Ask HN: Should I Take CTO/Co-Founder Role?

4 points by ctomaybe 10 years ago | 10 comments

Hi all.

I'm a little at a loss here. My CEO just offered me to fill our vacant CTO role and become a co founder to the company. I feel up for the challenge and capable of the responsibility, but I'm a little fearful of taking a salary cut (from ~100k to < 50k). I am our only earner between my wife and I, and we are finally reaching "financial equilibrium" (we racked up a ton of debt just after college and are nearly in control of it) and I really wanted a few months of normalcy or at least general liquidity to establish some savings and pay off some debts before plunging into something like this.

The opportunity for reward of we're successful is immense and really enticing but don't know if I can stomach the risk. Short of budget adjustments (which we're planning now) what options do we have with our shitty credit to help float the next few months? I'm not per se looking for a yes/no, I just want opinions of those more experienced than I so that I can make a more informed decision.

dangrossman 10 years ago |

Maybe I just don't understand startup culture, but, no. Absolutely not. Cutting your salary in half to take a promotion? Where's the money going to come from to do CTO things, like hiring engineers, if the company can't pay its CTO a reasonable wage? I would not advise you to do that, especially when it's not even something your financial situation can support.

jeffmould 10 years ago | |

Completely agree here. I would not take a 50% cut to take, what amounts to in title at least, a promotion. Granted the founder role may come with different class of shares or bonuses which may be something to consider. But at the same time, those shares are probably worth minimum now and will be that way for an extended period of time or at least until fully vested. Either way, you are giving up immediate, guaranteed income to take a bet on the value of the company down the road. If you are not financially and mentally prepared to take that gamble I would not recommend doing it.

I am not sure I understand why a CTO role would be a 50% pay cut from your current role? It sounds like they are trying to pull a fast one on you hoping you like the title over the salary.

ctomaybe 10 years ago | | |

There's definitely a component of saving burn rate for the company and making me more literally dependent on the success of the company. I understand the perspective there and the needs that the company has right now, but I'm leaning on the no side -- if I can't provide for myself and my wife a stable means of living, there's no way I can continue doing the high-quality work that has earned me this offer.

ctomaybe 10 years ago | |

That's where I'm leaning. I want to be part of this in a big way and I want to contribute in every way I can, but if I can't afford to live while doing it then it's not going to fly.

From a circumstantial standpoint we're in a significant pivot that's gotten really good response but we're running short on runway on our first seed round from 1+ year ago (hence the emphasis on lessened salary).

karterk 10 years ago |

While I don't know the details of this offer, I would strongly advise you to give it a pass. Such a paycut will rarely compensate you fairly even if your start-up ends up being a moderate success (~200 M exit). Unless this company already has a terrific traction and you get a significant chunk of the options, there is no point in a 50% pay cut.

There are also several gotchas around start-up options. You should read this: http://blog.samaltman.com/employee-equity

rajacombinator 10 years ago |

If you have to ask random people on the Internet, no.

prysie 10 years ago |

To take the CTO role and be the co founder the overall components that make up your package will change, it's hard to provide advice without knowing the rest of the package comments that you gain - but a big part of the structure will be to ensure you have skin I the game to make it a success.

ctomaybe 10 years ago | |

I mean, right now I have about 1% equity and I'd jump to near 10%, so in the event of wild success of the company (let's say a 100M exit) I'd be way ahead, but in the meanwhile I don't think it's responsible to sacrifice the financial stability we're just arriving at. I'm in no position to open deep lines of credit and have no savings, so it's not like those are options.

The way I see it, it's really a timing issue more than anything. If I were a homeowner, I could consider an equity line on my home to cover a couple months of expenses (plus I wouldn't be paying rent...), or if I had a longer credit history I could open a big card with the understanding that I would either have a good exit with the company or leave for a well-paying, more stable job at a larger company at some point and be able to repay the debt either way.

It's just the wrong time in my life to take this risk, unfortunately. It's not even the long-term effects of the risk, either, it's the change to the near-term status quo that I don't think I'll be able to handle.

jf22 10 years ago | | |

I'm being blunt here but you should really re-think how financially literate you are if you think taking out debt for a unicorn exit is worth it.

It is not the wrong time in your life to take this risk. This is the wrong risk.

Jeeze, I mean you are saying you're willing to cripple yourself financially, and you are already in debt, I mean... I don't know I'm at a loss for words...