Betting everything on a single investment and building 12 products in 12 months: A peek at an indie hacker's finances

Benjamin Katz put everything he had into stock options at a startup while he worked there. It was risky, but the bet paid off. And it enabled him to quit a job that was taking a heavy toll on his mental health. Now, he's living on his own terms.

For him, that means building 12 startups in 12 months. It's still early days, but I caught up with Ben to understand how he thinks about — and invests — money. 👇

3 Core beliefs

Let's start with his three core beliefs about money:

1. Don’t lose money.
2. Don’t buy things that depreciate in value.
3. Be greedy when others are fearful (especially if you know something that others don’t).

Regarding #1... enough said.

An example might be helpful for #2. Ben doesn't buy much in the way of "things". But a few years back, he did make one exception. He's a "mechanical watch nerd" and he spent $5,900 on a luxury watch. It's the single most expensive purchase of a "thing" in his life.

But he was smart about it. He did his research to find out which watches had the best chance of appreciating. And because of that, his splurge became a sound investment — it went up 50% in value after he bought it.

As far as #3, well that belief has profoundly impacted his nascent indie hacking journey, so let's get into that.

Be greedy when others are fearful

A few years ago, Ben worked at a startup. He was given the opportunity to exercise stock options, but everyone told him to put his money into a house instead — startups were too risky.

But he knew something they didn't. He was working for the startup. He saw the sales exploding, leadership making all the right decisions, high morale, etc. And he had something else going for him too...

💰 "I remember being 13 years old and sitting down with my dad to learn about P/E ratios, how to value companies, and other concepts related to the stock market - probably an unusual activity for a 13-year-old but it helped me later in life." —Ben

He knew he might not get another chance like this, so he drained his entire bank account and exercised 100% of his stock options.

A few years later, he made a huge return when the company unexpectedly announced its IPO.

💰 "Don’t be afraid to go all-in on something (a business, an investment, or anything else that you think has a chance to generate a huge return) if you have the chance to do so, especially if you’re young, and have time to rebuild your portfolio if things don’t turn out the way you hoped them to." —Ben

12 businesses in 12 months

A few months ago Ben quit that job. His mental health was suffering — he was struggling to get out of bed most days — and after a particularly long week of meetings, he woke up and realized he didn't want (or need) to do it anymore.

💰 "I’m a creative person and I find that building a business solo is the best form of creative freedom I’ve ever had." —Ben

He already had several years of runway saved up. That's more than most people manage to save before taking the leap, but he knew going into this that it could take years to find product-market fit and he wanted to be prepared. He's seen too many people ask for their old jobs back with their tails between their legs, or take contract work that distracts them from running their businesses.

Since he didn't have a side-hustle when he quit, he's doing a 12x12 to see what sticks. He just IP Sync. Before that, it was Simple OTP, Dynamic Duo, and Print Swarm.

The revenue so far? $5/mo

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Ben's revenue and income

Luckily, he's got other forms of income, and lots of savings.

• Revenue: $5/mo (from Dynamic Duo)
• Bond payments (fixed): $1,535/mo
• Stock dividends (average): $1,277/mo
• Bank interest payments: $317/mo
• Founder pay: Anything that comes in
• Personal account: $75,000
• Business account: $250

To cover his expenses, he withdraws from his investment portfolio once per year. He uses the 4% rule when withdrawing money from his stock portfolio, though he tries to spend even more conservatively than that.

As for that $75k in his savings, the startup he was at paid him $12k/mo in base salary after taxes, plus 401k contributions. From that $12k, he saved $6k or more each month, so it didn't take long.

Ben's business and personal expenses

His business expenses are basically zero:

• Total: $12/mo
• Game server: $100/yr
• Domain renewal fees): $39.95/yr

He's on the AWS free tier and he has $5k in AWS credits for the next 2 years as backup, thanks to a perk with his business bank account at Mercury.

And he plans to reduce his costs even more by downgrading the game server so that he pays about $50/year. That'll make the Dynamic Duo ($5/mo) profitable.

Here are his personal expenses:

• Total: $4,750/mo
• Rent: $3,200/mo
• Utilities: $150/mo
• Food and entertainment: $1,400/mo

Doing whatever it takes to extend runway

💰 "I’ll do whatever it takes to extend my time building businesses, including leaving the US if necessary." —Ben

The crazy rent I mentioned above is on the low end of what's available for a 1 bedroom where he currently lives in New York City. So he's considering leaving.

In order to extend his runway, he applied for a residence visa in Thailand where he could lower his living expenses by roughly 70%. But as of yesterday, Thailand changed its income tax rules, so it may not work out after all.

Build products that power your products

He also invested time into building an authentication product.

The way he sees it, even if no one else becomes a customer, all of his own business ideas will need authentication flows. And this way, he can save thousands of dollars per month instead of giving it to a third party. It only took him a month to build.

A healthy distaste for authority — and VCs

Though Ben would do just about whatever it takes, he won't take funding.

He has a healthy distaste for authority — and VC money.

💰 "I’m the happiest when I get to have complete creative freedom and not have to answer to anyone except the customers of my product." —Ben

He admits that not all VCs are bad, but he likes his freedom and software businesses are cheap to operate, so why take money?

Pay off your credit cards

He doesn't have any debt and pays off his credit cards in full every month. He also pays them off early if he notices that the balance is over a couple of thousand dollars in total.

Keeping them near a zero balance and paying them off monthly decreases credit utilization and boosts his credit score, which gives him more leeway if he ever chooses to get a loan.

Set up a holding company

Ben keeps business and personal funds separate for legal liability reasons, as well as to make accounting easier.

He formed a holding company as an LLC which is ideal for him because he's experimenting with several business ideas and LLC paperwork is costly (in more than money). When a new product is expected to make money in the near future, he sets up a DBA (doing business as) under the LLC.

It's the simplest setup and maintenance he knows of while providing legal protection. And it allows him to file one set of tax forms each year.

The only downside is that all of his businesses are at risk if one of them gets sued. But at this stage, it's not a big risk.

Stocks, bonds, crypto, startups... but not real estate

Ben mostly invests in stocks and bonds.

For stocks, he invests primarily in Vanguard total market ETFs. He also has a few concentrated positions, like the startup he used to work at.

For bonds, he invests in US Government Bonds and small business loans. It's fixed, passive income with tax benefits.

The small business bonds (which he gets through SMBX) are high risk. But they're paying him 30+% (mostly principal, not interest). His US Government bonds are very safe, and they're paying ~5% in interest every month.

Speaking of risk, he contributes 10% of his net worth to “risky” investments: 5% of his portfolio in crypto (even split of BTC, ETH, LTC) and 5% is in angel investments through tools like AngelList, Wefunder, SeedInvest, StartEngine, and Republic.

💰 "When trying to build wealth, diversification beyond a certain point is overrated. I’d rather own 20 great stocks than 2,000 mediocre ones." —Ben

Overall, he says he strongly prefers passive investments. Real estate is too much "tenants, termites, and toilets". Stocks do better on average anyway in terms of appreciation and some bonds have similar tax benefits to real estate.

Investments that pay non-monetary dividends

Ben also invests in travel and motorcycling in new countries.

💰 "I find that the best way to get startup ideas is to travel and experience new things in general." —Ben

And he invests in his fitness.

💰 "I find that when I’m stuck on a particularly hard problem or there’s something I can’t figure out, picking up a heavy thing and putting it back down a few times does the trick." —Ben

He says these pay dividends in terms of both mental and physical health.

Advice for beginner investors

He suggests long-term thinking for beginner investors. And he says the most important thing you can do is to get a job or business that brings in a lot of income. You need money in order to invest.

💰 "Once you have money to invest: Concentration and taking calculated risks, always with some degree of speculation, is one way to build wealth quickly. However, I would suggest concentration only in scenarios where you have some kind of advantage and to exercise caution as these are scenarios where you can easily lose your entire investment." —Ben

Tools

Every month, Ben looks at his personal expenses to see whether his spending is on track with his burn rate for the year. He uses the Empower/Personal Capital app for that, and for monitoring his net worth.

He uses Fidelity for stock trading and Coinbase for his crypto investments.

As a rule, he tries to use well-known tools that have been around for 10+ years. It's a security thing. Even though apps like Robinhood are easier to use and cheaper, the significant outages and controversies don't make them worthwhile in his view.

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You can find Ben building in public on Twitter and Twitch. He also writes about it on beehiiv. Or check out his two latest companies: IP Sync and Simple OTP

Please note that the above are opinions. It is meant for information purposes only. It is not intended to be financial advice.

And if you'd like to be featured as a guest in a future interview for this series, let me know in the comments!