Finance · Revenue

How you survive financially

Anonymous

August 17th, 2018

Hi,


I joined a startup (firstly as a developer and then as a CTO) which I have helped them to lean and go out to the market asap. I have recruited the right developers and built a team that have helped the company to sell the product and currently, there are 20 paying customers. The company's revenue is about few million dollars ARR.


Not to long ago, the company raised few million dollars - Round A (angles).

However, everything sounds good but, I am struggling financially. my salary is about 55K USD(same salary from the beginning ) and my equity is 20%.


Do you see it fair to be like that, should I demand more?

Richard Beck Founder-SoftwareOutsourcingSolution.com

Last updated on August 19th, 2018

I would not demand more.. Demanding is not good...


What I would do is speak to the other shareholders about increasing your salary to at least $150,000...


Why?


First, you have already helped make the company successful.... They now have a few million dollars of revenue and a few million dollars of investment capital.


Second, the salary is in line with a company with that revenue and cash on hand.


You have already delivered. It is time for them to pay you a fair salary. They cannot expect you to work for $55,000 forever hoping you'll cash in. It could six months or sixty years... or never.


In the end, this is a good thing to ponder for future ventures... As revenue and investments come in, the shareholders working below market rate should have their salaries automatically increased. This enables them to focus on growing the business instead of worrying about their bills. It is a win-win for everyone.




William M. Digital Retention Lead | CX Empathy Strategists | Copywriter

August 17th, 2018

It's a difficult position. I know people who were in a similar predicament who had to make cutbacks in their personal life so that they can focus on the company (i.e. give up certain things so that they didn't have to constantly worry about money.)


If you love the company and recognize the potential growth, I would say make whatever cutbacks are needed- because it will eventually happen (you'll grow to a point where you can make more).


For example, lets call him "Mark". Our friend Mark went from a 1 bedroom condo to moving into a bachelor apartment so that he didn't have to worry about money. He was making (I think) 47K CDN after seeding and Round A.


But he fucking loves what he does now.


It just comes down to your personal needs. Can you make that step back in your life so there is room to go forward? Or do you need to leave and find a role that can support your current life style?


I know this isn't the best 'black and white' answer,, but I hope it gives you something to think about.

Dane Madsen Organizational and Operational Strategy Consultant

August 17th, 2018

You may want to chose a different word than "demand". You can be confrontational, but often that backfires. In fairness, being a significant owner of illiquid shares is perceived to the be "payment", but leadership grasps you cannot eat paper. A leader in the organization not able to pay rent is a critical issue for a company trying to keep talent. You need to look at your expenses, refine them to a level you can live with, and if the $55 K does not cover them, then ask for an increase to get them covered. The risk to your company is that if you, as CTO leave for an opportunity to cover your costs and the some, it will set a company back both operationally and emotionally. You need to be direct, honest, unemotional, and reasonable (i.e. you likely cannot keep 20% of the equity and have a market rate salary).