Q: Where can I get some good starting salary information for a SaaS startup? I need the information for CEO, CFO, CIO, CINO, Director of Sales. How much should the starting salaries vary for a startup with $5 million vs $10 million gross revenue?
A (Brad): First of all, you can find a great deal of info on structuring employee compensation right here on Ask the VC. We have posted about this topic many times in the past and have often covered specific aspects in great detail – take a look at the Compensation archive. Although many of the posts found within the archives relate to the question, the few listed below are a targeted to your question.
- What are typical compensation numbers?
- Compensation In A Very Early Stage Company
- Compensation In A Very Early State Company – Follow Up Question
The CompStudy report, written by Harvard University Professor Noam Wasserman, is also extremely good. It’s a yearly report on the current equity and cash compensation within private companies. Noam also has an excellent book related to startups (but not to compensation) titled The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.
The numbers we list here on Ask the VC or those found within published market reports are based on average market data and should therefore be used as a general guideline. Many variables like the company’s age, current revenues, profitability, geography and others all come into play when structuring compensation packages.
Finally, I have a belief that most of these compensation studies have a frustrating survivor and reporting bias that tends to cause the numbers to be inflated. So, use them to calibrate, but not justify, your numbers.
David Skok (Matrix) has today’s great post up titled Multi-axis Pricing: a key tool for increasing SaaS revenue. If your business uses a subscription pricing model, this is a must read post. While David positions it as SaaS related post, it applies to any subscription model, including consumer and add-ons to hardware products.
Mark MacLeod (Real Ventures) is about to start a blog series on SaaS Math. The topics he’s going to write about follow:
- Why investors, customers and vendors love SaaS
- SaaS Metrics 101: Acquisition, Activation, Retention, Referrals, Revenues
- What and how to measure
- Per User Economics broken down
- Measuring tools: custom vs. off the shelf
- How to bill your customers
- Pricing your service
- Freemium in depth
- Case studies
- SaaS Valuations
- Putting it all together: SaaS Best Practices
Based on the importance of SaaS in the software ecosystem along with the ability to deeply track all metrics on a real time basis, this looks like a series worth reading.