Market Rate Prevents Burnout

Jason Lemkin shares his perspective on founder compensation, drawing from personal experience where he significantly underpaid himself in his early ventures. He emphasizes the importance of proper CEO compensation to prevent burnout and maintain long-term sustainability.

Key Points:

• Personal Experience with Underpayment:

  • First two years: Paid himself $20K
  • Third year: Around $100K
  • Fourth year: Few hundred thousand
  • Result: Felt "fucking poor" and became a "tired CEO"

• Impact of Low Compensation:

  • Led to becoming a "tired CEO"
  • Created impatience in decision-making
  • Influenced the timing of company sale (sold at 4.5 years)

• Core Advice:

  • Pay yourself market rate as soon as you can afford it
  • Don't wait to increase compensation
  • Being underpaid is a "huge mistake"

• Rationale:

  • Financial stress affects decision-making quality
  • Proper compensation prevents burnout
  • Helps maintain long-term focus and patience
  • Enables better strategic decisions

• Warning:

  • Being a "tired CEO" is one of the worst things for a company
  • Financial stress can force premature exits or poor strategic decisions
  • Underpaying yourself can impact your ability to build long-term value

The key learning is to prioritize proper CEO compensation as soon as the business can support it, rather than maintaining artificially low compensation out of a sense of sacrifice or frugality.