[tptacek]

the terms aren't set because $20k is a lifeline, they're set because just-above-starvation is the impetus for you to work your arse off getting to profitability

Respectfully (I don't know you): this is bullshit. The terms are set this way because that's what the market will bear in this specific instance. The idea that the terms of VC deals are structured to align the incentives of founders with VCs is a negotiating tactic and little more.

Misaligned incentives might keep you from taking 6 figures off the table in an A round, but anybody who tells you that they're deliberately calibrating your funding to keep you at a below-market salary is feeding you a line.

There are plenty of founders, some of them first-time founders, who make at, near, or better than market salaries. Most of the difference between them and the people whose boards get them to live on ramen is simple negotiating skill.

This isn't to say that there isn't some "hustle quotient" to be extracted from underpaying founders. Just that it isn't dispositive.

[Schwolop]

I agree with what you say for later rounds of VC funding (and this is valuable advice for naïve founders!), but I'm talking about YC and other seed rounds/incubators. The idea of this seed stage is to validate the business, getting it to the point where the founders can get more funding from elsewhere. If YC paid much more than $20k then the three months of hacking around might start to look like quite an attractive job. By keeping the funding fairly low, they ensure the ideas aren't overvalued straight away, and that the incentives are aligned. Only founders who back their ideas/team enough to walk away from their jobs for three months, splitting a mere $20k between the team and product, will apply.

[tptacek]

Strong disagree. As evidence for my argument: the extremely short duration of YC sessions, and the fact that so many YC companies immediately proceed to grab follow-on funding and market salaries.

[Schwolop]

We're miscommunicating, because I don't see how that invalidates what I said.

Roughly speaking, the original guy to whom I replied said "YC doesn't provide enough money, so I can't solve hospital care through them." I suggested that this wasn't the point of YC, that the money was appropriate for three months, and that if the idea was really so good, YC would help him get subsequent funding (with which he could pay himself properly).