Sitemaps
Should Kids Follow in Our Founder Footsteps?
The Evolution of Entry Level Workers
Assume Everyone Will Leave in Year One
Stop Listening to Investors
Was Mortgaging My Life Worth it?
What's My Startup Worth in an Acquisition?
When Our Ambition is Our Enemy
Are Startups in a "Silent Recession"?
The 5 Types of Startup Funding
What Is Startup Funding?
Do Founders Deserve Their Profit?
Michelle Glauser on Diversity and Inclusion
The Utter STUPIDITY of "Risking it All"
Committees Are Where Progress Goes to Die
More Money (Really Means) More Problems
Why Most Founders Don't Get Rich
Investors will be Obsolete
Why is a Founder so Hard to Replace?
We Can't Grow by Saying "No"
Do People Really Want Me to Succeed?
Is the Problem the Player or the Coach?
Will Investors Bail Me Out?
The Value of Actually Getting Paid
Why do Founders Suck at Asking for Help?
Wait a Minute before Giving Away Equity
You Only Think You Work Hard
SMALL is the New Big — Embracing Efficiency in the Age of AI
The 9 Best Growth Agencies for Startups
This is BOOTSTRAPPED — 3 Strategies to Build Your Startup Without Funding
Never Share Your Net Worth
A Steady Hand in the Middle of the Storm
Risk it All vs Steady Paycheck
How About a Startup that Just Makes Money?
How to Recruit a Rockstar Advisor
Why Having Zero Experience is a Huge Asset
My Competitor Got Funded — Am I Screwed?
The Hidden Treasure of Failed Startups
If It Makes Money, It Makes Sense
Why do VCs Keep Giving Failed Founders Money?
$10K Per Month isn't Just Revenue — It's Life Support
The Ridiculous Spectrum of Investor Feedback
Startup CEOs Aren't Really CEOs
Series A, B, C, D, and E Funding: How It Works
Best Pitch Decks Ever: The Most Successful Fundraising Pitches You Need to Know
When to Raise Funds
Why Aren't Investors Responding to Me?
Should I Regret Not Raising Capital?
Unemployment Cases — Why I LOOOOOVE To Win Them So Much.
How Much to Pay Yourself
Heat-Seeking Missile: WePay’s Journey to Product-Market Fit — Interview with Rich Aberman, Co-Founder of Wepay
The R&D technique for startups: Rip off & Duplicate
Why Some Startups Win.
Chapter #1: First Steps To Validate Your Business Idea
Product Users, Not Ideas, Will Determine Your Startup’s Fate
Drop Your Free Tier
Your Advisors Are Probably Wrong
Growth Isn't Always Good
How to Shut Down Gracefully
How Does My Startup Get Acquired?
Can Entrepreneurship Be Taught?
How to Pick the Wrong Co-Founder
Staying Small While Going Big
Investors are NOT on Our Side of the Table
Who am I Really Competing Against?
Why Can't Founders Replace Themselves?
Actually, We Have Plenty of Time
Quitting vs Letting Go
How Startups Actually Get Bought
What if I'm Building the Wrong Product?
Are Founders Driven by Fear or Greed?
Why I'm Either Working or Feeling Guilty
Startup Financial Assumptions
Why Every Kid Should be a Startup Founder
We Only Have to be Right Once
If a Startup Sinks, Founders Go Down With it
Founder Success: We Need a Strict Definition of Personal Success
Is Quiet Quitting a Problem at Startup Companies?
Founder Exits are Hard Work and Good Fortune, Not "Good Luck"
Finalizing Startup Projections
All Founders are Beloved In Good Times
Our Startup Culture of Entitlement
The Bullshit Case for Raising Capital
How do We Manage Our Founder Flaws?
What If my plan for retirement is "never retire"?
Startup Failure is just One Chapter in Founder Life
6 Similarities between Startup Founders and Pro Athletes
All Founders Make Bad Decisions — and That's OK
Startup Board Negotiations: How do I tell the board I need a new deal?
Founder Sacrifice — At What Point Have I Gone Too Far?
Youth Entrepreneurship: Can Middle Schoolers be Founders?
Living the Founder Legend Isn't so Fun
Why Do VC Funded Startups Love "Fake Growth?"
How Should I Share My Wealth with Family?
How Many Deaths Can a Startup Survive?
This is Probably Your Last Success
Why Do We Still Have Full-Time Employees?
The Case Against Full Transparency
Should I Feel Guilty for Failing?
Always Take Money off the Table
Founder Impostor Syndrome Never Goes Away

When do Founders Get a Raise?

Wil Schroter

When do Founders Get a Raise?

For some reason, Founders are incredibly "shy" about giving themselves a raise.

It's odd really because we are responsible for looking out for the futures of so many other people, yet we often shortchange ourselves when it comes to our own needs. The reality is, our raises tend to come last, and in many cases, not at all.

So when is the appropriate time to pull ourselves aside and award that long-overdue raise?

Balancing Salary Versus Distribution

For many of us, the default answer on when our salary goes up (or down) is based on our ongoing Net Income. If we make more money, we take some home. If we lose a bunch, well, those credit card balances and Home Equity lines just keep growing... and growing...

That said, basing all of our "salary" on Net Income is a dangerous proposition because like everyone else, we have monthly bills to pay too. So the best approach is for us to strike a balance between a reasonable salary and distributions. What matters most about our salary isn't the size, it's the consistency. An ideal salary should be no less than what it takes to cover our baseline bills, with a little added so that we can actually eat. (Why are Founders the only people who consider "eating" a luxury line item?)

How Much is "Too Much"?

As Founders, we really don't have to be too concerned with overshooting the mark on our raises. Unlike everyone else, Founders have the option to dial their raises back down at any point, and even raise it back up if things recover. What we should shoot for is typically "more than we think we need" not because we're being greedy, but if there's one thing that's very consistent amongst Founders, it's that we're way too optimistic about what we think it will take to survive, especially personally.

Remember, we're the idiots who coined the term "Ramen Profitable"!

At the very least, our salary income should increase at the same annualized rate as everyone else, which typically reflects a combination of growth and inflation. If we let our salary lag behind, we're basically saying our contribution is worth less than everyone else.

What Will Investors Think?

For those who have taken on capital, this becomes an even trickier task, because we never really know if it's "OK" to ask investors for a raise. For most of our time with investors, we're losing money, not making it, so asking for a bigger salary seems counter-intuitive.

But that's just our silly Founder Brain telling us we're not worthy. As it happens, we're also employees of the startup, and if we leave, the person that replaces us will sure as hell expect not just a market salary, but annual raises. When it comes to working with investors, we need also be paid as employees, not just equity holders!

Investors aren't going to mention this! It's our job to keep them apprised of our needs and our market value. I've never heard of an investor saying "You know, Erica has been working here a long time — we should really ramp up her comp!"

The net of it is: if we don't hold fast to making sure our bite of the pie is taken, absolutely no one else will. There will never be a good time to take a raise, so in lieu of that, we need to put ourselves on a path of steady progress where no one else will!

In Case You Missed It

How Much to Pay Yourself. As a Founder, how do you determine how much to pay yourself? How much is too much or too little? We’re breaking down the long-debated issue of Founder compensation to help you find the right balance.

My Startup is Worth Millions. Why am I Broke? It's not uncommon for Founders to have all of their net worth tied up in their company without a real dollar to show for it. Our startup might be worth millions on paper, but is there a way to turn it into real money?

How Do I Get More Equity Back? Giving equity away is easy. Getting it back is super hard. So while we can get some stock back into our coffers, we have to focus more on how quickly we give it away than how we get it back.

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