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I've always heard that a founder's salary should be the amount that allows the founder to focus on the business. The concept of a super low salary seems to be f

• beat 13y ago
  Married founders, especially with children, must also maintain the support and good graces of their #1 lead investor - their spouse. And founders with spouses are less likely to be easily manipulated or bullied by investors. Another cause for investors to be less than thrilled with them.
  • the_watcher 13y ago
    > Another cause for investors to be less than thrilled with them. Bad investors. Good investors will let good founders so their thing and support them.
    • beat 13y ago
      True, for sure. But 80/20 rule applies.
    • kordless 13y ago
      There are lots of bad investors, that is for certain.
      • mkramlich 13y ago
        my observed rule of thumb is that there are more bad <foo> than good <food> for any given <foo>
• j45 13y ago
  I've found what you're saying to be true. having a minimum amount that doesn't leave one thinking about money in one's life is important. The thing is, we change (for the better) as a person in our 20s. I've worked and paid myself nothing, a little, more than needed, and now am settling decent amount that can service everything in my life beyond just breaking even. I plan on being an entrepreneur for the rest of my life. I plan on working hard all the time, things are boring when I'm not. Still, I don't want anyone else other than my paying customers to tell me to go home if they don't like what I offer.. especially when software will be in high demand around the world for the rest of my life. The bottom line is cashflow is king, in our personal, professional and business. The more this neglected as each day passes, the harder things get to getting to a point of no return where one starts permanently giving up other areas of life and experiences at the cost of entrepreneurship. Cashflow decides when and if we go home or give up or have to move on. The longer one can set oneself up to survive in the business game (savings, low burn rate, being able to generate a few income streams reasonably passively) all teach entreprenurship from a sustainability perspective in addition to the "go hard or go home" mantra, because the majority inevitably go home, when they could have stuck around a few more years learning how to keep moving.
• ry0ohki 13y ago
  In theory older people have had a better chance to build up savings or have a working spouse/partner to help out.
  • michaelochurch 13y ago
    When you're 22 and single, you've never had money of your own so you don't know how much to ask for or how to keep what you have. When you're 34 and married, you can't just piss your wealth or career away because some frat boy with connections or a checkbook says that working with him will have you set for life inside of 2 years.
• verteu 13y ago
  > I have a family to support, so I can't take a super small salary and eat Top Ramen. This may be a subtle way that older founders are discriminated against. This is not (harmful) discrimination. Ceteris paribus, people with financial obligations are less fit to found a startup.
  • wpietri 13y ago
    The question is whether the ceteris really is paribus. Lower burn is definitely helpful, but lower experience, fewer connections, lower maturity, and higher controlability are less so. That said, older founders are also more likely to have access to capital, so of the kinds of discrimination I worry about in Silicon Valley, age discrimination is lower down on my list despite my salt-and-pepper beard.
  • troels 13y ago
    Are you sure? There's probably a strong correlation between age and financial obligations and there's probably also a strong correlation between age and maturity/experience. Unless the pool size is very large, you are severely limiting the candidates by selecting for two mutually excluding parameters. Calling it discrimination is a bit odd though - It smacks of entitlement. But investors might want to consider these factors.
  • toast76 13y ago
    They're also more motivated to succeed. I have a wife and two kids (both under 5) and a big mortgage. I pay myself barely enough for us to get by (the lowest salary that I've ever earned). The difference is made up in savings and my wife's occasional consulting work. I'm the lowest paid in the company. The cost of failure is so much higher, which simply means you're far more driven to succeed.
    • beat 13y ago
      Absolutely. When the fate of your family hangs in the balance, you're not going to walk away just because it stops being fun.
• ronaldx 13y ago
  > This may be a subtle way that older founders are discriminated against. I would prefer to say that this is a way that younger founders are exploited. And, it illustrates a bigger problem: If startup founders cannot afford to pay themselves a living salary, this limits startups to people who can comfortably afford to fail. (Essentially, the rich).
  • BadassFractal 13y ago
    This certainly rings true.
  • jumbled 13y ago
    Isn't that how all businesses work these days, anyway? You can't start a business and expect to be able to support yourself until your business starts making money. This is only feasible if you are able to get into huge amounts of debt or if you already have plenty of resources (i.e, rich).
    • ronaldx 13y ago
      IMHO Venture Capital is supposed to escape us from that type of ruin: that's where I would accept it to have some value.
• nostromo 13y ago
  Older founders have had more time to prove themselves and should in theory have a nest egg large enough to take a sabbatical to start a business. For example, when I decided I wanted to start a business, I talked with my significant other about it at length. When we bought a house, we bought a duplex where the other half pays the entire mortgage. Now, I'm actually able to focus on my business (or projects, or whatever really) better than most 20-somethings could because I have a supportive spouse with an income, previous income-generating projects under my belt, a nest egg and no rent to speak of. So, while low (or no) salaries may have an anti-age effect, I'd suggest it's not by design and more relative to what people have previously accomplished and what their priorities have been.
  • Domenic_S 13y ago
    Your comment summed up: "Look how clever I am!"
    • nostromo 13y ago
      No, it's: know what you want in life. If you want to be a founder, don't paint yourself into a corner with life decisions that prevent you from being a founder, and then blame ageism.
      • derefr 13y ago
        Some people only figure out that being a founder is a possible life-path when they're already in their 40s/50s. You can't plan your life around things you don't yet know you'll want to do. Presuming that every founder is someone who has wanted to be a founder since they were in their 20s--but for some reason just didn't perhaps get the chance until their 40s/50s--is exactly ageism.
        • davidbanham 13y ago
          No. If people were being actively excluded purely on the basis of age, that would be ageism. The fact that some people plan better than others is just life.
• icambron 13y ago
  > I've always heard that a founder's salary should be the amount that allows the founder to focus on the business From whose perspective? For you as a founder, certainly that makes sense (how else would you do it?), but requiring a higher salary is definitely a real disadvantage and your investors and cofounders are right to see it that way. It should surprise you not at all that having a high cost base limits your options and decreases your chances of success. For certain neutral-connotation definitions of "discrimination", that's a fine way to describe it, but it's hard to see why an investor would change their views there. You can certainly argue that the extra experience you have from previous work makes up for that relative to a replacement candidate who can work for a ramen salary. I'm not completely convinced that's true in the general case; like you said, there are people your age (and presumably experience level) with war chests or breadwinning spouses. But it might be fine for you: "I'd like to make this deal worse for you (and, EV-wise, me) because I need to extract cash from the company, but I still think it's a good deal for you." There's nothing wrong with that, but be aware that's the argument you're making.
  • dangero 13y ago
    You can certainly argue that the extra experience you have from previous work makes up for that relative to a replacement candidate who can work for a ramen salary. I'm not completely convinced that's true in the general case That's really the question. Is experience in industry worth anything in the case of a startup founder? You're saying you don't think so which obviously means it's a "worse" deal for investors. An engineer with experience can earn a lot more annually in industry, so if they are given equal salary at a startup to somebody with no experience, what's happening is that they are being required to take on even more opportunity cost. I think the bottom line is that a 20 something with a small pool of experience fits a very cookie cutter scenario that makes it an easy risk calculation for the investor. To say a deal is "better" or "worse" compared to an experienced founder who requires a larger salary is really impossible to calculate.
    • icambron 13y ago
      > You're saying you don't think so which obviously means it's a "worse" deal for investors. I did not say that. Experience is worth a lot, I suspect [1]. What I said was that needing a higher salary makes it a worse deal than not needing it. I think that was pretty clear. In fact, the next set of words after that snippet you quoted was: > ; like you said, there are people your age (and presumably experience level) with war chests or breadwinning spouses I was submitting that the choice between a 20-something with low salary requirements and an experienced hand with high salary requirements is a false one; i.e. the replacement ramen candidate may have equal experience. Lots of people are older and don't need salaries, and that's who you're competing with for limited investor resources. I know plenty of those people; it sounds like you do too. There's no law that says older people have to make more money. And there's a very good reason why an experienced entrepreneur who can afford it should take less salary; their company is more likely to succeed because those leftover resources can be applied to the company. It even shows up in the data! So that certainly explains a bias against salary needs. > what's happening is that they are being required to take on even more opportunity cost. A separate point, but no investor cares how much opportunity cost you're taking on because it doesn't make the deal any better. There's no fairness rule at play here. Having a higher salary at your current job may improve your bargaining position [2] for a deal the investor already wants to pursue, but a) giving yourself a better bargaining position does mean the deal is worse for the investor, and b) it sounds like you're complaining that it doesn't improve your bargaining position, which sounds...good for the investor, no? Best to stop think of your salary needs as some justified thing that flows naturally from your position of experience and should be somehow baked into the entrepreneurship process as a given, and start thinking of it as a exogenous negative you have to overcome with that experience and wisdom, not mention skill and hard work. Otherwise you end mispositioning your arguments like that. [1] But don't know. I will say it's not some crazily hard calculation; for example, the analysis that came up with "The lower the CEO salary, the more likely it is to succeed." could simply adjust for prior experience (i.e Is this negative correlation because of stupidly overpaid 23-year-olds or are people being paid according to their demands and that isn't working out? Or maybe experience doesn't matter at all?). Then we'd know. So in a sense I agree that's an important question for investors to figure out ("How do I weigh the negatives of salary versus the positives of experience?"), just not the one I was addressing. [2] http://en.wikipedia.org/wiki/Best_alternative_to_a_negotiated_agreement http://en.wikipedia.org/wiki/Best_alternative_to_a_negotiate...
• yetanotherphd 13y ago
  Since everyone who has tried to correct your comment on discrimination has been downvoted, I will try to explain it is as neutral a way as possible: If, for any reason, a person requires a higher salary, and if investors prefer people who can accept a lower salary (and this preference is a fundamental preference, not an attempt to rule out founders because of other characteristics), this is not discrimination. To say otherwise, would be to say that the only way to avoid discrimination is to actively pay people who "need" the money more. Is that really what people believe is fair, or good business? Do I deserve less pay for the same work because I don't have a family?
• dsugarman 13y ago
  you aren't being discriminated against, you are presented with a disadvantage. There is a huge difference. Also, no one wants to eat a lot of ramen and pay themselves nothing. You value providing for yourself and your family higher than your company, which is the right answer, be lucky you have your family and respect the sacrifices of others.. please