089: Family Office Systems for Tech Professionals - WealthOps 101

00:00 - 38:44 | Christopher Nelson: Back in 2012, I experienced a financial high that many people dream of. I went through a multiple seven-figure IPO with my company Splunk and I was surrounded by friends and co-workers and there was an amazing party. And I'll tell you that later that night, I went home and I shared the great news with my wife and she asked me two simple questions. When do we get the money and when can we buy the house? It was at that point that a spotlight of unpreparedness just shone on me. I realized that I had no idea what to do next and was feeling overwhelmed with fear, anxiety, and even depression. I didn't realize that I was hit with Sudden Wealth Syndrome. It was in reflection around that moment that I realized that making money and managing the money that comes with it are two completely different skill sets. And since that day, what I've come to learn is that there is a systematic way that you can manage your money successfully the same way that you manage building products at work or managing the division that you're in charge of. And I'm excited to show you how. Welcome to Managing Tech Millions. I'm your host, Christopher Nelson. And in this episode, I'm going to take you on a journey. I'm going to take you on my emotional journey. I think it's important that we all relate to that, that has to do with money. There are emotions involved. And then also on my journey of discovery of how I came to understand and build my proprietary framework for managing wealth called WealthOps. Now for you, my question is, have you ever felt alone and unsure of who to talk to, or how to manage your tech wealth? I know I have. I know that when I went through my first IPO in 2012, I was overwhelmed and had no clue of who to talk to or how to talk to about it, how to talk to anybody about it. And I'm here to tell you, you're in the right place. You're here at the Managing Tech Millions podcast where this is what we're going to talk about every single week going into 2025. We're going to be giving you real-life use cases. We're going to be giving you conversations with experts. We're going to have the conversation of how do you build the skills to be the CEO of a generational portfolio. And it's not just Managing Tech Millions, the podcast. We also have, if you go to managingtechmillions.com on that single source, you'll be able to access our newsletter. In our newsletter, I have a section called Wealth Ops in Action. Wealth Ops in Action is going to be the source where every week I'm going to let you know what's going on with my personal portfolio as well. So I'm excited to be on this journey with you. You're in a community. If you have any questions, you can feel free. Hit this video. Ask a question. We answer all questions. When I walked away from my first IPO, the months afterwards, I was on an emotional rollercoaster. I think like many of you, if you've gone through this event, at that point, my portfolio was 95% in a single stock. What this meant is that every single day as the stock market opened, I was watching my net worth go up 20%. Yay, I'm really excited. down 30%. Oh, you know, I've got stomach pains. I was riding this crazy emotional roller coaster and I didn't know what to do. This overexposure for many of us is nerve wracking. And especially when we haven't prepared, we don't understand what to do with this harvest. It can be nerve-wracking, and I think of the analogy – when I think about how you're setting up a generational portfolio, I think about setting up an orchard. If you think about a fruit orchard that can provide fruit for your family for generations, I think many of us focus on tilling the soil, getting the right soil, getting it balanced correctly, getting the right trees in there, removing all the insects, letting these trees grow. But when we get to the point of the first harvest and they're overflowing with fruit and we don't know what to do with it, that's where we can easily get overwhelmed. I know I was in that same situation. Now, I am an experienced stock investor. I was managing my own portfolio. I was doing very well, had seen it climb, was doing individual stock investing and had a modicum of success. After my IPO, when I had an offer come into my email inbox to meet with Morgan Stanley, a very reputable financial services organization, I was intrigued. Because I thought at this point, because I had multiple seven figures on paper, I thought that they were going to come to me with a wealth management service that was more akin to what I understood happened in family offices, where they were going to give me access to private equity, real estate, private equity investments, and in different types of assets that would allow me to diversify this portfolio. So you can imagine my disappointment that after I sat through a 30-minute conversation and pitch, when they pitched me on what I consider a fast food wealth management portfolio of 70% growth stocks, 20% bonds, and 10% in cash, they were gonna manage it for me. All they asked for was control of all of my stock and to give them 1% a year, whether they made money or lost money. I had to look them in the eye and say, incentives aren't aligned. If you're getting paid and I'm not making money, we don't have incentives aligned because you're incented to not do anything and still make money. It was a turning point for me. It was a turning point for me because I realized I was on my own. The services that were out there did not fit. And I still believe this today from my conversations with many people through my private equity company, through conversations here, people that I'm coaching, that for people that have 1 million to 20 million net worth, there is not a financial services company that fits them. There may be one or two bespoke, but I'm saying generally speaking, it's not out there or it costs a lot of money. So this is where I realized that I had to do this on my own. So my strategy, whether it was in work, you know, or learning anything is I want to try and find people that have the results that I want. So when I wanted to get into leadership, working in technology companies, I found leaders that I admired their leadership style. I admired the teams that they built. And I then came alongside them to look for mentorship, to look for guidance. I did the same thing when it came to managing my wealth. I started talking to people that were managing their own personal portfolio, that were making investments, that had expanded into private equity. I also started calling experts. I was lucky enough to have a good friend from college who had been in tech for a number of years, and ended up going to Wharton. MBA from Wharton and then went into investment banking. And when I started calling him, he was the chief investment officer of a private family office of a gentleman worth a few hundred million dollars. And so with all of that aligned. I went on this journey to diversify my portfolio, to bring income to my portfolio, and to turn this portfolio that was 95% of a single stock into something that was well diversified, that could provide checks for me and my family, and ultimately to be able to grow for generations. Over these 12 years, so from 2012 now to, let's say 2024 just ended, so 2025, but it's been roughly 12 years, I have taken all of the things that I've learned and I've shaped it into a framework. And I was very influenced by my last tech role at a company called GitLab, where they had a tool that supported DevOps, which is development and then operations. And I felt like there was a huge center to the G there because in wealth ops you have wealth, you're managing the wealth, but then you want to have operations. You want to manage it as a business. You want to have a clear way that you manage that month over month, quarter over quarter, year over year to reach your results. And so it was, you know, the product of these 12 years that I've been able to develop the WealthOpps framework and I'm excited to share it with you today. So what is WealthOpps? WealthOpps at its core is a structured framework for technology professionals on how to build manage and grow their portfolio as a business. It empowers you to move beyond just the wealth accumulation to get to the wealth management and to create a foundation for a legacy business that you're going to build. So it's based on two phases and two cycles. So I'm gonna break these down for all of you, but two phases and two cycles. So where it needs to start is where many people get it wrong. It needs to start with architecture. So architecture is where you design the blueprint of your wealth management business. And like any other business that you're going to create, it needs to start with a why. And in this case, you want to stamp it with a legacy why. Why am I choosing to manage my money as a business and impact future generations? And then it's what for, to what end, like what do I want it to do for my family? Do I want to then just give them a trust fund that they can consume? Probably not, right? Do I want to give them access to dollars that if they're creators that they can accelerate their creation, they can accelerate their impact? Probably so. But this architecture is so important. And it's not just architecture for the distant future, you have to architect it for what do you want it today? Many people go out and they are investment led in their portfolio, meaning they go get a bunch of investments and then they look at their portfolio and say, well, it's not working the way I want it to. I don't have enough income. Well, are you investing in income generating assets? Well, no, that's not the investment that I was presented. Okay, well, again, You have to begin with the end in mind, and this is where architecture is so important. So phase one, architect. Phase two is built. A business needs a structure. Your portfolio business does not live inside of personal finances. It has a business structure. It could be an LLC, an S Corp, depending on whatever tax structure you have. You need to work with a tax professional on that, but it needs to have a structure. It needs to have tools and it needs to have a system. in place so that you can manage it. Now, managing it and structuring it as a business has many benefits. One of them is the fact that it's much more tax efficient. Number two is that it's easier to then take this business and you can pass it on generationally to your heirs because you naturally have it in this container and it's operating in a very structured manner. So phase one, architect. Phase two is built. Then you get into the core operational cycle. So the core operational cycle is the continuous management of your portfolio. And this is the magic thing is that when you're in a clearly defined operational cycle that has different sections that are defined on what happens there, that means that then you have a rinsable and repeatable business that you can pass off to somebody. And that's ultimately what you're trying to do with your wealth is you're trying to structure it and organize it in a way that you can start bringing your kids into the business to help you run it, help them understand how money works and how to manage the money. And then. you can have that happen for generations. But that is the operational cycle. The fourth one is the succession cycle. We're not gonna talk a lot about that today because I need to dig into the operational cycle. But as you are going through your operational cycle, there are ways that you wanna make sure that you're phasing in your kids or your family or whoever is going to run this business for you in the future so that it's ready to operate as well. So before we go into the operational cycle, I just want to say taking a step back, the phases I would argue are so critical and can't be overlooked. If you do not architect and begin with the end in mind of what you want to build, you're probably not gonna get there. And this is where many people go wrong. The second thing is building a clear structure and having a framework to leverage. That is what's going to unlock scale. So the problem that many people have is they have no plan or idea of where to go. That's where architecture fits that. If you have the WealthOps blueprint, you're gonna understand where to go. And number two is, If you don't have a structure or systems, you're not gonna be able to get to scale. And this is again, where WealthOps is a framework that walks you through every single section, every single action so that you understand what you need to be doing to get to the next step. So now I want to take a pause and I want to ask you, have you ever felt like you've looked at your financial statements and are feeling overwhelmed, right? Do you want to get your money working as hard as you do? Well, this is where you need to have your portfolio in a core operational cycle so that it can actually meet those goals. So I'm going to walk you through the cycle steps right now. So let me go over all of these. I do need to have a cheat sheet. There's a lot to cover here with you. So I want to make sure that I'm covering all the details. But it goes like this. Plan, assess, invest, and divest. Those are the first four. So you wanna plan what you're gonna do next. That could be next month, that could be next quarter, right? These are all depending on where you are in your cycle. So there's a plan, there's access, you have to divest. Many people miss this step too, is the strategy of how do I take my equity and start moving it and start investing it in something else? So those are the first four. You plan, you assess, you divest, and then you invest. Then on the other side is you operating your business. This is where you monitor, you operate, you learn, and then you optimize. Those are more overlooking your business, right? If you think about it, the first is really your wealth, is managing your wealth in the actual investments. The next is you're looking over your business. And we're gonna walk in all of these and I'm gonna break these down for you. So your plan is where you've taken from your architecture and from your architecture, you know where you're taking this in the next 10 years. So then you're gonna back down in your plan, you should be looking at a five, three and one, meaning you understand what you wanna happen in this year. And that's then taking you to three years out to five years out. Now, this may sound like a long period of time and it's like, well, because some of this does take time when all of a sudden you build wealth, taking and divesting dollars from a large stock position. I know getting out of the Splunk position took me years. I worked with a tax strategist and did it strategically so that I could save myself hundreds of thousands of dollars in taxes to make sure that I was investing the maximum. And that's something I still do to this day. But you want to have a clear plan for where you're going next and have that laid out. So this could include for many people what is your, do you have a three or five year plan to financial independence? So then you want to back into where you may need to be moving dollars to income bearing assets today to get to that plan. But you need to have a plan. And that plan needs to involve your positions, your people, and then also your processes. Like where may you need to tune? So positions are your investment positions. So right now we are in some single family homes that we've held for the last seven years. We've got a lot of equity in those. We're planning. to divest out of one or two of those this year so we can start investing in some other things. That's part of our plan, of a positional plan. People's plans could be upgraded. I know many people want to upgrade their tax person. Maybe that's part of your plan that, again, gets you to a better process that says, I've now gone from reactive tax process to proactive. All of this is very important to have those key things in your plan. And like any other business plan, you can't overload it. You wanna make sure that you're prioritizing what's important for that year. Number two is assess, which is where are you today? So I have a plan, I need to look at where I am. Why? Because depending on where I am, that could adjust priorities, that could adjust where I need to be quickly. If you're assessing your situation and you could have some, You know outstanding notes being due or you could have you know I have a child who's going to college and I want to I want to help them out going to college So you have big dollars coming due that can affect your plan, but you want to plan Then you want to get clear and assess where you are today. And again, the assessment needs to be over the three P's Your positions. What are my investment positions? Who are my people? Right? Are you working with a wealth manager? I do know people who they want to manage and actively manage their own real estate portfolio. So they have a financial advisor or wealth manager over their stocks. And so they're managing that person. So you always want to make sure, like a CEO of any company, if you're not satisfied with that person, that then you are looking to upgrade them, or you're looking to manage them and get them on a plan to move them in the right direction. And the third is then your processes, right? Maybe it's your accounting process. Maybe it's your budgeting and planning process. You wanna get more efficient so that then you're able to get more upside out of your plan, out of your portfolio. The third one is so critical for many people in tech, which is divestiture. Divestiture, I would say it is one of those core steps that's hardly ever talked about, but it's so important. And all of the tech people that I coach or that I have conversations with, they tell me it's one of the biggest problems is they don't understand a strategy. And I want you guys, we're gonna be doing some case studies moving forward on divestiture in future podcasts and other things. So stick around because that's gonna be something we're gonna hit hard this year. I'm going to be bringing in some tax pros to talk about it because it is so important that you have clarity. How do you get out of that position and how do you get to cash in the most tax effective way possible? Let me say that again. This is important. Let that sink in. How do I get out of my equity compensation, my stock position to cash in the most tax effective way possible? That's what divestiture is. You want to divest to stockpile the cash and then you invest. You don't want to do those quickly or have those tied too close together because that can create inefficiencies. But making sure you're clear on how I want to divest. Divestiture also is looking at your current positions and saying, is there something that I want to sell? Is there an underperforming asset that I want to sell? As I mentioned, we have something that's highly appreciated and we think that we don't know how much more appreciation it can get. And we also know that we're concerned about the wear and tear on the actual property itself. So we're saying, hey, this is a good time to divest out of this, reduce our exposure, take money off the table. But you want to then think about your divestiture. And then you also want to think next. Next step is step number four is invest. This is where you want to put your money to work. This is where you want to ensure that you're doing due diligence. You understand the valuation of what you're buying. You understand who is operating this. And arguably, this is the step that is also an additional skill. that you need to build and you need to practice to make sure that you get good at it. Because when you're managing your positions, the plan, the assess, the divest, the investment is the most important because you want to make sure that you're capturing your lessons learned, you're enhancing your skills as an investor. Because an investment Being a great investor is nothing more than removing risk and making sure that you don't lose money and that you make as much money as possible. That's it. And again, step number one is just don't lose any money. You're ahead of 80% of the people. That's for sure. So plan, assess, invest, and divest. That is really how you're managing your positions, your people, and your processes. Now the next ones, the next four, the monitor, operate, learn, and optimize. This is how you're managing your business. This is how you're managing and scaling your business. So monitor, you wanna be monitoring your position, you wanna be monitoring your people so that you know, do I need to go in and optimize that? Do I need to go in and make changes because it's not efficient enough? But that's where you wanna make sure that you are getting details month over month, quarter over quarter, and you're staying on top of your people, positions, and processes to ensure that that's going well. Operations, that's how things happen behind the scenes. Operations is, you think about it, it's your accounting, that's your taxes, that is all of the things that are happening in your business. This could be your estate planning. This could be your systems, your tools that you have running these things. It's so important. I know that it's an exciting time right now because there's a lot of different FinTech tools that are coming online that can help you manage your wealth or manage the documentation that comes with that. Right? Because the more you get, there is, there's a ton of documents. How are you going to move that forward? There's also, as you become a high net worth individual, you can become a target. So how do you cover all this with a layer of some cybersecurity? All that stuff is so important. And that's really in your core. How am I running my business? Step seven, this is where you have to have a cycle for you as a business owner operator to learn. I'm always fascinated by the stories of Bill Gates, Jeff Bezos, Mark Zuckerberg, because these are people that had humble beginnings and had a constant state of learning and have evolved into tremendous CEOs that built tremendous wealth. And I could argue that the reason they were able to build that wealth is because they were able to continuously learn and adapt. They didn't hit a ceiling where the board of directors said, we have to vote them out. No, in fact, they were moving ahead of the board of directors and constantly learned to stay ahead and be these leaders that were constantly growing their companies. That's you. That's what this is. If you want to know as you're switching from moneymaker to money manager, you need to be learning more and more of how to do this. This is why we're here at Managing Tech Millions, whether that's the podcast, the YouTube channel and newsletter. We want to share these insights with you so you can keep learning and understanding how this stuff works. But there's more beyond that. There's more like learning about the different types of asset classes, learning about private equity investments that's not talked about, learning different ways to structure portfolios, learning different ways to run the business. It's so important that you're constantly learning and changing because we can learn from others and understand the landmines that they've stepped on so we can avoid those. And then we can also understand and accelerate and it saves us time, money and energy so that we don't have to go and experiment. And finally, the last one is optimizing is taking time to look at your business and say, where do I want to make changes? You know, one of the things that we're looking at is, as we've looked across our portfolio, as we realized that as we were acquiring assets, we're acquiring a lot of assets that required our time and attention. So now as we're. This year, one of our focuses and this is why we're looking at some of our active real estate properties is how do we start divesting of some of those so that we're optimizing this so that we're spending time. where we want to. Our time isn't all over the place. Even a couple of years ago, we had some Airbnbs that we were running, but that took a lot of our time. We wanted to take those dollars and put them somewhere else so that maybe we're getting less return, but we got more of our time back. That was an optimization to us that we made a decision to choose. That is a lot. That's a lot. And this is why, you know, I've created the Wealth Ops Collective so that we manage our portfolios together in the Wealth Ops Collective. I am managing my portfolio in front of everyone so you can see how this is done. You know, the biggest challenge, one of the biggest challenges I had is how did I finally get an over the shoulder view to see what somebody was doing? And while many people have been generous with sharing with me tips and tricks, and some people have been very open to what they're doing, many people weren't. But I want it to be different. I want to be different for you, and I want you to have the opportunity to look over your shoulder and see how somebody is managing a multi-million dollar portfolio, decisions they're making, and they're managing it systematically like a business. So what are the benefits? So if you do this, so what? So important that you say, so what? Well, if you have a framework that you're using and you understand the framework, you buy into the logic, you've seen its function, you've seen the results that it generates, well, this framework can move you from overwhelm, I don't know what to do next, to confidence. right? And when you have confidence, that means that you have clarity. And then you also have commitment, you want to do more of it. But you can move from overwhelm to confidence once you have a clear system. You can actually then move from You know, generating income to actually generating impact, like you then you can go from being a moneymaker to a money manager because now you have a system. And instead of having to think and build all of that, you're actually then able to scale and grow your business so that then you can be. you know, choosing your own mission for your life. Is that impacting your family? Is that impacting a nonprofit? Is it solving one of the world's biggest problems? I don't know. But you get to choose because you can go from being a moneymaker to an impact generator. Ultimately, you can go from dependent to empowered, from feeling so dependent on the company that you're working for and the equity and all the checks that you get to being empowered because now you understand how to do this yourself. And ultimately, I want this to be a sustainable, scalable solution for you so that, again, you're not thinking about how you run and operate your business. That's coming from the WealthOps framework. But then you're able to focus on what the investments are? How do I focus on, you know, good, clean divestiture? How to invest, you know, investments? How do I actually plan and execute this? Because your life is going to change. When you can manage your portfolio to goals, you're setting clear goals. I want this percentage of income from my net worth. I want this percentage of growth every year. And when you meet or beat those goals consistently, that's when things are gonna change for you. That's when things are gonna change. When you're setting those goals for yourselves and you're getting the income you want, you're getting the growth you want steadily and you see how that happens and it's scalable and it's seamless, that's when your life is gonna change. Okay, that was a lot. I wanna just sort of take a breath, take a step back. I know that that was a lot to take in. However, when you actually get down to it, it is not more complicated to learn and understand than many things that as technology professionals, you do in your job. It's really not. And it is a straightforward framework that I believe that anybody can learn. And so I want to tell you what are the five top problems that this solves, because having a structured way that you manage your portfolio, that you as the CEO use it to run your portfolio business, will solve five big problems. Number one, it will solve this problem of lack of goal-driven wealth management. There are studies, and I will put some in the Managing Tech Millions newsletter next week, you know, when this comes out, go check it out. But there are studies that say that goal-driven portfolios perform better than those that aren't. Because you're trying to get it focused to a goal and it's like anything else. If you want to lose weight, you may lose one or two. If you say, hey, I really want to lose 10 pounds and you're focused and you're constantly understanding, what do you need to avoid? What do you have to do to get there? It's the same thing with investing. What are the few risks I want to take? How do I just be patient? How do I get to these different goals? A goal-driven portfolio with systems, with the WealthOps framework is much easier. It solves that problem. Number two, one of the biggest challenges we all have is overexposure from a concentrated equity compensation position. right, is it solves that because as we're doing our assessment, and we're doing this assessment regularly, quarter over quarter, we're looking at all of our positions. We do not want to be overexposed because that risk can keep us from our ultimate goals. So we're going to then be going into a divestiture cycle. We're going to be steadily hitting that. And divestiture, again, is very complex. We're going to be talking about that more as we get into this year. You want to make sure that you are being very strategic in the way that you're divesting that so that you're being tax efficient, but you're also reducing risk. So number three is WealthOp solves the problem of not having systems to manage wealth, not having a structured way. Because structure, when you don't have systems, you're going to constantly be reactive. You're going to be saying, well, wait, what do I have to do next? I'm not sure if this is important or that's important. You're going to be reactive. When you have a system to follow, you're going to be going through a step-by-step process that's holistic that makes sure that you're covering everything. Again, you're executing all of the aspects of your business to make sure that it's scaling and that it's moving forward. Number four is it solves inefficient tax strategies. So when you're managing through a system like WealthOpps, you're constantly not just gonna be looking at the revenue that you generate, but what's the revenue that you keep? And really focusing on the operations, like who are the core people that are managing that? How do you need to up-level that? I will tell you that over the last couple years, upgrading my tax strategist and being incredibly proactive, managing my tax strategies a year ahead, two years ahead, has allowed us as a family to keep a lot more every year. And that's something that WealthOpps can solve for you as well. And then the fifth one, which is the most important, is just the lack of financial education and confidence. When you see this and you hear this laid out, all of a sudden lights are going to be going off, okay, here are the things that I need to cover. The more you get exposed to it and you see how holistic it is in nature. Then the focus becomes on where it should, which is I want to spend more time doing due diligence on the investments, understanding where I'm putting my money, and you're not going to be spending as much time as building and experimenting with how I run the business because you're going to have a business to run and you're going to know what do you need to focus on to actually grow and scale the business. You know, managing wealth isn't just about numbers. It's not. What that unlocks is it's about growing and scaling a business to get you to ultimate freedom, financial freedom from having to work for money, missional freedom to be able to choose what and where you want to focus on. and having a structured system that shows you how to run that business so that you can focus on being the best you can and eliminating you know, and reducing the amount of time and experimentation or mistakes that you make with money is gonna allow you to get to that destination much sooner. Hey, if that resonates with you and you like what we're doing here, my request to you is, you know, go to YouTube, hit the subscribe button on Managing Tech Millions, or you can go to managingtechmillions.com and you can sign up for our newsletter. And every Tuesday, you're gonna get new drops of you know, whether that's a real life case study, whether that's a how to guide, whether that's experts that we're interviewing and tips, you're also going to get wealth ops in action where I am updating you on what I'm doing with my portfolio, because I truly believe that if you're able to see and understand how other people are doing it, that's going to accelerate your learning, too. How much of our learning in tech do we really do side-by-side, over-the-shoulder, learning from one another? That's what this is. And if you're interested in going deeper and you think to yourself, you know, I'd actually love to look over your shoulder and understand what you're doing, you know, I'm accepting applications to the Wealth Ops Collective. It is going to be exclusive. I want to make sure that people who are in there, you know, have the ability, have the desire and really want to manage their portfolio. And then we're doing it together in front of each other in this curated environment. I want to thank you so much for being a part of this episode. If you have any questions, again, put that on the YouTube channel on the video, or you can actually reply to one of the emails, managing tech millions. And we're excited that this coming year, we're going to again be giving you more case studies. And I want to leave you with this. I'm not working in a vacuum. I'm not working in a bubble here. And I know that even in our previous life as Tech Equity and Money Talk, if you go to episode 76, I interviewed David Banks. David Banks is a good friend of mine. He's somebody that we have been. managing our portfolios together for the last, you know, four or five years, if not longer, is, you know, you can hear his story, a case study of how he took his tech wealth from three different IPOs, and he turned that into a business. Addison Financial is the name of his business. Yes, it's formed as a business, and how he's growing that and scaling that to live the life that he wants today. And there's more to come, but thank you so much for listening to this episode. We'll hear you next time on the live cast. See ya.