Tactical insights for first-time founders to outsmart the burn, the churn & the breakdown.

Hey Founder,

You know your company inside out. But can you answer a simpler question: how do you make money?

Not the business. You. How does the company’s success actually turn into money in your pocket and personal wealth?

Last issue was about building wealth alongside your company. This one is about the machinery.

There are only four ways a founder gets paid, and which ones are available depends on how you funded the business and what stage you’re at.

Whether you’re bootstrapped, VC-backed or somewhere in between, by the end of this issue you’ll know which door to work next.

Let’s dive in. 

Founders can recite their CAC, burn multiple and net retention in their sleep, but ask how they personally get paid and build wealth, and even founders eight years in often freeze.

Most can’t clearly answer three questions: which payment channels are open to them, how each one works, and when the money actually shows up.

Pilot asked 1,844 founders how they set their own pay. The top answer, at 31%, was “whatever the startup can afford.” Another 20% said “I only pull money when I need it.”

Not a benchmark. Not much of a plan. 

Most first-time founders also rely on one path to a big payday.
Bootstrapped founders think: build, sell someday, get rich then.
VC-backed founders think: grow fast, IPO, get rich then.

But there are other ways to take money off the table before an exit. According to PitchBook, cash-out windows went from roughly once every 2.5 years in 2022 to nearly three times a year by 2025. Founders and early teams are using them to pull billions out of their companies without selling the whole business.

If you’ve played Super Mario, the mechanics are surprisingly familiar. 

There are four ways founders get paid.

1. Salary is the coin block.

The company pays you for doing the job. Money arrives every month, whether the business is profitable or not. If you’re bootstrapped, you largely set the number. If you’ve raised, your board usually has a say.

2. Distributions are the hidden coin block.

When a profitable business generates more cash than it needs, some of that profit can flow to you as an owner. No sale required. But no profit, no block.

3. A secondary is the mushroom.

You sell a small portion of your existing shares, often during a funding round, to an incoming investor. Your ownership drops a little, but so does your personal concentration risk, and cash reaches your bank account years before an exit. 

4. The exit is the castle.

Acquisition or IPO. Potentially the biggest payday on the map, but usually the slowest and rarest. Before the money reaches you, it passes through liquidation preferences, deal terms and investors with seniority. You get what’s left.

And founders you’ll recognize have used different parts of this map.

Nathan Barry bootstrapped Kit past $40M ARR and pays himself through the same salary system as every employee: market rate, benchmarked and reviewed yearly.

Buffer’s founders built profit into the model, bought out their investors and have used distributions to take money out of the business.

Brian Halligan took a secondary before HubSpot’s IPO. Worse on paper, he said. Better for his life.

And Mailchimp’s two founders stayed fully bootstrapped until the $12 billion Intuit acquisition, meaning they reached the castle without outside investors sitting ahead of them.

None of them found a secret level. They understood the machinery and worked the blocks available to them.

But not every block is available to every founder, especially at the beginning. Which ones you can reach depends heavily on a decision founders often make in year one or two without understanding its personal consequences:

How you fund the business. 

Take VC and you trade blocks for speed. Salary gets a board-set ceiling, while distributions largely disappear because profits are expected to fund growth. Your first meaningful liquidity may be a secondary, years away. Most of your personal upside now sits behind the two furthest doors.

Bootstrap and you make the opposite trade. Once profitable, salary and distributions open up. The exit is still there too, Mailchimp walked through it, you just reach it on profit multiples, not story multiples, with no preference stack ahead of you. 

Then there’s the middle: you raised enough to limit distributions, but not enough to create meaningful secondary or exit opportunities.

The near doors narrow. The far doors stay out of reach.

How you fund the company doesn’t just shape the business, it shapes how and when you get paid. 

When you raise, you think you’re deciding how much money to take and at what price.

You’re also deciding which of your four blocks stay open, and how long you may wait to reach them.

Wealthy founders choose that lane deliberately, then work every block it leaves available. 

Salary, distributions, the eventual exit: those three, founders understand. The secondary is the one they miss.

During a funding round, you sell some of your existing shares to an incoming investor. The money goes to you, not the company.

That’s the key difference: a primary round funds the business; a secondary funds the founder.

Founders may sell 10–20% of their holdings, enough to reduce personal concentration without giving up too much ownership.

The trade-off is price. Common shares often sell below the investor’s preferred shares because they come with fewer protections.

So yes, a secondary can look expensive on paper.

But you’re buying something too: liquidity, optionality, and the ability to stop making every company decision with your personal finances sitting in the background.

That’s why Brian Halligan described his secondary as a bad financial decision on paper, but a very good one for his life. 

Each move builds on the last: find your lane, work the doors open now, then prepare the ones that open later.

Your funding lane decides which doors you have.

Ask yourself:

Now mark your four doors: open, closed, or not yet. Then name the one that gets you paid next.

If your answers split across lanes, you may be stuck in the middle by accident. Decide before the next raise makes switching harder. 

For most founders, that means salary and distributions, if you’re bootstrapped and profitable. They’re boring, which is exactly why they get ignored.

VC-backed: benchmark your salary, justify it like an executive, and take it to the board.

Bootstrapped and profitable: put distributions on a schedule. Once you’re above a cash buffer of X months, draw Y% of profit quarterly or semiannually. Set the rule once, otherwise “let’s reinvest it” tends to win every quarter.

The tax bill on an exit can be shaped years before the sale.

If you’re a US C-corp, ask your accountant whether your stock is QSBS-eligible and when your holding-period milestone hits. Under rules updated in 2025, qualifying stock issued after mid-2025 can receive a partial exclusion after three years and a full exclusion after five, subject to a gain cap of up to $15 million.

Two details matter: the clock starts when qualifying stock is issued, not simply when you founded the company, and the company’s gross assets at issuance can affect eligibility.

Then run the waterfall. Take a realistic sale price and subtract investor preferences, taxes and other cuts. That’s the number you should plan around. If it disappoints you, lean harder on salary, distributions and secondaries. 

Don’t wait until you need liquidity to start talking about liquidity.

Pick the milestone where you’ll ask for a secondary, ARR, funding stage, or another traction marker, and put it in the plan now. For venture-backed companies, meaningful traction around a later funding round can create the opportunity.

Bootstrapped founders have another version of the same move: selling a minority stake to a private buyer.

Either way, keep the slice sensible so it doesn’t signal you’re heading for the door, and understand the tax treatment before signing. 

A founder emailed me:

Lead with the paying customers. Then show the LOIs as the funnel behind them.

Think of it as a ladder of proof:

At the bottom: a handshake, waitlist signup, or “we’d love to use this.”

Then: an LOI. Interest in writing, but no money paid.

At the top: a paying customer. Someone felt the pain, got budget approved, and sent money.

A little recurring revenue is more credible than a pile of LOIs because it proves willingness to pay, not just willingness to talk. But credible LOIs still beat vague interest or a logo wall.

So show both: here’s our revenue today, here’s the qualified pipeline behind it, and here’s what it becomes if these LOIs convert.

Just don’t present LOIs as revenue they haven’t earned. Investors will discount that immediately, and they’ll ask about the gap between LOIs and paying customers anyway.

Answer it first.

Certainty first. Upside second. 

Send it my way, just hit reply.

Reads worth your time this week: 

Before you go…

Mario doesn’t sprint straight to the castle. He collects coins, finds hidden blocks, picks up mushrooms, and keeps moving.

Founder wealth works the same way.

You don’t have to wait for the “one day” exit to start getting paid. The game has already started. Now you know which blocks are open to you, and which one to hit next.

That’s the real moat.

See you next Thursday,

— Mariya

Hit reply and let me know. I read every single one (for real).

1. Early stage? Start with one of my practical finance guides.

2. Stuck on something specific? Book a 1:1 and we’ll work through it together.

3. Past $2M ARR? Work with me and the team at FounderFirst to run your CFO function.

Hey, I’m Mariya, a startup CFO and founder of FounderFirst. After 10 years working alongside founders at early and growth-stage startups, I know how tough it is to make the right calls when resources are tight and the stakes are high. I started this newsletter to share the practical playbook I wish every founder had from day one, packed with lessons I’ve learned (and mistakes I’ve made) helping teams scale.

Mariya Valeva

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