It's one of the most common tradeoffs and there is no boiler plate answer as there are so many "depends". My own founding journey has included 50% to 90% pay cuts and periods of zero pay. As an investor I think about it differently - I don't want the founders mental energy getting drained by personal finance issues whilst I also want the founder to set a decent example that is culturally robust around pay and incentives - so between those two points is a zone where we can all find a model
Thanks for sharing this viewpoint Chris. I found it tricky to point to an ideal solution, and with so many “depends,” it’s something to be aware of and keep the conversation open.
We all know it's happening, many mentioned it in their Millennial Masters interviews, and when Melissa articulated it so well in her episode last week, I knew it was time to tackle it head-on.
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.
I agree there’s a phase where you do pay yourself last.
The line gets harder later, when the habit stays in place longer than it should.
That’s where it becomes more nuanced, because underpaying yourself for too long starts doing something to your energy, your judgement, and the relationship with the business.
Sure, but still, a founder's salary should be proportional to the results of the company - in my modest opinion.
If the founders makes a "good job", there will probably be enough money to pay him/herself properly - otherwise, if the company is not profitable, yet, it means that salary is not deserved, yet.
I understand perfectly how frustrating and hard it can be to work and gain almost nothing in proportion of the effort put into a project, but differently from any employee, founders' money should be mostly related to the outcome in terms of profit, that is actually a reflection of the job he/she has done along the way.
It's one of the most common tradeoffs and there is no boiler plate answer as there are so many "depends". My own founding journey has included 50% to 90% pay cuts and periods of zero pay. As an investor I think about it differently - I don't want the founders mental energy getting drained by personal finance issues whilst I also want the founder to set a decent example that is culturally robust around pay and incentives - so between those two points is a zone where we can all find a model
Thanks for sharing this viewpoint Chris. I found it tricky to point to an ideal solution, and with so many “depends,” it’s something to be aware of and keep the conversation open.
It is one of the topic under discussed yet has direct effects not only in your business but in your life decisions too
We all know it's happening, many mentioned it in their Millennial Masters interviews, and when Melissa articulated it so well in her episode last week, I knew it was time to tackle it head-on.
thank you for sharing it
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.
I agree there’s a phase where you do pay yourself last.
The line gets harder later, when the habit stays in place longer than it should.
That’s where it becomes more nuanced, because underpaying yourself for too long starts doing something to your energy, your judgement, and the relationship with the business.
Sure, but still, a founder's salary should be proportional to the results of the company - in my modest opinion.
If the founders makes a "good job", there will probably be enough money to pay him/herself properly - otherwise, if the company is not profitable, yet, it means that salary is not deserved, yet.
I understand perfectly how frustrating and hard it can be to work and gain almost nothing in proportion of the effort put into a project, but differently from any employee, founders' money should be mostly related to the outcome in terms of profit, that is actually a reflection of the job he/she has done along the way.
💯 And here you pointed at the first and foremost problem.