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What salary does the founder of your favorite startup get?

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Re: What salary does the founder of your favorite startup get?

#11

Post by michaelochurch »

The lower the CEO salary, the more likely it is to succeed.

Sure, but this an obvious "correlation is not causation" situation and the reason for this is unpleasant.

If you're from a middle-class background, you have to take full salary because that's the only money you have to live on. If you're from an upper-class background, taking full salary hurts your relationship with investors, and will possibly hurt your bargaining position in future negotiations.

People from middle-class backgrounds cannot afford to pay themselves under $50,000 per year in San Francisco. As for the upper class, if they have trust funds, they can and probably will accept low salaries, just as there are publishing interns all over New York, making what would be poverty wages, and who live on their trust funds.

People from upper-class backgrounds are more likely to have the connections that will make their startups succeed.

That is the reason for the correlation. It's just another incidence of (unintended?) VC classism.

Re: What salary does the founder of your favorite startup get?

#12

Post by mindcrime »

dinkumthinkum wrote: post #10
mindcrime wrote: post #2

Well... my favorite startup is Fogbeam Labs, and I get a salary of a whopping $0.00 / year. :-(

I guess according to Thiel, your startup should be infinitely successful?

w00t! Who knew it was so easy to be amazingly successful!?!! Yeehaaawww!! I'd just like to thank all the people who helped me make it to this momentous occasion - my mom, my dad, my 3rd grade science teacher, ...

Re: What salary does the founder of your favorite startup get?

#14

Post by beat »

dangero wrote: post #8

I've always heard that a founder's salary should be the amount that allows the founder to focus on the business. The concept of a super low salary seems to be focused on the 20 something single crowd. I have a family to support, so I can't take a super small salary and eat Top Ramen. This may be a subtle way that older founders are discriminated against. The story I've heard from founders who have families is that th…

Married founders, especially with children, must also maintain the support and good graces of their #1 lead investor - their spouse.

And founders with spouses are less likely to be easily manipulated or bullied by investors. Another cause for investors to be less than thrilled with them.

Re: What salary does the founder of your favorite startup get?

#15

Post by ivanplenty »

michaelochurch wrote: post #11

The lower the CEO salary, the more likely it is to succeed. Sure, but this an obvious "correlation is not causation" situation and the reason for this is unpleasant. If you're from a middle-class background, you have to take full salary because that's the only money you have to live on. If you're from an upper-class background, taking full salary hurts your relationship with investors, and will possibly hurt your bar…

This post will be downvoted to hell, but I have been wanting to say this for a while and can't find a way to contact you. (My email is my HN handle at gmail)

You may or may not be right about this or the rest of VC-istan. But I LOVE the fervor and color of your posts. I love hearing a contrarian view. And I would love to buy you a cup of coffee or beer to say thanks for making my time of HN so much more interesting.

Edit: Thanks for the reply, and I'm relieved to hear others share my sentiment. I have seen you refer to rankban elsewhere, but this was the first time I understood what you meant.

Also, yesterday I published research about Everpix shutting down and I got two groups of feedback:

1) From startup founders generally positive comments or clarifying questions. All were constructive conversations.

2) From VC-connected people generally defensive FUD and ad hominems.

It was very interesting to watch, and you are certainly not alone.

Re: What salary does the founder of your favorite startup get?

#16

Post by danielharan »

“In practice we have found that if you only ask one question, ask that.”

As most CEO salaries are low, the answer has very little information value. Adding numbers from that chart, ~8k / 11k founders surveyed were making do with less than 50k/yr.

Looking for the top 10% of businesses by asking a question that only discriminates against the bottom ~30% is better than nothing. Assuming this gave no false negatives, it would increase the investor's hit rate by ~43%.

Any lower than 50k and a founder is either independently wealthy, living a pauper lifestyle (and being stressed out instead of concentrating on their startup), or using an expense account. So the positives don't all mean the same thing. If you're independently wealthy because of a previous success, your odds are already much higher. A person stressed out about money however is likely to make really poor decisions.

Re: What salary does the founder of your favorite startup get?

#17

Post by karangoeluw »

Before you jump to conclusions from this graph [1] about India, keep in mind that for most families, making $50k a year is a glory. You can live luxuriously, drive "high-end" car(s), but a moderately-large house in a couple years etc. You get the idea. I always hate it when they compare economies in $ for everyone.

http://cdn2.tnwcdn.com/wp-content/blogs.dir/1/files/2014/01/...

Re: What salary does the founder of your favorite startup get?

#18

Post by j45 »

dangero wrote: post #8

I've always heard that a founder's salary should be the amount that allows the founder to focus on the business. The concept of a super low salary seems to be focused on the 20 something single crowd. I have a family to support, so I can't take a super small salary and eat Top Ramen. This may be a subtle way that older founders are discriminated against. The story I've heard from founders who have families is that th…

I've found what you're saying to be true. having a minimum amount that doesn't leave one thinking about money in one's life is important.

The thing is, we change (for the better) as a person in our 20s.

I've worked and paid myself nothing, a little, more than needed, and now am settling decent amount that can service everything in my life beyond just breaking even.

I plan on being an entrepreneur for the rest of my life. I plan on working hard all the time, things are boring when I'm not. Still, I don't want anyone else other than my paying customers to tell me to go home if they don't like what I offer.. especially when software will be in high demand around the world for the rest of my life.

The bottom line is cashflow is king, in our personal, professional and business. The more this neglected as each day passes, the harder things get to getting to a point of no return where one starts permanently giving up other areas of life and experiences at the cost of entrepreneurship. Cashflow decides when and if we go home or give up or have to move on.

The longer one can set oneself up to survive in the business game (savings, low burn rate, being able to generate a few income streams reasonably passively) all teach entreprenurship from a sustainability perspective in addition to the "go hard or go home" mantra, because the majority inevitably go home, when they could have stuck around a few more years learning how to keep moving.

Re: What salary does the founder of your favorite startup get?

#19

Post by Duhck »

This correlation is lost on me. Founders are entitled to make a living wage. In NYC being paid less than $50k would mean a few things: !) You have to live in squalor. 2) You have money from somewhere else to support the rest of your needs. 3) You use the business to pay for your expenses

I would like to see the size of the business as it relates to compensation. A single founder with no employees and no office space can make $50k/yr salary and live comfortably if their rent and expenses are on the business. Otherwise I am dumbfounded by how this works...

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