We’re taught to diversify our stock portfolio – that way, if one stock tanks, our whole portfolio doesn’t go with it. Should we do the same with our identities?
Starting, growing, and running a business can be all-consuming. Especially in the early years. I found that in order to make inroads and build a name, if I wasn’t working on client work, I was working on the business. That meant 60+ hour work weeks, evenings and weekends… you name it.
And when you spend that much time on something, it is a slippery slope to it becoming your whole identity. And when one thing is your whole identity, that’s a single point of failure.
That’s what it was like for me. For 10 years, I only really thought of myself as one thing: agency owner and entrepreneur. That’s how I spent the majority of my time. For a long time, that was ok.
But then my desire to run the company started to wane; I had accomplished more than I ever dreamt of, and was starting to think of moving on. I sat with the thought of selling a while, I did some napkin-math on EBITDA multiples, and read more of the FIRE principles I had recently discovered. I look at real estate listings in the types of mountain towns I had always dreamed of living in.
At a certain point, I committed. I wrote down a 3-year vision, including what sales targets, revenue and EBITDA targets I wanted to hit at my firm, and jobs I was currently doing that I’d need to offload. I put together a strategy to create a sellable business, with the idea that hey – even if nobody bought it, at least I’d have a more profitable firm while wearing way fewer hats.
It was at this stage – right before enacting my pre-sale strategy, designed to exit my firm and lose the moniker of agency owner – that the thought dawned on me: if I’m not Jeff, entrepreneur, who am I?
Diversification is a Hedge Against Loss
If you invest your money and pay a little bit of attention, you’ll have heard the age-old wisdom in finance: portfolio diversification is key. The rationale here is pretty straightforward – if you put all your money in one company’s stock, or one industry, you’re at risk of a downturn. One company can tank, or one industry can tank (hell, even an economy overall can tank) – and if you’re 100% in that stock or industry, your assets are gone. So, the prevailing wisdom is to buy a lot of companies across a lot of industries and even across multiple economies. That way, if one company (or industry) tanks, your portfolio can easily weather the downturn.
It’s a hedge against loss.
As I thought ahead to selling my business, and effectively losing my job, I thought about this same principle. I was fortunate in that I could see the end of my role as agency owner – I was the one planning it, and I had probably 3-6 years or so until that chapter closed.
And I knew that, if I continued putting 100% of my identity capital in the entrepreneur stock, I was going to flounder when I no longer owned that stock. That meant that, as part of my exit strategy, I needed to diversify my identity. I needed to hedge against the loss of both my job and my identity at the time.
And I think you should do the same.
Treat Yourself Like Your Stock Portfolio
Many founders have their whole identity tied up in their business, just like I did. But like our stock portfolios, that’s a risky proposition. Eventually, it is a guarantee that our tenure as entrepreneur / founder will end, and sometimes suddenly. As HBR points out, job loss (whether of our own doing, or not) can be devastating on our mental health. We need to prepare for our “owner-less” futures by diversifying our identity and thinking of ourselves as more than one thing.
You wouldn’t put 100% of your assets in a single stock, right? Why are you doing that with yourself?
How To Diversify Your Identity
This doesn’t necessarily mean you have to take up new hobbies – although, if you want to, go for it! For me, it was more of a mental exercise at first, then a change in behaviour:
- I made a conscious effort to think of myself as more than an entrepreneur, because I was more than that. I was a lot of things in addition to being an agency owner: mountain biker. Outdoor enthusiast. Coffee aficionado. Uncle. Dog dad. Trail runner. Skier. And so forth.
- I changed my behaviour to reinforce some of those other pieces of my identity. That meant I introduced myself differently – not just as a founder. It meant I asked people, when getting to know them, what they did for fun. It meant I dedicated more time to a balanced life across those interests. I made choices that reinforced those parts of my identity.
So, if you were to treat yourself like your own stock portfolio, how would you diversify?
- Who are you, outside of work + entrepreneurship and running your company?
- If you didn’t have the business, how would you spend your time?
- How would you answer the question “What do you do / what are you interested in?”
And when you have some of those answers written down, what behavioural changes do you need to make to reinforce them? How can they become habits?
At the end of the day, we should all strive to be well-rounded people. Adaptable people. The only certainty in life is change, and by diversifying our identities, we can all become a bit more well-rounded and adaptable, setting ourselves up a little bit better to weather whatever changes come our way.