Ask HN: Should co-founders receive equal pay? | Hacker News Reader

Ask HN: Should co-founders receive equal pay?

2 pointssubpixel3 comments

I see a lot of discussion about how one might distribute equity among co-founders, but I'm struggling with the issue of co-founder salaries.

As part of my agreement with my co-founder, I'd like to define salary 'bands' that correspond to the performance of the company: ramen-profitable, sushi for lunch, hiring a chef. (This idea came from a previous HN thread).

My question is, should my co-founder and I plan to take equal pay regardless of share allocation? (I'll hold 60%, my co-founder 40%).

My gut tells me yes (so long as we're both contributing seriously and the funds are available), but I'd appreciate feedback, esp. based on experience.

As a side note, pg mentioned in another thread that "whatever you pay yourself, you're always doing it at the expense of the stock you hold". Does that mean we should, in fact, return equity to the company as we pay ourselves?

I was part of a start up with 4 guys. 1 was my former boss, the 2 others were my equals. The original idea was the former boss's idea and he was paying for a lot of the overhead (hosting, hardware, beer, etc.) We all stated what our desired salaries were. His was above the 3 of us, and I was fine with that. He brought technical and business skills to the table and I was more than happy for him to have a larger salary. This was different than the stock allocation, which was based on hours worked (before we were funded)

So if you consider you and your co-founder equals, then equal pay makes sense regardless of the ownership. If you (or him) bring more to the table, then different pay rates is also fair, assuming you both see eye to eye on this.

I'm not sure at the PG quote. I do see the benefit of investing profits back into the company which will increase the value of the company and your ownership of it.

For political reasons, it's usually best to pay yourselves the same amount. Reasons for different amounts: children, loans, trust funds, etc. When you're medium successful, that may change if one of you is still CEO. For now, don't sweat it.

I interpret pg's comment to mean that any dollars that you aren't spending growing your business are doing harm to the value of your equity. Realistically, I think this means that if you achieve some degree of product market fit, it's a bad idea to pay yourselves more than you really 'need' as those dollars could be more valuable to the business.

I thought I might be taking that comment too literally ;)

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