Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

I surveyed 500 startup founders about their salaries

pilot.com

Post reply on HN
Print view View original

91–100 of 104 posts

Re: I surveyed 500 startup founders about their salaries

#91

Post by pclmulqdq »

Swizec wrote: post #80
rexreed wrote: post #71

Earlier quoted context omitted.

Can you provide some more detail or where to read on this debt instrument strategy?

You can use anything as collateral for a loan, even business equity. It’s how wealthy people get liquidity without selling assets. A HELOC loan would be a pedestrian example of this. You put house equity up as collateral to get money without selling the house. Fail to pay, bank sells house. When using your business as collateral, bank sells business.

Also, HELOCs have very high interest rates due to the illiquidity of the underlying asset. If you have a large private company that has some interest from private equity investors, you can get a much lower rate. ELOCs on huge blocks of the S&P 500 (essentially large margin loans) can have rates that are almost at the fed funds rate.

Re: I surveyed 500 startup founders about their salaries

#92

Post by rexreed »

Swizec wrote: post #80
rexreed wrote: post #71

Earlier quoted context omitted.

Can you provide some more detail or where to read on this debt instrument strategy?

You can use anything as collateral for a loan, even business equity. It’s how wealthy people get liquidity without selling assets. A HELOC loan would be a pedestrian example of this. You put house equity up as collateral to get money without selling the house. Fail to pay, bank sells house. When using your business as collateral, bank sells business.

How would this translate to salary? Are you saying you'd get a loan on your portion of the equity at full value and the company would only pay you the interest required to cover that loan?

Re: I surveyed 500 startup founders about their salaries

#93

Post by rexreed »

pclmulqdq wrote: post #91
Swizec wrote: post #80

Earlier quoted context omitted.

You can use anything as collateral for a loan, even business equity. It’s how wealthy people get liquidity without selling assets. A HELOC loan would be a pedestrian example of this. You put house equity up as collateral to get money without selling the house. Fail to pay, bank sells house. When using your business as collateral, bank sells business.

Also, HELOCs have very high interest rates due to the illiquidity of the underlying asset. If you have a large private company that has some interest from private equity investors, you can get a much lower rate. ELOCs on huge blocks of the S&P 500 (essentially large margin loans) can have rates that are almost at the fed funds rate.

I would imagine with the very high failure rate of startups, loans based on company equity, especially for small, non-public non-liquid companies must have sky-high rates.

Re: I surveyed 500 startup founders about their salaries

#94

Post by Swizec »

rexreed wrote: post #92
Swizec wrote: post #80

Earlier quoted context omitted.

You can use anything as collateral for a loan, even business equity. It’s how wealthy people get liquidity without selling assets. A HELOC loan would be a pedestrian example of this. You put house equity up as collateral to get money without selling the house. Fail to pay, bank sells house. When using your business as collateral, bank sells business.

How would this translate to salary? Are you saying you'd get a loan on your portion of the equity at full value and the company would only pay you the interest required to cover that loan?

Something like that yes. Mind you some jurisdictions have laws around “reasonable salary” so always important to check these things with a professional first.

For a more fun take: Watch WeCrash and notice how the protagonist magics 100mil for personal use after raising the huge Softbank round … and what happens to that liquidity when an IPO doesn’t materialize.

Re: I surveyed 500 startup founders about their salaries

#95

Post by [deleted] »

dcow wrote: post #86
jrochkind1 wrote: post #84

Earlier quoted context omitted.

Where the "company office" just happens to be a (from GP comment we are all replying to) "fancy SF and NYC apartment" in a residential building? I mean, I'm not a lawyer or CPA, and I'd advise any HN readers to consult such before deciding on a tax strategy based on HN thread. Because, also, yeah, no. Honestly, if you are sleeping in an actual office as your primary residence, you probably technically have to include…

I mean I've actually seen founders living out of work/life spaces. Not the WeWork type. The type where a large commercial or industrial building is converted into a "co-working-living" space. Not a lawyer either so I have no idea if it's legal to the letter of the law, but it exists.

[deleted]

Re: I surveyed 500 startup founders about their salaries

#96

Post by sushid »

dcow wrote: post #81
paxys wrote: post #17

Earlier quoted context omitted.

That's...not how it works. You can expense cell phone bills and lunches, sure, but VCs aren't paying for your fancy apartment. > EDIT: I'm not a tax person Most non-tech discussions on forums like this one should start and end with this disclaimer. Watching people here regularly talk about topics like law, "money laundering", write-offs and tax shelters is as hilarious and disconnected from reality as a hacking scene…

Ultimately, VCs are paying for your fancy apartment. They're just paying more the more expensive your personal life is. I wouldn't dismiss the obviously aligned incentives here that encourage minimization of capital expenditure for business entities, especially in the USA. I'm making no moral or legal judgements, just commenting based on what I've encountered and witnessed. I'm not a founder and never consulted anybo…

I don't understand your point. Of course at the end of the day VCs are paying for everything in the sense that they funded you, but there's a clear distinction between personal expenses (which come out of your salary) and business expenses (which you charge your business CC on).

Of course you wouldn't have fancy VC dinner on your personal dime but if you're meeting VCs to raise a round, talking to a potential customer, etc., those are legitimate business expenses.

No VC is going to be paying for your rent or your car lease, which is what you implied above. That's patently false.

Re: I surveyed 500 startup founders about their salaries

#97

Post by jrochkind1 »

dcow wrote: post #86
jrochkind1 wrote: post #84

Earlier quoted context omitted.

Where the "company office" just happens to be a (from GP comment we are all replying to) "fancy SF and NYC apartment" in a residential building? I mean, I'm not a lawyer or CPA, and I'd advise any HN readers to consult such before deciding on a tax strategy based on HN thread. Because, also, yeah, no. Honestly, if you are sleeping in an actual office as your primary residence, you probably technically have to include…

I mean I've actually seen founders living out of work/life spaces. Not the WeWork type. The type where a large commercial or industrial building is converted into a "co-working-living" space. Not a lawyer either so I have no idea if it's legal to the letter of the law, but it exists.

I have never heard of a "co-working-living space", so you know things I don't!

Sounds like a different thing than just trying to deduct 100% of your apartment as a business expense because you don't have an office yet though. Which is what I thought we were talking about from the GP. Like, maybe lots of people are doing that, but maybe lots of people are committing tax fraud, the IRS instructions are not too fuzzy here.

Re: I surveyed 500 startup founders about their salaries

#98

Post by rexreed »

Swizec wrote: post #94
rexreed wrote: post #92

Earlier quoted context omitted.

How would this translate to salary? Are you saying you'd get a loan on your portion of the equity at full value and the company would only pay you the interest required to cover that loan?

Something like that yes. Mind you some jurisdictions have laws around “reasonable salary” so always important to check these things with a professional first. For a more fun take: Watch WeCrash and notice how the protagonist magics 100mil for personal use after raising the huge Softbank round … and what happens to that liquidity when an IPO doesn’t materialize.

How and when does the loan get paid off then? How is this better than taking salary without the burden of debt repayment?

Re: I surveyed 500 startup founders about their salaries

#99

Post by dcow »

sushid wrote: post #96
dcow wrote: post #81

Earlier quoted context omitted.

Ultimately, VCs are paying for your fancy apartment. They're just paying more the more expensive your personal life is. I wouldn't dismiss the obviously aligned incentives here that encourage minimization of capital expenditure for business entities, especially in the USA. I'm making no moral or legal judgements, just commenting based on what I've encountered and witnessed. I'm not a founder and never consulted anybo…

I don't understand your point. Of course at the end of the day VCs are paying for everything in the sense that they funded you, but there's a clear distinction between personal expenses (which come out of your salary) and business expenses (which you charge your business CC on). Of course you wouldn't have fancy VC dinner on your personal dime but if you're meeting VCs to raise a round, talking to a potential custome…

You say it’s patently false and yet here I am saying I’ve seen startups own houses and cars. Maybe your and their tax accountants would disagree, but that’s a different topic.

My point is simply that the low founder salaries are not because the founders are being particularly frugal or living humbly. The low salaries exist simply to pay for the things that the business’ accountant can’t expense. In every respect, the founder lives their business.

Re: I surveyed 500 startup founders about their salaries

#100

Post by dcow »

jrochkind1 wrote: post #97
dcow wrote: post #86

Earlier quoted context omitted.

I mean I've actually seen founders living out of work/life spaces. Not the WeWork type. The type where a large commercial or industrial building is converted into a "co-working-living" space. Not a lawyer either so I have no idea if it's legal to the letter of the law, but it exists.

I have never heard of a "co-working-living space", so you know things I don't! Sounds like a different thing than just trying to deduct 100% of your apartment as a business expense because you don't have an office yet though. Which is what I thought we were talking about from the GP. Like, maybe lots of people are doing that, but maybe lots of people are committing tax fraud, the IRS instructions are not too fuzzy he…

I never said 100%. I am not sure if I put off the wrong vibe by accidentally insinuating that founders are lavishly burning money or something. That’s not my intention. My point is that 50k/yr is not enough to live in SF or NYC. Something is filling the gap.

The logistics aren't really the point. No I don’t know how exactly founders do their taxes. But I do know that when you work 24/7, a lot of things look like business expenses.

Post reply on HN