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Why is it when I read this it feels like the VC essentially "hazing" the founder saying that "you will get your payout later so suck it up." Thats not true for

Why is it when I read this it feels like the VC essentially "hazing" the founder saying that "you will get your payout later so suck it up." Thats not true for every company because not every company has the goal of doubling every year and then getting sold to Google. They don't all have to follow the Silicon Valley model. The irony of this is that the VC has the operating funds to wait till later to get their payout, its like they are making the founder suffer with them. Simultaneously they are taking as much equity as possible essentially minimizing the founder's payout. The difference is that this is probably not the VC's first venture so they have plenty of cash to rest upon whereas a first time founder is literally scraping by, possibly with a family, mortgage, etc.

nautilus12 9y ago
Really the more I think about it, this more sounds like one VC's attempt to weed out people thinking about starting a company by scaring them. There is nothing set in stone that says founders should get paid a certain amount. Every company has different cash flows and situations.
- lmilcin 9y ago
  You don't need external funding to start a company. Then you can pay yourself whatever you want it's your company. If you want external funding then you stop being sole owner and you need agreement with othe owners on what is the worth of your services to the company. Your stake has nothing to do with it.
- CalChris 9y ago
  weed out people thinking about starting a company by scaring them Yeah. You sure won't be hanging out at the cool cafes with your new superfriends delegating menial tasks to your hirelings. You'll be working your personal ass off while risking someone else's money.
- chrija 9y ago
  I'm not sure if you've read my post. If you read it, you'll see that I wrote: << The numbers in the model reflect what I think is market and fair based on the data points that we have and some industry benchmarks that we were able to get. However, our data set is quite limited and the numbers produced by the calculator should by no means be taken as the ultimate truth. If you disagree with my assumptions or have seen different numbers in the market I’d love to hear from you! >> No need to assume bad intentions.
mooreds 9y ago
Because when you take someone's money they have the right to counsel you that "you will get your payout later so suck it up." That said, most VCs I have read indicate you should pay yourself enough to take the money concerns off the table, but enough to cause the startup stress. Obviously there's a tension and no perfect answer.
- CalChris 9y ago
  should pay yourself enough to take the money concerns off the table But not so much that you're checking flight availability for your weekend in Cabo.
chrija 9y ago
If your goal is not to double every year, at least for a number of years, and to eventually create huge enterprise value, you shouldn't raise venture capital. If your goal is to grow a little slower and to get a good salary (or dividends) rather soon, you should use a different way to finance your company.

nautilus12 9y ago

Really the more I think about it, this more sounds like one VC's attempt to weed out people thinking about starting a company by scaring them. There is nothing set in stone that says founders should get paid a certain amount. Every company has different cash flows and situations.

lmilcin 9y ago
You don't need external funding to start a company. Then you can pay yourself whatever you want it's your company. If you want external funding then you stop being sole owner and you need agreement with othe owners on what is the worth of your services to the company. Your stake has nothing to do with it.
CalChris 9y ago
weed out people thinking about starting a company by scaring them Yeah. You sure won't be hanging out at the cool cafes with your new superfriends delegating menial tasks to your hirelings. You'll be working your personal ass off while risking someone else's money.
chrija 9y ago
I'm not sure if you've read my post. If you read it, you'll see that I wrote: << The numbers in the model reflect what I think is market and fair based on the data points that we have and some industry benchmarks that we were able to get. However, our data set is quite limited and the numbers produced by the calculator should by no means be taken as the ultimate truth. If you disagree with my assumptions or have seen different numbers in the market I’d love to hear from you! >> No need to assume bad intentions.

mooreds 9y ago

Because when you take someone's money they have the right to counsel you that "you will get your payout later so suck it up." That said, most VCs I have read indicate you should pay yourself enough to take the money concerns off the table, but enough to cause the startup stress. Obviously there's a tension and no perfect answer.

CalChris 9y ago
should pay yourself enough to take the money concerns off the table But not so much that you're checking flight availability for your weekend in Cabo.

chrija 9y ago

If your goal is not to double every year, at least for a number of years, and to eventually create huge enterprise value, you shouldn't raise venture capital. If your goal is to grow a little slower and to get a good salary (or dividends) rather soon, you should use a different way to finance your company.