Younger Startup Founders Pay Themselves Lower Salaries

http://thenextweb.com/insider/2014/01/22/startup-founder-salaries-younger-more-inexperienced-entrepreneurs-pay-themselves-less/?fromcat=all#!sWaaJ

by bjoernlasseh • 13 years ago

33 31 13 years ago

thenextweb.com

iterable• 13 years ago

This is super valuable. $40K. Not much in SF!

niamh• 13 years ago

Nor in NY but it happens. A breakdown in location X salaries would be interesting to see. Is this just in the U.S?

dev1n• 13 years ago

In Albany, NY a couple of my friends are making 40,000 as web developers up here.

cgore• 13 years ago

$40k isn't much anywhere in the US, not just in San Fransisco. Mississippi is the poorest state in the US, with a median household income at $37,095.

Cite: http://www.parade.com/166996/viannguyen/what-are-the-10-rich...

dllthomas3• 13 years ago

I wonder where X% or $Y over or under median has a bigger impact on quality of life.

lnanek2• 13 years ago

I've crashed at places like the StartupHouse in SF for very low rents. They had closet sized private rooms or bunk bed rooms for even cheaper. A private room in a shared apartment down in East Palo Alto was probably the best valley place I stayed, for $600/month. It was easy to Caltrain anywhere needed, including SF. Young people are far more likely to accept college dorm like crowded living conditions like this, though.

beat• 13 years ago

I don't suppose I could talk my fortysomething wife into those living conditions, no.

ffrryuu• 13 years ago

They haven't wisen up yet :)

DamnYuppie• 13 years ago

This can be filed under "duh". Younger people, generally speaking, have less obligations.

wyclif• 13 years ago

Yes, I was shocked too. Guys fresh out of college without wives, children, and family obligations don't need as much money to operate, you say? Stop the presses!

scott_s• 13 years ago

And it would be silly to do that. We should not dismiss findings if they happen to corroborate our expectations; that makes us less likely to test our expectations, which means we're less likely to find instances were our expectations are wrong.

Further, you should especially not dismiss findings if you could constructive a narrative for the opposite outcome. And, in this case, I can. If the result had been that older founders typically pay themselves less, I can imagine an explanation of "Older people, generally speaking, have more experience and better understand what it takes to keep a business going."

colmvp• 13 years ago

I saved your comment for future reference because it's exactly what more online communities need. I don't understand how a community that's built on knowledge sharing can be so dismissive of research.

dllthomas3• 13 years ago

...or "Older founders generally have saved up more of a cushion for themselves" or...

Good points well made.

mmmbeer• 13 years ago

I've also seen it work the opposite way - older founders who were already wealthy paying themselves no salary at all. But yes, it is obvious that younger founders without families can live on less. Another consideration is the older you are the closer you are to retirement and the less risk you can take if you are not already wealthy.

monkeyboysteve• 13 years ago

The article was written by Captain Obvious.

sliverstorm2• 13 years ago

Maybe also more faith that they will exit for 11 figures.

jfasi• 13 years ago

These charts are completely unreadable. Can anyone here actually read this chart without whipping out a color picker?

http://cdn1.tnwcdn.com/wp-content/blogs.dir/1/files/2014/01/...

semerda• 13 years ago

I don't believe the focus should be "how much" rather "is it enough to survive". Are founders paying themselves enough to meet their basic needs of survival (food, shelter, family etc) ref Maslow's hierarchy of needs. We all have different circumstances and thus needs change too. Ref I am not talking about wants, just needs :-)

Like in business it is a fine art of balancing it all out. Pay yourself too little and our human basic needs to survive kick in (reptilian brain) and instead of using your cognitive mind to focus on the business you focus on the lack of money. So not paying yourself enough is very damaging for everyone involved with the business too.

ryanSrich• 13 years ago

I would love to see some statistics on location and personal debt (aka student loans) in relation to these numbers.

I'd suspect that first time entrepreneurs that live in SF who also pay themselves < 100k are free of personal debt. The only other option is that they're just not paying their bills and live with 5 other roommates.

Can any first time entrepreneurs that make less than 100k chime in here?

kps• 13 years ago

Except for the mention of ‘serial founders’, there's no attempt to correct for levels of relevant experience. Is the ratio of founder/employee salaries the same across different degrees of experience?

refurb• 13 years ago

Bingo.

I read an article a while ago about how biotech CEOs get paid way more than tech CEOs (on average).

Of course, the reason for that is that there are very few 20-somethings starting biotech companies (there are some!), but most tend to be 50+ year old with 30 years of industry experience who left jobs with salaries in the low to mid six figures. They take pay cuts too, but start from a much higher number.

ventures• 13 years ago

interesting insights!

eCa• 13 years ago

I would like to see the "Founder salary and team size" graph per founder age.

Since team size seems to also be a strong indicator such a graph might show which of age and team size is the stronger correlator.

ritchiea• 13 years ago

I missed the HN discussion of the previous article about founder salaries that lead to this [1] but reading it now it's blowing my mind how sheltered from reality the community here is. One HNer & startup founder says 80k doesn't go very far in NYC, when the median income in NYC is around $50,000 so a lot of people/families have to get by on less than 80k. I live in Brooklyn and understand there is a lot in New York you cannot afford at 80k, but to suggest that it "doesn't go a long way" is to completely misunderstand how fortunate you are.

1. https://news.ycombinator.com/item?id=7058840

malandrew• 13 years ago

I'm curious about the median income in NYC for those on rent control and those without it. You need to remember that most tech entrepreneurs in the city probably moved there within the last few years and therefore don't have the benefit of 10-20 year old rental rates.

stevenkovar• 13 years ago

To me, a founder's age and experience has less bearing on salary than circumstances of the business itself. I'd be interested to see:

  * Salaries of funded vs. unfunded founders
  * Salaries compared across age of the startup
  * Salaries compared across year-over-year growth rate

Eliezer• 13 years ago

And do they pay themselves more equity, or are they just being screwed by social expectations?

elwell• 13 years ago

I think it's mostly social expectations.

anthony_franco• 13 years ago

It's also quite possible that younger founders have companies that produce less revenue. Which would just be restating the first chart (higher revenue companies lead to higher founder salaries).

Younger Startup Founders Pay Themselves Lower Salaries

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