Getting from Zero to One in Your Startup (4): Founder Compensation Should be Slim to None

 
This is part of my Series on Getting from Zero to One.

You are talking to investors soon. They ask you for the executive summary and you send it to them.

If you have included significant salaries for yourself and the other founders you have delivered the wrong message. Investors will see this, recognize you to be a disrespectful amateur and will press delete instantly. Also, they will place your name in a special box in their mind. This box has a skull and cross bones painted on it.

But you have done no such thing. You are prepared to live modestly for however long it takes, even if you do manage to get this funding.  You understand the proposition that by constantly driving value in the company the equity too will become very valuable. You know that in this way management and investor’s interests become perfectly aligned. Your projections have taken all this into account and as a result investors understand that you respect them and that you understand your role.

Peter Theil of the Founders Fund has expressed similar thoughts on the subject of start-up compensation and its correlation to a company's success:

 

“The lower the CEO salary, the more likely it is to succeed.  The CEO’s salary sets a cap for everyone else... It aligns his interest with the equity holders.  But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks.”

So continues our journey in this series- the journey from "Zero to One".

For Part Five in this Series, click here.