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I think a smart "founder" saves his Porsche buying until after the company is actually profitable. A $50k salary for a founder is about the limit until the com

I think a smart "founder" saves his Porsche buying until after the company is actually profitable. A $50k salary for a founder is about the limit until the company is actually raking in some dough, unless the goal is to feel important and drive that sucker into the ground.

joshu 16y ago
50k is often not survivable. Especially in SV, where everything is expensive. I agree that if it is possible you should do that. I'm drawing zero salary right now myself. But more importantly - strong talent is expensive.
- btmorex 16y ago
  50k is easily survivable in SV as long as you don't have a spouse and kids to support. I'm really having trouble understanding how you need more. Are you doing all your shopping at Whole Foods or something? Eating out 2 times a day? Where does all that money go?
  - klbarry 16y ago
    My girlfriend and I are surviving easily in NY on about 24,000 a month total, and the valley probably isn't too much more expensive. I also eat delivery fairly often and am not particularly careful with money.
    - tptacek 16y ago
      Presumably, you meant $2,400/month. The average studio apartment in Manhattan is $1900, leaving you with $500 at the end of each month to cover every conceivable expense. MTA to-from work alone ate $180 of that between the two of you.
      - joshu 16y ago
        When I lived in NYC you could have a nice, inexpensive apartment in Astoria or Williamsburg for much less than that. When I did delicious, one of my employees could get to our office in manhattan from wburg faster than I could from the Upper West Side, too...
        idlewords 16y ago
        Back then it was possible to rent cheap in NYC without having to worry about bedbugs. I don't think I'd be willing to rent in w-burg again without paying for an inspection on any place I was serious about.
        maxawaytoolong 16y ago
        You can just look at the bedbug registry. No landlord is going to let you run your own bedbug inspection. As gross as the bedbug situation is in Williamsburg, I still think there's a worse roach problem. There's just as big of a bedbug problem in Manhattan (if not worse) and it's not confined to cheap buildings. My office building got infested and it was primo real estate. Finally, Williamsburg is no longer cheap unless you luck out and find an apartment-by-owner rental where the owner is senile. In a weird warping of reality, you can get a better deal in the Upper East Side (if you go over towards 1st/York.)
        idlewords 16y ago
        Dude, I run the Bedbug Registry. Hence the level of fear. Roaches are trivial to get rid of in comparison to bedbugs. I agree that the problem is citywide. My intended point was that there is now a big new transaction cost to renting in NYC (and soon to renting in most cities).
        tptacek 16y ago
        This comment thread is why I love Hacker News.
        neilk 16y ago
  - tptacek 16y ago
    This is the calling card of a very boring argument. $50k ($40k after taxes in California filing single) is $20k after the median single bedroom apartment rent in Santa Clara county, leaving you with $1600 headroom every month. This is comfortable if you have very, very few expenses. It is obviously possible to cite a life plan that will navigate you through an arbitrarily low comp plan. Just sleep on a couch and eat rice and beans, you can make a go of it at $20,000/yr!
    - joshu 16y ago
      Right. Founders are very highly compensated in equity, so asking that they take a lower salary is a reasonable argument, but may not be practically possible. (People with mortgages shouldn't start up? etc) The main issue is that strong talent can get better prices elsewhere, so you either have to give them a huge chunk of equity, or reasonable salaries. I think people here are talking about startups that 1) can be bootstrapped in a year 2) by two or three college kids 3) with little significant technology other than RoR and mySQL or whatever. I avoid investing in startups like this because honestly I don't think they have great chances of having exits.
      - netcan 16y ago
        It sounds like at early stages founder salaries are an issue. Does the number of founders and their salary needs have much of an impact on early valuations? Say startup A has 3 founders willing to take $100k gross. They hire 2 $100k employees 100k expenses. Startup B is a single founder with a mortgage that needs $100k and hires 4 $100k employees and $100k expenses to get the same amount of work done. Startup A has 1 year runway on 400k. Startup B has 1 year runway on $600k. Would this be reflected in valuation?
    - anamax 16y ago
      > 50k ($40k after taxes in California filing single) is $20k after the median single bedroom apartment rent in Santa Clara county $20k/year for rent? (When I was renting, I never paid median.) $20k/year more than a $300k/30 year mortgage plus insurance. (Property tax adds another $4k or so in SJ.) And yes, a $300k mortgage is possible in SV - older founders could have bought a while back and I suspect that some folks are paying about that now.
  - Andrewski 16y ago
    Of course, eating out twice a day, whole foods, the finest wines every night, and of course the Porsche 911 for him, and the Cayenne for her so she can get the kids to soccer practice. Seriously, how much do people spend on the kids? Also, we have this thing called the Internet now, you don't have to live in SV to start a tech company.
  - joshu 16y ago
    And if you want to hire someone?
ojbyrne 16y ago
Or you live in the Bay Area or NYC and hope to avoid poverty.
- yummyfajitas 16y ago
  If your startup lives in NYC, you can avoid poverty quite easily on $50k/year. NJ is about 20-30 min away. Rent is lower, food is cheaper, and you don't need to pay 2-3% of your income to MTA ticket booth agents taking home more money than you do [1]. Where you live is a choice, and living in Manhattan is choosing luxury. [1] Or assorted other overpaid NYC workers.
  - manhotten 16y ago
    living in manhattan can also be choosing to be closer to customers (existing and potential), closer to potential talent, closer to startup events, closer to angels, closer to VCs, closer to conferences and closer to the universities. Sure, NJ is cheaper but it's a lot easier to have coffee with people if doing so doesn't involve an hour round-trip commute.
- michaelchisari 16y ago
  Maybe there's a case that, at least in the early stages, startups shouldn't be based in the Bay Area or NYC?
coffeemug 16y ago
Me and my cofounder both pay ourselves $65k/year. We live very comfortably, afford most things we want, and while we do have to worry about money on occasion, it's a very comfortable salary. Another $15k/year or so would help alleviate that, but really isn't necessary. A bigger problem is that talent is very expensive. A top-notch engineer just out of college costs about $120k/year when you factor in insurance and other expenses (this number will likely go up even more). A senior engineer can easily cost $150k - $180k/year. That's not counting recruiting costs, which are about a third of first year's salary (You can find recruiters that will work for 15-25% but they won't get you any good engineers). Between a team of five, and other expenses, a startup that raises $500k is incredibly underfunded. People say startups are getting cheaper, but the primary expense is talent, and talent is getting more expensive. So startups are getting more expensive too. A superb team of five (with two founders) costs about $700k/year, so IMO raising less than a million at the least is irresponsible.
cvg 16y ago
50K may have worked in 2000, but we have 10 years of inflation since then. I think 65K is more in line with the times.

joshu 16y ago

50k is often not survivable. Especially in SV, where everything is expensive. I agree that if it is possible you should do that. I'm drawing zero salary right now myself. But more importantly - strong talent is expensive.

btmorex 16y ago
50k is easily survivable in SV as long as you don't have a spouse and kids to support. I'm really having trouble understanding how you need more. Are you doing all your shopping at Whole Foods or something? Eating out 2 times a day? Where does all that money go?
- klbarry 16y ago
  My girlfriend and I are surviving easily in NY on about 24,000 a month total, and the valley probably isn't too much more expensive. I also eat delivery fairly often and am not particularly careful with money.
  - tptacek 16y ago
    Presumably, you meant $2,400/month. The average studio apartment in Manhattan is $1900, leaving you with $500 at the end of each month to cover every conceivable expense. MTA to-from work alone ate $180 of that between the two of you.
    - joshu 16y ago
      When I lived in NYC you could have a nice, inexpensive apartment in Astoria or Williamsburg for much less than that. When I did delicious, one of my employees could get to our office in manhattan from wburg faster than I could from the Upper West Side, too...
      - idlewords 16y ago
        Back then it was possible to rent cheap in NYC without having to worry about bedbugs. I don't think I'd be willing to rent in w-burg again without paying for an inspection on any place I was serious about.
        maxawaytoolong 16y ago
        You can just look at the bedbug registry. No landlord is going to let you run your own bedbug inspection. As gross as the bedbug situation is in Williamsburg, I still think there's a worse roach problem. There's just as big of a bedbug problem in Manhattan (if not worse) and it's not confined to cheap buildings. My office building got infested and it was primo real estate. Finally, Williamsburg is no longer cheap unless you luck out and find an apartment-by-owner rental where the owner is senile. In a weird warping of reality, you can get a better deal in the Upper East Side (if you go over towards 1st/York.)
        idlewords 16y ago
        Dude, I run the Bedbug Registry. Hence the level of fear. Roaches are trivial to get rid of in comparison to bedbugs. I agree that the problem is citywide. My intended point was that there is now a big new transaction cost to renting in NYC (and soon to renting in most cities).
        tptacek 16y ago
        This comment thread is why I love Hacker News.
        neilk 16y ago
- tptacek 16y ago
  This is the calling card of a very boring argument. $50k ($40k after taxes in California filing single) is $20k after the median single bedroom apartment rent in Santa Clara county, leaving you with $1600 headroom every month. This is comfortable if you have very, very few expenses. It is obviously possible to cite a life plan that will navigate you through an arbitrarily low comp plan. Just sleep on a couch and eat rice and beans, you can make a go of it at $20,000/yr!
  - joshu 16y ago
    Right. Founders are very highly compensated in equity, so asking that they take a lower salary is a reasonable argument, but may not be practically possible. (People with mortgages shouldn't start up? etc) The main issue is that strong talent can get better prices elsewhere, so you either have to give them a huge chunk of equity, or reasonable salaries. I think people here are talking about startups that 1) can be bootstrapped in a year 2) by two or three college kids 3) with little significant technology other than RoR and mySQL or whatever. I avoid investing in startups like this because honestly I don't think they have great chances of having exits.
    - netcan 16y ago
      It sounds like at early stages founder salaries are an issue. Does the number of founders and their salary needs have much of an impact on early valuations? Say startup A has 3 founders willing to take $100k gross. They hire 2 $100k employees 100k expenses. Startup B is a single founder with a mortgage that needs $100k and hires 4 $100k employees and $100k expenses to get the same amount of work done. Startup A has 1 year runway on 400k. Startup B has 1 year runway on $600k. Would this be reflected in valuation?
  - anamax 16y ago
    > 50k ($40k after taxes in California filing single) is $20k after the median single bedroom apartment rent in Santa Clara county $20k/year for rent? (When I was renting, I never paid median.) $20k/year more than a $300k/30 year mortgage plus insurance. (Property tax adds another $4k or so in SJ.) And yes, a $300k mortgage is possible in SV - older founders could have bought a while back and I suspect that some folks are paying about that now.
- Andrewski 16y ago
  Of course, eating out twice a day, whole foods, the finest wines every night, and of course the Porsche 911 for him, and the Cayenne for her so she can get the kids to soccer practice. Seriously, how much do people spend on the kids? Also, we have this thing called the Internet now, you don't have to live in SV to start a tech company.
- joshu 16y ago
  And if you want to hire someone?

ojbyrne 16y ago

Or you live in the Bay Area or NYC and hope to avoid poverty.

yummyfajitas 16y ago
If your startup lives in NYC, you can avoid poverty quite easily on $50k/year. NJ is about 20-30 min away. Rent is lower, food is cheaper, and you don't need to pay 2-3% of your income to MTA ticket booth agents taking home more money than you do [1]. Where you live is a choice, and living in Manhattan is choosing luxury. [1] Or assorted other overpaid NYC workers.
- manhotten 16y ago
  living in manhattan can also be choosing to be closer to customers (existing and potential), closer to potential talent, closer to startup events, closer to angels, closer to VCs, closer to conferences and closer to the universities. Sure, NJ is cheaper but it's a lot easier to have coffee with people if doing so doesn't involve an hour round-trip commute.
michaelchisari 16y ago
Maybe there's a case that, at least in the early stages, startups shouldn't be based in the Bay Area or NYC?

coffeemug 16y ago

Me and my cofounder both pay ourselves $65k/year. We live very comfortably, afford most things we want, and while we do have to worry about money on occasion, it's a very comfortable salary. Another $15k/year or so would help alleviate that, but really isn't necessary. A bigger problem is that talent is very expensive. A top-notch engineer just out of college costs about $120k/year when you factor in insurance and other expenses (this number will likely go up even more). A senior engineer can easily cost $150k - $180k/year. That's not counting recruiting costs, which are about a third of first year's salary (You can find recruiters that will work for 15-25% but they won't get you any good engineers). Between a team of five, and other expenses, a startup that raises $500k is incredibly underfunded. People say startups are getting cheaper, but the primary expense is talent, and talent is getting more expensive. So startups are getting more expensive too. A superb team of five (with two founders) costs about $700k/year, so IMO raising less than a million at the least is irresponsible.

cvg 16y ago

50K may have worked in 2000, but we have 10 years of inflation since then. I think 65K is more in line with the times.