How long should a founder be without salary? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Andrew Chen, General Partner at Andreessen Horowitz, on Quora:

I'm a believer in free markets, and also in thinking long-term.

When founders first get their company off the ground, they are often taking a risk and go without salary. However, as soon as they raise a real amount of money -- either from institutional seed funds, a large group of friends/family, or with a VC -- I think the founders should pay themselves basically market rate (within reason).

The reason for this, especially if there are co-founders, is that starting a company is already hard enough. Your customers are leaving you, recruiting is hard, employees will occasionally quit. It's hard to think long term, even though it's a fact that startups will need to be oriented long-term to succeed.

If on top of all of this stress, if the founders are paying themselves way below market, to the point where they are burning their savings, that's just not a good thing. It creates a lot of stress, and unwanted behavior from the perspective of an investor.

Obviously if there's a case where the founders were highly compensated before and it would impact the runway, OK, then great, there's an opportunity to trade off a longer runway by capping the cash compensation. If the team wants to do that, great.

But in general, I believe in market rates for everyone, including the founders and the employees, within reason.

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Published on: Mar 25, 2019