How much should a startup CEO pay themselves?

ceo
salary

#1

This one is more of an open discussion and not a question that is specific from my perspective. One of the reasons why people start companies and are passionate about solving a problem is to make money for themselves and for others around them.

As a founder, there is always this burning question that pops-up during two major stages of the company:

  1. They acquired a bunch of paying customers and are tasting profits
  2. They got their first seed round

The question is:

As a founder, should I pay myself before the company reaches say 6 months worth of savings in the bank account?

My initial thoughts are:

  1. Founders need to pay themselves as soon as they make profits;
  2. Taking money from the profits cannot be a huge amount; take what I call the “Frugal Money”; money that helps you meet your basic needs;
  3. As the company grows, pay yourself more;

If you have an investor on-board, anyone who is restricting you to not pay yourself a minimal amount to cover your expenses might not understand the importance of the personal life a founder has.

I think this is a question (a tough one though) that every founder asks, where there is no definite set of answers for them. Instead, I thought Converse could be a great place for us to discuss on this issue, and get some clarity on it.


#2

I have wondered about this question for a long time until recently. I went to a founders’ meet where one of the founders (I can’t remember his name) put it in a good way. When a startup is founded and/or funded, the initial years are most crucial. We are likely to arrive at the answer when we question ourselves, “how much can I live on?”, obviously being frugal comes into picture in this case :slight_smile: .

I understand this answer can be translated in many different ways but the idea behind stays the same, because the startup’s success matters more than anything else.
So, there is your answer.


#3

This is interesting. Something that a lot of people wonder and many assume that the founders take salary way before the company does. But in a start-up the situation that you explained has to be the best fit I have come across. I am looking to hear more thoughts on this from others as well.