Simon Willison’s Weblog

What prevents founders from taking blown up salaries?

19th October 2013

My answer to What prevents founders from taking blown up salaries? on Quora

When the money runs out, the startup dies. If a founder takes a high salary they are reducing the runway of the company, and dramatically increasing its chance of failure. Good founders will take the lowest salary they can make work for them.

In response to your updated question: in the very specific scenario you describe where a dishonest founder manages to raise a large amount of money while maintaining enough control to be able to set their own salary, there is nothing to stop then from paying themselves a super high salary for a few years. This sometimes happens. But the startup world is small and runs on reputation, so they would find it difficult to fool investors like that again.

If they paid themselves a high salary but their company performed really well and the investors were happy with their return, then maybe they were worth the salary they set for themselves!