a small team of VA’s.
I would love to see what you could do by leveling up (without investment from outsiders), but I would also love to see your voice be the primary one on the site.
I also believe what others have mentioned in the comments above, it is your perspective and lessons as a practitioner that make you unique and interesting. I would hate to see a bunch of staff writers on the site. That would totally change and dilute your brand.
Not sure if you follow Gary Vaynerchuck or not, but he has a philosophy of “Give, Give, Give, Ask.” And you have mastered the Giving piece without asking much in return for all the value bombs you have dropped on this site. Now it’s time for a little asking and you can still give 99% of what you create for FREE.
Man I wish I were in your shoes right now. You have an exciting journey ahead of you my friend.
Cheers!
Dominic
$300K – $400K a month is massive! That method while being your own boss sounds to be the ideal scenario. Thanks for helping highlight what’s possible. Knowing other people can do it is a great motivator.
I’ve got to get over my ambivalent attitude towards making more money if I want to start a bigger business. It is really weird. I love that money buys freedom, but I don’t love money. In fact, I think money is the cause of a lot of stress and problems.
Maybe the real answer is to find a new passion; my life story goes in a different direction, but I’ve spent eight years teaching, and I’m at a point where I’m starting to wonder what else I can realistically take from it that brings me joy. I’ve won some accolades, crafted a successful product in the classroom, and don’t have the ability to leverage my skills within the work day to bring me more wealth. So I’m exploring other career paths now.
You’re content with this site in its current form, and it still brings you joy, but it doesn’t sound like becoming a major player and pusher of content is something that you necessarily want (or at least not with this business model). Why not figure out your end game first? I think following another company’s example/story isn’t the risk you’re looking for. Do something you’d never expect yourself to do, and then live it; you won’t have any regrets that way.