Pre-Zillow Real Estate Loss

Michael Sonnenfeldt shares a story about losing 25% of his net worth on a failed venture after his first successful exit.

"After I sold this amazing project when I was 30, I started a business in real estate information - this was before the internet. It was pretty much what Zillow is today, where you can look up any house and get a price on it. We created a business that was a precursor to Zillow before there was an internet.

I probably risked around 25% of my net worth on it. This taught me one of the biggest learnings: when you sell a business, many people think they're great investors because when they own a business, if they make an investment they have to talk about it at cocktail parties. But if they lose money on an investment, it gets swept under the carpet because the business itself is profitable and covers up those losses.

Many successful entrepreneurs don't realize how poorly they are as investors because they've never been battle tested without the benefit of the company providing cover if you make a mistake. One of the biggest mistakes people who sell businesses make is assuming they can do it again and again, but only a portion of people who've been successful once are going to be successful twice."