Think like a minnow
Everyone knows that entrepreneurs make a ton of money, right? Not according to this post by Compass, stating that a whopping 73% of startup Founders make less than $50k per year.
In 2008, Peter Thiel, venture capitalist and co-founder of PayPal, was the first to publicly propose the idea that higher founder salaries are correlated with lower levels of success. The reason is that founders who sacrifice everything for their startup are more dedicated to their idea, set a strong example for their team and have lower burn rates. More than five years since, the debates continues.
As loath as I am to agree with (hyper-dick, vampire) Peter Thiel, it would seem the numbers play out: the less you make as a Founder, the more likely your startup is to succeed. I am a bit dubious about the specifics for these companies, because there could be other reasons why companies that pay their founders $150k+ fail, for instance: their founders knew how to build the company initially but do not have the experience to guide them to large-scale success. That would actually correlate nicely with a higher salary. The founders guide the company to $1m in revenue, start drinking their own Kool-Aid, pay themselves more, and then find out they aren’t the right dudes for the job to move the company forward, company fails.
At any rate, no one should ever start their own company for the money. That’s a recipe for frustration and failure. Get into it because you love what you do, and do the right things for your company and the people around you, and then the money will come. We may focus on those who have made a lot of money in this country, but the truth is that these entrepreneurs started their businesses out of a love of the concept, and it was that love and passion that drove the business forward. Money was a logical outgrowth of their passion. That gets obscured often in our rush to heap accolades on successful entrepreneurs. In the beginning they were not money-hungry Sharks, they were passionate minnows testing the waters from their basements and garages. Perhaps all the study above says is that we should strive to think like minnows for as long as possible.