The Foundational Rule
Two weeks ago, my post about founder salaries sparked hundreds of comments. It clearly hitting a nerve in the startup community. Given the heated discussion, I decided to dive deeper into this nuanced topic.
💭 Here’s what I’ve learned from both sides of the table – as a founder who started with an extremely low salary twenty years ago, and now as an investor:
The foundational rule: Early-stage founders should aim for breakeven, not wealth. Your salary should cover:
– Location costs (US vs Europe)
– Family obligations
– Housing essentials
– Basic healthcare
Three key factors that actually determine appropriate founder salary:
– Company progress (revenue/user engagement)
– Deal momentum (investor competition)
– Founder track record
🚩 Major red flag: Founders taking excessive salaries (think $400K) right after pre-seed funding. This signals misaligned priorities and sets problematic precedents for company-wide compensation.
🔑 Key advice: Have transparent salary discussions with investors before signing investment papers. Benchmark against other founders in your city and industry at similar stages.
Want the full deep-dive, plus a massive FAQ on the topic? Check out my latest newsletter, link in the comments.
