[tobyjsullivan]

There's an interesting blip at the end of the chart "Bootstrapped vs. VC-Backed Salaries Breakdown".

     Salary Range   Bootstrapped   VC-Backed  
    -------------- ----------- -------------- 
     200k-249k      3%          6%            
     250k-299k      1%          3%            
     300k+          6%          2%            

Overall, I see a pattern that could be explained by slightly different perspectives. A VC-backed founder likely sees themselves working for someone else - "My work will benefit the investors, so I will get paid for that work." Whereas the bootstrapper is very obviously working for themself - "I'll take what I've earned or need and no more".

That's also where you get into that bump at the end. If my bootstrapped company is earning 10M/yr, you bet I'm taking 1M+ salary guilt-free.

edit: accidentally swapped the headers on first post

[paxys]

Simpler explanation – salaries of VC-backed founders have to be approved by the board, which consists of these same VCs. Bootstrapped founders can pay themselves whatever they want.

[Swizec]

> If my bootstrapped company is earning 10M/yr, you bet I'm taking 1M+ salary guilt-free.

Wouldn’t you prefer to take minimum salary and the rest as dividends? Seems like that would be the more tax advantaged approach and fully within your ability to do as majority owner.

[pclmulqdq]

Once your company is earning $10M/year, you should probably be using debt instruments instead, and paying yourself enough salary to cover the interest. That gives you a real tax rate on your cash earnings under 10% (and capped at the LTCG rate) if you can get a decent valuation.

[JumpCrisscross]

> gives you a real tax rate on your cash earnings under 10%

And turns your start-up failing (or firing you) into a financial end game.

[rexreed]

Can you provide some more detail or where to read on this debt instrument strategy?

[Swizec]

You can use anything as collateral for a loan, even business equity. It’s how wealthy people get liquidity without selling assets.

A HELOC loan would be a pedestrian example of this. You put house equity up as collateral to get money without selling the house. Fail to pay, bank sells house. When using your business as collateral, bank sells business.

[rexreed]

How would this translate to salary? Are you saying you'd get a loan on your portion of the equity at full value and the company would only pay you the interest required to cover that loan?

[Swizec]

Something like that yes. Mind you some jurisdictions have laws around “reasonable salary” so always important to check these things with a professional first.

For a more fun take: Watch WeCrash and notice how the protagonist magics 100mil for personal use after raising the huge Softbank round … and what happens to that liquidity when an IPO doesn’t materialize.

[pclmulqdq]

Also, HELOCs have very high interest rates due to the illiquidity of the underlying asset. If you have a large private company that has some interest from private equity investors, you can get a much lower rate. ELOCs on huge blocks of the S&P 500 (essentially large margin loans) can have rates that are almost at the fed funds rate.

[rexreed]

I would imagine with the very high failure rate of startups, loans based on company equity, especially for small, non-public non-liquid companies must have sky-high rates.

[tobyjsullivan]

Good point. I guess I assumed it wasn't incorporated which would be silly (though probably not uncommon for solo founder)

[catsarebetter]

Yeah, in Company of One they say Peldi from Balsamiq takes 1 mil per year