When you ran your company, decisions came fast. Hire this person. Kill that product line. Double down on this market. The feedback loops were tight, the stakes felt manageable, and your pattern recognition sharpened with every call you made.
Then you exited. And everything inverted.
The inbox that once overflowed with urgent problems now fills with opportunity. Private equity funds. Angel deals with former colleagues. Real estate syndications. A crypto fund pitched by someone who seems smart.
Every option is possible. Nothing feels urgent. And somehow, the decisions got harder.
Operator's Problem
Running a company trains you to make fast decisions with incomplete information. You develop instincts. You trust your gut because it was built through thousands of reps in a domain you understand deeply.
Capital allocation works differently.
A founder I know held 80% of his net worth in a single tech stock for three years post-exit. His reasoning made sense at the time—he knew the company, the stock kept climbing, and diversifying felt like admitting defeat. Then a sector rotation knocked 40% off the position in six weeks. He diversified eventually. Just at a much worse price.
The cognitive modes required for building versus preserving are fundamentally different. When building, speed matters. You make decisions with 70% confidence because waiting for 90% means missing the window. Feedback loops are tight—you know within weeks whether a hire worked out or a product resonated.
Capital allocation operates on different physics. Private equity funds might not return meaningful distributions for seven years. Even public market positions need time horizons measured in years to separate signal from noise.
The confidence that makes operators effective becomes dangerous when applied to domains where their pattern recognition hasn't been calibrated. A founder might have exceptional intuition about software markets—but that intuition says nothing about energy infrastructure or biotech or emerging market debt.
Here's the uncomfortable part: the same founder who correctly ignored sceptics about her business strategy now needs to take sceptics seriously about her investment strategy. Different context, different rules. The conviction that built the company can destroy the wealth it created.
Why Architecture Beats Information
The instinct after exit is to learn everything. Read the books. Take the courses. Build a spreadsheet model for every asset class.
This approach fails for a predictable reason: more information doesn't produce better decisions when you lack a framework for using it.
Warren Buffett famously passed on investing in Amazon and Google despite having direct evidence of their potential. His insurance subsidiary GEICO was paying Google $10 to $11 per click for advertising—a staggering margin that should have signalled the business model's power. Charlie Munger later admitted they "screwed up" by not identifying Google earlier, noting they "were smart enough to do it" but simply didn't.
The lesson isn't that Buffett needed more information about Google. He had the information. What he needed was a mental model flexible enough to accommodate businesses that fell outside his traditional circle of competence.
You face the same challenge with different variables. The answer isn't more analysis. It's a better architecture.
Decision Fatigue Reality
Research on decision-making reveals something founders rarely consider: the quality of your decisions degrades as you make more of them.
A landmark study examining over 1,100 parole decisions by Israeli judges found that favourable rulings dropped from approximately 65% at the start of each session to nearly 0% by the end. After a food break, approval rates jumped back to 65% before declining again. The judges weren't consciously biased—they were depleted.
Barack Obama and Mark Zuckerberg famously wear the same clothes daily for this reason. Steve Jobs had his black turtleneck. These aren't fashion statements—they're decision-preservation strategies.
Post-exit founders face an unlimited number of decisions with no natural constraints. Every opportunity requires evaluation. Every advisor needs vetting. Without architecture, you'll either exhaust yourself into analysis paralysis or default to gut decisions that bypass rational evaluation.
The solution isn't to think harder about each decision. It is to think once about your decision process, then let the process handle the volume.
Investment Policy Statement
An Investment Policy Statement isn't bureaucratic overhead. It's your automated first filter—the document that says no to most opportunities before you waste cognitive resources evaluating them.
Most family offices operate without a formal IPS. A recent Citi Bank survey found that 48% of family offices lack this foundational document. This correlates uncomfortably with the statistic that only 25% of wealthy families successfully transfer wealth to the second generation.
Your IPS doesn't need to be complex. A sound framework addresses five areas:
Investment objectives: What is this capital actually for? "Growth" is too vague. "Achieve 7% real returns to maintain purchasing power across two generations" is actionable. Capital earmarked for your children's education in fifteen years requires different treatment than the capital you're deploying for lifestyle flexibility.
Risk tolerance: Not what you think you can handle emotionally, but what you can actually afford to lose without changing your life. A founder with $30M and annual expenses of $300K has a different real risk capacity than one with the same net worth and $1.5M in annual obligations. Most founders overestimate their risk tolerance in bull markets and underestimate it in bear markets. Write the IPS during neither.
Asset allocation ranges: Not precise targets but boundaries. Something like: equities 40-60%, fixed income 20-35%, alternatives 10-25%. The ranges give you flexibility while preventing drift into concentrated positions. They're your guardrails—the points at which you either rebalance or explicitly acknowledge you're making a tactical deviation.
Constraints: What you won't do, regardless of opportunity. Write these down before you face temptation. "I don't invest more than 5% in any single manager" is easier to follow when it's a pre-established policy than when you're being pitched by a charismatic fund manager with impressive returns.
Governance: Who makes decisions, who advises, how often you review, and what triggers a policy change. Even if you're making all decisions yourself, write down the process.
The IPS works because it forces decisions before opportunities arrive. When a compelling pitch hits your inbox, you check it against your existing framework. Does it fit your allocation? Does it violate a constraint? Does the risk profile align? Most pitches fail these filters before you've spent ten minutes on them.
Pre-Commitment Strategies
The concept of pre-commitment traces back to Ulysses ordering his crew to bind him to the mast so he could hear the Sirens' song without steering toward the rocks. He knew his future self would be compromised, so his present self removed the option.
Behavioural economics has validated this approach extensively. A study on smoking cessation found that participants who voluntarily committed money to a savings account—accessible only if they quit—were approximately 30% more likely to succeed compared to the control group. The mechanism works because it changes the cost-benefit calculation at the moment of temptation.
For capital allocation, pre-commitment takes several forms:
Timing rules: "I don't make investment decisions on the same day I receive a pitch." This creates space between excitement and action. Some founders use 48 hours. Others require sleeping on it twice. The cooling-off period filters out opportunities that only look good in the heat of the moment.
Category exclusions: "I don't invest in industries I don't understand, regardless of returns." Buffett's famous circle of competence isn't just humility—it's pre-commitment to staying in domains where his judgment has actual value.
Process requirements: "I don't commit capital without a written memo explaining why this fits my strategy." Writing forces clarity that verbal reasoning lacks. If you can't articulate the thesis in two paragraphs, you probably don't understand the investment well enough.
Allocation limits: "I don't put more than 5% of liquid net worth into any single opportunity." This prevents the concentrated position problem before it starts.
The key is to establish rules when you're not facing specific temptation. The rule needs to exist before the opportunity arrives, not be created in response to it. Your excited future self will find reasons to make exceptions. Your calm present self needs to make that harder.
Decision Journal Practice
Daniel Kahneman, the Nobel laureate who transformed our understanding of cognitive bias, offered this advice when asked how to improve decision-making: go to a drugstore, buy a cheap notebook, and start tracking your decisions.
For each consequential decision, record what you expect to happen, why you expect it, how you feel about the situation, and the date. Then review periodically.
The power lies in defeating hindsight bias—our tendency to remember past decisions more favourably than they actually were. Without a written record, you'll convince yourself that winners were obvious calls while losers were bad luck. The journal prevents this self-serving narrative reconstruction.
Over time, patterns emerge. You might discover that decisions made on Fridays work out worse than Tuesdays. Or that your emotional state correlates with outcomes. Or that a particular type of opportunity consistently disappoints.
What to record for investment decisions:
- The thesis in two sentences
- What has to happen for this to work
- When you expect results (specific, not "long term")
- What would make you sell—upside and downside
- Your confidence level, 1-10
- How are you feeling physically and emotionally
Schedule quarterly reviews where you revisit decisions made 6-12 months ago. Compare predictions to outcomes. Look for patterns in failures. The point isn't paralysis—it's building a feedback loop that actually works.
Building Personal Board
No CEO makes major decisions without input. But post-exit founders often operate as a "consensus of one"—making calls in isolation, without meaningful pushback.
The challenge is structural. When you're the boss of your own money, who pushes back? Your wealth advisor has incentive alignment issues. Your lawyer gives legal advice, not investment advice. Friends and family usually tell you what you want to hear.
Charlie Munger's solution was building what he called a "latticework of mental models"—frameworks from multiple disciplines that could challenge single-perspective thinking. He estimated that 80 to 90 key models would handle roughly 90% of life's challenges. The practical application: don't evaluate investments solely through financial metrics. Consider them through competitive dynamics, human behaviour, and system design.
But models alone aren't enough. You need people who will tell you when you're wrong.
The contrarian: Someone whose default is scepticism. Their job is finding holes in your reasoning, not validating your conclusion. This person should be genuinely comfortable saying "I think you're making a mistake here" without hedging.
The experienced allocator: Someone who's managed capital through multiple cycles—not someone selling you access to their fund. They've seen what works and what doesn't across different market conditions.
The industry expert: When evaluating specific sectors, someone who actually operates in that space. The gap between how venture investors describe AI companies and how AI practitioners describe them is instructive.
The disinterested party: Someone with no stake in your wealth who asks obvious questions insiders miss. Sometimes the best question is "Why would you do this at all?"
This isn't a formal board with quarterly meetings. It's a network of relationships you cultivate specifically for intellectual honesty.
Getting genuine pushback requires effort. Ask specific questions rather than seeking general validation. "What am I missing here?" invites deeper engagement than "What do you think?" Make it safe to disagree. If people believe you want validation, they'll provide it. Demonstrate through your reactions that disagreement is welcomed.
Two Frameworks Worth Testing
10/10/10 Rule
Suzy Welch's framework asks three questions before any significant decision:
- How will I feel about this in 10 minutes?
- How will I feel about this in 10 months?
- How will I feel about this in 10 years?
The 10-minute answer captures emotional state. The 10-month answer reveals medium-term consequences. The 10-year answer connects to values. A founder might find: 10 minutes—excited. 10 months—stressed about illiquidity. 10 years—regretful about misallocated attention.
Hell Yes or No
Derek Sivers, who built and sold CD Baby for $22 million, operates by a simpler rule: if a decision doesn't generate an immediate "hell yes" response, the answer is no.
This seems extreme until you consider the alternative. Saying yes to things that are merely "good" fills your capacity for things that could be great. Every mediocre investment consumes attention that could go toward exceptional ones.
Applied to capital allocation: if a pitch requires you to talk yourself into it, that's probably your answer.
Personal IPS Template
Here's a starting framework. Your final document should reflect your specific situation.
Section 1: Purpose and Goals What is this capital for? What return do I need? What time horizons apply?
Section 2: Risk Parameters What is my actual capacity for loss? What drawdown would change my lifestyle?
Section 3: Asset Allocation Target ranges for each asset class. Rebalancing triggers. Liquidity requirements.
Section 4: Investment Selection What characteristics must an investment have? What disqualifies it? What due diligence process will I follow?
Section 5: Exclusions What will I never invest in? What concentrated positions will I avoid?
Section 6: Governance How are decisions made? Who provides input? How often do I review this policy?
The goal isn't perfect decisions. Perfect decisions don't exist in capital allocation. The goal is good decisions, made consistently, without exhausting yourself.
Your architecture should make the right choice easier than the wrong one. It should filter noise before it reaches you. It should preserve your cognitive resources for decisions that actually require them.
Start with your IPS. Add pre-commitment rules. Implement a decision journal. Build your informal advisory network. Test frameworks like 10/10/10 and hell yes or no on actual decisions.
Then review what's working. Adjust what isn't. Iterate.
The founders who preserve wealth long-term aren't the ones who make the best individual decisions. They're the ones who build systems that make good decisions inevitable.
I write when there’s something worth sharing — playbooks, signals, and patterns I’m seeing among founders building, exiting, and managing real capital.
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