If you’re a startup
founder, how much should you pay yourself?
In Silicon Valley, 75%
of founders pay themselves less than $75,000 per year and 66% pay themselves
less than $50,000 per year, according to the data collected by Compass.
Average salaries around the world vary from a low of $30,208 in India to a
high of $72,363 in Australia.
Back
in 2008, investor Peter Thiel posited that a low CEO salary was the best
predictor of startup success:
“The
lower the CEO salary, the more likely it is to succeed.
“The
CEO’s salary sets a cap for everyone else.
If it is set at a high level, you end up burning a whole lot more money.
It aligns his interest with the equity holders.
But [beyond that], it goes to whether the mission of the company is to
build something new or just collect paychecks.”
“In
practice we have found that if you only ask one question, ask that.”
It seems that the
majority of startups align their own salaries with this thinking.
Source:
Compass.co
With
the exception of India, the salary ranges for startup founders around the world
are remarkably similar. Low founder pay is a particularly striking factor in
Silicon Valley, when you consider the high cost of living in cities like San
Francisco.
Does
the stage that a startup is at affect its founders’ salaries? Not as much as
you might think. Founders tend to keep their salaries below $45,000 per year
until they hit a high-growth product phase. Even then, the average salary for a
startup with a mature product is $70,109.
Funding
level appears to be a stronger influence on founder salary, as you might expect.
Few
startups are transparent when it comes to salaries, so it’s interesting to see
at least some aggregate data about the salary landscape as a whole. While the
image of the startup founder as a champagne sipping, private-jet-hiring may
still remain for some who remember the days of the first dotcom bubble, it’s a
thing of the past for most, it seems.
Reference:
Martin
Bryant, Startup CEO salary: what wage does founders get? Probably not a very
high one http://thenextweb.com
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