[earl]

Of course, less the quite possibly considerable difference between market rate and the reduced rate the engineer is being paid. If you go by Fred Wilson's numbers [1]: $10k per month per engineer, the engineers are probably accepting a $60K/year salary. That's an enormous pay cut for me at least, and well below market for virtually all engineers. So certainly the founders are taking very little money, but the engineer may well be making a $4k/mo investment as well...

[1] http://www.avc.com/a_vc/2011/12/burn-rates-how-much.html

[davidcuddeback]

$10k/month x 12 months/year. Isn't that $120k/year? How did you come up with $60k? This is a serious question, because I assume there's an unspoken assumption in your post.

[earl]

David -

That's the fully loaded cost of the employee, so the sum of salary, payroll taxes, health insurance, unemployment insurance, office rent, and whatever else I'm forgetting.

Edit: also called the fully burdened cost