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What do you pay yourself as a founder?

Those of you that have the means either through revenue or funding, what kind of salary to you give yourself? 

I'm currently paying myself $87,500 per year as a single founder of a lightly funded company that has a product, but no revenue yet. 

I've always been curious what other founders pay themselves. 

  • I made the mistake of paying myself and my 2 co-founders $1,200 a year (yeah, 200 a month) for two years while we were building our startup. We had raised about 150k, and we made the mistake of thinking that, by barely paying ourselves, we would be able to last longer and rely less on investments.

    Obviously, we all ended up either freelancing and running out of savings, which ultimately led to us to focus in all kinds of things other than our startup. It’s sad, because we were having good traction, revenue, and a good product. But in the end, that single mistake ended up splitting us apart.

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    • $1,200 a year is not $200 a month. That’s $100 a month. I don’t know how anyone can live on that salary in America; maybe some third world country but not here. Even if 12 such people shacked up together they couldn’t afford rent.

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      • You are right, what a stupid mistake, it’s $2,400 a year. We had savings and we all have wealthy families that helped us a little, yet we were living in very precarious conditions.

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  • If your company has no revenues I don’t think you should be paying yourself $87,500. You’re effectively killing your company by doing that, as you’ll run out of money pretty quick paying such high salaries. Try to get by with as little as possible.

    See, this is why VCs and angels prefer 20-something founders. Because they can live on ramen noodles and sleep on couches while they’re first working on their startup; they don’t need a salary as high as $87,500; they can get by on $20,000 or even less depending on how thrifty they are.

    Ultimately the question is, are you in it for the salary or are you in it for the shares and trying to make a big company? If you’re in it for the salary then you’re not a good founder, as you don’t believe in the growth potential of your company.

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    • If you raise funding, you should pay yourself. CEOs should not be thinking about if they can afford dry cleaning this week, or whether they can afford to eat out and should have to cook their own food. The value in avoiding circumstances like that is the value in paying yourself. Anyone who says a founder should be earning 20k is probably in high school.

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      • 20K can go a long way. I don’t know what kind of rich area you live in but in most of America, people can easily live on 20K if they have no children and have roomates.

        You can get a room for around $500-$800 a month. If you had $800 a month for food and other expenses like gas and car insurance, that’s $15,600-$19,200 a year, which is under the $20K figure that I used.

        You don’t think that one twenty-something year old guy or woman can live on that then you’re a spoiled brat and only care about having a high salary because you don’t believe in the prospects of your company.

        Nobody said that $20K had to be a long term thing anyways; just the first year or two when you’re bootstrapping the company, and/or when you have raised a small amount of capital but generate no revenues like the OP.

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        • You do realize most consumer startups don’t generate revenues until much later, right? Would you have told twitters founders or mark zuckerberg that they can only have a 20k salary after they raised seed or series A?

          Again, you seem to think 80k salary is a lot – it’s not. The point of paying the CEO is so that they can think about company problems, not about mundane real life problems like if they can afford rent this month or if they have enough money to go out to dinner. I don’t think any investor would give a shit if any of their CEOs paid themselves from 75k-125k, anything more without having reached milestones towards a series B+, and you might argue the salary is high, but lol at thinking anyone even a 21 year old kid should be only giving themselves a 20k salary after they’ve raised.

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      • This. Founders need to be focused, not worried about whether they can make rent and needing to find outside gigs.

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    • With that logic, we should put 20-somethings in charge of running fortune 500 companies. “They can live on ramen noodles and sleep on couches… they don’t need a salary as high as [millions]; they can get by on $20,000 or even less…” It would save stockholders millions of dollars and they would gladly do it for the experience, cause they are “thirsty”

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      • You’re missing the point. Fortune 500 companies generate lots of revenue, hence they can afford to pay high salaries. The OP’s company doesn’t generate any money whatsoever and yet he pays himself like it’s making millions.

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    • Here’s another angle- I’m a 40-something founder and I don’t take a salary (even though my company makes revenue) because I have assets and I want to reinvest the max back into the business. It’s not about age; it’s about being practical and future-oriented; there’s something to be said for maturity.

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    • I think you are right to pay yourself. Housing in Silicon Valley (if that is where you are) is high. REALLY high. Giving yourself poverty wages is silly. The young 20 somethings, have the advantage of living in their parent’s house or crashing with a ton of other people, which can be a horrid experience.

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  • four founders, 76.000 EUR (~95.000 USD) in total through EU financed aid. we got a product but no revenue yet.

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  • If you are paying yourself 87k, how much are you paying your employees? If your salary will consume 20% of your investment, I’m worried how much you are spending on salaries altoghether. Or are you paying small salaries to compensate? If that is the case, how do keep the morale up? In my case I don’t pay high salaries, but I don’t take a lot of money myself, so I manage to keep a “we are all in this together” kind of feeling.

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    • ++++

      and not to mention, office rent will end up eating a large chunk of it, especially if you’re in a high COL area.

      what is your burn rate? plus, it usually takes six months to raise another round… but then it’s hard to raise another round if you don’t have traction.

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  • Zero. All deferred. Entirely bootstrapped. Taking “stipends” in the form of reimbursements for the past years out of pocket funding. We will realize the deferred only at profitability, and when we close funding will pay 2 founders about $55k each

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  • I’m thinking 20-30K is reasonable. But with the option for annual/bi-annual bonuses as a percentage of revenue — Possibly a large percentage, since it’s justified it in terms of the low salary and incentive. First two years or so will be doable but a little lean. But it comes with a big medium term upside.

    Thoughts?

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  • Early thirties founder – pay myself nothing viewing “sweat equity” as compensation. Raised roughly $300K of outside financing to fund the business, not my salary. Benchmark for getting paid is after the company generates enough cash flow to meet its operational needs. Agree with the view of taking “stipends” for certain out-of-pocket expenses, but need to have strict limits around that (few hundred dollars a month) justification being that as a founder, you are basically always “working”.

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  • $30-55,000 for the first 2-3 years. I now pay myself $80,000 after 8 years. I never took funding, bootstrapped the whole thing myself and paid all employee, legal, lawsuit, software, engineering costs based on revenue from day one. COL is huge though, I live in the mountains of Colorado where life is cheaper and enjoyable. 🙂

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  • Our History

    First 6 months – Paid ourselves 6k each from incubator money, lived at home

    1-2 years in – Paid ourselves 50k after raising $1M

    2 – 3 years in – Paid ourselves 80k after raising another $3M

    4 years in – Paid ourselves 120k for 6 months, than now moving to 150k, closed 15M and 8 figure revenues

    Next Year – Looking at around 200k+ salary for each founder, company is profitable.

    It starts slow, but when you guys get there, the rewards do come. Just keep truckin!

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