I Chose Fun Over Profit…. And I Regret It
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this Moneywise podcast episode, Harry Morton interviews Jordan Schlepp, a serial entrepreneur and former CEO who left investment banking to pursue the startup world through an innovative venture-building model called Rainmaking. (00:48) Jordan shares his journey from high-paying investment banking to creating a unique founder collective where multiple entrepreneurs shared equity across all their ventures, effectively creating an insurance model for startup risk. While financially successful with $4 million liquid and additional non-liquid assets, Jordan grapples with whether optimizing for enjoyment and curiosity over pure financial gain was the right choice. (24:04) The episode explores the trade-offs between following passion projects versus focusing on wealth accumulation, and Jordan's recent pivot toward private equity-style business acquisitions that offer better risk-adjusted returns.
Speakers
Jordan Schlepp
Jordan Schlepp is a serial entrepreneur and startup educator who began his career in investment banking before transitioning to the entrepreneurial world in 2008. He co-founded and spent years developing Rainmaking, an innovative venture-building collective where multiple founders shared equity across all portfolio companies. Jordan has taught startup courses globally and recently served as CEO of Matrix, a beauty brand doing $10 million in revenue, where he's focused on applying private equity principles to drive growth and profitability.
Harry Morton
Harry Morton is the host of Moneywise podcast and founder of Lower Street, a podcast production company. He's a member of Hampton, a private founder community for high net worth entrepreneurs, and focuses on exploring the real financial and emotional challenges that successful founders face beyond the typical startup success stories.
Key Takeaways
Focus Beats Diversification in Venture Building
Jordan's experience with Rainmaking revealed a crucial lesson about investment strategy. While their model of letting each founder pursue their passions across different industries was "fricking fun," it came at a significant financial cost. (08:30) The lack of a clear investment thesis and focus area meant they spread resources too thin across unrelated ventures. Jordan admits they "would have made way more money had we been focused and had a clear investment thesis." This applies beyond venture building - whether you're an investor, entrepreneur, or professional, developing deep expertise in a specific area typically generates better returns than spreading efforts across multiple unrelated pursuits.
Service Businesses Are Undervalued Wealth Creators
One of Jordan's biggest regrets was underestimating the wealth-creation potential of service businesses. (31:16) At Rainmaking, they had a successful agency that was scaling well, but dismissed it as "a non-scalable business" and "a dumb business model" because it wasn't following the VC playbook. Instead of reinvesting profits back into the service business, they funneled money into higher-risk venture investments. Jordan now realizes that "if we just focused on that service business and reinvested in it, we would have made way more money." Many entrepreneurs overlook profitable service businesses in favor of venture-backed startups, but service businesses can generate substantial wealth with lower risk.
Private Equity Offers Better Risk-Adjusted Returns
Jordan's perspective shifted dramatically after a conversation with an HG Capital fund manager who revealed that none of their 50 portfolio companies fail. (14:57) This contrasted sharply with the startup world where "75% of startups basically don't make it past two years." The private equity approach of buying profitable businesses with established revenue streams offers much better odds than the startup lottery. Jordan realized he was "the idiot at the craps table throwing dice" while private equity firms were "the house." For professionals seeking wealth creation, consider focusing on acquiring and improving existing profitable businesses rather than starting from scratch.
Shared Equity Models Create Hidden Tensions
While Rainmaking's shared equity model provided risk mitigation, it created significant interpersonal challenges that many entrepreneurs don't anticipate. (08:51) Jordan describes the inherent tension: "one of you guys is building a business where you're working a lot harder... and there's this piece where you're like, if I'm successful, I'm paying for you." Even when everyone initially agrees to the arrangement, resentment builds when effort levels and business outcomes differ significantly. The model also diluted wins - exits that would be meaningful for individual founders became less impactful when split among multiple partners. Before entering shared ventures, carefully consider how different work ethics and success levels might affect relationships.
Lifestyle Inflation Changes Your Relationship with Risk
Jordan's risk tolerance and financial priorities shifted dramatically after marriage and having children. (26:58) Before family responsibilities, he lived an "amazing quality of life" with lower net worth, focusing on experiences like paragliding and travel without worrying about restaurant bills. After buying a house and having a child, his monthly burn increased to £15,000, fundamentally changing his perspective on wealth accumulation. He now focuses on building "a treasure chest" for family security rather than just pursuing interesting projects. This evolution is crucial for entrepreneurs to understand - your risk tolerance and financial needs will likely change significantly as your life circumstances evolve, so build flexibility into your long-term strategy.
Statistics & Facts
- Jordan and his partners at Rainmaking wasted approximately £10 million over the years through unfocused investments and poor strategic decisions. (10:38) This included losing roughly £1 million every six months in their Middle East operations alone, chasing deals that never materialized profitably.
- 75% of startups don't make it past two years, giving entrepreneurs worse odds than putting money on red at a casino roulette wheel. (16:17) This statistic was what made Jordan realize he was playing a statistically losing game compared to private equity.
- The Rainmaking investment portfolio has a book value of approximately £17 million, with Jordan's 15% stake worth around £2.4 million on paper. (19:35) However, Jordan previously valued this at zero until a recent £500,000 exit provided some validation of the portfolio's potential.
