Entrepreneur · Salaries

Should Entrepreneurs Have Competitive Salaries?

John Maloney Internet of Things Executive Consultant, IoT Engineer

September 8th, 2016

Should entrepreneurs have competitive salaries like those of public servants, bureaucrats, nurses, assistants, police and fire professionals? See:

Seems necessary to attract the best talent. 


Michael Meinberg Teacher (iOS Development) at The Mobile Makers Academy (A Hack Reactor School)

September 8th, 2016

Sure, except for one little point:  Who is going to pay them those salaries?  Entrepreneurs tend own their own companies, so they are paid what the market dictates.   

Robert Warren Founder and Managing Director, Mean Eyed Cat Venture Labs

September 9th, 2016

I think you are asking two separate questions.  As an entrepreneur you make what the business provides per Michael M's comments.  If the business doesn't provide you enough of a salary within a reasonable time (this varies by type of business so homework is required on salaries in your space) then the entrepreneur should opt for a day job if at the maximum amount or work to build the business more so they are paid more.  If you are talking about salaries for employees then Mike Moyer's advice is sound.  

As a general rule, I tell entrepreneurs to expect to make 60-75% of the average salary in their industry for the first few years and to realize the equity they are building.  In the Manitoba market this provides enough to live on and keep them engaged in the company.  Keep in mind this advice is only valid in the Manitoba market.

Rob G

September 8th, 2016

the city of san francisco appears to be flush with cash!  Maybe they can pay me a $200k base plus OT plus bennies... how many assistant fire chiefs does one city need.... at $370K+/yr?  Anyway, Michael M, said it well.  Our compensation is already competitive... what the market thinks we are worth. 

Mike Moyer

September 8th, 2016

Yes. They should always get a fair market salary. If the company can't pay them a fair market salary, what they don't get paid is essentially a bet on the future of the company.

A person's share of the equity in a bootstrapped startup should be equal to their share of the bets.

When the company starts paying them over time their bets will get smaller.

Paying someone less than a fair market salary and not giving them a fair share of the equity is taking advantage of them.

This is how the Slicing Pie model for equity splits works. It's the only way to get a fair split.