Startup Economics 101, or, How Long Until We’re Dead?
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Re: Startup Economics 101, or, How Long Until We’re Dead?
#2nice post, unfortunately SF payroll tax is 1.5% over $150,000 in payroll, not $250k in payroll as mentioned in your article :( It's a racket and is one of the reasons Twitter and Zynga are threatening to leave SF if the city doesn't give them a break on the tax. But it hurts the little guys more. If you have 4 employees making $40k each you have to pay 1.5% of 160k, which is $2400 (that amounts to almost 2 months of office rent or 75% of one employees monthly salary).
Re: Startup Economics 101, or, How Long Until We’re Dead?
#3nice post, unfortunately SF payroll tax is 1.5% over $150,000 in payroll, not $250k in payroll as mentioned in your article :( It's a racket and is one of the reasons Twitter and Zynga are threatening to leave SF if the city doesn't give them a break on the tax. But it hurts the little guys more. If you have 4 employees making $40k each you have to pay 1.5% of 160k, which is $2400 (that amounts to almost 2 months of…
Personally, I'd be willing to take a 1.5% paycut to work in SF instead of the Valley, because I can't stand suburban commutes. But that kind of reasoning is probably why I'm in NYC instead of out west to begin with.
EDIT: Also, I'd suspect that the "1.5% on payrolls over 150k" only applies to the amount in overage, because that's the way most graduated taxes work. So it'd be 150 bucks on the 10k of overage in your 160k example.
Re: Startup Economics 101, or, How Long Until We’re Dead?
#4Salaries are hard. We are in a somewhat identical situation, seed funded 6 month old, and were grappling with salaries after we closed our seed round.
We went with something slightly different but probably more appropriate for a Scandinavian or European country. Basically each founder has a fixed sum that they can cost the company each month. It's up to each founder to decide how they split that sum between salary, benefits and mandatory retirement schemes. The salary itself can vary by as much as 30-40% depending on how you compose your package.
From my point of view, as the keeper of the cash, this makes burn rate planning manageable. All of us feel that the system is fair and we also feel we can optimize it for our own particular lifestyle. As for the actual sums we agreed on an equal split, with a slightly higher amount for the founder who had kids (that would be me).
Re: Startup Economics 101, or, How Long Until We’re Dead?
#5A very good post by @asmartbear on the same subject : http://blog.asmartbear.com/death-clock.html
Re: Startup Economics 101, or, How Long Until We’re Dead?
#6nice post, unfortunately SF payroll tax is 1.5% over $150,000 in payroll, not $250k in payroll as mentioned in your article :( It's a racket and is one of the reasons Twitter and Zynga are threatening to leave SF if the city doesn't give them a break on the tax. But it hurts the little guys more. If you have 4 employees making $40k each you have to pay 1.5% of 160k, which is $2400 (that amounts to almost 2 months of…
Personally, I'd be willing to take a 1.5% paycut to work in SF instead of the Valley, because I can't stand suburban commutes. But that kind of reasoning is probably why I'm in NYC instead of out west to begin with. EDIT: Also, I'd suspect that the "1.5% on payrolls over 150k" only applies to the amount in overage, because that's the way most graduated taxes work. So it'd be 150 bucks on the 10k of overage in your 16…
Well, in NYC you have a 1.5% income tax, rather than corporate tax, which is almost worse in a way.
Re: Startup Economics 101, or, How Long Until We’re Dead?
#7Great writeup! As I read it, it also reminded me of this poem "Dulce Et Decorum Est" - http://www.english.emory.edu/LostPoets/Dulce.html
Re: Startup Economics 101, or, How Long Until We’re Dead?
#8You would think, with the big deal Obama is making about how we need to do everything we can to encourage more start ups, he would offer some kind of 2 year tax free grace period. I understand that we need to tax to some extant, but how much more likely do you think start ups would be to succeed if we didn't have to worry about taxes eating away our already limited money during the first most crucial steps?
Re: Startup Economics 101, or, How Long Until We’re Dead?
#9Earlier quoted context omitted.
Personally, I'd be willing to take a 1.5% paycut to work in SF instead of the Valley, because I can't stand suburban commutes. But that kind of reasoning is probably why I'm in NYC instead of out west to begin with. EDIT: Also, I'd suspect that the "1.5% on payrolls over 150k" only applies to the amount in overage, because that's the way most graduated taxes work. So it'd be 150 bucks on the 10k of overage in your 16…
Well, in NYC you have a 1.5% income tax, rather than corporate tax, which is almost worse in a way.
Yeah, and that doesn't even bother me, because I love living here and wouldn't trade that 1.5% for a suburban commute. To start with, I don't have to own a car, so that alone probably puts me ahead on income (the cost of rent puts me right back behind again, though).
I am still upset as a Red Sox fan that a bunch of that money went to subsidizing the new Yankee Stadium, though.
Re: Startup Economics 101, or, How Long Until We’re Dead?
#10> Two blog posts early on (one on NY vs. SF, and another about my time at Goldman Sachs) went viral and were what first put us on the map. To this day, people stop me when I’m wearing an AdGrok shirt and ask if I’m the guy from the blog. We’ve gotten meetings with major companies who might otherwise not return emails because of those posts. Pick a fight. Pinch a nerve.
It was interesting to know that these blog posts had such a positive effect just by unearthing a controversy, something out of the 37Signals playbook. Hard to argue against free marketing despite potentially stepping on a few toes.