This Week in Startups

How to pay yourself as a startup founder | Startup Finance Basics w/ Kruze's Scott Orn | E1860

Dec 7, 2023

23:36

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Scott Orn, startup finance expert, joins the host to discuss how startup founders determine their pay. They explore the average CEO salary and the importance of being thoughtful before starting a company. They also delve into the salary disparity between male and female founders, and the value of properly compensating high-performing employees in startups.

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Quick takeaways

Founders should be aware of gender-based salary disparities and strive to close the gap for female founders.

Founders must consider their personal burn rate and align it with the company's burn rate to determine appropriate compensation and financial stability.

Deep dives

Determining Founder Salaries

When it comes to determining how much a founder should pay themselves, several factors come into play. In the early stages of a startup, founders should expect to earn significantly less than they did in their previous roles. However, as the company raises more capital and progresses through funding rounds, founder salaries can increase. On average, seed-stage founders tend to earn around $120,000 to $140,000 per year, while series A and series B founders may see salaries closer to $175,000 and $250,000, respectively. It's important for founders to strike a balance between being adequately compensated and remaining hungry and scrappy to drive the company's success. Founders should also be aware of gender-based salary disparities and strive to close the gap for female founders.

Salary Expectations as a Founder

02:01

Close the Salary Gap and Maintain Integrity

01:30

Introduction

3min

The Changing Role of a Startup CEO and Salary Considerations

2min

The Importance of Work and Stability in Entrepreneurship

7min

Gender Pay Gap and Founder Compensation

8min

The Value of Paying High-Performing Employees in Startups

3min

Jason chats with Scott Orn about founder salaries, discussing the trade-offs of starting a company, the importance of board-approved salaries, and equity. They also address gender disparities in founder salaries, managing personal expenses, and investor expectations.

(0:00) Scott Orn joins to discuss founder salaries

(2:25) Trade-offs of starting a company and how salaries increase with funding

(4:41) Role of builder founders and dangers of underpaying oneself

(8:05) Transitioning into entrepreneurship and managing side hustles

(10:03) Importance of board-approved founder salaries and discussing equity

(13:05) Gender disparities in founder salaries and efforts to close the gap

(15:52) Managing personal expenses and company accounts

(17:05) Leading by example and salary distribution within a company

(20:26) Investor expectations and high-value employees earning more than founders

* Check out Kruze: ⁠https://kruzeconsulting.com⁠

Follow Scott: https://twitter.com/scottorn

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