3 ms·

Founders usually decide their salary, not VCs - if you are raising a seed and decide to use your runway to pay yourself a competitive salary then that's on you.

Founders usually decide their salary, not VCs - if you are raising a seed and decide to use your runway to pay yourself a competitive salary then that's on you. How you decide to spend your seed money is up to you (barring fraud). Same for early employees, they negotiate with the founder, not VCs. Founders are the type of people who even if they were paid more, would plow that money back into the business - it doesn't make sense to take the tax hit. I may be mistaken, but I've never heard of a VC dictating salaries.

alephnerd 2y ago
> I may be mistaken, but I've never heard of a VC dictating salaries. We don't exactly (Boards are a thing) but we do give recommendations of decent salary ranges, but then again, serious founders are not going to ask to get paid a Director at Google's salary when they're the CEO of a 5-6 person startup.
- ilrwbwrkhv 2y ago
  Get paid 995_850 for not doing much, whereas startups are much harder and are a lot more work. Somewhere the inventives are misaligned for sure.
  - alephnerd 2y ago
    No ones asking you to raise with us. You can be a PM or EM at a company and have an equal impact. Also being a Director at a company is a hellish role. I remember my Director of Eng at a startup that hired me as a SWE eons ago was working almost 60-70 hour weeks. They were both technical minded AND business minded
  - majormajor 2y ago
    You gotta do a lot to get a director gig at Google. You might not think it's all useful especially if you're not into the people/politics side (I would agree, personally), but it's not like you can go sleepwalk your way into that job.
tptacek 2y ago
Technically, after your first priced round, you'll have a board; you probably control it, but perhaps not after your second round. The board will approve a headcount plan, with implied costs. Realistically the management team (the operators, not the investors) do control most of this. The subtext of the question though isn't why operators don't increase comp; it's why investors don't kick in enough to let startups compete with comp packages from FAANGs. (I think the answer is: it's because most startups fail.)
- nemothekid 2y ago
  I think the comparison to FAANG is unfair. Most operators, after a priced round, AFAIK, are paid fairly, sans FAANG. The idea that any startup should have similar comps to companies that have been growing 50%+ year/year for decades with money shooting out of every orifice isn't realistic. Most startups don't compete with comp packages from FAANG for the same reason that Target doesn't offer competing packages - they aren't making that much money. An exception, OpenAI, which is completely flush with money. More succinctly, FAANG salaries aren't market rate salaries - they are above market. I find operators are paid in comparison to similar sized companies, especially companies that appear "mature" after their 2nd or 3rd priced round. It's the same reason the quants at Chase don't make as much as the quants at RenTech, doesn't mean the Chase quants are being paid under market.
  - alephnerd 2y ago
    FAANG base salaries and bonuses for most roles aren't all that different from similar roles at other companies in the Bay Area - it's just the stock comp that makes the difference. A PM II at Google Cloud is earning the same base+bonus as a PM II at Cisco Meraki or Databricks.
    - leetcrew 2y ago
      that seems about right, but I don't understand your point. it doesn't really "cost" a publicly traded company less to pay employees in stock vs cash. instead of paying $x + y shares, they could just sell their own shares periodically and pay all cash. they might lower TCs a little to offset the risk of additional dollar-denominated expenses in down years, but they would still be paying way above market.

alephnerd 2y ago

> I may be mistaken, but I've never heard of a VC dictating salaries. We don't exactly (Boards are a thing) but we do give recommendations of decent salary ranges, but then again, serious founders are not going to ask to get paid a Director at Google's salary when they're the CEO of a 5-6 person startup.

ilrwbwrkhv 2y ago
Get paid 995_850 for not doing much, whereas startups are much harder and are a lot more work. Somewhere the inventives are misaligned for sure.
- alephnerd 2y ago
  No ones asking you to raise with us. You can be a PM or EM at a company and have an equal impact. Also being a Director at a company is a hellish role. I remember my Director of Eng at a startup that hired me as a SWE eons ago was working almost 60-70 hour weeks. They were both technical minded AND business minded
- majormajor 2y ago
  You gotta do a lot to get a director gig at Google. You might not think it's all useful especially if you're not into the people/politics side (I would agree, personally), but it's not like you can go sleepwalk your way into that job.

tptacek 2y ago

Technically, after your first priced round, you'll have a board; you probably control it, but perhaps not after your second round. The board will approve a headcount plan, with implied costs. Realistically the management team (the operators, not the investors) do control most of this. The subtext of the question though isn't why operators don't increase comp; it's why investors don't kick in enough to let startups compete with comp packages from FAANGs. (I think the answer is: it's because most startups fail.)

nemothekid 2y ago
I think the comparison to FAANG is unfair. Most operators, after a priced round, AFAIK, are paid fairly, sans FAANG. The idea that any startup should have similar comps to companies that have been growing 50%+ year/year for decades with money shooting out of every orifice isn't realistic. Most startups don't compete with comp packages from FAANG for the same reason that Target doesn't offer competing packages - they aren't making that much money. An exception, OpenAI, which is completely flush with money. More succinctly, FAANG salaries aren't market rate salaries - they are above market. I find operators are paid in comparison to similar sized companies, especially companies that appear "mature" after their 2nd or 3rd priced round. It's the same reason the quants at Chase don't make as much as the quants at RenTech, doesn't mean the Chase quants are being paid under market.
- alephnerd 2y ago
  FAANG base salaries and bonuses for most roles aren't all that different from similar roles at other companies in the Bay Area - it's just the stock comp that makes the difference. A PM II at Google Cloud is earning the same base+bonus as a PM II at Cisco Meraki or Databricks.
  - leetcrew 2y ago
    that seems about right, but I don't understand your point. it doesn't really "cost" a publicly traded company less to pay employees in stock vs cash. instead of paying $x + y shares, they could just sell their own shares periodically and pay all cash. they might lower TCs a little to offset the risk of additional dollar-denominated expenses in down years, but they would still be paying way above market.