When we launched the founder salary survey five years ago, we intended for it to be a narrow answer to a straightforward question: What should I pay myself? It ends up, there are few public answers, and the numbers on Glassdoor have never reflected our experience as founders nor that of the startups we served. So, we launched this report.
Now in its fifth year, this report has taken on a life of its own. It’s a community effort with mostly volunteer respondents that is now regularly covered in Entrepreneur and Fast Company. It offers insights into what other founders are paying themselves with breakdowns by funding level and company age, stage, and region—including deep dives into markets like San Francisco, New York City, Boston, and more.
This year, the numbers give voice to something many of us have been feeling in the startup market. Salaries have dropped. AI startups took over and bootstrapping rose. We feel this data reflects the present “growth plus profitability” zeitgeist—where founders prove their conviction by taking less so they can give more.
We explore all those trends and more within.
A huge thanks to those who have participated over all these years including our 1,844 anonymous participants this year!
- The Pilot team
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In this year’s survey, founders paid themselves an average of $98k, with a median of $75k. Some of these respondents have raised hundreds of millions of dollars, mind you, which is why that average far exceeds the median.
Meanwhile, 1 in 20 founders (5.4%) paid themselves nothing. (We will show how all this data compares to prior years in the next section.)
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For the first time, we asked founders how they chose their salaries. Most pay themselves “What the startup can afford,” followed by a fair market rate and by only pulling out money as needed. An exciting 1.5% say they relied on Pilot’s Founder Salary Report. (Winning.)
Founders who pay themselves “market rate” earn 79% more.
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We also asked founders to write in their responses. Many look to their board and investors for guidance. Some reinvest what they can to fund operations and a small number do not actually see a divide between company finances and their own.
Just over half of all founders believe they’re being paid just right. Just 1 in 33 feel they are paid too much, and those individuals earn twice as much as those who say their pay is too low.
What other factors can determine a founder’s salary? We cover these later in the report, but consider that:
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AI startups took over this year’s dataset. Last year, 14% of founders were running AI startups. This year, it was 40%—an increase of 287%. This is noteworthy given the average age of the startup in our report is seven years. A significant number have pivoted to AI in the last year.
AI founders make substantially more than non-AI founders (+20%). Though they too have taken a significant and commensurate pay cut this year.
AI founder salaries vary significantly by the type of AI company. It’s good to be in AI for big data—in fact, nearly twice as good as in AI for marketing. (Statistically speaking, and assuming all money is equal.)
Up until last year, salaries were rising. This year, they declined significantly, both by mean and median. Almost twice as many founders paid themselves less than $100k this year compared to last year.
That said, more founders paid themselves something. Whereas 9% of founders did not pay themselves anything last year, just 5.4% said the same this year.
What can we make of the decline? The story is not clear-cut. Certainly the higher incidence of bootstrapping has reduced the average salary. But whereas one might expect AI startup founders to be lean and pay themselves less, they actually pay themselves much more. And if you would assume those AI startups have fewer employees, you would be wrong—companies in our survey were much less likely to be in the 0-5 employee range, including AI startups.
What is clear is that VC funding was down last year, that founders pay themselves in proportion to their investors’ expectations, and that it has likely depressed pay. Startups are getting by with less and founders are leading the way.
Next, we examine salary breakdowns by funding, company size, company phase, and geography, one by one.
Funding is down significantly this year. Last year, the median startup in our survey raised $4 million with an average of $11 million. This year, the average was down by one-third and the median down by 8x. This does not necessarily suggest that is their total capitalization—only that it’s how much outside funding they raised. A founder could be using their own money. In fact, many are.
There are 77% more bootstrapped companies in our survey this year, meaning they took no outside funding.
Bootstrapped founders have always paid themselves less than VC-backed founders in our survey. This year, that gulf has grown. Of founders who pay themselves $100-200k, 90% are VC-backed and just 10% are bootstrapped.
Last year, 57% of bootstrapped founders paid themselves $1-100k. This year, 67% did. And whereas last year, 57% of VC-backed founders paid themselves $50-150k. This year, 73% did.
The higher the revenue run rate, the more founders pay themselves—though it evens off after $3 million. Seems straightforward. Though we’ll caution you that this particular metric does not have a strong correlation, statistically speaking, and you should be considering a basket of factors, not just revenue. For example, some founders with very low revenue pay themselves far more than the analysis would suggest, and vice versa.
Salaries also increase with the number of employees, up to a point—salaries level off after 11-25 employees. That is also the level at which that wage might be considered livable in most markets, especially the tech hubs where respondents were primarily from.
That said, the salary-employee count correlation is not strong and there is a good deal of variation. One founder in our survey running a company with 10 employees pays themselves $1M, the same as another founder with 51+ employees.
There is a moderate but not overly strong correlation between company phase and founder salary. If founders are in growth or optimize phases, they pay themselves more, but there are many exceptions and outliers. Most companies are in the optimization (42%) or growth (37%) phases. Few were in the decline phase, but that’s to be expected—they are likely not responding to surveys.
Founders in growth mode pay themselves 20% more.
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There is a strong correlation with geography and salary, which more or less mirrors the cost of living (so no surprise). Salaries dropped across the board this year, but in some regions, the drop was steeper. Next year, we plan to more thoroughly sample founders in non-tech centers. This year, 33% of our respondents were in California and 11% were in New York State.
On average, San Francisco Bay Area salaries are lower than the New York City or Boston areas. Nearly half (45%) are paying themselves less than $100k and 28% are paying themselves $150k or more.
Half of New Yorkers (48%) pay themselves under $100k and 22% pay themselves $150k or more. Despite this, those who pay themselves more pay themselves a lot more, and New York’s average salary is 34% higher.
Bostonians have a greater founder salary disparity than San Francisco or New York. Half pay themselves less than $100k (49%) and 30% pay themselves $150k or more.
Texan salaries are lower than other regions overall, in line with the cost of living. Two-thirds (66%) pay themselves less than $100k and just 9% pay themselves $150k or more.
Collectively, all other U.S. salaries were the lowest “area” for which we gathered data, but also the region where the sample size was slimmest, hence our grouping. Outside of major startup hubs, 64% of people pay themselves less than $100k and 15% pay themselves $150k or more.
Founders this year want to invest more in operations and are willing to sacrifice their salary so their startup can grow. But consider that living below your means comes at a cost and it is also partly a question of how little you can afford to be paid and still focus. Many founders have families and dependents and a low salary could more than offset itself in increased distraction, if they are forever worried about rent and childcare.
We hope this report helps inform your discussions with investors and your board, and helps you make your case. It also, in sum, offers advice from other founders: As bootstrapping rises and companies morph into AI startups, more founders are choosing to reinvest more of their pay into operations. Perhaps that’s an easy decision for those who already have personal means or a supportive significant other (our survey did not ask about this). But it’s a route many are taking.
In the end, the correct amount to pay yourself, company funds permitting, is not a specific dollar amount: It’s enough so that you can focus all of your energy on creating a successful company.
- The Pilot Team
