[erikbern]

> Pay yourself and a VC-appointed board member below market rate, hire six good engineers, lease some office space, buy equipment, pay for legal and accounting services… and presto, you’re burning through $5M a year

Would love to see the math behind this. How does this add up to $5M/year??

[calcsam]

This is basically “what can a banana cost, Michael, $10?” math.

[gnicholas]

Right, unless you're paying the engineers $400k/yr each, I'm not quite sure how this would add up. Also, what does it mean to pay your VC-appointed board member below-market rate? How much do people pay board members, and how would this be a material line item?

[internetter]

> Right, unless you're paying the engineers $400k/yr each

Is this that unreasonable? He comes from a Google background and he did clarify good engineers.

[gnicholas]

If someone's making $600k at Google, how much would they expect to make at a startup? Based on what I've heard folks tend to top out around $2-300k, with the rest in options. Much of the reason people leave places like Google is to be in a more startup-y environment, and to have a chance to build something from the ground up. If they wanted to just keep making bank, they'd stay at Google.

[eru]

Well, if you are leasing office space, you are likely in a high cost location like Silicon Valley, and so you are most likely also paying your engineers a lot.

If (almost) everyone is working remotely, you can probably get by without office space and also with lower salaries.

[gnicholas]

I'm not sure why leasing office space means you'd be in a high CoL area.

[eru]

Areas like Silicon Valley are very productive for some reason. That's why people put up with the high costs.

Leasing office space in such highly productive areas might be worth it. (I don't know exactly how the mechanism works, but I'm just assuming that at least some of the companies there know what they are doing.)

Of course, the author of the original piece also seems to implicitly assume Silicon Valley?

If there's no highly productive part of the world where you want to concentrate people, you might be better off spreading out your startup and taking advantage of lower labour costs around the country and around the world.

There's lots of smart people in eg the flyover states, or in South America, who for one reason or another can't or don't want to move.