If a would-be founder doesn't want to start a company because of their salary, then it's probably for the better. An early-stage startup isn't a vehicle to funnel VC money into your account at the rate that multi-trillion dollar companies give it out.
Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
21–30 of 75 posts
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#22Earlier quoted context omitted.
> I may be mistaken, but I've never heard of a VC dictating salaries. We don't exactly (Boards are a thing) but we do give recommendations of decent salary ranges, but then again, serious founders are not going to ask to get paid a Director at Google's salary when they're the CEO of a 5-6 person startup.
Get paid 995_850 for not doing much, whereas startups are much harder and are a lot more work. Somewhere the inventives are misaligned for sure.
No ones asking you to raise with us. You can be a PM or EM at a company and have an equal impact.
Also being a Director at a company is a hellish role. I remember my Director of Eng at a startup that hired me as a SWE eons ago was working almost 60-70 hour weeks. They were both technical minded AND business minded
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#23Founders can make a "competitive" salary, if they have existing experience for the actual job of being a founder (i.e., previous executive leadership experience).
For many, being a founder is not just "taking a risk on an unproven idea" it's also a career change from being a solo IC or technical leader to being an executive, with very, very different requirements for success, so the risk here is compounded.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#24I think you may be wrong on 3, I think more founders want to stay, and investors want a fast exit for big bucks.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#25Earlier quoted context omitted.
> I may be mistaken, but I've never heard of a VC dictating salaries. We don't exactly (Boards are a thing) but we do give recommendations of decent salary ranges, but then again, serious founders are not going to ask to get paid a Director at Google's salary when they're the CEO of a 5-6 person startup.
Get paid 995_850 for not doing much, whereas startups are much harder and are a lot more work. Somewhere the inventives are misaligned for sure.
You gotta do a lot to get a director gig at Google.
You might not think it's all useful especially if you're not into the people/politics side (I would agree, personally), but it's not like you can go sleepwalk your way into that job.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#26I joined a startup as the first employee. One year and €1M in VC spend later, and they were in a cashflow problem.
You can definitely give yourself a too high salary as founder.
I’ve learned that I’d make that money stretch a lot longer.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#27It’s a test to see if the founder values their equity more or less than the salary gap. If not even the founder values equity more than the gap, then they should close down and go get jobs.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#28Founders usually decide their salary, not VCs - if you are raising a seed and decide to use your runway to pay yourself a competitive salary then that's on you. How you decide to spend your seed money is up to you (barring fraud). Same for early employees, they negotiate with the founder, not VCs. Founders are the type of people who even if they were paid more, would plow that money back into the business - it doesn'…
Technically, after your first priced round, you'll have a board; you probably control it, but perhaps not after your second round. The board will approve a headcount plan, with implied costs. Realistically the management team (the operators, not the investors) do control most of this. The subtext of the question though isn't why operators don't increase comp; it's why investors don't kick in enough to let startups co…
I think the comparison to FAANG is unfair. Most operators, after a priced round, AFAIK, are paid fairly, sans FAANG. The idea that any startup should have similar comps to companies that have been growing 50%+ year/year for decades with money shooting out of every orifice isn't realistic. Most startups don't compete with comp packages from FAANG for the same reason that Target doesn't offer competing packages - they aren't making that much money. An exception, OpenAI, which is completely flush with money.
More succinctly, FAANG salaries aren't market rate salaries - they are above market. I find operators are paid in comparison to similar sized companies, especially companies that appear "mature" after their 2nd or 3rd priced round. It's the same reason the quants at Chase don't make as much as the quants at RenTech, doesn't mean the Chase quants are being paid under market.
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#29To play devil's advocate - since we're talking about "pay yourself less than Google" not "pay yourself nothing" - what would happen if someone was throwing tons of money around and telling founders (and early employees, while we're at it, who also take less than Google et al) to pay themselves several more hundreds of thousands of dollars a year? They'd attract a lot of people to fund, for sure. You'd lose a bit of a…
There could be some ways around that. They could pay these would be founders in IOUs which can be cashed in for a generous amount of money once some condition is met, such as the company becoming successful or going public. :^)
Re: Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?
#30You don't understand.
A lot of the time, founder CEOs decide their own salary, as well as that of their employees. Why would a founding CEO want to shorten their runway by paying MAANG salaries to themselves an others? It decreases their likelihood of success by shortening runway and burn. As soon as the funding that VCs give founders is wired to the bank, the founders are playing a zero-sum game with every dollar. Their job is to decide the best allocation of capital.
A startup, by definition, is a team in search of a business model. They're not profitable or self-sustaining. If you're Google or Meta, you have at least a chance of saying "for every dollar I pay this engineer working on ads, I get this many dollars back." And sometimes that return/salary ratio is very large, so it makes sense to pay them a ton. That reasoning does not apply to startups. That is, you earn your high salary by contributing to a profit-making product.
When your product or profit do not exist, you get compensated in options so that your incentives align with those of the business as a whole.
VCs invest progressively larger sums as an idea is proved out and risk is eliminated. I don't see any other world that makes sense. Most overfunded startups die before they ever find product market fit because they hire too many people, have a hard time pivoting, and lose their hunger.
Given the choice between hunger and complacency, I'd say founders with hunger are probably more likely to succeed that complacent ones. Earning a MAANG salary makes you complacent, all other things being equal.