On an episode of Farnoosh Torabi’s podcast “So Money,” Patrick McGinnis, a venture capitalist and investor, says the 2008 financial crisis changed his ideas of what it means to be secure in your job, and in your finances.
At the time, he was working on Wall Street, at AIG.
He told Torabi:
“Not only did it hit me sort of from a career perspective and you know, I sort of felt like my résumé was blown up and that I had lost a lot of money, but it hit me emotionally and I felt very — I felt like the world, I always thought I kind of had control, I was like, I went to Harvard Business School, what could go wrong, right? My career will always be fine. Even if everything else goes downhill.
“I realised that I had very little control and it was very frightening to me. I actually became very — I would say, very depressed and nervous for a while but over time, what I found was that taking control and building something for myself actually was the best way to feel a lot better about the world around me.”
That was the beginning of his entrepreneurial journey, which led to his book, “The 10% Entrepreneur: Living Your Startup Dream Without Quitting Your Day Job.” In it, he explains that you don’t have to quit your job to be an entrepreneur — even he still holds a day job.
His explanation of diversifying his career connects to related area of his life he purposely diversifies post-crisis: his finances.
McGinnis explained that he’s originally from Maine, “a place where people always lived within their means,” and he practices that himself. “I have a spreadsheet that’s updated on a monthly basis of how much money I have, what’s invested where, what do I expect to look like and I only invest and I only spend what I think is a reasonable amount, keeping lots of cushion,” he told Torabi.
He continued: “That way I know that I will never get into a situation where I’m in trouble. In fact, had I not done that in the 2008 financial crisis, I was working on Wall Street. My company blew up, I lost my bonus, it was disaster. Had I not lived by that mantra, I would have been in big trouble.”
His stock in AIG plummeted, he had no diversification in his finances, and the reason he stayed afloat was because he had cash in the bank from living below his means. What he learned from that experience, he said — just like with career prospects — was that “you must diversify.”
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