I think it depends on where the startup is in its development. If there is no income, and the startup is very young, there should be no employees. The founders

I think it depends on where the startup is in its development. If there is no income, and the startup is very young, there should be no employees. The founders should all take a salary, even if it's just a token salary of their living expenses, for tax purposes. In my opinion, anyone working on building the primary product of a company (the hackers) should be a founder, or have a significant equity share in the company, especially if the company has yet to earn a profit (assumed if the primary product isn't build yet). If the startup is at the point where they are earning a steady income, and needs to hire additional people, then it depends on the role needed. Secretaries, customer support, and other administrative work should be hourly (or even better, contracted out). Sales should be commission (to the extent permitted by law). Additional hackers should be on salary with stock options and the expectation to do a lot of work beyond the typical 40 hour work week. I'm interested in hearing what others think about my suggestions. Please let me know what's worked/worked better for you.