Note to Facebook Shareholders: What to do After You Make a Zillion Dollars

In the dot-com boom I lost $15 million cash. Yes, I am an idiot. You know what happens when you lose that kind of cash? When you go to zero? You lose your libido. You don’t want to have sex ever again. And even Viagra won’t help.

I lost my house. I lost my family. I lost all my fake friends. I was sick all the time. When I passed people on the street who were laughing I was definitely sure they were laughing at me. $15 million cash. One million a week in the summer of 2000. I could’ve saved lives with that money.Instead every night I would lie on the floor and try to mentally force my body to die. [See, “What It Feels Like to Be Rich“]

So now I will save some lives. You Facebook shareholders are about to make a lot of money. One friend of mine made one of the most common features on Facebook we use every day. I’ve used this feature at least ten times today. He’s going to make $15-20 million. So this message is to him but the rest of you can listen in on the conversation.

1.) The One-Year Rule. Don’t change your lifestyle at all for at least one year.

No new house or apartment. Don’t buy a fancy car. Don’t buy expensive artwork. Don’t take on a mistress. Don’t get her pregnant. Don’t then stalk her after the abortion. This is not to say these things are bad. It’s just that you need to let the new wealth marinate your soul a little bit.

(I bought this 5000 sq ft apartment a month after I sold my first business. Stupid!)

Get comfortable with it before you try on new clothes that might not fit yet. Once you buy some massively expensive toys or homes, it changes your whole perspective and might make you much more foolish than you were when you were first climbing the ladder of success.

Remember: One year.

2.) The No-Friends Rule. Don’t lend money to old friends. Don’t be so quick to make new friends. Once you make money, everyone will approach you about new investments you can make. Or people will want to borrow money from you. And everyone will want to be your friend. You went from being the dorkiest kid in class to prom king. You went from being a community activist to President of the United States.

Don’t do either.

It’s very hard, of course, to deny a friend who says, “listen, I just need to borrow $100,000 for 90 days.” Or “I have a great new start-up that looks like Twitter but better. I’m just raising $500,000 and I left $300,000 for you to come into the round.” I probably lost a few hundred thousand in loans that were going to be repaid the next day.

Here’s what you can say, “I’d love to do it. It sounds great. Right now everything is tied up with my financial adviser and you can talk to him. I have to go by what he says because of all the legal stuff I don’t understand.”

And you aren’t lying. Make your wife or husband or mother or whoever your financial adviser and tell them to say no to everything. But it’s necessary if you want to keep your friends. Particularly in Year One (see previous rule).

3.) Don’t Invest. What’s the rush? You just made your money. Put it in a savings account for one year at least. Or under your mattress. No stocks. No paintings. No private investments. Try not to start a business again so quickly.

A friend of mine recently won $3 million in a poker tournament after being broke for many years (all his life). Right away he wanted to buy a hotel. In Brooklyn. Where nobody has ever stayed in a hotel before.

Don’t do it.

This was right before the entire housing crisis and recession that followed. Thank God he took my advice.  If you feel absolutely compelled to do some investing then follow the next rule.

4.) The 2% Rule. If you really feel that Google is going to $5,000 per share and you have to buy some stock at $600, don’t put more than 2% of your money into it. Then, if it all goes to hell, you’ve only lost 2% of your money (or more likely, 1%, since Google will probably never go down more than 50%).

This is hard for entrepreneurs who come into sudden wealth because they are used to making their money by having most of their net worth tied up in one investment (their business).

But this is probably the most important rule on the list. After the other six rules of course.

5.) The Good Health Rule. Believe it or not, your health is now at serious risk if you just came into sudden wealth. More risk than ever before.

A friend of mine had a very stressful business in the online gambling space. He was worried the Feds were going to outlaw him and arrest him. He was broke and the business was always in a state of running out of money.

High, high, stress.

I thought he was going to have a stroke or a heart attack but he always stayed in great health. Then he sold his business and made about $50 million. Three months later he was on a ski slope in Aspen, enjoying the fruits of his labor, when he suddenly had a major heart attack and only survived because of immediate medical care. He was essentially dead for five minutes on the operating table.

Your body, in a high adrenalin situation, will postpone punishing you until the situation is over. But don’t think when the stress is over that your body will forget. It doesn’t.

You must focus on health after achieving sudden wealth.

Here is the key thing to remember. When you are mugged, your body goes into a fight or flight mode. Adrenaline shoots up. The same thing happens when you start a business. Only difference is: you are mugged every day and you sit immobile at your computer. So once that adrenaline calms down your body is going to do some very weird things. Unless you keep in good health.

(you’ve had a lot of stress)

6.) Try Not To Burn Out. You worked hard to get here. You worked 120 hours a week. You gave up watching “Mad Men”. Your girlfriend cheated on you. Your missed your parents 50th anniversary. I get it. Congratulations. All of that pain and suffering now have led to a few moments of happiness. For a few seconds you might even think you are smart in every aspect of life. And then…FLAME OUT.

But don’t burn out just yet. You need to be responsible and show the people around you that they all made the right decision in trusting you, hiring you, paying you, inspiring you, feeding you. You have few chances in life to demonstrate that you’re made of the right stuff and this is one of them.

And what to do if you lose it all? Don’t worry. Do the next item:

7) The Daily Practice

Should you happen to implode and lose everything, here is the technique I used to get off the floor and get motivated again and start new businesses and go from failure to success (and I had to repeat that a few times). Basically, I view the body as four bodies interconnected: physical,  emotional, mental, and spiritual. They are all connected. It’s like if one path to your heart is blocked then blood and oxygen won’t flow through your body properly and you will get sick.

It’s the same here, if everything isn’t flowing properly then you’ll get sick, lose all your money, and die. But if you check the boxes on what I call The Daily Practice, your life will be completely different in six months, no matter how badly you fell apart before. Trust me, my life still changes completely ever six months.

Note: There’s no such thing as luck. In the chess-playing world there’s a saying: “Only the good players are lucky.” That applies to business as well. People can say you were lucky. But the truth is you’ll be able to do it again and again, no matter how deeply you fall.

Trust in this and follow these rules and sudden wealth will become permanent wealth.

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  • Jay Shirley

    If I come into some solid money, I will violate the one-year rule. I have my eyes set on an elliptical machine that’s stupidly expensive but it’s fantastic. Torn cartilage in my knee means no outdoor running… It’s the only machine that feels like proper running.

    • James Altucher

      Jay Shirley, Ladies and Gentlemen, the creator of

      • Sooz

        Nice work on the site, Jay.
        Sorry to hear about your knee..walking, although not as aerobic/anaerobic, will at least keep you outdoors. I sure hope it heals fast for you.. 

      • Veeh Cirra

         Great job Jay,the site rocks. I especially love the colors of achievement :)

      • Mloody2000

        I was waiting for that one for a long time ! Great job. Thx

    • ken carpenter

      I have less than 60% cartilage in both knees including 2 reconstructed ACL’s, but I run 3 times per week.  You can do it, use a sandy path, trail, or even grass.  I started back running after saying the same thing for 15 years.  (rubberized track also works)  There is no substitute for the outdoors.

  • Tarun Garg

    “lost all my fake friends” – so true..

    by-the-way, what percentage survived??

  • Jabbar Ali

    honesty oozes in every blog of urs..keep it coming james..we all love ur just going to deep scrape and save ur blogs locally..lest u turn ur blogs off one day! ;-)

  • Mike

    James, some research suggests taht a person only needs to earn $80,000 a year to be happy. Do you agree with that generally? How much do you personally need to earn to feel happy?

    • James Altucher

      it’s a very very interesting question Mike and I think a lot depends on definition of happiness. Many people think they need to suffer to be happy. I have a post coming on this. I think the goal is to be happy pre-suffering, regardless of what goals or income you achieve.

    • Anthony

      Happiness can be measured by the distance between where you want to be and where you are so the amount of money you earn is only as relevant as it relates to your requirement to purchase the tat that you see advertised on TV everyday.

      From a purely financial perspective: $80,000 per annum and you would have servants in parts of Asia, $80,000 in London is less than half the pay that a top butler would earn. I presume that the disparity in spending power is not as marked but significant enough if you compare NY to Iowa for example.

      What I have always found to be true is that regardless of how much you earn 99% of people adapt their lifestyle to their greater spending power, this always leads to wanting more money and never being truely comfortable in their current wage bracket. It is very rare to find the person whose earnings increase signaficantly over time yet maintains the same car house etc, I would guess that person is happier.

      Once a person earns some real money, even millions, they soon understand that they are no where near owning a decent yacht. As the saying goes, you do not realize how little money you have until you start earning some.

      • James Altucher

         Anthony, by your definition. If you don’t want to be anywhere then you will be infinitely happy. I like that.

      • Priscilla P. Wood

        There is a lot of wisdom in you answer Anthony, I like that :)

      • Email

        Money may not buy happiness.

        But it *is* easier to cry in a new Mercedes than on a ten-speed bike. 

        • T. AKA Ricky Raw

          You’re right. I’d find it easier to start crying too if I wasted that much money on a depreciating asset.

      • Stewart

        80000 bucks is around £50k which is nearly twice the average wage in the UK, living in London on £50k is easy, it’d even afford one a couple of servants (mileage may of course vary) ;)

      • mbrmlg

        #5 is the answer, Mike.  I did 28 years in Silicon Valley (now in 50s) ~ the company never did go public and I was screwed out of the value of my shares when they sold a’la the dude in the Facebook movie. Anthony refers to the idea behind the book “The Millionaire Next Door”, where one keeps one’s behavior modest.

        My answer to the question ~ how much do you personally need to earn to feel happy?  The answer is zero but the craving for the challenge never ends.   I ate the crap everyone else ate, I sat around behind the computer and I was in high stress constantly.  James is right about the adrenaline and the long term effects on your body.

        My husband loves me and supports me so I am extremely fortunate.  I get to be “retired”, but I miss the excitement – but now I can’t handle it because emotions bring on symptoms.  A day without chest pain and shortness of breath and nitroglycerin is a happy day(microvascular heart disease…). I was blind, but now I see.

        • mikeyhell

          god, mbrmlg. you got screwed out of your shares…..Doesn’t that kind of thing make you want to throw your damn computer out the window and start a small farm or something where the product is real and the only way to get screwed is by the weather or the rabbits eating your lettuce?  

          Get well soon. m 

      • T. AKA Ricky Raw

        s the saying goes, you do not realize how little money you have until you start earning some.

        Never heard that one before but wonderful saying.

  • Jamal

    This may sound insensitive but I mean it as politely as possible:

    When you longed $15million of dot com stocks, why didn’t you have a mental stop in place to avert any chance of blowing up? 

    • James Altucher

      I ask that every day

      • Ali

        it happened so that you could grow as a person and be a little more wise and then teach that wisdom to others

        Here is a muslim saying:

        “From the perfection of Allah’s ihsan is that He allows His slave to taste the bitterness of the break before the sweetness of the mend. So He does not break his believing slave, except to mend him. And He does not withhold from him, except to give him. And He does not test him (with hardship), except to cure him.” –Ibn ul Qayyim (RA)

  • Kristine Wang

    “Instead every night I would lie on the floor and try to mentally force my body to die.” i can relate to this one. But the weirdest thing is once we realize that we are not afraid of dying, the thought itself manifest into empowerment. Then we get up, get out there and feel almighty than ever before.

  • Gilbert Tan T S

    Life will not change much if you got two feet firmly on the ground with only eyes for the goals you champion, riches does not matter to me, it is the prize you are after in the world to come that matters, as long as you do not lose sight, you will never be tempted.

  • tgxman

    i just want one million. i figure if i have that and i can get 4-5% interest on it i could work part time. i’ll get 40-50k a year off investments and another 40-50 from working and i’ll be content. i live simply and i like it that way. i just hate my job. now getting that million is proving to be a little difficult. maybe you could post on how to get it or how to get 4-5% on your money. im figuring a combination of dividend paying mutual funds, cd’s, municipal and corporate bonds. if i invest in bonds i figure i dont have to worry about price as long as i hold until maturity and i get the yield i want what do i care about price. am i right on this?

    • Stewart

      spend less :)

    • andrew

      No, tgxman, you are dramatically wrong about bonds.  Inflation will destroy the real value of your fixed yield.  When the bonds mature, sure you will get the face amount, but the purchasing power of that amount will be dramatically lower.  People are wrong to think that bonds are safer than (diversified) stocks.

  • Jeff

    James – I took your advice and I’m combining two separate ideas to create a whole new product. 

    I’m combining the scent-absorbing fabric technology from the hunting apparel industry with sound absorption foam technology from the studio construction business to create underwear with fart sound-muffling and odor-absorbing capabilities! 

    • Kate

       ha!  i can think of many wives buying that for their husbands!!! 

    • QuantRec

      Thanks for giving it away Jeff, I have filed the patent application and will sue you like Vringo is suing Google.  (Just kidding) – ha!

  • Statspotting

    We live in exciting times. Look at this: you want to sit tight in 2012 after making millions? 

    You are basing this total argument on a thought process bias called Confirmation error. Or it is a combination of that and distortion of the past. 

    Had your 15 million turned into a billion (say you put your money in an instagram) would you still give the same advice?

  • TripleB

    Very timely article.  I live and work in the valley, my clients are start-up companies.  The founders and “management”  seem to be getting progressively younger and *incredibly* naive about the very basics of business and money management.  Sure, they may be able to code or design like no one else, and they may have some “gee whiz, gonna change the world” concept but at times it feels like the lunatics are running the asylum out here.

    • mikeyhell

      TripleB, I thought that the bursting tech bubble sobered up everyone out there. Or is this this new generation just too young to know any history?

  • howardlindzon

    sereneity now. and short sugar :)

  • Beijingperspective

    Great Piece man and so true… seen that many times

  • Rob Norwood

    This is the best post you’ve written in months.  I absolutely love it.

  • Feng

    Would you be willing to disclose what this facebook feature is that made your friend 15 M?

    I am curious.

    • James Altucher

       I’ll ask him but I have a feeling he won’t want his name disclosed.

      • Feng

        Thanks James. I don’t need to know his name. I am just curious about this common Facebook feature that he made. Can you elaborate on that? I just want to get a sense of the work involved to build a feature that worth 15 Mil.
        It’s totally cool if you don’t feel like sharing it.

        • James Altucher

           I’m sorry I’m mysterious about it. If I say the feature, he can be identified. Without saying anything more  lets just say its THE most commonly used feature on facebook.

          • Feng

            Fare enough. I hope he keeps his money and live a frugal yet rich life.

          • Ben Dunphy

            Definitely poke. I use that thing EVERY day. 

        • trader003

          It’s the Like button. 

  • Blaine

    Well said James, but I need to get there first.

    I am no Sergey.

    Sergey is human being number one.  He will mine asteroids.  James Cameron will throw tea parties for his friends at the bottom of the Marianas Trench.  Paul Tudor Jones will pick me clean in the stock market and build an East wing on his mansion for a harem of yoga babes…

    I am no Sergey.  But I am smart… and I am your target audience.

    A post on starting a small business outside of the tech realm would be great?
    Next topic:  How can I launch a scalable business with $5000-$20000, a full time job, and family.

    • Bob

       Blaine -The ‘secret’ to launching a scalable business w/5-20K, AND with a full time job and family is:

      1) Identify a product that is small, expensive, easy to ship, and that you wouldn’t mind selling.
      2) Go find a good domain broker, and have them find you the best 2 word .com domain that perfectly describes that thing, and use up to about half of your total budget.
      3) Spend half of the rest on an ecommerce website. Or learn WordPress and do it yourself. Have family help!
      4) Find mfr’s or distributors of that thing that will dropship orders directly to your customers.
      5) Work on orders/website at night, mornings, weekends, etc.
      6) When you get enough volume, establish a direct distributor relationship, or rinse/repeat.
      7) Outsource as much as possible.
      8) Take vacations, be good to those around you, and enjoy your extra money!

    • mikeyhell

      I’d also like to see a post or two about working outside of the tech world. When I see James say that he writes down ten ideas a day I’m thinking that those ideas are mostly non-scarce 1’s and 0’s. What ever happened to making things you can hold in your hand? 

  • Tatersalad

    Another smug article that shows how out of touch James Altucher is with reality.
    According to James, there is no such thing as a bubble, stocks always go up, and Greece doesn’t matter. Neither does the news or anything that isn’t in proximity to his socially awkward myopic little world.

    VRNG down another’s that pump and dump going?  you will need to sell a lot of crappy ebooks to pay the legal bills when lawsuits start coming hahaaaa

    • MartyMcDuff

      Get mark cuban on the line..tell him to buy more lolmust. …keep….scam…going

    • victualcog

      he’s a fuckin moron

  • Papawasabi

    Observance of rule #1 helps support rule #2. When asked for money, you can simply say it’s all tied up by your financial advisor, and you can’t even get any for yourself. Then ask you friend, “Do you see a new Ferrari in my drive? And look at my watch, it’s still a Seiko. Do I look like I have access to money?”
    Incidentally, I met the richest man in America as a waiter back in the 80’s. He was wearing a Timex. 

  • kcastagnaro

    I truly hope to be able to follow your advice someday!

    • James Altucher

      You can follow it today!

  • 4thaugust1932

    Govt may tax on “idle” cash.

  • Priscilla P. Wood

    That article on Techcrunch about VRGN is very interesting. Frankly I think you should create an app that puts all your articles in one place so I (we) don’t have to go back and forth following your reading. 

    • James Altucher

       Haha, maybe. But I don’t like writing about stocks so much on this blog. Else I fear this blog will become less interesting.

      • Priscilla P. Wood

        Do what you fear. Every time I read about stocks I feel like yawning, however your writing/stories are very engaging and informative, you somehow humanize the stock market. Your choice of course, I’m just saying.

  • 4thaugust1932

    With money, you’ll have many options in life.
    Without money, you’ve to pick the right option.

    • James Altucher

      Maybe. But maybe there’s not that many good options to begin with. If “happiness” was an option you can be happy with or without money. Unfortunately, many people, including myself on MANY occasion, chose to be unhappy no matter how much money I did or didn’t have. What wastes those moments were.

      • mbrmlg

        worth watching, especially in high def & sound.  Slow as molasses but all about this subject.  James, you are actually talking about these ideas:

  • tscarborough

    Just started The Power of Habit by Charles Duhigg. Very interesting so far.  Am working on making the daily practice a habit and have found the useful/not useful thinking very helpful. Thanks! 

  • Jordi Perez

    I can see myself falling for the “invest IMMEDIATELY” reaction. But someone told me AAPL was going to hit $1,001 per share next quarter…

  • brianlmerritt

    Great article – I will (try to) follow your advice!  If you want to invest your 2% in ComposeTheFuture, let me know ;-)

  • Zee

    Hi James, I feel compelled to comment. I’ve been reading your blog for about a year now. I’m a huge fan of your blog! My comment ties to your previous “scarred” post as well. It sounds like you’re carrying around this guilt and huge weight on your shoulders for losing money that impacted people’s lives. Look at it this way, you’re not powerless, you still have time on earth to make it better and make yourself feel better in return. I can’t imagine what it feels like to be in your place and have lived through such a traumatic experience. My most reasonable solution to this problem that seems like too much of a burden to sleep well at night is to live the rest of your life paying back the money. Make another 15 million and pay every cent back, even if it takes you 50 years to do so. Even if you never make another million, the mental process of forgiving yourself and attempting to help the ones you hurt will give your soul a break, I really believe.
    Anyway, keep up the great work! Your writing is amazing!

  • Brooke Farmer

    If I ever win the lotto, I will come back and re-read this.

    I almost never play lotto though. The pot odds are terrible.

  • Ben Dunphy

    When my business gets going I’m spending my fortune on…inventory. 

  • Customerexplabs

    excellent post as always. love the quote about luck – so true!

  • Sesiri Pathirane

    I just don’t know why your blog is so addictive!! :)

  • Colin Gillingham

    James – the Daily Practice really rebooted my life.  While I strayed at times the overall approach has kept me focused and feeling more positive about life.

    The idea generation approaches are extremely powerful!  In fact I had an idea for a simple voting website and just finished developing it.  It’s a useful tool for those trying to engage their followers and audience in new ways!

    I created a poll about the upcoming Facebook IPO.  I’d love your feedback!



  • AFan

    And you aren’t lying. Make your wife or husband or mother or whoever your financial adviser and tell them to say no to everything”

    But you ARE lying.  Or at the very least, making someone else lie for you.

    Not saying I disagree with the advice. I only disagree with you lying to yourself that you aren’t really lying to someone else.

    So let’s just be honest — tell your friends “no”, knowing full well you may end up losing that friend.  Why not classify these people as “fake friends”, same as the ones you mention earlier who bailed when times were bad?

  • Jo M.

    Very useful post, and actually it’s good advice to what’s left of the middle class. Example: When someone experiences the death of a parent and inherits a chunk of money (even a couple hundred thousand, which isn’t THAT much) that One Year Rule of no lifestyle changes should be implemented. I’ve known many 50-something-year-old women who inherited, thought they were “rich” (NOT) and they stopped working and rented a high cost luxury condo. They ate out all the time, took their dogs to the groomer, paid expensive utilities, and half-heartedly looked for a job (if at all). Many ladies did this in my condo. And you know what happened? They burned through $50,000 a year, realized they were not as rich as they thought, and as soon as their lease was up they disappeared. I knew a lady who inherited from her doctor father, moved to Maui, and just lived off the money for 12 years until she was nearly broke. Now she’s 59, obese, diabetic, flat broke, no job. In her current mental and physical condition she’s not really employable in this highly competitive job market, and has a little ways to go til early retirement. So middle class, beware, because your 6-figure inheritance is middle-class NOT upper-class, and that chunk of money will disappear quickly if you don’t show control and common sense.

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