“If you buy things you don’t need, you will soon have to sell things you need” [Warren Buffet]
It’s the very simple things that are true about some of the funded startup founders that nobody talks about.
Versus what they’re trying to build.
One famous startup recently shut down because the investor didn’t invest the promised money. The word is that the investors are bad guys who *screwed* the founders.
But the truth is that the investor didn’t put in rest of the tranched money because they found the startup to be throwing money on things that didn’t need (and ofcourse, startup failed to meet the tranch milestone).
To start off, the fancy office at a fancy location which comes at a fancy rental. Agree that you need a great place to build a great team, but move a street here and there, and your rental is down by 30%.
The respect for (somebody else’s) money is what I am talking about.
– Some of the post Series-A founders take a salary of INR 2 – 3 crores per year.
– Cofounders of a Bangalore startup hiked their salary by 100% and laid off a lot of employees because they were not able to raise money (eventually, the investors have written them off).
Ofcourse, one can argue that the founder has ‘sacrificed’ enough and should make up for it; which is a valid argument but do it only when you have made it big.
Currently, some of these entrepreneurs are shortchanging the future of the startup and taking undeserved salaries (vs. revenue/respect) because they don’t seem to be confident of the business.
Let’s Learn From Azim Premji?
First, read this : The total pay of Azim Premji, chairman of Wipro, India’s third-largest IT services exporter, crossed the Rs 10-crore mark in financial year (FY) 2013-14, rising over 150% from FY13.[source]
And then this : He recently upgraded from his Toyota to Mercedes Benz, which he apparently bought (second-hand) from one from one of Wipro employees.
What’s the lesson?
His salary is what he has earned (and deserved to) from the business, and not something that’s he feels entitled to because of his lifestyle choices. If anything, the latter follows the former – and many a founder would do well to learn from this.