There are 2 financial traps on a founder journey.
Over my 25+ years of being an entrepreneur, I’ve fallen into both of them.
As a founder who’s had multiple exits, I often get asked the same question by younger entrepreneurs in the building phase. Ali Abdaal, a massive YouTuber and successful entrepreneur in his own right, asked me and Patrick Campbell a version of this question:
“What patterns do you see in the wealthy founders who have made it and are actually happy?”
This is a common question for a reason. Entrepreneurship is incredibly challenging, filled with constant struggles and uncertainty. Embedded in Ali’s question, I hear a deeper wondering: “Is this worth it? Will I end up truly fulfilled, or will this journey leave me exhausted and unhappy?”
The 2 Financial Traps on the Entrepreneurial Journey
When I talk to Ali or any aspiring entrepreneur, I emphasize that self-doubt is part of the journey. It’s normal and simply a sign that you’re in the arena. But there are 2 traps worthy of fear.
Trap 1: The continual movement of your financial goalposts.
As you make progress, as you enjoy new comforts, you will experience hedonic adaptation. You will be temped to simply raise your goals so you feel the rush of experiencing a new level of luxury. My social scientist friends call this hedonic adaptation. It’s an elaborate hamster wheel. It’s a trap.
Trap 2: Chasing money as THE direct goal.
Ironically, chasing money for its own sake IS a happiness trap. For centuries this has been attempted and the results are clear. You can enjoy financial rewards but ironically the enjoyment only lasts if they are the result of something bigger than yourself (for more on that, check out my conversation with happiness researcher Dr. Sonja Lyubomirsky).
How to Insulate Yourself from the 2 Traps of Financial Success
There are two critical ways to protect yourself:
Define Your Version of “Enough” Financially
If you can define what “enough” means for you, financially and otherwise, you’ll know when you’ve reached it. This doesn’t mean you have to stop building or striving for more, but it allows you to shift from a mindset of scarcity to one of abundance. Without a clear definition of “enough,” the goalposts will always keep moving.
I encouraged Ali—and I encourage others—to do the work to define what “enough” looks like for them. Then, share that with a close circle who will hold you accountable to it so that your goals don’t keep shifting endlessly.
Define Your Purpose or North Star
Whan you are chasing a purpose of connection, contribution or growth, you have a purpose beyond yourself.
Ali's North Star, for example, is “the freedom to live, learn, and teach on my own terms.” He noticed that any decision aligned with this purpose felt good, energized him, and led to positive outcomes.
A purpose-driven founder is more likely to be a more fulfilled, energized, relentless founder over time, regardless of their financial circumstances. If you can define your purpose and your “enough” early on, you’re better insulated against many of the dangers and traps that financial success can bring.
The Bottom Line
Do the work early to get clear on what matters most to you. Define what “enough” looks like, find your North Star that’s bigger than you, and stay aligned with it. This clarity can be your compass through the complex and often overwhelming journey of entrepreneurship.
For more from Ali, including his YouTube channel, newsletter and book, check out his website here.
