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Why don't they just give the company the net then? Free + $35k is better psychologically than "$50k but we'll be taking some back."



It keeps the company in check. It reminds the company that expenses come with the business. It forces founders to be mindful of what they're getting. It makes everyone realize that they're being invested in as much as they're investing too.

I don't care if psychologically $35k sounds better than $50k minus expenses to you. It makes for better founders and better companies. You should think about it from this perspective.


It makes for better founders and better companies.

Can you explain this part a little more?


They may be selecting for companies and teams that are more analytical, than looking for a 'psychologically better' deal.


I agree.

(I think part of the reason is that some startups have more team members, which takes up more resources in the office.)




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