Startup founders are just like us. They may know how to negotiate term sheets and build unicorns, but when it comes to their own personal finances, billion-dollar valuations be damned—they’re just as lost as we are.
An unscientific survey of 133 tech founders show most have nothing stashed away for retirement—one entrepreneur even reported a negative balance in his savings and checking accounts. To prove how unrepresentative this survey is, only six of the respondents are women. Still, it gives a fascinating glimpse into how founders manage their money.
These numbers come from The Hustle, a blog from the tech conference Hustle Con, from a survey it circulated among its investors and past speakers asking about salaries, bank account balances, retirement savings, salaries, debt—basically the questions “you’ve always wanted to ask but were too afraid to,” says Sam Parr, who created the Hustle brand.
Though the data are anonymized, it’s possible to deduce who the respondents might be based on the conference’s past speakers and other information provided. One founder, for example, says his startup is worth $8 billion, dramatically narrowing down the list of companies that fit such a criterion. (We’ll leave the speculation to you; the raw data is available here.)
When it comes to retirement, the vast majority of respondents have nothing stashed away for their nest eggs. (In contrast, just one-third of Americans in general haven’t saved for retirement.) One founder explains his reason for not saving: ”Don’t save for retirement. That’s like betting you’ll fail.”
And their bank account balances are surprisingly not outrageous. Just seven have a cool million dollars or more lying around, and the median amount of cash founders have in their accounts is $25,550. The mantra of one founder: “You can’t save your way to being wealthy.”
Another, who has “6k to [his] name,” laments that he “should have saved more money,” but says a “liquidity event coming up soon” (it could be an IPO, acquisition, stock buyback, or something else) will give him the opportunity to cash out on about $1 million in shares. Fittingly enough, another offered this piece of advice: “C.R.E.A.M. [Cash rules everything around me]; cash out a significant amount on liquidity events whenever you get them.”
Forty founders say they have no other assets, liquid or illiquid. One 33-year-old founder—who has $15.4 million in cash and assets, $425,000 in retirement, and a 38% stake in his $40 million company—has this piece of advice: “Bet on yourself rather than on external investments (housing, stock market, etc.).” Uh huh.
Another 45 had $1 million in illiquid assets. It’s likely most of that value tied up in real estate, given the large representation of founders in the Bay Area, where home prices are skyrocketing. But ”renting should not be frowned upon especially in high overvalued markets,” advises a founder. “It’s a lot harder to take risks when you have a $400,000 mortgage.”
All the while, most report no credit card or other type of debt. Two say they owed $1 million or more (again, likely a mortgage).
And what do startup founders actually pay themselves? Following the lead of many CEOs whose salaries are entirely based on performance, 28 startup founders say they take zero salary, and two earn $1 annually. (This, of course, leaves out stock-based compensation; see next chart.) But most founders make less than six figures, probably less than the engineers working for them. Twenty report a salary of $200,000 or more.
Three founders say they own none of their company—these founders all have salaries between $100,000 and $200,000. In contrast, 40 retain 100% ownership, but most have between 20% and 39%.
And among founders who report zero in salary, most hold at least half their company—16 of them own 100% of it.
And here’s a bird’s eye view of the data.