Start. Scale. Exit. Take Some Money Off the Table. Repeat.

My whole entrepreneurship process is summed up in my book title: Start. Scale. Exit. Repeat. But there’s actually an invisible step in my process between “Exit” and “Repeat.” When I look back at what’s brought me security, it’s this invisible step. My process looks more like:

1. Start.
2. Scale.
3. Exit.
4. Take Some Money Off the Table.
5. Repeat.

I learned this the hard way when the NASDAQ index crashed in 2000. It killed the exit I was working on, and lost most of my wealth because it had been tied up in the company’s stock.

Since then, my philosophy has been called “Laddering Up Wealth.” After I exit, I take money off the table before I go off to Repeat. For those who envision a life of serial entrepreneurship, taking money off the table from a successful exit should be a prerequisite for repeating success in your next venture—or two.

So let’s talk about the two key advantages of taking some money off the table versus putting all your wealth into your next venture:

1. Taking Money Off the Table Makes You More Change-Proof

Let’s be honest—there’s always a bit of a gamble in any venture, no matter how surefire it seems. So, in gambling terms, you need to take some chips off the table every so often for security. Take a portion of your wealth from your prior exit and invest it in very conservative, safe instruments where it can earn interest.

The first thing I did after my second big exit was to max out my kids’ college savings fund. There was a deep satisfaction in knowing that even if every other business crashed and burned, my kids would have a debt-free education. Likewise, consider setting money aside for your personal home, second home, and/or stocks and bonds.

The point is: don’t put all your eggs in one basket!

In February 2022, Russia invaded Ukraine, setting off a war that brought the frontlines within a stone’s throw of the headquarters for one of my startups. Thankfully, I had already sold some of my stock to “take some money off the table.” Meanwhile, a couple of my business partners invested most of their wealth in the company and took a significant hit.

Pretty much every disaster you can imagine hit one of my businesses in 2022—not just war, but the crypto crash, a hurricane, and even a family health crisis. Life is going to throw you (and your business) some curveballs. The only way to protect yourself from such change is to be proactive.

2. Taking Money Off the Table Makes You More Profitable

When you’re a first-time entrepreneur, you probably can’t do without some kind of salary. But if you have made a previous exit, then one of the smartest moves you can make with your next venture is to take no salary—at least for a while.

In prior fundraising rounds, I’ve put myself on the line by investing in a portion of the offering. But I’ve also agreed to take zero salary until the company starts generating consistent revenues and earnings. This accomplishes two things:

First, it reduces your personal out-of-pocket to Uncle Sam.

Second, it sends a strong signal to investors about your commitment to making the company profitable.

Now, don’t get me wrong—it’s not a charity. When a company starts to perform, you should start drawing a salary. But the last thing you want to do is take a salary and have to pay taxes on it while the company is still losing money. Having the freedom to defer your salary is an easy way to speed up the process of becoming profitable.

It’s also beneficial when preparing for the next exit. When we start considering exiting, we make any cuts we can to make the company more profitable and, therefore, more appealing to a buyer. That includes cutting my own salary or even stepping out of the company altogether.

“Laddering up” by taking money off the table is not giving up. Your identity should never be based on one company or a job title. If you envision a life of serial entrepreneurship, you have to keep this one thing in focus:

Your trade is entrepreneurship. Period.

Learn more about this strategy and other aspects of my process in my book Start. Scale. Exit. Repeat. Or join us every week at Startup Club on Clubhouse.