Today, I would like to share with you a real world case study that explains the concepts of liquidation preference and preferred participation.

I’m not a lawyer. I’m giving you a very simple example. My intention is to get you started and give you a basic understanding. For a thorough, authoritative discussion of legal aspects of start-up financing, please read the excellent The Entrepreneur’s Guide to Business Law. In fact, I think this book is a must read for anyone who plans to start a business or join a start-up.

Liquidation preference is a legal term used by venture capitalist to protect their down side risk. They wanted to at least get their money back. Liquidation preference is very common. The most common term is 1x of venture capital investment.

Preferred participation is another device used by venture capitalists to protect their down side. It is sometime referred as "double dipping".

Let me give you an example to illustrate.

Startup X just received 3rd round of financing. Prior to the financing, Startup X is valued at $8 million dollars. Venture Capitalist put in $2 million dollars. So, right after the financing, Startup X has a post-money valuation of $10 million dollars. After the 3rd round of financing, venture capitalists owns 80% of the company, founders and employees own 20% of the company. venture capitalists have a liquidation preference of $8 million, and preferred participation of 3X liquidation preference ($24 million).

Also, in most startups, venture capitalists own preferred stocks, while founders and employees own common stocks. This means venture capitalists will get their money first before everyone else when an exit event such as acquisition takes place.

Let’s go through 3 scenarios: Bad, OK, and Home Run.

Scenario #1: Bad outcome for Start-up X. The company was crushed by competition. It’s sold for $6 million dollars.

Venture capitalists have two options:

Option #1: Venture capitalists can convert all of their stocks to common stocks. Since they own 80% of the company, they will get $6 million X 80% = $4.8 million. Founders and employees will get $6 million – $4.8 million = $1.2 million.

Option #2: Venture capitalists chooses to take advantage of liquidation preference. Since the liquidation preference is  $8 million, and the company is sold for $6 million, the venture capitalists get the entire $6 million. Founders and employees will get nothing.

Obviously, venture capitalists will choose option #2 in this scenario.

Scenario #2: OK outcome for Start-up X. The company did OK, but had limited growth. The company is sold for $18 million.

Again, Venture Capitalists have two options.

Option #1: Venture Capitalists convert all of their stocks to common stocks. Since they own 80% of the company, they will get $18 million x 80% = $14.4 million. Founders and employees will get $18 million – $14.4 million = $3.6 million.

Option #2: Venture Capitalists choose to take advantage of liquidation preference and preferred participation. They will get:

• $8 million due to liquidation preference
• Because of preferred participation, they will be able to "double dip" for the remaining money up to the $24 million preference participation cap: they will get ($18 million – $8 million) * 80% = $8 million
• $8 million + $8 = $16 million, which is less than the $24 million preferred participation cap. So, venture capitalists will get $16 million.
• Founders and employees will get $18 million – $16 million = $2 million.

Obviously, venture capitalists will choose option #2 because they will make $1.6 million more.

Scenario #3: Home run outcome for start-up X. It’s sold for $100 million.

Let’s review the two options venture capitalists have.

Option 1: venture capitalists convert all of their stocks to common stock. Since they own 80% of the company, they will get $100 million *80% = $80 million.

Option 2: venture capitalists chooses to take advantage of liquidation preference and preferred participation. They will get

• $8 million due to liquidation preference.
• Due to preferred participation, they will double dip. ($100 million – $8 million) * 80% = $73.6 million. However, due to the preferred participation cap of $24 million, venture capitalists can only get $24 million in total, including the $8 liquidation preference.

Obviously, it makes much sense for venture capitalists to choose option 1 since they will make a lot more money by converting their preferred shares to common shares. This example demonstrates that liquidation preference and preferred participation are used to protect down side for venture capital investment.

Liquidation preference is very common — almost every venture capital backed start-up has it. However, preferred participation is something entrepreneur would fight very hard to avoid. In today’s economic environment, it’s not uncommon to see 2X or 3X liquidation reference for preferred participation term, which is pretty bad from entrepreneur and employee perspective.

Today’s market is drastically different from the dot com days. Big acquisition or IPO are rare. It becomes even more important for employees to understand the financing terms to make a realistic assessment of the start-up.

Related posts

• IPO shouldn’t be the goal for a start-up
• Too many managers, too few leaders
• Is starting a company in Silicon Valley stupid?
• You must be a lazy man if it takes you ten hours to do a day’s work

Excellent resources

• The Entrepreneur’s Guide to Business Law
• The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything
• From Alchemy to IPO: The Business of Biotechnology
• High Tech Start Up, Revised and Updated: The Complete Handbook For Creating Successful New High Tech Companies

Unfortunately, I needed a car. And I didn’t want to get ripped off. So, I was determined to get a good deal while minimizing my pain. Here are 11 lessons I learned from hard-nosed negotiation with car salesmen.

1. Start price negotiation below invoice price. Dealers will tell you that they cannot sell you at invoice because they will not make any profit. Never believe what dealers tell you. They will make money if they sell the vehicle to you at invoice price because of dealer hold-back. My initial offer was $800 below invoice. Everyone thought I was crazy. The car salesmen laughed at my offer. But, I had done plenty of research online. I knew the market. Trust your data. Don’t let other people’s opinions and negotiation tactics sway you.
2. Set an one-hour time limit when you walk into a car dealership. This is a common tactic used by every car salesman I talked to: I made an offer. They said that they needed to talk to their manager. They then disappeared for 20 to 30 minutes. They would finally came back and said that they couldn’t take the offer. They asked for a compromise. They would then repeat this process. They wanted to make the negotiation process as time-consuming as possible so that the customer would give up in the end. Don’t fall into this trap. When you walk into a car dealership next time, tell them that you will only have an hour to talk to them. You must leave in an hour.
3. Plan two weeks of time to purchase your car. — test drive your desired vehicle in the middle of a month, but wait until the last few days of the month to purchase the vehicle. Car salesmen have monthly quota. You’re likely to get good deals in the end of each month. I bought my car three days before end of the month, and got a pretty good deal.
4. You should research car data on multiple auto web sites and forums. Don’t trust a single source. I mostly used Edmunds.com, and TrueCar.com. I also frequented Edmunds.com’s message board to check actual paid price reported by users in my area. TrueCar.com is a fairly new site, but it provides very useful reports of actual price paid by customers in your area. However, you should still cross check data across multiple sites.
5. Car dealerships don’t expect to make a lot of money from new car sales. Most car salesmen will tell you that they cannot sell you a new car at such a low price because they have a big building with a lot of employees and the owner has to pay the bills. But, they will not tell you that car dealerships make most of their money from used cars sales. They don’t make much money from new car sales since the prices for new cars are much more transparent. If you’re buying a new car, don’t let this argument sway you during negotiation. 
6. Don’t buy cars from a dealership with fancy building and flashy advertisements. One dealership I visited has a super nice building. It has a young lady whose job is to serve free coffees/cookies/drinks to customers. It’s really nice. But, someone has to pay for the ambience! If you’re a value buyer like me, stay away from those fancy dealers. They will charge you more. 
7. You can do much better than the Costco auto buying program. A common negotiation tactic I encountered at almost every single car dealership was that they would offer me the Costco car buying price as the lowest price. They said that it’s backed by Costco. It’s non negotiable. Since I’m a value buyer, it’s the best program for me. In my opinion, the Costco auto buying program is being abused by many dealers. Costco is damaging its brand by partnering with dealers. My advice: never buy a vehicle at Costco price. You can do much better than the Costco price.
8. Cut the price for dealer-installed options by at least half. It’s very likely that the dealer has installed several options on the car. Tell them you don’t want these options. The price they quote you will give them 50% or more margin. You can easily cut it by half, if not more.
9. Find yourself a good car salesman who takes care of customers. I once heard a quote: "when did car salesmen lie? When they moves their lips." However, there’re good car salesmen. They tend to stay at the same dealership for five years or more. They have established a happy customer base who will go back every few years to purchase cars from them. You should ask around for referrals. A good car salesman will make the purchase process much easier for you.
10. You want to be a tough negotiator, but not an unreasonable negotiator. Remember that car salesman needs to make a living as well. You should give them a reasonable margin, which is about 3-5% for new cars. 
11. Don’t negotiate for pennies. Here is the formula I used: if I can save $600 for two-hour negotiation, I’m making $300/hour, which is much higher than my paycheck rate. However, if I spend a few hours to save $100, it doesn’t worth my time. Keep your perspective during negotiation.

Related posts:

• Will you still buy Toyota?
• My "Rich Dad, Poor Dad" lesson on New Year Eve: How one family with $70K annual income owns five houses in the San Francisco Bay Area
• Should parents pay for the full amount of their kids’ college education expenses?

Excellent resources:

• Bargaining for Advantage: Negotiation Strategies for Reasonable People 2nd Edition
• Getting to Yes: Negotiating Agreement Without Giving In
• Getting Past No

It’s heart wrenching for the parents and siblings. No matter how accomplished and wealthy they are, they feel powerless in dealing with this problem.

In the past few years, directly and indirectly, I have known several families who are facing this very difficult problem.

All of these families have an adult son or daughter who is in his or her late 20’s or early 30’s. They share a common pattern.

• They have all been good kids when they grew up. They were good students, and graduated from good colleges. Most of them attended prestigious Ivy Leagues schools or small liberal art schools.
• After college, they moved around low-paying jobs, but they never found the jobs they really liked.
• They held a belief that they didn’t want to "sell out"; they wanted to pursue their passion.
• They also had a notion of living certain life styles because they all grew up in middle-to-upper class families.
• When the economy was going south, they had a even harder time to find a job. They moved home to stay with their parents.
• They have been jobless for two years or even longer. 
• They got monetary help from their parents and occasionally from their siblings. They’re not starving by any stretch, but they’re dependent on their parents.

Most of them are not even actively looking for jobs. When opportunities knocked at their doors, they usually would say things like "it’s not something I’m passionate about", or "it sucks. I don’t want to work in that environment", etc.

They’re confused, aimless, and just hanging out with a few friends who are in the same boat.

The parents and siblings are worried, frustrated, and angry — they hate to see their precious son, daughter, brother, or sister to waste away.

I’m neither a psychologist nor a social scientist. I could only offer hypothesis about what is going on based on what I knew about the families I talked to.

I think most of these families have provided an over protected environment to their kids. Almost all of the families are well off, and they tried to provide everything to help their kids to succeed. The kids had lived a very sheltered life.

The kids didn’t disappoint their parents. They did well in school. Until graduating from college, it was a pretty smooth ride for the son or daughter.

But, that’s where the problem started. They had experienced very little setback in their lives. Things came too easy to them.

As a result, they were not prepared to face the harsh reality in professional environments. They lacked the mental toughness and street smart to navigate the real world.

Additionally, they grew up during a period of unprecedented economic prosperity. They were not prepared for the sharp economic down turn, and the difficult job market.

I was chatting with a college friend of mine. One thing he mentioned to me was really interesting: we both went through a very competitive environment at UC Berkeley. One thing about attending a large public school like Berkeley was that nobody really cared about you. You had to take care of yourself; otherwise, you’d drop out. There was a grading curve for most classes at Berkeley, which means certain percentage of student would flunk the class. We were conditioned to work really hard, rely on our ability, and survive. Some people really disliked that environment. Unlike a private school, Berkeley was pretty rough. But, we felt that we acquired the mental toughness from that experience.

I think the point is that adversity really helps young people to build characters and mental toughness. These attributes become increasingly important as we navigate our career and life after college. 

I also think the phrase "pursue one’s passion" is way overblown by media and self help gurus.

Don’t make me wrong — I’m an idealist in my heart. I have wanted to be a writer since I was third grade. My ideal job is to write, read, and teach full time. That’s why I have been diligently working on this blog because I really enjoyed it. But, I also have a full time job in high tech because I need to survive and support a family.

Instead of blindly pursuing one’s passion, I think Abraham Maslow’s Hierarchy of Needs provides a more balanced and pragmatic paradigm.

Do you know any never grow up, jobless, and confused young adult? Do you have any ideas to help them? I would love to hear from you.

Related posts

• You’re too sensitive!
• The anti dot com path to success: A different way of living and working
• Don’t get stuck
• The first time I cried at work

Excellent resources

• Quarterlife Crisis: The Unique Challenges of Life in Your Twenties
• Conquering Your Quarterlife Crisis: Advice from Twentysomethings Who Have Been There and Survived (Perigee Book)
• The Overachievers: The Secret Lives of Driven Kids

It’s "high profile" because

• it has two of the most famous venture capitalists on earth sitting on its board.
• it had received $100 million in venture funding.
• its senior management consists of super stars from major internet companies such as Google and Amazon, top-tier strategic consulting forms such as McKinsey & Company, prestigious universities such as Stanford and Berkeley, etc.
• It has been selected by major publications as "top 100 start-up super stars", "The next Google", "The 21 Century Top Digital Company", etc.

SOP’s goal is to make one product: it offers a "secret sauce" — its scientist have figured out a way to apply artificial intelligence technology to make any start-up become profitable instantly. It holds the secret of profitability.

But, SOP has one problem: it is not profitable itself. In fact, it doesn’t even have a product yet.

SOP had four rounds of funding. Its senior management team had changed three times. About one year ago, the company hired its 4th CEO. He had done a good job to turn around the company. Product development is on track. Initial beta test of the product had very positive results. SOP seems to be finally turning a corner.

SOP still has some cash left in the bank. But, the CEO wants to launch a very aggressive marketing and sales push. He wants to beef up his cash position so that he can take SOP to the finish line as soon as possible. His goal is to make a lot of money quickly.

To make the aggressive marketing and sales push, the CEO has decided to raise 5th round of funding. He’s already gotten verbal commitments from several venture capital firms.

But, he ran into a problem. A couple of years ago, when the company raised its 4th round of funding, to protect employee’s stock options, the management put in a "poison pill" — in the future, if the company wants to get more funding that will further dilute the employee options, the financing must be approved by employees that represent 70%+ of the total number of employee stocks.

The CEO’s challenge is to get the required votes from employees to approve the 5th round of financing.

The shrewd CEO worked with CFO and legal counsel to come up with a game plan. Instead of calling a company-wide meeting that include all employees, he identified a group of employees who are close to him. Most of them are managers or above. And they represented a little bit over 70% of the total employee stocks.

The CEO gathered these people in a small room. He told them that in order to approve the financing proposal, everyone in the room had to vote "yes". If the financing proposal didn’t get pass, then the proposal will be presented to the entire company to approve, which would significantly delay the financing process.

Pretty much everyone in the room voted "yes" — they knew that they had no choice. The company might go under if they didn’t vote "yes". But, they all felt pretty bad — they wonder why they had such a secret meeting. Isn’t every employee shareholder equal? Why were we invited to this meeting while some colleagues were not invited?

In my opinion, the CEO is not very ethical. All employees should be invited and given a chance to vote.

I’m not a legal professional, but I wonder if this is even legal — this is like the United States has a presidential election, but only certain people are allowed to vote initially.

This post is a fictional account, but it’s based on true stories. I’d like to hear your take on this story: is the CEO’s action ethical? Or even legal?

Related posts:

• Don’t get screwed! Stock option questions you should ask before you join a start-up
• IPO shouldn’t be the goal for a start-up
• Is starting a company in Silicon Valley stupid?
• If I can pick and choose any start-up to work for, I’ll pick … Part 1

Excellent resources:

• The Entrepreneur’s Guide to Business Law
• Entrepreneurial Finance: Finance and Business Strategies for the Serious Entrepreneur
• Raising Venture Capital for the Serious Entrepreneur

Jake was a member of the senior management team in his company. On the surface, he got along really well with the president. They worked together at another company before they both came to work for Jake’s current company.

Jake told me that his last day would be two weeks from yesterday. In the high tech industry, the "norm" is for employees to give at least two-week advance notice.

Jake emailed me this morning at 5AM. Today is his last day.

Yes, he is supposed to be in good terms with everyone in the company. He doesn’t have any performance issue. His team has been performing well. He is a member of the senior management team. He did the right thing by giving two-week notice. But, he was still asked to go immediately.

I’m NOT surprised. For most of us, unless you belong to an union, the employment contract you sign is at-will. Either employer or employee can terminate the contract at any time. The two-week advance notice is a common courtesy, but employers are NOT required to honor your courtesy and professionalism.

When you offer your resignation, you really don’t know how your employer will react. You need to protect yourself. You need to expect the worst.

So, before you offer your resignation, you should be ready to leave immediately.

You should clear out your office, save contact information, and clean up your computer.

You should be ready to leave the second you tell your boss that you’re leaving.

Related posts:

• Quit early, and quit fast
• Seizing the enemy without fighting is the most skillful
• The clear and present danger of internal transfer
• The dirty secrets of performance review

Excellent resources:

• Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them

It’s All Politics: Winning in a World Where Hard Work and Talent Aren’t Enough

Every Employee’s Guide to the Law

Fired, Laid Off or Forced Out: A Complete Guide to Severance, Benefits and Your Rights When You’re Starting Over

They share one thing in common: they have been laid off by their previous employers. But, instead of feeling bitter about the experience, they’re using it as a turning point to find something better and more fulfilling. To certain extent, the layoff is a wake-up call they have been subconsciously waiting for a long time. It’s time to make some changes, and pursue a career path that they truly have a passion for.

I totally respect and admire what they’re trying to do — although the job market is tough and they are without jobs, they still want to make sure they find the right jobs, not any job.

Quite a few of them have been focusing on making transitions to other functional area. For example, a system engineer wants to become a DBA, a PR professional wants to get into business development, and a enterprise sales rep wants to become a product manager.

They’re all very talented individuals. I have no doubt that if they’re given the opportunity, they’ll successfully make transitions to their new roles.

But, everyone of them, without an exception, has hit a wall in their job search process. They had phone interviews and even informal coffee chats with potential employers. In the end, the conversation boiled down to "we really enjoyed talking to you. We’d love to have you. But, at this point, we want to hire someone who has done similar things before."

This doesn’t surprise me at all. In this economy, employers are tightening their belts. They cannot afford to hire an unproven commodity. They want to hire experienced people who can hit the ground running, and start adding value to the company’s top line and bottom line immediately. 

We all have our ideals, and our vision for the perfect job and career. But, we have to face reality. It’s virtually impossible to look for a new job and make a career transition at the same time in this economy.

For folks who’re interested in making a career transition, the best time to think about it and prepare for the career switch is while you’re still employed. In fact, if your desired job function is available in your current company, that’s the best place for you to explore career transition.

I wouldn’t say it’s impossible, but it’s very hard to switch to a different job function while you desperately need a job to feed yourself and the family.

Throw away any romantic notion you might have about finding your passion and your dream job at the same time while you’re unemployed. Those are definitely worthy goals for you to pursue. But, do that after you get a steady paycheck. While you’re unemployed, your number one priority is to get a job. You can then figure out ways to pursue your passion and make career transitions. (The only exception is that you have the financial means to last for a long time without having a job. If you have that luxury, then feel free to pursue your own course of action. But, I think for most professionals, they need to get another job in three to six months, if not sooner.)

To get a job, the most important advice I can offer you is to leverage your existing strength, background, and experience. During interviews, your job is to show the hiring company that because of what you have done in the past, you’ll be able to immediately add a lot of value to the hiring company. You’ll be hired if you can convince the employer that the ROI of hiring you is tremendously positive.

Related posts:

• 10 Professional Development Actions that you can take to make you more competitive in today’s job market
• Are you interested in a lot of different things, but not sure what exactly you want to do about your career?
• From laid-off dot com worker to medical doctor

Excellent resources:

• Your Next Move: The Leader’s Guide to Successfully Navigating Major Career Transitions
• Escape from Corporate America: A Practical Guide to Creating the Career of Your Dreams
• Career Renegade: How to Make a Great Living Doing What You Love

His employer was a recently funded start-up when he joined the company as a contractor. He performed well, and was soon hired as a professional service consultant.

Jimmy had great customer facing skills. Customers loved his work. He won an excellent employee award two years after he joined the company. He was doing great.

On the 3rd year, Jimmy then married and started a family. He didn’t want to travel as much as he used to be. So, he talked to his manager, and made a transition to in house software development. He was still working on the same product that he was implementing at client sites. He now worked on adding new features as well as maintaining the software.

On the 4th year, there was a disruptive change in the market. The product Jimmy has been working on started losing market share. It was still used by a sizable number of customers, but its growth was starting to level down.

On the 5th and 6th year, the product was becoming obsolete. It was clear to everyone that the company would soon end-of-life the product.

Jimmy was the only person who was working on this product. He felt threatened a little bit. But, he was waiting for his green card. If he moved to another company, he would have to apply green card again.

Jimmy could try to move into a different role. But, he had been settling nicely into his existing role — he was the expert in the product. He had a lot going on at home — with two little kids, he had to spend a lot of energy on the home front. He enjoyed the familiar work that he was doing everyday — it afforded him flexibility to balance work and life.

On the 7th and 8th year, the company kept losing customers. It’s apparent to everyone that in 12 to 18 month, the product would no longer be supported.

At that time, there was plenty of rumors that the company would be acquired by a large company. The employees might finally see an exit event. Although it wouldn’t make Jimmy a millionaire, it would still mean a healthy amount of cash.

Jimmy wanted to wait until the exit event took place. His plan was to cash out, and then looked for another job.

On the 9th year, the economy took a dive. None of the acquisition rumors became reality. The company had to raise another round of funding. Employee stock options were further diluted.

The good news was that Jimmy finally got his green card.

But, his product was no longer offered. His job was eliminated. He was laid off. He was very disheartened by what had happened to him. He had a lot of fears about what would happen next. He hadn’t looked for a job for 9 years. A lot of the stuff he worked on were very specific to the particular company and product — in other words, they’re not very transferable.

Don’t let yourself get into similar situation.

If you work in high tech industry, you should be ready to switch job every few years. The industry changes too fast.

Don’t let yourself get too comfortable.

You need to continue to renew your knowledge and skills.

It is very risky to place all of your bet on a single employer.

Until an exit event actual happens, it’s just a rumor. Expect the unexpected when you plan your career moves.

(Disclaimer: This post is based on a true story, but details have been changed slightly to protect confidentiality.)

Related posts

• Job Hopping is good for you: Career Lessons from Lane Kiffin
• Don’t get screwed! Stock option questions you should ask before you join a start-up
• How to convince employers to hire you even though they don’t have job openings

Excellent resources

• Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them
• Career Warfare: 10 Rules for Building a Successful Personal Brand on the Business Battlefield
• The 5 Patterns of Extraordinary Careers: The Guide for Achieving Success and Satisfaction

Over the years, I have heard many answers.

• "We were high school sweethearts. We have known each other since we were thirteen years old."
• "We were in the same English class during our freshman year in college."
• "We had a common friend who set us up".
• "He was my TA in college."
• "We met at work".
• "eHarmony.com"
• "We were part of the same bible study group."
• "I was traveling in Argentina, and fell in love with this guy I met in a Cafe."
• "We both were part of a weekly hiking group."
• "We were partners in a Salsa dance class."
• "I was the sales rep. He was my customer. We ended up getting married."
• "We met at the Kaplan GMAT class."
• "We were both on the same coed softball team."
• "We were both studying in the quite room in the public library."
• "We were both volunteers at Habitat for Humanity."
• "We were both interns at Microsoft."
• "We met at the post office. I was short of $10 dollars. He came to the rescue."
• …

There are many ways for people to meet and fall in love. But, I know very few couples who met in bars or other type of "meat markets".

The most common theme is that people meet via shared activities — school, volunteer work, sports, dancing, work, etc.

In fact, there is a body of academic work on building personal and professional networks via shared activities.

But, I keep hearing complaints from single guys and gals about how hard it is for them to find dates. They go to bars, clubs and other "meat markets". I keep telling them that they’re going to the wrong place!

Finding a suitable significant another is one of the most important decisions in your life. Your life quality, career satisfaction, and financial security will have a lot to do with your choice of spouse. You’ll be much better off by finding someone via shared activities. Instead of going to bars and clubs, take a class you have a genuine interest in. Volunteer for a cause you care about. Join a sports league. Sign up for a dance class.

Do things with others, expand your horizon according to your interests, and you’ll meet a lot of truly interesting people.

Related posts:

• Who was the bartender I met at Montana?
• How my friend got a high-power finance job by walking his dog
• What’s the most effective way to network?

Excellent resources:

• Mars and Venus on a Date: A Guide for Navigating the 5 Stages of Dating to Create a Loving and Lasting Relationship
• Networking Like a Pro: Turning Contacts into Connections
• Your Next Move: The Leader’s Guide to Successfully Navigating Major Career Transitions

I asked him: "How are things going?"

He said: "The same old shit, the same old shit".

Have you had your own "same old" moment/day/week/month/year/decade? 

You get up at the same time every morning, tired, want to sleep in for another hour but you have to go to work.

You go through the same morning routine: eat a quick breakfast, fight through the same morning traffic, stop by Starbucks to grab a cup of coffee, check your blackberry while you stop at a red light, get to office, and start slaving away. 

You don’t like your bully boss. You’re tired of your back stabbing colleague. You don’t like your work environment. But, you keep doing the same thing at work. You attend meeting after meeting. You write email after email. You come in early in the morning so that you can talk to your colleagues in Europe. You work after dinner so that you can get an update from your colleagues in China.

You feel you don’t spend enough time with your family. You feel that you’re chained to your paycheck.

Days past. Months past. Years past. The same old stuff.

You suddenly wake up one day. What am I doing? Why am I wasting my time? Don’t I deserve better than this?

Don’t wait until you have a major life crisis to wake up.

Don’t repeat the same old stuff.

If you find yourself saying "the same old stuff" to others, you’re having a problem.

You need to have an identity outside of work.

You need to feel motivated, active, and stimulated everyday.

I challenge you to step out of your comfort zone and try new things:

• Take an Outward Bound Adult Renewal class such as Blue Ridge Mountains Backpacking and Rock Climbing.
• Pick up a magazine in a subject area that you never had any interest in the past. Read it cover to cover. 
• Start attending Toastmaster meetings and set a goal to become Able Toastmaster (ATM) in two years.
• Moonlighting for 10 hours each week at a job that you’re truly passionate about. You might earn no or very little money, but you’ll find the experience energizing.
• Start blogging consistently for 30 days to share your thoughts, feeling, and insights with your friends and the public. You’ll be surprised by how much fun blogging will bring to you. 
• Devote 90 days to go through the P90X workout program.
• Take a dream Vocation Vacation to learn to be an actor, an animation TV producer, a baker, a brew master, a Broadway director, etc.
• Go to live and work abroad.
• Take a Tango class.
• Learn to play an instrument.
• Take classes to become a paramedic.

The list goes on and on. But, the key message is that instead of repeating the same old stuff, it’s up to you to inject energy, excitement, and fulfillment into your own life and career.

Friends: Life is too short. Live your life fully.

Over the past decade, I have become much better in figuring out what I want. A critical lesson I learned is the importance of defining my Non-Negotiables for personal and professional situations.

Let me share with you a story.

In 2002, right after I was laid off from a start-up, I decided to apply business school. It wasn’t the best time to apply business school as I was unemployed, and the number of applications were shooting through the roof.

However, I also knew that I needed to have clear reasons to attend business schools. Otherwise, I would be wasting a lot of money and getting very little in return. In other words, I needed to know what I wanted to get out of business school.

After thinking through my situation, I defined a few Non-Negotiables — these were things that I would absolutely not compromise.

• I would only attend a business school outside of the Silicon Valley. Although the bay area has two of the best MBA programs, I knew that I needed to get out of my comfort zone, and study and live in a different geographical area.
• I had worked in enterprise software for several years. I didn’t feel fulfilled. I wanted to work on product and services to make people’s lives better. I wanted to work on something that my family and friends would use. So, post MBA school, I wanted to work in consumer product or service. I would not return to the lucrative enterprise software space.
• I was a technical person my whole life. The key area of development for me was soft skills. I wanted to attend a school that had a track record for teaching soft skills.
• The two-year in business school would be mostly likely my last chance to enroll in school for an extended period of time. I wanted to focus on learning and enjoy the student life style. I didn’t want to have any financial concerns.

It’s debatable whether all of my Non-Negotiables were right — everyone’s situation is different. For me, at that point of time, they were the right ones.

I stuck to my list of Non-Negotiables.

Unlike most applicants who applied several schools, I only applied two schools because only those two schools fit all of my criteria. I was extremely focused on these two applications because they were my only chances. I ended up getting into both schools with average academic record and professional experience.

I had a hard time to find an internship and a full-time job. During the recession, companies wanted to hire people with experience. It was incredibly difficult for me to get a job in a consumer product or service company. I was among a small group of students who didn’t have a job at time of graduation. At that time, several enterprise software companies were very interested in me. But, I decided not to interview with any of them. It was not easy — when most of my classmates were travelling around to enjoy their time before starting new jobs, I was still working my tail off to look for a job. I remembered one MBA friend said to me: "I cannot believe that you’re still looking for a job". He was about to start his job at an investment bank.

Again, I stuck to my Non-Negotiables. Three months after graduation, I had three job offers in my hands. All of them were in consumer internet space. This experience gave me tremendous amount of confidence — it doesn’t matter how grim the situation is, I know that I can stick to my guns and prevail.

To make sure that I didn’t need to worry about money matters during business school, I took out maximum amount of student loans. I had some savings and could have borrowed less. But, I wanted to fully enjoy my two years in school without worrying about finances. During these two years, I lived in Europe for one month. I traveled to nine national parks in eleven states. I skied in Whistler. I drove around Florida. I took short trips to LA, Seattle, and New York City. I never regret the money I spent on those trips. I ended up with a sizable amount of loan to pay back. But, I don’t mind at all. For the next 15 to 20 years, with kids and family, I will not have the time and luxury to travel to these many places.

To stick to my Non-Negotiables, I have to make trade offs. Instead of applying more schools to give me better chance to get into a school, I had to be very focused and work extra hard to get into the two schools I applied. To get my desired job in consumer product, I had to keep fighting until the end to get a job offer. To do all of the fun travels, I had to borrow more money. But, having the set of Non-Negotiables gave me clarity. They guided my decisions.

You can have many different type of Non-Negotiables. Some are personal. Some are professionals. Some are long term. Some are short term.

I want to challenge you to think about your Non-Negotiables:

• What are your Non-Negotiables when you’re looking for your next job?
• What are your Non-Negotiables when you’re managing others?
• What are your Non-Negotiables when you’re teaching your kids?
• What are your Non-Negotiables when you’re looking for someone to marry?
• What are your Non-Negotiables when you’re dealing with unethical situations at work?
• What are you  Non-Negotiables when you’re buying a car?

Different situation calls for different set of Non-Negotiables. I encourage you to go through this process. It’ll give more clarity and determination to carry through.

Related posts

• Do you have an identity outside of work?
• The first time I cried at work
• Don’t get stuck
• Preview: How to Get Into Top MBA Program After Layoff

Excellent resources

• Smart Choices: A Practical Guide to Making Better Decisions
• Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life
• Co-Opetition : A Revolution Mindset That Combines Competition and Cooperation : The Game Theory Strategy That’s Changing the Game of Business