056: Learning to Manage Tech Wealth with Fred DeWorken

00:00 - 00:23 | Fred: Well, I'm interested in the operating side. One of the things that I really wanted to do at both Tableau and Snowflake was to get P&L experience. And now that I've gone down this path of learning and actually taking a position in data dot world, you know, as a private company investor in several different real estate syndications, I kind of get the feel for what it's like to be an investor, but also what good looks like for somebody who would want to invest in.
00:24 - 01:40 | Christopher: Welcome to the podcast for financially focused technology employees. Are you working for equity? Do you have questions on how your career and money work together? Then welcome. Every week we discuss strategies and tactics for how to grow your career, build wealth and reach your financial and lifestyle goals. Okay, welcome to Tech Careers and Money Talk. For those of you who were with us last week, you'll know that this is week number two that we're doing with Fred DeWorken. And we're super excited to be here with Fred, who is the CEO and founder of Blue Yeti. And he also spent some time in the Peace Corps down in Latin America, and he had IPOs with Tableau and also with Snowflake. I'm excited. Welcome back to the show, Fred. Thanks for having me again, Christopher. This is amazing. It is. It is. And so we left everybody at this cliffhanger last time. And I think what I want you to do is you give me the moment that you had with your wife. I want to tell you mine. And then I want to sort of move through some of these emotions because I think it's so important that people really understand this. You went through this Tableau IPO, or not Tableau, you went through the Snowflake IPO. Walk us through that again.

01:40 - 03:05 | Fred: Well, I mean, the two moments were great. The Tableau moment, they brought in a full bar in our Seattle offices at six in the morning so that we could celebrate with everybody in the New York Stock Exchange floor. And full bar, I mean, I was drinking at six in the morning making calls. It was fantastic. And then opening up your Fidelity and looking and and reveling in the numbers, it goes larger and doing the calculation as they have the, you know, set in the book and all that stuff. Right. And Snowflake was the same thing. Snowflake was internally broadcast. There's a gentleman who works for Snowflake now named Ryan Green. Right. He's the He was working for New York Stock Exchange or the ice at that moment. And he's kind of like part of the package, right, where you get this person who goes and interviews all the execs and everything. So we're there with the execs and virtually and watching along with this. And if I'm not mistaken, we were knee deep in the pandemic. Right. 2020, September. No, it was just pre-pandemic because everybody was, anyhow, they had it broadcast and Ryan was interviewing everybody and you just feel giddy. And they'd already loaded everything into Fidelity so you could start seeing the price populate as the book was set and closed and everything. So the next day, and I think it got up to 311, was the highest that it got on the first day.

03:07 - 03:19 | Christopher: So, what was that like when all of a sudden, and I don't know, what did it come out at? Do you remember? I want to say it was like $240 was the final price.

03:19 - 03:32 | Fred: And then I opened up my laptop and I go into Fidelity and there's this seven-figure number in there. And I show that to my wife and she just looks at me just incredulously like, what is this? It's our Fidelity account, honey.

03:35 - 05:48 | Christopher: It's so funny because we're both married to Latinas, so this is absolutely hilarious. The first one was the most monumental to us because we got super prepared for the ones that followed. But the first one was just like you, I show up at 530 in the morning, there's, you know, omelet bar, there's DJ. And for us, we thought that we were going to go out at 17. And we didn't even end up going out till 32. So everybody had a had a really good number at 17. Because we hadn't taken a lot of money, they've been very generous with the shares. And My boss had actually showed me how to negotiate really hard and I didn't realize at the time, but he had like super stoked me out. Like I had an amazing… opportunity. And then it goes out and ends up going out at 32. I think it ends the day somewhere around 34. Same thing. I get home. I spin around the laptop. My wife's pregnant at the time. And she looks at it and she goes, okay, the numbers on the screen is great. When do we get the money? And then when can we get the house? Because like I want to have these kids in a house. And I know for myself, I said, hey, go back to sleep, babe. Like I went into the next room and I had almost a nervous breakdown because I had no idea, and you'd said it before in the previous episode, is I had no idea how to protect that money and what to do with it. I was questioning, is it real? Did we really get that? You know all the work that goes into getting there. all the sweat, the blood, the tears. And it created just a ton of doubt. And I didn't realize it at that time. Since then, I've studied it. I was suffering from what's called Sudden Wealth Syndrome. Happens to lottery winners and guys who go through the draft and all these things when you have sudden wealth. immediately a lot of your network and the things that you can talk about just gets wiped off the map because they have no idea. And I know that the few calls that I did make to family members or friends at that time were like, why are you sad? Like, why are you upset? Like, why are you distraught? What was that like for you?

05:48 - 06:07 | Fred: You articulated it so well. And it is a sudden wealth syndrome. And it's this kind of lonely place where you got to figure out how to navigate this. I knew that there was going to be some sort of a big stick waiting to whack me from the IRS. Right. I didn't know how hard that was going to hurt. Yeah, yeah. But I knew it was coming.

06:07 - 06:29 | Christopher: Yeah, because I think for you, you had gone through one. and maybe you didn't have the weight, you'd written some checks already. So when you went through number two, that was then this much larger windfall, you also have that scar tissue to deal with too. Like, okay, yeah, man, Uncle Sam is coming to work me over. For sure.

06:29 - 07:25 | Fred: And I'd picked a different strategy and I'd gotten the CPA to help me get prep, but I didn't have full confidence and faith in that yet. Right. And I come from pretty humble means, you know, my parents are are not wealthy, either one of them. My circles, I do have several people who are wealthy in my network, but in my close friends, not that many. So, you know, it's kind of like a solitary. And my wife was in disbelief. It's just like, that doesn't even exist. I'm not even going to, let's not approach it. Let's not talk about it. So it was broaching the conversation in certain different ways, educating myself on how to think like an investor. Right. And how to think in terms of starting to diversify it into different revenue streams. Yeah. And I did that by starting to change my circle of people who are around me and started to change my consumption patterns in terms of information.

07:25 - 07:30 | Christopher: That's fascinating. Tell me a little bit more, like what was some of the information that you started consuming?

07:30 - 08:27 | Fred: Well, one of the things that I've always been into was commercial real estate and understanding that commercial real estate is a pathway through depreciation and other for making considerable wealth. Right. Right. And you can generate an income stream. So I started identifying different commercial real estate groups where I could go and learn from people. I do have a couple of close friends who are curious as well. So I kind of took them along the way. I invested in some classes as well. One of them was called Family Office Real Estate. Oh, wow. So underwriting real estate from the perspective of a family office and all the different considerations of putting an LLC on it and things like that. And that was great. And I met some great people who I continue to be on a very cordial basis with. Some of my consider my mentors because they've helped me to to underwrite deals. So just those type of things, you know, changing my scenery a little bit, actively seeking out different information to educate myself on how to think like an investor.

08:28 - 08:38 | Christopher: When did the fear and anxiety start to sort of subside for you? Or when did you start, I guess, or let me ask it sort of in the positive sense, like when did you start to feel more confident?

08:38 - 09:09 | Fred: I guess it was kind of like a dial. Like I felt more confident as time passed. Yeah. And, you know, you get past the first, the first year vest and then it's a monthly vest. Right. And then it was like six figures a month. Right. Almost my entire salary for a month, for a month. It was amazing. And I wanted to take all that off the table and I wanted to make sure that I was doing everything that I could to try to do it in a tax efficient manner. So as I got further into those months, I got more comfortable as time went on.

09:09 - 11:26 | Christopher: So we have to break that down because I think this is where people get stuck. This is where a lot of technology employees, because I've had hundreds of conversations with technology employees about their portfolio, about how they manage their equity. And what happens is, like anything else, our primal brain can take over. And so our primal brain is going to tell us to do three things, fight, flight, or freeze. And I think that What people tend to do is they leave it there, they freeze. What they don't understand is it's a freeze and I'll have to go back to my psychologist, neurologist friends and is it freeze or is it flight where they actually ignore it but they tend to get incredibly overweight in single positions. There's this pattern that I've seen in I would say 80% of tech employees where they will have 70 or 80% of their net worth in that one company stock or maybe both company stock. However, in your story, it seems like we shared the same mindset where mine was, my strategy was exactly what you articulated, which is, how do I efficiently get this from the company stock through the tax machine to cash. That's my first thing is let me just move it from there because for me, and it goes back to that moment with my wife, that moment when she saw the false, we were in Schwab, so she saw the false Schwab account. My thought, my imagination, I've never shared this with anyone, it was, you know what she would be more happy with is if I brought her a suitcase full of cash. right? Because then she'd be like, oh, you got the money. Like, now we can go do things. And that was my whole, when I started, you know, because I'm definitely a fighter. So, I was like, okay, I got to get out of this funk. I got to get through this. My thinking was always, how do I get it from this equity to cash? Because then that's when it becomes real. I've you know, taking it off the table and then I can go and make investments. Was that part of your thinking?

11:26 - 11:52 | Fred: Was that… Very similar. And I by no means have it all figured out. You know, that's why we're on this journey together, right? But there was a portion of it where I just needed to get the money into my control. Yes. Now, if I had it to do over again, I probably would have been a little bit more proactive in diversifying. Okay. Press go a little bit harder.

11:52 - 11:56 | Christopher: As far as taking the money from cash and putting it into investments? Yeah. Okay.

11:56 - 12:26 | Fred: Absolutely. But I also think that that caution was warranted. Of course. We're talking about 2021 in Austin, Texas. Yes. And me trying to invest in multifamily properties and other income bearing, and there's all kinds of snake oil salesmen out there in these Sponsor circles that are trying to push things so they can get fees. And if you don't understand how to get into the proformas and how to go digging for all of the different levels of risk, you can just put yourself into a position that's worthless.

12:27 - 12:53 | Christopher: It really is. And people don't understand enough that private equity real estate, it's really easy for that equity portion to collapse. It's a lot different than residential real estate. It moves a lot faster. So in 2021, there were so many tailwinds in the market that people were thinking the money was growing on trees. So I think to your point, you're wise to to hold on to it and keep a position in cash.

12:53 - 13:31 | Fred: So we made some, I would classify them as conservative investments, and also learning investments with good operators that have very good fundamentals in terms of their communications, that have the patience to pick up the phone and talk to you, that have the patience to deal with really dumb, low-level questions. I felt it was very important for me to get that type of experience, because I'm an experiential person. You know, I do my fair amount of reading and prep and things like that, but it really clicks for me whenever I have the ability to go through the motions myself. So that's been what's been helpful for me.

13:31 - 14:26 | Christopher: Well, it's so important. It's so important because we all in the one thing that's clear to me is that you're also very much of a I want to get educated. I want to take a conservative position and I then want to do this experiential learning, which I honestly believe with investing, the best way to invest is to put some money to work and really observe and manage and understand what that is. And then you can go and buy, hold, sell, whatever it's going to be. Do you want to continue to invest there? Do you want to change the asset class? But I feel the same way. Yeah, absolutely. So let's think about this now, is where are you trying to grow your knowledge today? What are some of the things that you're trying to learn about now? Here you are, you've left Snowflake, you're starting your own business and you're on this investment path, where's your learning?

14:26 - 16:04 | Fred: Well, I'm interested in the operating side. One of the things that I really wanted to do at both Tableau and Snowflake was to get P&L experience. And now that I've gone down this path of learning and actually taking a position in data.world as a private company investor in several different real estate syndications, I kind of get the feel for what it's like to be an investor, but also what good looks like for what somebody would want to invest in. And I think it's fascinating to be able to put together a company and to put people to work. I once read Atlas Shrugged when I was in the Peace Corps. Oh yeah, Ayn Rand, sure. Ayn Rand. And there's, I think it was, the industrialist that Taggart winds up going out with. And he says to Taggart, of all the types of curiosity, the most underappreciated is the, or of creativity, the most underappreciated is business. Because you could be a musician and make the most beautiful song, and the people who hear it will appreciate it. And you could also be an artist and create a beautiful painting and the people who see it will appreciate it. And those are types of creativity, but the business person will take his creativity and he'll put people to work and those people will provide for families and they'll have more kids and things like that. And I thought that was very touching because we never think about, you know, I did my MBA. We never think about business people as creatives. So that's what really kind of blossomed in me now with this space to be able to imagine myself differently, to be creative in different ways.

16:04 - 16:11 | Christopher: Yeah. To take your skills, to take your journey. And you're right. The result of this is the creation of a business where people are working. I think that's beautiful.

16:11 - 16:31 | Fred: Now in Latin America, there's lots of amazing professionals, and I've got 15 years of experience working with all these data professionals. Wow. And they operate at the same level as United States, sometimes even better. Sure. It's more structured. There's more rote kind of education down there. So people kind of get things really, really drilled into. Really, yeah.

16:31 - 16:33 | Christopher: Which is so important with data too, right?

16:33 - 17:28 | Fred: Absolutely. And then there's a resourcefulness advantage to it as well, because when you're resource constrained, you become very resourceful. Yeah, Blue Yeti is basically contracting people in Buenos Aires, in Medellin, and we're pointing them at the United States. And we're specifically focused on people who are digital natives, because that's where I've been most of the time. You know, Mercado Libre ecosystem, Rappi ecosystem. These are hyper growth technology companies that nobody in the U.S. has ever heard of, but they're on par with Mercado Libre is the eBay of Latin America. And Rappi is an Instacart and DoorDash of Latin America. So we've got talent that's got experience there. And now we're just focused on this modern data stack that is everybody's race in the generational AI. And I feel like these 15 years of operating in data have prepared me to know what good looks like from an operational perspective and where the opportunity is in this ecosystem.

17:29 - 18:54 | Christopher: Well, and I think for anybody who listened to your first episode and now, it sounds like there's this really amazing arc of somebody who had this experience in Latin America. Obviously, if you're going to volunteer and spend time somewhere and fall in love, and then you created this specialization for you that allowed you to grow these skills in the tech community to trade that talent for equity to now build well. So now you have this backstop for your family. I think that then being able to focus your creative efforts to say, now let me go create a business that allows me to really benefit that. This is one of the things that I talk to people about which is this is your impact moment, where I say for many people in tech, and again, this is where I like to be the investigative journalist, like let's talk about this right now, which is you've built the resume. You got an incredible resume, I mean, going, you know, two big Super Bowl rings, you had Tableau, you had Snowflake. But now you say, let me build a legacy. Let me go, it is the DeWorken legacy, and then it's also this legacy of love, of how do you now take some of these other countries and have them the ability to show value here in the United States. Who knows what kind of opportunities that can create.

18:55 - 19:26 | Fred: Absolutely. And that's what it's all about. You know, that's why I truly, honestly believe, you know, Ayn Rand is controversial. Sure. People pooh-poohed at me for even reading the book, but I found that very inspirational. The highest form of creativity is the businessman who can put people to work. I think it's a beautiful thing and I think we should encourage more of it. I'll be honored to put people to work in Blue Yeti and I have two great partners who are on this journey with me and we're excited about it.

19:26 - 19:37 | Christopher: That's exciting. You're going to take a moment and say what's something on your wealth journey side that you would definitely recommend for people to do that are listening?

19:38 - 20:48 | Fred: Well, there's a lot of people out there that will slide you right into equity's portfolio. I would say be skeptical of that. I mean, you don't have to be uber skeptical, but at the same time, have confidence in yourself that you can learn these things. And there's been a revolution in technology starting with Charles Schwab and now with the ETFs. and the ability to make very efficient, low fee portfolios that you don't have to worry about that can just grow. And it's not all about the banger bust. One of the things that I had to remove from my thought pattern was my grandma and my mom were really big on like get rich quick schemes and lottery tickets and stuff like that. And Sometimes you think you got to put all your eggs in one basket and that one's going to hit big, but the long game is diversity and being comfortable in that and things that you don't even have to worry about, that you don't have to think about. You know, so I would say have confidence in yourself that you can learn it. It's not complicated. It's not rocket science. You know, there's tons of resources out there for you. And then, you know, just thinking of a whole bunch of little bits here and there.

20:48 - 21:05 | Christopher: Yeah, diversification, right? Money's made through concentration, managed and grown through diversification. Well, I can't thank you enough, Fred. Thank you so much for spending the time having a couple episodes with us. We hope you enjoyed this and we'll see you next week on Tech Careers and Money Talk. you