šŸ“ˆ How much do you make #7

Making $1.00 as a founder, equity vs salary, & the mistakes tech people make with their finances

April 19, 2023

  • This week we spoke with Jessica, the 37-year-old founder and CEO of Uprise, a fintech / wealth management startup.

  • She makes $1/yr

  • Is married with kids - all while building a Fintech startup

  • Her hot take is that everyone in tech is ā€œover-concentrated financiallyā€

  • More on that + wealth management, pros & cons of alternative assets, FIRE, wealth building, & more.

What do you do professionally and how much do you make?

I'm the founder of an early-stage fintech company called Uprise and I make $1 a year.

As you might expect, I'm not living off that income alone, and we're definitely burning through our savings. My husband is also a founder and has given me permission to share that he makes $180k a year. So, between the two of us and our toddler, we're living on $180k and $1 a year in the Bay Area.

My salary would be zero if it weren't for the fact that the minimum that JustWorks (payroll provider) allows is $1. As an early-stage founder, I'm not focused on making a salary right now. Instead, my focus is on building my company. If that works out, my equity will be valuable.

We made these decisions deliberately. We consciously decided to take this path rather than working at a big company and making a lot more money, but this is what is so exciting. It gets me out of bed and gets me energized all day long by this thing that I'm working on.

Together with Rollfi

Give your employees the power to choose exactly how and where they want to get paid. We're building the payroll & HR platform for companies creating the future.

How has your income changed over time?

When I first graduated, I was working on Wall Street doing investment banking. This was in 2007 at the peak of the market. And bonuses were crazy through the roof. After that, I went on this journey of learning and figuring out how do I get more ownership and decision-making ability?

Coinciding with this journey, my salary has been comparatively less with each job because thatā€™s not what Iā€™ve optimized for. Iā€™ve focused on getting equity in the startups Iā€™ve worked at and now the company I founded.

Note: The above graph does not include stock compensation.

Can you walk us through your monthly expenses?

Our monthly expenses in the Bay Area are around $12,000 to $13,000. 

The bay area is expensive and right now we are just trying to minimize our burn and break even. To help with this, my husband and I are moving to Las Vegas where weā€™ll remote work in a more affordable city and can better accommodate our lifestyle with a child.

Can you share more about you and your husbandā€™s combined personal finance philosophy?

So my husband and I actually love discussing finances. It's fascinating to us because we come from different cultural backgrounds. I'm Chinese American and he's Brazilian. We both have unique approaches given our personal histories with money.

But despite our differences, we share a philosophy of making asymmetric bets in our careers. As founders, we're taking on a lot of risk, but we believe in our ideas and are willing to take that chance. On top of that, we have investments in stocks from previous companies, crypto, and other areas that we think have high potential returns. To balance out these high-risk bets, we've made sure to diversify the rest of our portfolio through ETFs.

So overall, our strategy is to take calculated, asymmetric risks in our careers while also ensuring that our overall investments are well-diversified.

Asset allocation

For our asset allocation, my husband and I have the majority of our investments in total market ETFs, both US and international. We do have some exposure to crypto, with a focus on Cardano. We also have 529 accounts, but even those are invested in broad-based ETFs. On top of that, we have a small number of angel investments and equity in our companies.

Currently, excluding our current companies which can be hard to value, our shares in TransferWise and Turo make up around 50-60% of our total portfolio, with the rest being in ETFs and crypto.

Tell us more about your company Uprise. Why did you start it?

Uprise empowers financial institutions to embed human+AI-powered financial advice into their offerings. The whole idea is to make financial advice accessible to everyone and we do this by partnering with financial institutions to basically offer access to personalized advice everywhere youā€™d have a question about your finances.

I started Uprise because while working at Robinhood, I saw users come to the platform with tons of questions on how to manage their finances. The platform did not give them the right answers to their questions. Growing up, I had a resource in my mom, who worked at the FDIC for 30 years. She gave me the right advice at the right time, and I realized that not everyone has access to that kind of resource.

Thatā€™s how Uprise evolved. What if, instead of getting directed to the list of the ā€œmost popular stocksā€ on Robinhood, which is the wrong answer for everyone, you could get the exact right recommendation for you? Based on where youā€™ve come from and where youā€™re going, you should buy this one. One-click, done. Thatā€™s what weā€™re building towards.

The value of wealth managers & advisors

The main value of having an advisor is the relationship and trust that you build over time with that person.

An advisor can really understand what you care about, what your goals are, and tailor their advice accordingly. For example, some people may care about ESG investing or making generational wealth, while others may simply want to retire comfortably with a white picket fence and play with their grandkids. An advisor can take all of these factors into consideration and provide personalized guidance.

I think this human connection is often missing in many financial tools and apps. It's not just about getting the right advice, but also having someone who understands your unique situation and can be there for you when you need them. And because you have that relationship, thereā€™s a lot of value for psychological reasons also, as they can prevent you from making bad, emotionally-driven decisions with your money.

POV on wealth management fees 

I don't believe in % of AUM fees. Charging a % of assets under management has been the traditional model because it's hidden, and I hate hidden fees.

The real problem is not trying to solve the pricing model but rather trying to make it possible to offer advice profitably at a lower cost, like $100 a year or $50 a year. This is definitely possible now, which is why we're building a lot around AI and machine learning.

Unless you're selling alpha, I don't think you should charge any meaningful % of AUM. I think the reason why people don't move away from it is that doing a fee-for-service would lead to less money for many firms. Charging a % of AUM is just not a very aligned business for most consumers. Itā€™s mostly salespeople trying to make as much money as possible off hidden fees.

What I recommend is that you keep alternatives to a small percentage of your portfolio, meaning 1-5%, especially for really risky things.

On top of that, I would say don't just invest in alternatives because your friends are doing it. Rather, invest in alternative assets because it's something that you know deeply and you love and you care about. Because that gives you a level of knowledge and expertise that you might not have otherwise. That can help you make better investment decisions. For example, if it's baseball cards and you've been collecting baseball cards for years, then investing in baseball cards seems like something that is worth spending your time and money on rather than getting into baseball cards just because your friend made a lot of money from it.

So, in summary, my perspective is that investing in alternative assets can be a good way to diversify your portfolio, but it's important to do it in a measured way and invest in something that you truly understand and have a passion for.

POV on the FIRE movement

I think it's really cool. Obviously, I've taken a different approach. But what's really cool about the FIRE movement is the community around it and the encouragement to hit goals. Working backward from a financial goal is smart and I think the community support around it is great.

Why is ownership important in building wealth?

For me, it wasn't necessarily about wanting ownership for the sake of it. It was more about wanting the ability to make a direct impact and see my ideas come to life.

As I started my entrepreneurial journey, I also realized that building wealth and creating financial freedom often comes through ownership. It's the small business owners who tend to build significant wealth, and having equity in a company is a key part of that. Even as a senior executive, there are limits to how much wealth you can accumulate through a W2 salary. So, from a financial perspective, having ownership and equity is crucial for breaking through those limits and achieving greater financial success.

Common financial mistakes tech people make

One common mistake we see at Uprise is over-concentration in tech, which I'm a clear example of myself. And then also, because you have to think about it, it's not just your portfolio, it's also your career. And so if you are working in crypto and all your money is in crypto, and then crypto goes up and down, then both your job and your investments are at risk.

So from an investment portfolio perspective, we take a close look at overall exposure to specific asset classes and/or industries. People don't realize that sometimes when they invest in the broad market, there's actually a lot of tech exposure there as well. So looking at career exposure, broad portfolio exposure, and then company equity exposure.

Renting vs Buying Homes

There's this belief that if you're not buying a house, you're throwing your money away on rent, but I think that's a bit misguided. It's possible that if you rent and save enough money, you can invest those savings in the market and earn higher returns than the equity you would be building by buying a house. It depends on the local market, so step one is to be okay with renting, and then step two is to look into the market to figure out what makes the most sense for your specific situation when considering whether to rent or buy.

Book + Podcast Recs

Links for Jessica + Uprise

Financial Stack

I have more accounts because Iā€™m a fintech nerd, but those are the main ones.

Advisors or Accountants?

We have an accountant from Greenback Taxes.

We worked abroad for a few years. I was in London for two and a half years and then in Singapore for a bit as well. And so I was using TurboTax and I'm totally comfortable using TurboTax but then when it got to the international tax stuff and the tax between the three countries, it was like, oh my God, I can't do it anymore. So that was when we finally pulled the trigger and got an accountant.

Financial GoalsšŸ’°

My number would probably be around $5 million. I would like to have that number in order to feel secure, to be able to go do more startups or whatever it is I want to do with my time without worrying about income. But I'm not working to it on a month-to-month basis from a steady paycheck. If I get there, itā€™ll likely be through one of the companies Iā€™m working on succeeding.

I think my husband's number would be higher, but I don't need a ton of money personally. So $5m basically gets our monthly spend covered, plus buffer, which is enough for me.

Lessons Learned

So many, but a few of the things that come to mind are:

  • Don't take investment advice from your friends. I think this is a fundamental issue that causes bubbles. People listen to their friends and invest accordingly, which can lead to major problems.

  • We need to acknowledge that what worked for our parents and grandparents may not work for us. They experienced some of the biggest wealth creation from 1950 to the 1990s, but there's no guarantee that will happen again, especially given the current global turmoil. We also need to be more deliberate about our finances since the shift from company pensions to self-directed investing requires more strategy and planning.

  • One of my biggest lessons learned is that I under-saved for retirement. I wasn't deliberate about it, and I missed out on a lot of tax savings as a result. There are so many things that are known, such as the cost of business school, having kids, and how much retirees generally spend. I wish I had planned better and smoothed out my finances earlier on. I believe it's important to work backward from your goals and figure out what's important to you in order to make deliberate financial decisions. It doesn't take much time to sit down and make a plan, and it can save a lot of pain down the road.

  • Careerwise, I think back-channel referencing is really important. It's a mistake I made by not doing enough of it. So now I always back-channel anyone I'm going to hire or work with as an investor.

  • Equity is also really important in general for me, and I negotiate for it more than cash.

  • Finally, I optimize for learning in my career, always.

These are things that work or have worked for me. So take it all with a grain of salt.