Underpaying yourself is hurting the company đž
Founders in survival mode are bad for business
Thereâs a point where underpaying yourself stops being discipline and starts affecting the person making the companyâs most important decisions. Thatâs when the founder becomes the weakest part of the business.
I heard it put in different ways by Millennial Masters guests, and most of them treated it as part of the deal. I did that for too many years, until I realised what it was costing.
Melissa Kwan also used to think founders should get paid last and least. After years of doing exactly that, she changed her mind. âThe biggest variable to success is the founder,â she told me, and âif you are constantly in survival mode⊠you cannot make good decisions for your company.â The real issue is what that does to the founder.
Before eWebinar, she described almost ten years of âpure sufferingâ, paying herself barely enough to get by well into her 30s, living with multiple roommates, picking the cheapest thing on the menu, or meeting friends after theyâd already eaten because she couldnât afford dinner with them. Thatâs what bootstrapping often looks like in real life.
Itâs easy to package that kind of sacrifice as part of the job. It sounds different when you look at what people are actually giving up.
James Fleming went from a highly paid executive job to selling his watches while his wife sold off her gold just to keep the marketing going. He had days when he didnât know how he was going to put fuel in the car to get to meetings. Emma Mills ended up remortgaging her house to sort out cash flow after getting too optimistic about what the business could support.
Tyler Dunagin pulled money out of his savings and retirement account and paid himself a pittance for the year. Andrew Steele pointed to another version of the same problem: founder pay thatâs too low or too erratic can leave you unable to get a mortgage at all.
People blur the line between lean and self-destructive when they talk about âleanâ. The word sounds smart and controlled. The reality is often much uglier.
Yota Trom says scarcity leaks. If youâre operating from that mindset, people feel it, even if you never say it outright. Her question stings: who wants to be part of a culture like that? She pushed it further by asking how you can be generous with other people if youâre not generous with yourself. That moves the conversation out of personal finance and into company culture.
The overlooked bit is what chronic money stress does while youâre still trying to lead well. It can show up as caution that looks sensible but is really fear. It can make you more defensive, tighter with people, more hesitant to hire, slower to spend where it matters, more transactional, and less trusting.
It also pulls you into short-term thinking. When money stress is constant, you start solving for immediate relief instead of better long-term decisions. You might call it prudence, but the team experiences it as pressure. And the people you most want around you usually donât stay long in a culture shaped by private financial panic.
Damon Flowers pointed to another part people tend to leave out. Founder money stress is lonely. You canât really take it to staff because then they start wondering whether they should look for another job. You canât fully take it home either. So you end up carrying it in your own head, and it gets heavier. That isolation matters because people donât make their clearest decisions when the financial pressure is constant and private.
Peter Watson made the case for taking less and keeping more inside the business. Founders should work out the minimum they can live on, then take that, and leave the rest in the company. That can give a business breathing room. It can leave you with more room to survive, invest, and move when opportunities appear. Some founders do win that way.
But Peter also shows the trade-off. Even later, after the business had improved, he was still pricing purchases against an old ÂŁ5-an-hour wage. He describes how hard it is to âunlockâ that after years of living so frugally. Extreme discipline can help a founder survive. It can also rewire their relationship with money in ways that donât disappear once survival is no longer the issue.
A founder taking less for a while can be rational. A founder who stays so underpaid that they become distracted, anxious, reactive, isolated, resentful, or mentally worn down is no longer helping the company.
That was Melissaâs point. If youâre constantly in survival mode, you cannot make good decisions for your company. Once the strain starts affecting judgement, itâs already affecting the business.
None of this means founders need luxury first, or that every business can pay market-rate salaries from the start. It also doesnât mean frugality is fake or that every rough period is a mistake.
It means the founder should not be the part of the business quietly breaking while everyone pretends itâs discipline.
The founder doesnât need comfort first. They need enough stability to think clearly, lead properly, and keep building. Without that, the business pays for it.
Related Millennial Masters conversations
If the company is not making profits, as it happens often in the launch phase and/or in bootstrapping ventures, a highly paid founder would affect both the culture and the company itself.
Of course, this should be only a phase until the company makes enough money to afford certain wages.
If there are no profits, there cannot be a "relaxed" founder with a high level of income - in my opinion.
Scarcity is what makes people do more, and no wonder why people with more kids are those who make more money. They just HAVE TO. :)
I come from the bootstrapping school, with years of paying myself at last - and only if there was enough money for my salary. But that was a (long) phase that stopped when I found out how to scale the business up to several millions in revenue.
Everyone was very well paid, at that moment, and I as well.