There’s a peculiar phenomenon in entrepreneurship that nobody warns you about when you’re sketching out your ambitious business plan. If you decide to build a company that commands high EBITDA multiples—think SaaS platforms, specialized manufacturing, healthcare services, or branded consumer products—you’re signing up for what I call the skills-wealth inversion. You’ll become extraordinarily capable while watching your bank account dwindle to alarming levels.This isn’t a bug in the system. It’s the fundamental feature of attempting to build something genuinely valuable.
High multiple businesses earn their valuations for good reason. They possess some combination of recurring revenue, defensible moats, operational leverage, and brand equity that makes investors willing to pay eight, ten, or even twenty times EBITDA when it comes time to exit. But here’s what the spreadsheets and pitch decks don’t tell you: building these characteristics takes an absurdly long time, and during that entire period, you’re essentially running an expensive graduate program where you pay tuition instead of receiving a salary.
Consider what you’re actually attempting when you start a business destined for high multiples. You’re not opening a cash-flowing service business where you can trade hours for dollars from month one. You’re building systems, developing proprietary processes, creating intellectual property, establishing brand recognition, and constructing the kind of operational infrastructure that will eventually run semi-autonomously. Every single one of these activities costs money while generating nothing immediately tangible to sell.The skill acquisition happens faster than you’d think possible. Within your first year, you’ll learn financial modeling because you have to know if you’ll make payroll in three months. You’ll become conversant in unit economics because every dollar matters when you’re operating on fumes. You’ll develop product intuition from countless customer conversations. You’ll understand supply chains, hiring psychology, legal structures, and regulatory compliance because there’s nobody else to figure these things out. The learning curve isn’t steep—it’s vertical.But learning doesn’t pay rent. The mortgage company doesn’t accept “profound insights into customer acquisition costs” as payment. Your expanding skill set coincides almost perfectly with your contracting financial cushion.
This creates a strange cognitive dissonance. You’re simultaneously becoming more valuable in the marketplace while becoming personally poorer. If you quit tomorrow and applied for jobs, you’d be qualified for positions that pay multiples of what you earned before starting your venture. Yet you can’t quit because you’re the only person crazy enough to believe in this thing you’re building, and besides, you’ve invested too much to walk away now.
The cash flow reality of high-multiple businesses is brutal in a way that surprises even experienced entrepreneurs. These businesses require upfront investment in areas that don’t immediately generate revenue. You’re building a platform before you have users. You’re establishing processes before you have volume. You’re creating brand assets before you have distribution. You’re developing intellectual property before you have customers who understand its value.
Meanwhile, your low-multiple competitors are eating well. The guy who started a landscaping company the same month you launched your vertical SaaS platform is probably clearing six figures by now. He trades time for money, keeps overhead low, and goes home at the end of each day with tangible proof that work occurred. You’re staring at GitHub commits and Figma files wondering if anyone will ever pay for what you’re building.
The timeline compounds the difficulty. High-multiple businesses typically take three to seven years to reach meaningful scale. That’s three to seven years of below-market compensation, deferred gratification, and explaining to family members why you left a stable job to be perpetually stressed about cash flow. It’s three to seven years of seeing friends take vacations you can’t afford and buy homes you can’t qualify for because your income statement looks like a disaster.What makes this particularly challenging is that you can’t half-commit to a high-multiple business. These companies have a minimum viable scale below which they simply don’t work. You can’t build a credible SaaS platform with weekend hours. You can’t establish a national brand while maintaining your day job. You can’t create proprietary manufacturing processes in your spare time. The vision demands full commitment, which means full financial exposure.
The psychological toll of this paradox shouldn’t be underestimated. You’re getting smarter, more capable, and more valuable while simultaneously feeling more vulnerable and financially precarious. Some weeks you’ll learn something about customer psychology or operational efficiency that would have taken years to understand in a corporate environment. Those same weeks, you’ll transfer your last personal savings into the business account to cover payroll.
Yet here’s the thing that keeps founders going through this contradiction: the skills you’re developing aren’t just making you a better entrepreneur. They’re building the specific capabilities needed to execute on your vision. Every financial model you create teaches you how to think about your business’s economics. Every failed marketing experiment refines your understanding of your customers. Every operational process you build becomes part of the infrastructure that will eventually generate the cash flows justifying those high multiples.
The broke period isn’t incidental to building a high-multiple business—it’s instrumental. You’re using financial pressure as a forcing function for learning. When every decision matters because resources are scarce, you develop judgment faster. When you can’t afford to outsource problems, you develop versatility. When you’re personally exposed to the downside, you develop risk assessment capabilities that no MBA program can teach.
This is why so many successful founders of high-multiple businesses talk about their early years with a mixture of nostalgia and trauma. They recognize that the period of maximum financial stress coincided with maximum personal growth. They became the leaders capable of running valuable companies precisely because they survived the crucible of building them while broke.
The vision you’re seeing through isn’t just a product or service. It’s a version of yourself that didn’t exist when you started. Someone who can raise capital, recruit talent, navigate complex regulations, build culture, make strategic pivots, and maintain conviction through uncertainty. These capabilities emerge from necessity, from being personally responsible for turning an abstraction into a functioning business while your bank balance approaches zero.
Most people will never understand why you’re doing this. They’ll see the financial sacrifice without understanding the asymmetric payoff you’re building toward. They’ll wonder why you don’t just get a normal job, as if trading your twenties or thirties for someone else’s vision is somehow more rational than betting on your own.
But you’ll know something they don’t. You’ll know that the skills you’re gaining compound in value. You’ll know that the infrastructure you’re building has the potential to generate cash flows that dramatically exceed what any salary could provide. You’ll know that high-multiple businesses exist precisely because they’re difficult to build, and that difficulty is what creates the moat that justifies the valuation.
The day will come—if you persist, if you keep learning, if you see through the vision—when the cash flows start matching the multiple. When customers start arriving faster than you can service them. When the systems you built start operating with leverage. When the brand you established starts working for you instead of you working for it. When investors start calling you instead of the reverse.On that day, the skills and the wealth will finally align. You’ll be both capable and compensated. But you’ll also know that the capabilities came first, forged during those years when your skill set was rapidly expanding while your net worth was steadily declining.
That’s the bargain you make when you attempt to build a high-multiple business. You trade present comfort for future optionality, current cash for future equity, immediate stability for eventual freedom. You become formidable while becoming broke, and you stay broke until the vision you’re building becomes undeniable to others.It’s not a path for everyone. But for those who choose it, the consolation during the difficult years is this: every day you survive is a day you’re becoming more capable of succeeding. The skills you’re gaining aren’t just useful for this venture. They’re portable, permanent, and profound. Whether this particular business works or not, you’re building a version of yourself that can build valuable things
.And that capability, once developed, never goes away.
