How many years did you go before you pay yourself a living wage in a startup software business?
New founders are always surprised to hear the truth from founders who are five years in:
Most new software startup founders don’t pay themselves much—or anything— for a few years.
Your business isn’t generating any extra cash at first. Whatever there is, you’re going to invest it to grow.
You’re lucky if there is extra cash to pay yourself that isn’t desperately needed to hire staff, buy software, and get customers.
This is when it goes well, and some investments will pay off next year.
Alan Miegel is co-founder and CEO of BetterComp, a modern compensation management platform for larger companies to manage compensation datasets to set market-priced salary benchmarks.
Alan and his cofounders started the company in 2019 with founder funding, then raised angel funding as convertible debt from his friends in the tech industry.
They shipped their first “minimum sellable product” in 2020 and grew revenues steadily, doubling every year from $1M in 2022 to almost $10M in revenue in 2025.
BetterComp now has over 80 employees and 200 customers.
In July of 2025, BetterComp raised a combined $33 million in growth equity funding from Ten Coves Capital and venture debt from Silicon Valley Bank.
Alan and his cofounders still own a majority of the company.
Now they have more resources and support to build on what has worked so far, enabling them to grow even faster and become a market leader.
And now he pays himself a living wage, after five years. As Alan describes:
“Early on, I didn’t pay myself anything. Then I paid myself enough just enough to max out my 401(k) contribution, with no taxable income. I made a promise to my founders, my co-founders, that I was going to pay them before I paid myself.
“I always paid my co-founders more than I made. That’s still the case now. As the CEO, you think of it like you are the last one to get paid in this equation. You’re not doing this to make money now; you’re doing this to make money down the line.
“And you ask a lot of other people to make sacrifices, you ask them to make less than what they’re used to making, so you have to put them first. Because if they see you putting yourself first, they’re not gonna think they’re the most important thing in the business, which they are.”
Ironically, he’s in the compensation benchmarking industry, and he didn’t pay himself a living wage until the company was up and running.
That’s the real benchmark for startups.
Compensation data for large companies doesn’t account for the potential equity payoff for practical SaaS founders.
People who hear about the wealth founders have in equity don’t see the sacrifices, risks, and luck involved to achieve success.
And the extreme frugality. Most people won’t choose that.
Check out this interview with Alan Miegel on the Practical Founders Podcast.
How long did you go?
