Keep Your Personal Burn Rate Low To Maximize Your Options

Why ‘Living Below Your Means’ Is One Key To Success & Happiness

$0 per year. That’s what my business partner and I decided that we wanted in salary from our newest venture fund. Or at least it was the resulting impact of declining to take additional capital from our investors and commit our own dollars instead. Now, my salary doesn’t go to zero overnight because we’re still drawing down historical management fees but it’s all downhill from here as those income streams taper and end.

Many of my industry colleagues shared that they too would like to pursue the model we chose but they didn’t have the capacity to do so yet. In many cases this was kind of a bullshit answer to be honest. What they really meant was that they enjoyed a lifestyle that was built around fees in addition to profit sharing, had a high personal burn rate, and were risk averse to putting more of their capital in the game. It might seem like I’m shitting on those folks, but actually it’s perfectly sane set of decisions (VCs are generally risk averse, that’s why they’re usually not founders)! But these same folks should be honest with themselves about their priorities because if they wanted to do what Satya and I did, they could!

It all brings me back to Sam Altman’s tweet from a few years back: