Answered May 1
If you worry about how much as a founder you will be paid you are probably taking your life in the wrong direction by becoming a founder. It’s a brutal truth but one that deserves bruiting abroad.
Investors by and large — in fact everyone that I’ve encountered, but I know that’s hardly everyone — see using their investment in a company for salaries as unacceptable. There’s a lot going for their logic, especially if they are comfortable with salaries being paid out of income. (You can see the logic of not investing in any startup that doesn’t have a revenue stream that could turn into income. Investors don’t expect founders to starve — only not enrich themselves on their money.)
It may be that you will get a salary, but as a founder your focus should be on earning it.
Answered May 1
I wish I knew! 😉
More seriously, founders typically draw a nominal salary that’s enough to live on. Later when the company gets serious investment, this salary will rise somewhat. As the company grows into many millions of dollars in revenue it will end up at market rate.
The reason they’re paid so much less is because the company has many very good uses for every dollar early on. You have to make so many compromises. Paying yourself a large salary would mean even more compromises. The big prize is growing the company’s value so the shares become valuable and you’re not going to achieve that through compromising.
I’m a big fan of the slicing pie model where founders are paid full market salaries but with as much as possible in shares. That model makes it much easier to handle two people with different needs for cash right now, and also to explain to a developer that if they want shares then they have to take a below-market salary.
Eventually the company should make a strong regular profit and start paying dividends (or get sold) and at that point the founders get their real payday. The rest is just having enough to live off in the interim.
My personal situation is a bit different as my company is bootstrapped so I don’t have to justify my drawings to an investor.
