How to pay yourself as a startup founder | Startup Finance Basics w/ Kruze's Scott Orn | E1860
This Week in Startups
Jason Calacanis
4.2 • 1.4K Ratings
🗓️ 7 December 2023
⏱️ 24 minutes
🧾️ Download transcript
Summary
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.
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(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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Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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Transcript
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| 0:00.0 | Alright everybody welcome to this week in startups this is our startups basics series why do we do this well because I get asked the same |
| 0:10.0 | questions over and over and over again my founders and what I like to do is have an expert |
| 0:16.3 | a partner of ours who knows how to do things at a high level. |
| 0:22.0 | Answer the questions with me and then when a founder |
| 0:25.2 | asked me this question like hey how much should I pay myself as a founder of a |
| 0:30.6 | startup company I can literally take a link to this very podcast and 99% of their questions and issues are answered and I only have to deal with like one and a hundred follow-ups. |
| 0:41.6 | My partner in Crime is Scott Warren, he is a CFA and Cruz |
| 0:46.2 | COO. Cruz is an amazing accounting firm that we use, about half of our startups use it. it's very popular here in the Bay Area and if you want to listen to all these past basic |
| 0:57.7 | episodes we do them with Wilson City my law firm as well this week in startups |
| 1:02.0 | com slash basics you'll see all the basics |
| 1:04.5 | episodes but welcome back to the program my good friend Scott. |
| 1:08.7 | Thanks Jason, thanks for having me. All right we get this question all the time. How much should I pay myself? Okay, I've raised a 1.5 million dollar seed round. I was making $300,000 when I was at Apple. Now I'm a founder. I got six people on my team they're all getting paid 10-K a month on average |
| 1:27.1 | Some are lower some are higher |
| 1:28.9 | So I'm burning with these I don't know let's say I have six people on my team, I'm burning 60,000 a month, |
| 1:35.3 | I'm burning 720k a year just on their salaries. |
| 1:39.2 | Not much left over for me and servers, accountants, lawyers, marketing, whatever, so how much do I pay myself, |
| 1:46.0 | can I just pay myself what I got paid at my last job? |
| 1:49.2 | I know that the answer to this is it depends, but people want us Scott to give a more |
| 1:54.3 | granular answer so let's take it depends and throw it right in the garbage and |
| 1:58.4 | let's get into details I gave you a scenario 1.5 million persons coming out of a great job there. What are their investors |
| 2:06.5 | going to feel comfortable with and how would you even go about this process? |
| 2:08.9 | Yeah, well the bad news is, well let's start the good news, the good news is you've embarked on this life-changing adventure to start a company |
... |
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