The Dark Side of Striking it Rich
The gold rush of the past decade has been technology. Millionaires have been rolling off the production line, and the success stories have come thick and fast. App ideas were scribbled on napkins and sold for staggering sums within a few years. Surely I’m not the only one who, at some point, has thought: I just have to make something?
Yes, even Wordle – the popular game that kept us all just about sane through covid – sold for at least a million dollars. I still play it, that simple, brilliant break from everyday life.
BBC News
Then there’s the other side: the founders who pour blood, sweat and tears into their company. They live on noodles, yet they still get stuck in the valley of death; the point where your startup isn’t growing fast enough to attract fresh money from investors. These are called zombie startups – a term used for businesses that are slowly but surely fading away. The companies where the founder can no longer justify the time it takes to keep building.
The tech boom has been brutal. For everyone who has cashed in, thousands have gone bust. But sudden wealth has a flip side too. The emptiness that sets in when everything you’ve worked for actually works out. When the money is in the bank, and all you have to do for the rest of your life is: well, live?
Sudden Wealth Syndrome
That emptiness has its own name: Sudden Wealth Syndrome. According to psychologists, it needs to be taken very seriously. Because something happens psychologically when mega-wealth hits.
Several newly rich founders talk about the sudden emptiness that hits the morning after. Others struggle with their conscience when they realise that what they built maybe wasn’t all that good for society. A third group gets imposter syndrome, and feels an urge to prove their success wasn’t just luck.
There are even books on the subject. Exit Strategy, by Sherry and Rob Walling, is a self-help book on how to sell your business without being left with that feeling of emptiness. There’s also a podcast, Exit Paradox, that aims to help founders find meaning again after selling their life’s work.
When we humans get exactly what we want, we simply don’t know what to do with ourselves.
Multimillionaire overnight
Last year I read Careless People, about life on the inside at Facebook.
One passage in particular has stuck with me, where the author Sarah Wynn-Williams writes about Facebook going public. All at once, dozens of employees had millions in the bank through employee shares. It threw the whole organisation off balance. A middle manager might have made $3 million from the IPO, while someone in their team – who maybe started two years earlier – was suddenly sitting on five million. Then they quit, one by one, and found something else to do.
This still happens. I know people working at fast-growing, global tech companies today. In some cases, more than twenty per cent of the staff will become dollar millionaires the day the company goes public.
The prime example is Anthropic, the company behind the language model Claude: the seven who founded it are expected to become dollar billionaires the day it goes public. But even more interesting is that around 50 employees will become centimillionaires – meaning they’ll get 100 million dollars or more. On top of that, another 1,200 employees will receive over 10 million dollars.
The biggest crypto heist of all time
One party that probably won’t get much sympathy if it comes down with Sudden Wealth Syndrome is North Korea.
On 29 October, six billion dollars in cryptocurrency was stolen from the world’s largest crypto platform, Binance. On Halloween, of all days, the FBI revealed that North Korea was behind it. They’ve given the cyber heist the name “TraderTraitor”. One of my favourite podcasts at the moment is The Story, from the British newspaper The Times. This episode is well worth a listen – they do a great job of explaining how on earth North Korea, a country without internet access, has managed to train up cybercriminals.
In the episode, The Times’ Asia correspondent Richard Lloyd Parry explains that in recent years the North Koreans have started stealing money through hacking and data breaches. Where they used to make and sell methamphetamine to fund the state, the communist regime has now gone all-in on crypto theft.
According to Ciaran Martin, who set up the UK’s National Cyber Security Centre, it’s quite simply because crypto assets are easier to steal than breaking into traditional banks. The digital break-in at Binance is the world’s biggest crypto theft. TraderTraitor needed just twenty minutes to funnel the billions to themselves.
If you’re thinking of putting your money into crypto, it might be worth thinking twice. According to the Washington Post, North Korea has stolen almost $13 billion worth of crypto since 2017. By comparison, the country’s entire gross domestic product is estimated at 26 billion dollars. Crypto theft has become one of the very engines of how North Korea funds its state.
I’ve never invested in crypto myself, but like everyone else, I regret not putting a few quid into Bitcoin in 2012.
Actually, I think I'm fine – I’d only have ended up with Sudden Wealth Syndrome.