How to pay yourself as a startup founder | Startup Finance Basics w/ Kruze's Scott Orn | E1860

Salary Factors

Determining a startup founder's salary involves several key factors, including approval from venture capitalists and the board. Scott Orn emphasizes the importance of transparency with the board to avoid future conflicts over compensation. Jason Calacanis supports this by highlighting the need for board resolutions to approve salaries, ensuring ethical standards are maintained 1. He notes that median startup CEO salaries have increased from $125,000 to $145,000 between 2018 and 2023, reflecting the evolving landscape of startup compensation 2.

The other little thing I like to remind founders about is determining your salary and then getting it okayed by the venture capitalist is super important.

--- Scott Orn

This approach not only aligns with industry standards but also fosters trust and accountability among stakeholders.

   

Board Approval

Board approval is crucial for maintaining transparency and trust in a startup's financial practices. Scott Orn advises founders to have their salaries approved by the board to prevent any potential misunderstandings or ethical issues 1. Jason Calacanis warns against unethical practices like paying personal expenses from company accounts, which can damage trust and violate tax regulations 3.

Just be super open and honest with your board. It takes five minutes to have a board resolution approving your salary every year.

--- Scott Orn

Implementing systems for expense approval can further enhance transparency and accountability, ensuring that all financial transactions are above board.