You’re Not a Founder If You’re Getting Paid

April 4, 2013 § 2 Comments

Edit: This post was syndicated to Women 2.0 on April 5, 2013 and can be viewed here

I recently went to an event on Fundraising where Ajit Medhekar, part of Band of Angels, sat on the panel to discuss early stage fundraising and the various seed investment structures (I might share my crude sketchnotes…maybe. Stay tuned!). He mentioned that if you’re getting paid, you’re most certainly not a Founder, specifically if this is an early stage company where all you really have is seed investment. Barely 40 minutes later, I met a founder who’s considering shutting down their company because it wasn’t performing well. They sounded defeated and heartbroken, but this is a tale that’s all too common in Silicon Valley. As they were telling me their story, they kept bringing up how they had to make so many sacrifices (welcome to entrepreneurship – expect to stay hungry and foolish), how they couldn’t spend like they used to (evidently for this Founder, it was designer labels – congratulations, you’re learning what it means to make short-term “sacrifices” and live like no one wants to, so you can one day, live the way most people can only dream of), and how once they raised a small seed round they had to give themselves a salary which was reduced considerably from what their market rate would be. Wait…what?! Pause for a second.. they were giving themselves a salary beyond the necessities?!

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It’s not that I wasn’t interested in them as a person, but that’s about the time I excused myself from the conversation. If you’re a founder of an early stage company and all you have is a small seed investment you really shouldn’t be giving yourself a salary. The only people that should be receiving a salary are your early employees, specifically your engineers, designers, and possibly even a community/sales person depending on your needs. When this founder told me they were taking a salary, I about lost all sympathy I had for their trials and tribulations. First of all, it’s a massive turn-off to investors, and second, if you’re giving yourself a salary, you probably don’t have your skin in the game or are not dedicated enough in your product or in building your company (and if you’re not dedicated towards your own vision, why should anyone else be?

Starting a company is not glamorous at all. If you can’t pull yourself away from owning labels, driving a fancy car, or you’re not capable of making incredibly hard sacrifices and being really really really stressed out, you really shouldn’t start a company. Sell that fancy car and pay for that designer you think will work for free – seriously, we know we’re as highly sought after as engineers and there are startups willing to pay us a very nice salary…explain why we should work for free sans equity? (This is a story for another time, and not mine to tell).

There are so many things I’ve had to give up when I decided to take the plunge: buying a new car (you don’t need a depreciating asset anyways..), buying new shoes, buying 1st world necessities, buying anything really, traveling, fine dining, a salary, a social life, my sanity (just kidding..kind of..) etc. Expect there to be fairly significant changes in your social life – it’s not that you won’t be able to relate to your non-tech/startup friends, just that you’ll realize fairly quickly how different your priorities become (not for everyone, but for a lot of them). It’s also not really necessary to be best friends with the whole world. It’s great to have many friends, but they don’t all need to be your best friend. That being said, you still want a few close friends – as a founder, any given day can be your absolute best, or your absolute worst. And on those days that it’s your absolute worst, you really want those closest to you there. The friends that remain there when you “make it” (whatever that means) or don’t, are the ones worth having in your life forever.

Forget about relationships, unless you’re already in one, and they’re absolutely supportive and wonderful! Hold onto those. However, if you’re seeing someone who’s clingy (seriously, what’s up with this new trend of incredibly clingy guys?), is high maintenance in that they need a lot of attention (another ridiculous trend – what’s up with that?), or you’re having to sacrifice important things you need/should be doing to build your company or product in order to spend time with your significant other, consider moving on. Overall your significant other should be adding to the quality of your life when you’re having to sacrifice so much already, not creating more stress or strain than necessary. But I digress..

…the point is, if you’re not able to make massive sacrifices, and if you’re expecting to take home a salary (i.e., anything that goes beyond paying your basic expenses of rent, food, non-spa gym membership, etc – in which case, that’s not a salary, that’s barely surviving), then you should seriously reconsider building a company. You shouldn’t be a founder for the sake of being a founder, nor should you start a company for the sake of starting a company.

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§ 2 Responses to You’re Not a Founder If You’re Getting Paid

  • Your article is the worst advice with the most inane commentary I have read and I didn’t read all of it. You embarrass me as a woman. None of my male friends would write such nonsense and their opinion matters more since I’m a self-hating female. This is the worst advice I have heard. I make many sacrifices for my startup as in I barely have at times money for basic transit and food. I am well beyond the the point of sacrificing labels for designer clothes. I wear clothes that are 5+ years old because I don’t shop. I also like talking about myself. What I will say is fortunately? Unfortunately? I have about 100 friends at min who are founders/ CEOs at extremely well funded/ respected / successful exit companies. None of them would advice me to get funding then not pay myself. Sorry. In fact they tell me to take 80k to 100k min a year because as a founder, you need to be able to be focused on what you are doing and you are worth it. You need to be able to afford the basics in life. Whether I agree with the advice on the amount I have been given or not, I think it is absolutely absurd as you suggest to be funded and not pull any salary. You need to be functioning not just well but at full capacity to even have a chance of success which I obviously know so much about success with my MessageMe clone of an app. That means knowing you have a roof over your head, are well fed and can network, subsist and have whatever are your basics you need to thrive. To think that startup founders should endlessly work for nothing is absurd – I refuse to read beyond the first few lines.

  • Samihah says:

    Thanks for your comment! It’d be great if you could reread my post since I explicitly say that anything beyond basic necessities (such as rent, transportation, food, etc) is unnecessary – my post is on people who use seed funding to live an expensive lifestyle or take a salary beyond what’s necessary. I don’t really see paying for rent, transportation/travel, food, and other necessities as a salary – and funding those, are in fact, necessary. I’d love to hear your thoughts on why you feel that it’s okay for founders to take a salary beyond basic necessities. It’d also be great if you didn’t resort to ad-hominem attacks. Those tend to make people sound like they’re incapable of any semblance of intellectual thought – and that energy would be better exerted on improving your product than writing half-witted imbecilic comments. Just a suggestion, but I’d also veer away from saying you have “100 friends at minimum who are founders/ceo’s” since it doesn’t do much to add to your comment. We’re in Silicon Valley. We all have “100 friends at minimum who are founders/ceo’s.” ‪

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