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I should clarify I'm playing Devil's Advocate. I do try to bootstrap my startups part-time, no salary until we have enough cash to pay decent full-time salary

I should clarify I'm playing Devil's Advocate. I do try to bootstrap my startups part-time, no salary until we have enough cash to pay decent full-time salary to founders. Good reasons to forgo salary: - startup already has revenue and/or a clear path to profitability that would be affected by the salary decision - because you probably need as much cash as possible for the first technical hire(s). This is a good problem and usually indicates growth - because you legitimately don't need or want it (e.g. cash from successful exit or good pre-fulltime planned savings)

CalChris 9y ago
Why should I forgo a market rate salary to take a 1 in 100 chance at a lottery ticket, where my likelihood of success is largely determined by the people who also choose my salary? Because as a founder you have a great idea that you think will be worth those odds. If you truly think it is a lottery ticket then your idea isn't that good and you should look for another idea. You can always make more money working for BiggleCorp. The benefits are always better at NanoSoft. So the deciding question for you is not what flavor of ramen you'll eat but whether your idea is so insanely great that you're willing to suffer. Moreover, your skillset is already factored into both your stock and the relative ease vs difficulty of your raise.
- doublerebel 9y ago
  Ideas are cheap, execution is everything. Actually getting liquidity for equity compensation is a function of the execution of the team, not me as an individual. So the real question of how much to pay yourselves as founders is "what makes you all get along and feel worthwhile?" so that you can maximize your productivity. Like equity, founder salaries are a major source of dispute, and if the business takes too long to reach market rates then it becomes a source of tension. That's why I think relying on low salaries as a business model is a bad idea -- the business should be focused on sustainably paying market rate ASAP, which should mean that the business has revenue or customers incoming steady and growing. I would argue that as a rule below market salaries means the business is unsustainable and has not found market fit. Founders can (and often do) still choose a lower salary when it makes sense to them.
  - CalChris 9y ago
    Yes, ideas ARE cheap but good ideas are very expensive. Hell, YC was giving away some ideas for free yesterday. But I don't think any of them were good ideas and respectfully, I don't think your successful track record as a technical founder could save AI for Communicating with Dogs or Social Network for Children regardless of the amount of VC dumped in or your founder salary. They just aren't good ideas. Myself, I don't think execution is everything. It is a lot but you can't execute a mediocre idea into a success. If I'm wrong about that, and I could be given my technical bias, then I'll rephrase that to if you can execute a mediocre idea into a success then anyone can and it just becomes a lottery. Been there and I won't revisit there. BTW, we are talking about initial salaries. If your startup is killing it then you can dictate your terms and your funders will still say thank you.
    - Judgmentality 9y ago
      > you can't execute a mediocre idea into a success No, but great founders can realize this sooner, wasting less money and decide to either return what's left of the money or pivot. Very few successful companies grew into their original vision - they changed along the way because they had great leadership (and luck).
      - baxtr 9y ago
        You mean like google, facebook and amazon?
        Judgmentality 9y ago
        Google initially didn't want to sell ads. Amazon was an online book store. Facebook, admittedly, seems to be the exception to the rule.
        CalChris 9y ago
        Amazon is still an online bookstore and Google did want to sell ads. But they just wanted to sell search first which they did, to Yahoo. Oracle is still a database company. Apple still makes computers. I’m blanking on a great founder who successfully pivoted, operative word being great. Successful is a lower bar.

CalChris 9y ago

Why should I forgo a market rate salary to take a 1 in 100 chance at a lottery ticket, where my likelihood of success is largely determined by the people who also choose my salary? Because as a founder you have a great idea that you think will be worth those odds. If you truly think it is a lottery ticket then your idea isn't that good and you should look for another idea. You can always make more money working for BiggleCorp. The benefits are always better at NanoSoft. So the deciding question for you is not what flavor of ramen you'll eat but whether your idea is so insanely great that you're willing to suffer. Moreover, your skillset is already factored into both your stock and the relative ease vs difficulty of your raise.

doublerebel 9y ago
Ideas are cheap, execution is everything. Actually getting liquidity for equity compensation is a function of the execution of the team, not me as an individual. So the real question of how much to pay yourselves as founders is "what makes you all get along and feel worthwhile?" so that you can maximize your productivity. Like equity, founder salaries are a major source of dispute, and if the business takes too long to reach market rates then it becomes a source of tension. That's why I think relying on low salaries as a business model is a bad idea -- the business should be focused on sustainably paying market rate ASAP, which should mean that the business has revenue or customers incoming steady and growing. I would argue that as a rule below market salaries means the business is unsustainable and has not found market fit. Founders can (and often do) still choose a lower salary when it makes sense to them.
- CalChris 9y ago
  Yes, ideas ARE cheap but good ideas are very expensive. Hell, YC was giving away some ideas for free yesterday. But I don't think any of them were good ideas and respectfully, I don't think your successful track record as a technical founder could save AI for Communicating with Dogs or Social Network for Children regardless of the amount of VC dumped in or your founder salary. They just aren't good ideas. Myself, I don't think execution is everything. It is a lot but you can't execute a mediocre idea into a success. If I'm wrong about that, and I could be given my technical bias, then I'll rephrase that to if you can execute a mediocre idea into a success then anyone can and it just becomes a lottery. Been there and I won't revisit there. BTW, we are talking about initial salaries. If your startup is killing it then you can dictate your terms and your funders will still say thank you.
  - Judgmentality 9y ago
    > you can't execute a mediocre idea into a success No, but great founders can realize this sooner, wasting less money and decide to either return what's left of the money or pivot. Very few successful companies grew into their original vision - they changed along the way because they had great leadership (and luck).
    - baxtr 9y ago
      You mean like google, facebook and amazon?
      - Judgmentality 9y ago
        Google initially didn't want to sell ads. Amazon was an online book store. Facebook, admittedly, seems to be the exception to the rule.
        CalChris 9y ago
        Amazon is still an online bookstore and Google did want to sell ads. But they just wanted to sell search first which they did, to Yahoo. Oracle is still a database company. Apple still makes computers. I’m blanking on a great founder who successfully pivoted, operative word being great. Successful is a lower bar.