Wealth management for founders
As a business nerd who started building companies (in that order), I frequently ask other founders what they invest in, outside of their own company. The most common answer is still ‘their own company’, closely followed by ‘oh and some other angel investments’ (although I find the most common answer for anyone under 25 is ‘this particular crypto project’). Now notwithstanding the fact that my best-returning investments have also all been my own companies, it is statistically a sensible thing to introduce some diversification into your life portfolio. The challenge tends to be that when the entirety of your brain energy is diverted into building, it leaves very little room to consider other things.
I would guess that most founder diversification, where it exists, is primarily focused on the real estate that they live in. For most people this is a somewhat non-correlated investment relative to their day job, although depending on your city, it may well be a pretty poor vehicle for actually growing capital. Perhaps a different (and more palatable) way of diversifying is to simultaneously have a basket of investments which are predicated on your sector growth but not linked to your individual company success. All this requires bandwidth though.
From time to time, I have mulled what an ideal wealth management firm for founders would look like without any strong conclusions (although through much experimentation I have a long list of what it definitely shouldn’t be). I assume hiding within the shadows of Iconiq and Sequoia Heritage are some fascinating small firms who have figured out a good interest alignment model with their founder clients. As we watch funds managed by finance professionals gradually get displaced by funds (and SPVs) managed by founders, it seems like wealth management might have a similar path?
The history of wealth management is essentially the transformation of early 20th century private banking services (discretionary services for the very rich) to what, by the 1990s, was being described as ‘ wealth management’ (but was ostensibly targeted products for the modestly well off). Today you will hear a lot of people talk about ‘family offices’ which at this point can mean anything from ‘the money in my bank account’ to a full-time team managing one family’s money but which notionally harkens back to the original private banking idea of being slightly more proactive about investing.
That little history interlude is to contextualise my point that many founders don’t want investment products, they want investment services to help them efficiently build their own products (so they can then get back to their own company building). When I initially saw Raval Navikant’s Spearhead platform, I thought he was heading in this direction with AngelList (maybe he is). Friends and family allocations in VC/PE funds, where the GPs waive a minimum investment level, are another (albeit much cruder) expression of this philosophy.
Who is building in this space?
Side-piece
As a by-product of our internal LFG Holdings debates, Max and I have launched a monthly newsletter tracking Generation Alpha and Z trends for investors (there’s a LinkedIn version if you prefer). This is kind of niche so I don’t think all of you will be interested but certainly some of you might.
Reading/Listening
I have very little to offer on the topic of tariffs but I’m currently reading (and enjoying) The Battle of Bretton Woods which provides some interesting historical context on economic aggression. I am also still reading Robert Caro’s biography on Bob Moses which, given the sheer size of it, might be a thing you hear from me for some time.
Razib Khan wrote an excellent long essay about the overwriting of the Neolithic culture (ancient farmers) with the Indo-European (ancient pastoralists) that made me think deeply about where we are in the arc of history.
As a fan of rap from not just the US, I’ve been very pleased to see the general response to albums/mixtapes from London-based Central Cee (which you’ve probably all heard of by now) and Dublin-based Travy (which I suspect many of you have not). Go run them up.