What is a decent founder salary in Silicon Valley? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Auren Hoffman, SafeGraph CEO, on Quora:

The simple heuristic is that founders should take the lowest possibly salary they can afford... but not lower. So it might depend on your situation, family, and past success.

You want founders that optimize for stock and want more stock than salary. You also want founders that optimize for success of the company... so one should try to have a very low salary in the beginning of a start-up's history. Founders' salaries, as a percentage of total company expenses, should be going down exponentially over time. So even when founders get a raise, that raise should represent just a tiny fraction of overall expenses.

That said, it is still important that founders can pay for rent, groceries, etc. You don't want founders worried about constantly saving money in their personal life to the detriment of their work. So that's why it is important not to pay them lower than the lowest salary they can afford.

Personally, I take a $0 salary at SafeGraph.

One important caveat is that if founders are doing a great job, their compensation should increase, especially when they have been in the business for many years. One could increase their cash comp but usually it is better to get the founders more shares along the way.

Additionally, if the company is doing well, it is usually a good idea to let founders to take a little cash off-the-table so they can align their interests for the best long-term value of the company (rather than taking the first offer that comes along). Allowing the founders of a successful company to be able to afford a house and pay for nice vacations for their families can help them release the pressure to sell quickly.

One additional thought: it is really powerful in recruiting to tell potential hires that their offers have higher cash compensation than the founder.

Summation: founders should take the lowest possibly salary they can afford... but not lower.

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Published on: Dec 8, 2017