Bankers, Techies, And Doctors: You’ll Never Get Rich Working For Someone Else

Although I estimate an entrepreneur needs to make at least 35% more to replicate his or her day job income to run in place, I’m truly beginning to realize after two and a half years how much more upside there is to entrepreneurship than to working for someone else.

I came from the world of banking where 23 year old graduates with one year of experience can clear $100,000 no problem. Despite ascending from Financial Analyst, to Associate, to VP, to Director within 10 years, and earning Director level compensation for three years before leaving, I still wasn’t able to earn and save enough money to buy my dream home in Kahala, Oahu.

Dream House In Kahala, Oahu, Hawaii

Contemplating on never being able to afford my dream home

The above is a picture of me sitting on a lanai, looking down the southeast coast of Oahu towards Koko Head. The home is on Blackpoint Road in the exclusive Kahala/Diamond Head neighborhood. Since I was a kid, I’ve always dreamed about living here one day. But I’ve come to realize my childhood dream will likely never come true.

The asking price for this 6,000 sqft Kahala home with 4 bedrooms and 4 bathrooms is $3.5 million ($583/sqft). The lower level is a 1,800 sqft rental apartment that is going for a below market rate rent of $2,500 a month. The main house is therefore not that huge. $3.5 million is actually great value given the view and the size of the house. Other houses in Kahala are easily asking for $900/sqft or more.

If I had $4 million cash, I would buy this house in a heartbeat. It needs at least $300,000 in renovations given it is quite dated. But the lanai and the spectacular view are priceless. All I think about when I’m looking for my dream home is being able to sit outside in 72-85 degree weather with an ice cold beer and write about various adventures. 

How One Company Is Trying To Screw Over A Loyal Employee

No Freedom

No Escape by Horizon

For 10 years, Rachel dedicated her life to working for Up Yours Inc. She rose through the ranks from analyst to senior manager. But her path wasn’t smooth. I told her to find another job many times before because they weren’t treating her well. When it was time for her to get a promotion two years ago, she was passed over for another male colleague. The guy was qualified, but she was more qualified. Unfortunately, she had to wait another 6 months before being considered again.

The great kick in the pants is that the guy who got promoted quit six months later to take some other job. For managers out there, this is your worst nightmare because those employees who you didn’t promote will not only secretly laugh at your poor managerial decision, they will also make you regret your choice as well.

Two months after being passed over, Rachel walked into her manager’s office and demanded not only the promotion she should have gotten earlier, but an even higher raise than she should have received.

“If you don’t like my term, unfortunately it’s time for us to say good-bye,” she told her boss firmly.

Her boss was taken aback by quiet, little, loyal Rachel. He apologized about the situation and promised her a promotion during mid-year. Rachel not only got that promotion, but also a retroactive raise as well.  It’s unfortunate meritocracy doesn’t work on its own. 

Five Sure Signs It’s Time To Move On From Your Job

move-on

Grey Skies On The Horizon

At some point or another, you will be passed over for a raise or promotion. The goal is to actually start strategizing about your future BEFORE this unfortunate event occurs.

Perhaps part of the reason why some men make more than some women is because men are more aggressive in having the compensation talk with management. Back when I was working on Wall Street, I made sure I had a very serious heart-to-heart talk every two years with my bosses about compensation and promotion. I very clearly laid out my goals about when I wanted to get promoted, and how much I was looking to make, in a respectful way of course.

Before each sit down, I made sure my performance to date was solid. I included a short five-to-eight page powerpoint presentation to demonstrate the progress of the business under my leadership. The goal was to make it easy for them to pay and promote me, and it worked. By 27 I was promoted to VP and then to Director by 31 where I stayed for three years until I left to focus on writing.

Towards the end of my career I knew that I would never reach Managing Director. I would have needed to relocate to Hong Kong or New York, and then prove myself for another three years before getting the nod. My manager was at least five years older than me based in NY and wasn’t even an MD. How the heck was I ever going to get ahead? I wasn’t. Once we realize our limitations, we must be happy with what we have or do something. I always like taking action, so I negotiated a severance.

Free Uber Rides! Changing Lives By Disrupting The Rules

Uber App Dashboard

Uber App Dashboard

For the past several years, I’ve seen Uber grow from a scrappy startup to an enormous success based right here in San Francisco. In the Fall of 2013, the company was “only” valued at $3.5 billion. A year later, the latest round of fund-raising puts the company’s value at $18 billion! Instead of driving for them, the best way to get rich would have been to work for Uber when it first started in March 2009.

Jabir, the “richest poorest person I know” actually became an Uber driver a couple years ago. He was unemployed for almost three years with a wife and daughter to support. It didn’t matter what time of day it was, he was always available to play tennis. We’d also drive all around the Bay Area to watch struggling professional players battle up the ATP points ladder for eight hours a day sometimes. As tennis junkies, we were in heaven!

Then one day Jabir stopped being available. No longer could he play pick-up tennis at Golden Gate Park at 2pm. No longer could he be my pal when everybody else had to work, so I had to find a new friend to pass the time after my morning writing was done. When I asked him what was up, he responded that he decided to drive for Uber.

For the next 12 months, I didn’t see Jabir at all. He drove ~10 hours a day for six days a week like a mad man. It was as if he was making up for lost time. When I asked him how much he was pulling in, he said well over $7,000 a month. Not bad coming from $0.

Uber allowed my friend and many other unemployed or underemployed people to find a way to earn some money and improve the inefficient taxi system in San Francisco. The disruption has been huge. I was even considering driving for them during my spare time, but Moose was too old as a 2000 Land Rover Discovery.

Starting in early 2014, Jabir began to come out and play again. When I asked him how were things going, he said that he was no longer driving for Uber, but driving a black SUV for a specific hotel instead. “Sam, I was getting too tired driving all those hours. Hotel driving is so much easier. Also, Uber kept cutting its prices so I was only making like $3,500 a month. It wasn’t worth it to me anymore.”

Jabir actually started outsourcing his car to his brother to drive for Uber so he could start collecting a percentage of his earnings and free up time for him to drive for the hotel. Smart man. There’s passive income opportunities everywhere!

Is An MBA A Big Waste Of Time And Money?

UC Berkeley Haas School of Business MBADuring the summer of 2014, Personal Capital had the luxury of hosting three MBA interns in the marketing department where I consult part-time. One was actually a Harvard JD/MBA, which is darn impressive because she has to get into both schools separately. The other two were from Stanford. They did a great job brainstorming and executing fantastic ideas.

In addition to our summer MBA interns, our head of business development (Stanford), our head of client engagement (Stanford), our digital marketing executive (Michigan), our CMO (Cornell), and our CEO (Harvard) also have MBAs . Then there’s me, a Berkeley MBA grad. In other words, the marketing department is a majority MBAs. But having an MBA isn’t a requirement for joining. Relevant experience is much more important.

Most MBA graduates will probably say that an MBA is money and time well spent. It’s kind of like spending big bucks on a fancy dinner. To justify the extravagant expense, of course you’re going to tell yourself and all your friends, how incredibly amazing the dinner was. But we all know that spending $250 per person at Jean Georges isn’t worth 100X more than a tasty In N’ Out cheeseburger for $2.5.

For similar reasons why going to private university without a scholarship is probably not the best use of your money unless you have plenty of it, getting an MBA is also becoming a tougher choice today.

For those of you with MBAs, be forewarned. This is not a cuddly, feel-good post on why getting an MBA is a no-brainer. There are a lot of hard truths from what I witnessed as a manager who consistently interviewed MBAs during multiple bull and bear markets. I’m also providing the perspective as an MBA eight years after graduating. Readers trust me to speak candidly, so that is what I will do.