As a non-start-up person who'd really not likely ever do it but looks at graphs all day as a job, it does seem like the long tail makes sense, although it's hard to tell if 500 (plus a survey) is a representative sample. It seems like the usual thing for power distributions, you'll have a long tail with flying high salaries which is what most people think of when they think of founders (the architype of a walking hype and reality-disortion field emitting white man wearing a poloshirt), but you'll have a nice chunk near the bottom of the distribution which is "everyone else" who likely won't make a big exit. Don't the vast majority of start-ups fail? That description is the quintessential description of "success" for any variable with a power-law distribution.
I surveyed 500 startup founders about their salaries
51–60 of 104 posts
Re: I surveyed 500 startup founders about their salaries
#52There's an interesting blip at the end of the chart "Bootstrapped vs. VC-Backed Salaries Breakdown". Salary Range Bootstrapped VC-Backed -------------- ----------- -------------- 200k-249k 3% 6% 250k-299k 1% 3% 300k+ 6% 2% Overall, I see a pattern that could be explained by slightly different perspectives. A VC-backed founder likely sees themselves working for someone else - "My work will benefit the investors, so I…
> If my bootstrapped company is earning 10M/yr, you bet I'm taking 1M+ salary guilt-free. Wouldn’t you prefer to take minimum salary and the rest as dividends? Seems like that would be the more tax advantaged approach and fully within your ability to do as majority owner.
Once your company is earning $10M/year, you should probably be using debt instruments instead, and paying yourself enough salary to cover the interest. That gives you a real tax rate on your cash earnings under 10% (and capped at the LTCG rate) if you can get a decent valuation.
Re: I surveyed 500 startup founders about their salaries
#53Super cool survey! And interesting results.
Does anyone know if it shares how the answers were solicited?
Every survey of this size has substantial sampling bias (which doesn't invalidate the result, just helps us to more rationally interpret it).
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[edit] there's some color at the bottom, though I'm still curious to know more.
> The 2022 Founder Salary Survey was conducted over a five-week period starting in May 2022, during which we reached out to founders through our extended networks and elsewhere online.
> We received a total of 516 responses.
> Over 60% of our responses were from either remote Founders or Founders in the San Francisco Bay Area.
Leaning on a network is a good way to scale up quickly, although it's probably the principle limiting factor on the scope of conclusions, drawn from this report.
"How much do Founders, who are 0-1 degrees of separation from a company that uses Pilot, pay themselves?" is still a pretty interesting thing to read.
Re: I surveyed 500 startup founders about their salaries
#54In what world does it make sense for a founder to pay themselves $1m/year in salary? One situation I could imagine is if they have a money-printing machine and outright own the business, then that would make sense. It's hard to imagine any other scenarios where that would be reasonable.
Re: I surveyed 500 startup founders about their salaries
#55Earlier quoted context omitted.
In what kind of startups is this happening in?! Edit: in our early days, if one of the co-founders did this, we definitely would've parted ways.
I've also seen cases where pretty well-funded startups (and, honestly, not just startups, I've also seen this with large public companies) have tons of expenses flow through a founder's/upper level exec's personal credit card. The expenses are all legit, but this results in at minimum multi tens of thousands of dollars in credit card bonus points accruing to the exec. Will let you decide how ethical that is (or not).…
As a counterpoint, the founder is effectively providing financing via revolving credit line to the co in this scenario (which the consumer bank issuing the card might not appreciate, but that’s another topic). You mention well funded startups but it’s also common among small businesses for the owner to use personal credit cards (at their own risk) when the business is having cash flow issues.
Re: I surveyed 500 startup founders about their salaries
#56I think what people often blissfully miss about founder comp is that the business literally supports the founder's entire life. Everything is a business expense. Pay yourself 50k as a little bonus and run almost everything through the business, because if you don't survive, neither does the business. You think founders are paying out of pocket for their fancy SF and NYC apartments at 50k per year living humbly? Think…
Writing off parts of your rent as a founder or business owner is perfectly ok with the IRS. Such a space needs to have "regular and exclusive use" for running your business and be your principle place of business (i.e. you do not maintain an office outside of your home).
In my experience CPAs consider it reasonable to take the square footage of the dedicated office area and divide it by the total square footage of your home and deduct that much from your rent.
https://www.irs.gov/businesses/small-businesses-self-employe...
Re: I surveyed 500 startup founders about their salaries
#57I think maybe this data needed to be cleaned a bit more before being analyzed. For example, in the "Breakdown of Salaries by Funding Level", in the 0 - 99.9k bracket, the "average" salary is 115k and the highest is 360k. I must be missing something basic; is the salary value computed from a monthly value, and the company will either raise more or close down within a period less than a year (having paid out less than the stated salary figure)? If so, it seems a bit disingenuous.
Re: I surveyed 500 startup founders about their salaries
#58This is not a valid Show HN. Please read the rules: https://news.ycombinator.com/showhn.html.
We've taken Show HN out of the title now.
Re: I surveyed 500 startup founders about their salaries
#59Would be good to show the median.
Re: I surveyed 500 startup founders about their salaries
#60Earlier quoted context omitted.
> If my bootstrapped company is earning 10M/yr, you bet I'm taking 1M+ salary guilt-free. Wouldn’t you prefer to take minimum salary and the rest as dividends? Seems like that would be the more tax advantaged approach and fully within your ability to do as majority owner.
Once your company is earning $10M/year, you should probably be using debt instruments instead, and paying yourself enough salary to cover the interest. That gives you a real tax rate on your cash earnings under 10% (and capped at the LTCG rate) if you can get a decent valuation.
> gives you a real tax rate on your cash earnings under 10%
And turns your start-up failing (or firing you) into a financial end game.