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Dropping your salary by over 75% to below poverty wages doesn't signal to me that you have "skin in the game", it signals to me that you're compensating for poo

by devmor 5y ago

Dropping your salary by over 75% to below poverty wages doesn't signal to me that you have "skin in the game", it signals to me that you're compensating for poor choices by making further poor choices and you likely do not think very far into the future.

lonbigtech 5y ago
It wasn't clear to me while reading this that the drop occurred while at the company, or was the drop from their prior gig. If they indeed lowered the salary their company paid them... yikes. Especially if a justification is "investor signalling". Sounds like kowtowing to unhappy investors.
BasilPH 5y ago
What makes you so sure that it is a poor choice? It's definitely risky, but there's also a large upside. And as I wrote, I have multiple safety nets. > you likely do not think very far into the future This is 1-2 year bet for me.
- devmor 5y ago
  Safety nets are for emergencies - by definition. If you are relying on them, you are having an emergency, by your own choice. Hard not to call that a poor one. You're trying to run a company while making less than a single experienced engineer. If you even can't pay yourself that much, what exactly have you been doing with your investors' money?
- tweedledee 5y ago
  Once your safety net is gone you’ll be in a weakened position in further negotiations.
  - mental1896 5y ago
    Or in a great position to start over from scratch.
    - tweedledee 5y ago
      Perhaps I missed the sarcasm? Wouldn’t it be a terrible position to start over?
      - mental1896 5y ago
        Depends on your perspective I suppose. As I see it, starting over is a opportunity to try again, this time with all the knowledge you lacked the first time around. You may still encounter many of the pitfalls of the first iteration, but this time, you'll have the advantage of experience.
- causi 5y ago
  I reduced my salary to force myself to focus on what makes the most sense strategically for the product. You know that sentence is completely incoherent, right? The man running the company suddenly having a bunch of personal financial distractions is bad. You thinking that having less money will make you more focused is a red flag big enough to go in a car dealership parking lot.
anonymouse008 5y ago
While I agree with your sentiment and am working through this issue myself... the appeal of the entrepreneurial grind goes hand in hand with a lot of religious suffering, or specifically a Christian martyrdom. Only very recently had a heard a parable that began to challenge the idea that to do deep good, one must materially suffer... However, I'm no where near cured, and hearing your take definitely helps.
- pirate787 5y ago
  Yeah the author seems to think going to a poverty wage will help him focus.
  - danjac 5y ago
    Unless they have significant savings and/or some passive income, or they don't have family and can live with their parents or adopt a very frugal lifestyle, they will find their focus distracted by worries over everyday things like rent and bills. They are more likely to make poor short-term decisions, or have to supplement their income to do things like consulting or part-time work, to literally keep the lights on. As an investor I'd be very concerned by this move.
- dfxm12 5y ago
  I do think the idea of redemptive suffering unfortunately permeates (at least) American society too much. If someone else wants to suffer that's OK, but I feel like it's baked into every day life too much and suffering just for suffering's sake is confused with being moral or working hard. I guess that's expected from a country founded by puritans though!
999900000999 5y ago
If I was an investor I'd assume the company was doing very poorly. He's admitting he can't make payroll. 110k isn't a ton of money.
- BasilPH 5y ago
  We do actually make payroll and have a solid runway. What my salary cut does is: a) signal the investor and the team that I'm serious about this venture, b) increase my equity and c) increase our runway by a couple of months. As I've noted in a top-level comment, my intended message about focus gets a bit muddled without me giving the proper context. I'll add an update to my post with some context.
- giantg2 5y ago
  $110k is a ton of money to me. But I agree that doesn't look good for a company.
  - devmor 5y ago
    It's a lot of money for a person, depending on where they live. But for a business it's definitely not.
    - coldtea 5y ago
      Well, it's about a yearly developer salary where that founder lives - so not really "a lot of money" for them there, just the expected amount (and FAANGs do better, as do developers in New York working for finance). Whereas his new salary is closer to a burger flipping salary, and actually less.
  - deleted 5y ago
    [deleted]
  - 999900000999 5y ago
    Are you a full time software engineer in the United States ? A decent programer can make at least 100k almost anywhere in the US. I'd expect anyone running a tech company to make more than their own developers. You don't even need to be a good developer, you can use an easier language like Python or JavaScript. Honestly 90% of success in this industry is not being a jerk and showing up on time. I've seen developers outright confront C level execs and predictably it doesn't work out so well. The other 10% is luck. Occasionally you'll have a bad manager, or you'll join a company which doesn't manage their money well. And the only thing you can do in that case is leave.
sokoloff 5y ago
Within two inches of that was the reasoning, which included that they had two years' of runway at this level of reduced income. That to me is the opposite of "[does] not think very far into the future."
- gremloni 5y ago
  How is two years of runway thinking far into the future?
  - PaywallBuster 5y ago
    right, the company should be self sustaining and he shouldn't be burning through his savings
  - sokoloff 5y ago
    It's a horizon several factors longer than they would be able to make course corrections. If you planned what lunch you would eat on January 15th, 2022, I'd also say that you were planning far into the future, even though it's only a tiny fraction of the time between now and the sun swallowing the Earth.
ac2u 5y ago
"Dropping your salary by over 75% to below poverty wages doesn't signal to me that you have "skin in the game" Why not? Author remains exposed to the upside through equity but their downside was always limited by their comfortable salary You might think that's a poor choice, and you might be right, but it's the very definition of skin in the game that poorer choices on their part leaves them more exposed to a poorer outcome.
dfxm12 5y ago
Or that you can afford to take big risks because you have parents who are willing and able to support you. The rich get richer... I agree with you, having to take such drastic measures to prove (to investors or yourself) that you have "skin in the game" wouldn't look good to me. It's cute to romanticize this ala Rocky III, but coming up with creative ways to overcome a lack of intrinsic motivation to do your job well is drama best left for the big screen, IMO.

by devmor 5y ago

lonbigtech 5y ago

It wasn't clear to me while reading this that the drop occurred while at the company, or was the drop from their prior gig. If they indeed lowered the salary their company paid them... yikes. Especially if a justification is "investor signalling". Sounds like kowtowing to unhappy investors.

BasilPH 5y ago

What makes you so sure that it is a poor choice? It's definitely risky, but there's also a large upside. And as I wrote, I have multiple safety nets. > you likely do not think very far into the future This is 1-2 year bet for me.

devmor 5y ago
Safety nets are for emergencies - by definition. If you are relying on them, you are having an emergency, by your own choice. Hard not to call that a poor one. You're trying to run a company while making less than a single experienced engineer. If you even can't pay yourself that much, what exactly have you been doing with your investors' money?
tweedledee 5y ago
Once your safety net is gone you’ll be in a weakened position in further negotiations.
- mental1896 5y ago
  Or in a great position to start over from scratch.
  - tweedledee 5y ago
    Perhaps I missed the sarcasm? Wouldn’t it be a terrible position to start over?
    - mental1896 5y ago
      Depends on your perspective I suppose. As I see it, starting over is a opportunity to try again, this time with all the knowledge you lacked the first time around. You may still encounter many of the pitfalls of the first iteration, but this time, you'll have the advantage of experience.
causi 5y ago
I reduced my salary to force myself to focus on what makes the most sense strategically for the product. You know that sentence is completely incoherent, right? The man running the company suddenly having a bunch of personal financial distractions is bad. You thinking that having less money will make you more focused is a red flag big enough to go in a car dealership parking lot.

anonymouse008 5y ago

While I agree with your sentiment and am working through this issue myself... the appeal of the entrepreneurial grind goes hand in hand with a lot of religious suffering, or specifically a Christian martyrdom. Only very recently had a heard a parable that began to challenge the idea that to do deep good, one must materially suffer... However, I'm no where near cured, and hearing your take definitely helps.

pirate787 5y ago
Yeah the author seems to think going to a poverty wage will help him focus.
- danjac 5y ago
  Unless they have significant savings and/or some passive income, or they don't have family and can live with their parents or adopt a very frugal lifestyle, they will find their focus distracted by worries over everyday things like rent and bills. They are more likely to make poor short-term decisions, or have to supplement their income to do things like consulting or part-time work, to literally keep the lights on. As an investor I'd be very concerned by this move.
dfxm12 5y ago
I do think the idea of redemptive suffering unfortunately permeates (at least) American society too much. If someone else wants to suffer that's OK, but I feel like it's baked into every day life too much and suffering just for suffering's sake is confused with being moral or working hard. I guess that's expected from a country founded by puritans though!

999900000999 5y ago

If I was an investor I'd assume the company was doing very poorly. He's admitting he can't make payroll. 110k isn't a ton of money.

BasilPH 5y ago
We do actually make payroll and have a solid runway. What my salary cut does is: a) signal the investor and the team that I'm serious about this venture, b) increase my equity and c) increase our runway by a couple of months. As I've noted in a top-level comment, my intended message about focus gets a bit muddled without me giving the proper context. I'll add an update to my post with some context.
giantg2 5y ago
$110k is a ton of money to me. But I agree that doesn't look good for a company.
- devmor 5y ago
  It's a lot of money for a person, depending on where they live. But for a business it's definitely not.
  - coldtea 5y ago
    Well, it's about a yearly developer salary where that founder lives - so not really "a lot of money" for them there, just the expected amount (and FAANGs do better, as do developers in New York working for finance). Whereas his new salary is closer to a burger flipping salary, and actually less.
- deleted 5y ago
  [deleted]
- 999900000999 5y ago
  Are you a full time software engineer in the United States ? A decent programer can make at least 100k almost anywhere in the US. I'd expect anyone running a tech company to make more than their own developers. You don't even need to be a good developer, you can use an easier language like Python or JavaScript. Honestly 90% of success in this industry is not being a jerk and showing up on time. I've seen developers outright confront C level execs and predictably it doesn't work out so well. The other 10% is luck. Occasionally you'll have a bad manager, or you'll join a company which doesn't manage their money well. And the only thing you can do in that case is leave.

sokoloff 5y ago

Within two inches of that was the reasoning, which included that they had two years' of runway at this level of reduced income. That to me is the opposite of "[does] not think very far into the future."

gremloni 5y ago
How is two years of runway thinking far into the future?
- PaywallBuster 5y ago
  right, the company should be self sustaining and he shouldn't be burning through his savings
- sokoloff 5y ago
  It's a horizon several factors longer than they would be able to make course corrections. If you planned what lunch you would eat on January 15th, 2022, I'd also say that you were planning far into the future, even though it's only a tiny fraction of the time between now and the sun swallowing the Earth.

ac2u 5y ago

"Dropping your salary by over 75% to below poverty wages doesn't signal to me that you have "skin in the game" Why not? Author remains exposed to the upside through equity but their downside was always limited by their comfortable salary You might think that's a poor choice, and you might be right, but it's the very definition of skin in the game that poorer choices on their part leaves them more exposed to a poorer outcome.

dfxm12 5y ago

Or that you can afford to take big risks because you have parents who are willing and able to support you. The rich get richer... I agree with you, having to take such drastic measures to prove (to investors or yourself) that you have "skin in the game" wouldn't look good to me. It's cute to romanticize this ala Rocky III, but coming up with creative ways to overcome a lack of intrinsic motivation to do your job well is drama best left for the big screen, IMO.