…. Said the woman who just did it :) And who’s now my favorite person of the day!
Her name is Sarah Hanson, and she just got $125,000 in return for giving up 10% of her future income for 10 years straight. That’s 10% of everryyyyyyyyyyyyyything she does (or doesn’t?) do for 10 years in a row – Wow. I love it. Anyone with balls enough to not only come up with the idea but also MAKE IT HAPPEN passes the “hustler” test in my books any day. And you better have yourself a hustler too if there’s any shot in making back that $125,000 as an investor!
The funny part too is that I was literally JUST talking to my biz partner about this stuff, and how I’ve considered doing the same over the years myself. Only I think it would be WAY to much pressure for me to then have to live up to expectations for so long and not enjoy what my future holds for me over the next handful of years. If I failed I’d feel so freakin’ bad for the investor and would probably psych myself out! Which if you haven’t guessed it already, makes me a terrible business man when it comes to that type of stuff. AKA feelings and not wanting to screw people over. Luckily though I don’t have a need for a big chunk of money anyways, so I’ll happily keep doing my thing and reach that first million over the next few years all by myself :)
I think that’s the key to all of this really – having a (damn) good plan for that $125k or whatever to help propel you to that end goal MUCH faster. Like investing it in your business or product or however you’re gonna make that first million or two. Which, for Sarah, is her idea on the Senior Living Map (I don’t know much about the industry, or how she’ll make money off it from first glance, but I do hope it works out for her!). Without a use for the investment it would just be sucked dry over time with nothing much to show at the end of the day. Which could still happen even in this case too!
But that’s what speculation is about – big risks for big rewards! If you can stomach the big losses that often come with it too, why not take a chance on a budding star? Perhaps you can mentor ’em and connect them with your own personal resources too now that you’d have a stake in the results? I can’t imagine anyone investing in someone without being able to offer any type of guidance.
(Also – how the heck do you *track* all this money coming in? How do you know you’re getting your fair share as investor all those years and the person doesn’t hide any?)
This also reminds me of the time years back when rookie baseball players were selling off parts of their future income too – remember that? I can’t recall the names of them at the moment, but I remember an article about it in the Washington Post where these kids were giving up 10-20% for like millions of dollars which would be a (quite literal) home run for any investor if they really did well in the major leagues! Do you know how much those players make?? The GOOD ones? It’s insane. And to be a part of it would be killer… until they break a leg or get traded and never hear about them again ;) Maybe those who foresaw it were the ones offering up these “deals”?
Anywho, interesting stuff to think regardless. I guess the real point to all this is that you really can control your destiny when it comes to your money and your career. And the more creative you can get, the more chances of succeeding down the line when you mix in a few ounces of hustle.
Now tell me – would YOU ever auction off your future income? If so, what type of money would you require in return, and for how long? What %? How about the other end of the deal – would you ever INVEST in someone in a similar way?
I think that’s the side I’d more than likely fall in if I were ever caught up in a deal like this… In fact, I offered to invest in two people just last month! Haha… Well, more in their companies they’re launching than in their overall income streams for X amount of years (they both turned me down, btw, as they were doing fine without me or my money), but still – it was a fun experience to test out all the same. If anyone ever takes me up on it I’ll be sure to post it all up here to continue on this fun conversation :)
Have a good day, y’all!
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PS: Here’s an interview that girl did on auctioning off her income. I don’t agree with the dropping out of college part, but I do admire her creativity.
UPDATE: Here’s a follow up on that interview where this whole thing may or may not be a hoax. Not that it matters really, it’s the *idea* of it all that I love, especially as I know people have done this in the past already and will continue to do so :)
(Photo by John-Morgan)
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I certainly wouldn’t auction off my future income unless I had some idea that it would be much lower than the price I’m asking for. People auction off their future income every time they go into debt. It’s just an absolute amount rather than a percentage.
“People auction off their future income every time they go into debt.” — Never thought about that before!! Wow that’s good. And true.
I wouldn’t because I don’t need the capital. If I did, I might consider it but it’d be a super hard sell. 10% isn’t a ton, but if you end up hitting a home run it could be insane!
Right. You’d need a good plan for the money for it to really pay off. No pun intended :)
I don’t think I would, but do see how it could be a potential goldmine if you played it right. Like MFIJ said, people do it all the time when they go into debt…yet so few realize it.
Let’s see… get $125K in capital… start a business of some sort (or invest the money)… don’t take any “income” from it until after 10 years and BOOM! Free money…
Not a terribly mind-blowing idea. Businesses set up as corporations make decisions on whether to fund operations through debt or equity all the time. There are plenty of complexities to consider, but it’s not crazy that the sole proprietorship is finally doing the same thing.
Because that’s basically what this is — selling equity shares in you, the business.
Yup! True that.
Wow, that is really interesting. Even though it’s surprising, I agree with @debtblag that it’s not entirely mind-blowing. I would never consider doing this unless I was in desperate need for quick cash, but even then I’d probably just take out a personal loan. I have never been a huge fan of the “royalty” or “giving up equity” deal with businesses and this is exactly what you’d be doing. As an investor, I don’t think I’d ever invest in anything like this either, but I’m pretty conservative when it comes to investing.
The nice thing about investors giving you money vs taking out a loan is that you’re not on the hook to pay it back when all is said and done. Granted you may lose credibility and/or relationships in the process, but in theory business is business and everyone’s aware of the risks before they jump in. Big risks for big rewards! :)
Whoa, that’s crazy! I don’t think I have the guts to do something like that, but kudos to her! That said, the husband and I have been talking about the importance of taking risks. Everyone who gets anywhere has had to take some big risks along the way. It doesn’t mean I’m any less terrified of taking them, but hey, we’ve got one life, so we might as well live it up and try some crazy stuff, right?
Haha I like the way you think :) I’m also now into the “I’ve gotta fail at something big sooner than later, so might as well get it out of the way now!” type mentality too for my next endeavor :) Makes me feel better and easier to take that move forward, haha… (although yes – still scary!)
I recently read a scifi book – The Unincorporated Man. The guy put himself in cryogenic freeze and wake up to a future where everyone is incorporated. A regular person will have to spend his/her life trying to buy a majority of themselves back. It’s interesting.
No, I don’t think I would auction myself off. Why not just get investors like in the show Shark Tank instead? Sell part of your business. Selling yourself is kind of crazy.
Haha… that book sounds kind of crazy! But I do like it ;)
Interesting concept. But apparently she might be fake. VentureBeat did a follow up.
Yeah, just saw that… Don’t think it really matters though – it’s the *idea* behind it all that intrigues me. And I know others are/have done it before in the past anyways :)
Isn’t this the same as venture capitalism? You get an investor to fund your start-up, and they get a percentage of the profits. Very interesting, nonetheless, especially if the person did NOT have a business plan, and was just working for McDonald’s or something. I don’t think I could do it, but then again, no one has offered me $100k :)
I’d like to make you an offer of $100,000 – What can you do for me? :)
Crazy system… As you said, kudos to whoever can pull it off. Hopefully not too many people will be confused by such financial manipulations.
I agree with Jake, this is basically venture capitalism. In fact, the show “Shark Tank” is exactly what this is. I’m with you about the pressure J, I think i’ll be more successful without worrying about having to “pay someone back”.
Unless I am deep in debt, I mean real deep, I would never go for auctioning off my future income.
Sounds like an easy scam. You auction it to 10 people and then sit on the money, “retired”… This Sarah can decide to have kids and stay home, with $125K for a downpayment on a house!
$125k won’t get you very far in 10 years though :) Even if I *wanted* to scam someone like that, I’d be wayyyyy to bored doing nothing for 10 years and would eventually just start hustling again. Better for all parties anyways cuz the more you have both sides winning, the more you’ll be successful in the future too. If this 10% worked out for the investor at $125k, imagine what you can then raise for the next ten years?
$125k is more like 50% of my income for 10 years!
If my career was relatively stable, I ‘d jump on this in a heart-beat. I wouldn’t be getting any raises in the next decade that would do be bigger than the return I would get on a year’s worth of income up front. But as it stands, my career is incredibly unstable. While this year will probably be lower than last year, if I switch gears, I could wind up with as much as a 100% raise over last year’s gross.
I think it’s just a matter of time until you find your sweet spot :) As soon as one of these hobbies/careers take off, you’ll be good to go for many many years my friend. So keep on hustling and growing!
This is fantastic! This is nothing more than shifting the risk of generating income to someone else for a price. Insurance companies hedge all the time.