Ask HN: Should you be paying your founders? | Hacker News Reader

Ask HN: Should you be paying your founders?

3 pointssamstave10 comments

So we have been met with serious interest in our company, and we are established, older founders (all north of 35, with decades of experience)

Our potential investors do not like that the 3 founders are seeking salaries commensurate with what we do (already reduced as much as possible)

What would you do in this situation? What is normal? zero pay just wont maintain, partial pay is the trade-off, but how does one communicate " well, people can't work for nothing" without sounding bad/greedy.

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It's standard to pay founders livable but below-market salaries. In my experience asking founders to completely forgo salaries is uncommon.

Now if it's a very small bridge round and they basically want you to take no pay for a few months until you raise more - I think that's resonable.

Otherwise unless you're all part-time, want over $100k or have substantial savings I think you're being taken advantage of.

Rule #1: You can never get what you want in any negotiation without being willing to walk away... even when it hurts; otherwise you're not negotiating you are simply capitulating.

Rule #2 (and this could easily be swapped with Rule #1) You don't try to negotiate with people who don't Desire what you have. If they don't desire it, then you are simply selling the lowest possible price.

The key to successfully negotiating really is that they Have to DESIRE what you have.

Greedy--well you folks likely poured your heart, soul, and imagination into this. This isn't a hobby, and you're not children, it is how you eat.

And listen: if you have drop your salaries do it in very Small increments during the rest of the negotiation. I'm assuming that they want to talk in 10,000 dollar increments--you Have to drive that conversation by using 1,000 dollar increments. That will set the tone and enable you to lessen the blood loss... unless of course it blows the whole deal up. It might.

Good rules. Any sources recommended for further rules?

Thank you.

IMO negotiating is very similar to face to face selling. I'm not saying you should read every sales and marketing book you can, get completely hooked on it; then quit your job and go work in car dealerships for few years. That's where I learned to negotiate (sometimes I really miss it) but that was quite a while ago, so no I can't specifically recommend any resources that deal just with negotiating.

I can recommend you read a few sales training books; Zig Ziglar was one of my favorites. You'd be surprised how phrases like; "let's split the difference, is that fair enough" work so well in so many different situations even when negotiating a salary--you'd be stunned.

This is a common problem with investors.

Others may differ, but I think it's a red flag, if they want you to starve. If you're dependent on the company, you'll become desperate to stay with the company. This opens up the door for all kinds of acts, legal and illegal, to screw you out of the share that you didn't sell to them.

I would have never believed it if I hadn't seen it firsthand, but it's amazing how many in the moneyed class would often rather have 100% of nothing, out of principle, than let an investee join the moneyed class by generating a massive financial return for investors and entrepreneurs alike.

No deal is too good to walk away from.

If you have nothing in it why would you stay when things get tough?

How can you ask investors and employees to invest in it if you aren't willing to?

If you can answer those questions and still keep a full salary then your all set.

If you have families you might be able to play the angle that your company has values and should be family friendly. And you want to work with people that share those same values. And that's how your going to attract better talent.

If your founders are spending their mental energy worrying that their kids will be homeless and starving because they can't pay next month's rent without a salary, how do you expect them to do their best work on the business or make decisions for the long term? Most VC-backed businesses aren't profitable in the short term, and even if they are you can't buy groceries in equity.

They don't value you, and they're making it clear. Asking for you guys to take no pay is downright disrespectful, especially for experienced founders.

Consider other sources for funding.

Asking for a salary doesn't sound greedy.

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