Seed financing rounds for startups are larger than ever these days, and their size often leads founders to consider larger-than-ever startup salaries to go with them. If you raise one million dollars on an idea with a couple of other teammates, you can probably make a logical looking point as to why you should make $70,000-$100,000 a year (i.e., your market value). After all, you’re about to devote the entirety of your being to taking that cash and turning it into something special — a high-growth software business.
You shouldn’t take even close to the market value of your salary, no matter the size of the seed round. Here’s why.
First off, this is a startup; if you’re looking for market value right out of the gate, you are in the wrong place.
Secondly, and more importantly, when you’re part of a startup, business productivity is the goal of everything you do. It is not the thing being achieved day in and day out, as it is in established businesses.
At the seed stage, business productivity is the nut that everyone is devoting their constant time and attention to cracking. The early-stage startup is a sucking up of resources in hopes of a future spitting out. The expectation here is that the resources that were sucked up grew in the belly before their eventual purge. Put another way, you burn, burn, burn through cash in hopes of creating something that produces much more cash down the line.
In the pre-productivity stage, where every startup begins, there’s no reason you should be paid what a post-productivity company would pay you. My advice is to take what you should be making and cut it in half. Until you find a way to put a dollar in the machine and watch more than a dollar come out, stay there, because you haven’t earned the alternative.
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