SaaStr · 2021-06-03 · 1826d

Founder Compensation Strategy: Pay Yourself a Market Salary Early

Jason Lemkin shares lessons from founding two SaaS companies about the importance of paying yourself a competitive salary early in startup development. Rather than working for free to conserve capital, founders should prioritize market-rate compensation once the business can afford it or after securing sufficient funding for 12+ months of runway, as underpayment can undermine accountability and founder well-being.

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Metrics in this report

Initial Funding

9$M

raised

First SaaS startup (pre-Web 2.0 era)

Minimum Runway Threshold

12months

recommended

For founder salary decision trigger

Series A Funding

2$M

raised

Second SaaS startup (Adobe Sign/EchoSign)

Series A Runway Extension

2years

achieved

Through cost-cutting measures including no founder salary