The BE WISE Planning Strategy for Tech Executives and Entrepreneurs

Mark Zuckerberg does it. So does his sister Randi. Vinod Khosla has been doing it since before the Zuckerberg siblings were born. Reddit co-founder and net neutrality advocate Alexis Ohanian relishes the many ways he can do it.

Why do financially successful tech executives keep working? And what is the nature of the creative energy that drives entrepreneurs?

Passion, combined with the effective use of financial resources, is crucial for personal happiness. Based on research and interviews with more than 65 leading high-tech entrepreneurs, executives, and notables who shared their insights about personal and financial fulfillment, along with my 20 years of experience as a CPA, I've created a five-step process for planning for life before and after a wealth event, called the BE WISE Planning Strategyâ„¢. The steps are simple: Before Event, Work, Identify, Strategize, and Execute.

Before Event
Creating and building a company starts with a business plan. It's important to identify what you want out of your career and what kind of company you want to build. Do you want to learn, build technology, and impact humanity? Or for you, is it mostly about the money and setting yourself (and your family) up for a flush future? There will be times when your company completely trumps your personal life, so make sure what you're building is worth the sacrifice.

Work
The next step is to create and build your company. The timeline varies for this step--between 2 and 40 years--and although there is no single formula for success, a great team is crucial. This phase is often the time entrepreneurs enjoy the most, and it can be very emotional. In addition to constant preoccupation with the startup--and sometimes loneliness--this time offers the most freedom to the founders.

Identify Your Essence
As you're building your company, determine what is important to you and what your personal goals are. If you are fortunate enough to one day have a liquidity event, how would you fill your time? Would you spend or salt away your new wealth? Without a post-liquidity plan, many executives who've had a quick exit after an IPO or buyout become despondent and have trouble hanging onto their savings. A Silicon Valley advisor tells of a friend who after a major liquidity event "bought $100,000 watches and vacationed at super-exclusive resorts around the world." The friend "lost all perspective in life" and "was turning into an unhappy person, because he lost his bearings. But he came around and started another company," which a number of IPO lottery winners do, in time. "He was bored and unhappy, and was only in his 30s. Starting another company and doing good works brought him back to happiness." The essential aspect of this stage is that you develop an understanding of what will satisfy you.

Strategize: Maintain, Risk & Give
Strategizing your goals and how you want to use your assets should occur directly after a liquidity event. Here you will determine, through quantitative analysis, if your assets will support your goals, values, and interests for the remainder of your life. If you have excess, divide your wealth into three categories:
1. The "Maintain Bucket" should consist of what you need to comfortably live out your life. It's crucial to make sure the assets in your Maintain portfolio are invested in a prudent, risk-appropriate way.
2. The "Risk Bucket" contains exploration funds; you can use this money for angel investing, self-managed investments, starting a new company--whatever you like.
3. The "Give Bucket" is for making donations to your favorite causes.

Execute
You've now determined where you are and have a vision for where you want to be. You have everything you need to move forward and implement your plan and are one step closer to living your dreams.

Mark Zuckerberg continues to run Facebook, and Randi Zuckerberg founded Zuckerberg Media, wrote two books, and appeared in "Rock of Ages" on Broadway earlier this year. Khosla co-founded Sun Microsystems and served as its first CEO and Chairman before becoming a venture capitalist. Ohanian is now an angel investor and ambassador to startup incubator Y Combinator.

It's never too early to use the BE WISE Planning Strategy to maximize and preserve your startup wealth and live your dreams.


Excerpted from "The BE WISE Planning Strategy™: A Formula for Financial Success and Personal Happiness Before and After a Startup Liquidity Event." Joyce L. Franklin, CPA, CFP®, is the founder of JLFranklin Wealth Planning and the author of Startup Wealth: The Entrepreneur's Guide to Personal Financial Success and Long-Term Security.