Equity transcribed: Slack’s IPO, the VCs behind Facebook Libra, founder salaries and trouble in scooter-land

Welcome back to this week’s transcribed edition of Equity.

This week, TechCrunch’s Danny Crichton filled in for co-host Alex Wilhelm – who was out in preparation for his wedding this weekend – joining Kate to cover the big news of the week.

Kate and Danny dive straight into Slack’s IPO and the implications of its direct listing strategy, before shifting gears to discuss the launch of Facebook’s new ‘Libra’ cryptocurrency and the VCs backing the initiative.

The duo then took a look at Lime’s latest fundraising efforts and the potential headwinds facing scooter companies with an appetite for capital. Lastly, Kate and Danny talk about underappreciated tensions for founders, including getting pushed out of their own companies and handling their own salaries.

Crichton: Talking about founders and compensation, our correspondent, Ron Miller, talked to a bunch of VCs to ask how are founders paying themselves today? Obviously, the cost of living in the Bay Area, in New York and other startup hubs has increased dramatically. So VCs have had to become acutely aware of their founders’ financial means.

One of the things that really came out of this survey though, from my perspective, was just how high the numbers are. We surveyed small number. We put it out in the interviews. It came out to post-Series A people are starting to get paid around 200K. But the numbers, even a couple of years ago, I seem to recall was like $120 was the magic number around the Series A, $90K if you had a serious seed fund and like $60 to $80 if you are just getting started.

But the numbers that we saw out of this were significantly higher. I think that shows a lot about how the cost of living has just continued to creep up in San Francisco and in New York.

Clark: Yeah. I think the point is made in the story. If you live in San Francisco and you’re paying a mortgage and you have kids, of course, you need to make six figures really to get by, which is just an unfortunate reality. I can’t say I was surprised by how those salaries looked. Seeing $125K for a founder, if anything, I thought was maybe a little low.

But it reminded me of, nearly a year ago at this point, when I wrote something on how much VCs are paid. I had written it based off data that was provided to me from a consulting firm. People were just up in arms at what I had written because, and I understand looking back, I think it grouped VCs together as VCs who work at really big funds who are getting the 2% carry out of a multi-billion dollar fund and who are paid a lot more.

And there are of course VCs who run seed funds or any kind of fund. There are many different sizes of VC funds. Some VCs actually don’t have a salary at all and are up against the same challenges, if not even more difficult challenges, of a startup founder.

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Kate Clark: Hello, and welcome back to Equity, TechCrunch’s venture capital-focused podcast. My co-host, Alex, is getting married this weekend so he’s not with us today, unfortunately. But we’ve got TechCrunch editor, Danny Crichton on the line. Danny, how are you?

Danny Crichton: Things are good. Good to be here, Kate.

Clark: So you’re joining us from New York right now. I’m in San Francisco. We’re doing a little bit of a remote recording. Just before we started taping, we got some news, which is always my favorite when news breaks right before we start recording. This is some Slack news. Danny, do you want to tell us what we heard from Slack?

Crichton: Yeah, absolutely. For context, we’ve been waiting for the Slack direct listing, I guess for almost years now. Slack has been talking about it, the S-1 was filed a couple of weeks ago. We found out five minutes before this taping that Slack is going to go out at 26 bucks a share.

The expectation up until this point was that it was going to be valued at around 17 billion. It looks like the price sort of matches that. For Slack going public, it looks like the direct listing is at least ready to be a success. I guess you’ll know this as you hear this episode.

Clark: We’ve talked about Slack’s direct listing a lot on this podcast. We’ve written about it a lot of TechCrunch. It’s a really big deal for a lot of reasons.

First and foremost, Slack is a product used all over the world. Of course, all of us use it here at TechCrunch. It’s very popular. It’s a well-known product. It’s raised hundreds of millions of dollars at a large valuation of about seven billion.

So it’s a big deal on that front. Secondly, it’s only the second very mainstream direct listing to ever be completed following Spotify’s direct listing last year. Danny, do you remember much about how Spotify’s direct listing went at least initially?

Crichton: I think it went absolutely fine. I mean there wasn’t a lot of controversy. It actually went a lot better than a lot of people anticipated. There was a lot of fear, at least for the Wall Street folks around where I live, that it might actually cut back on fees for investment bankers going forward.

If Slack goes the same way, you can imagine that maybe Airbnb, some of the other larger consumer and well-known IPOs may also take this route and that’s going to cut back a little bit on the investment bankers.

Clark: Yeah, so you mentioned Airbnb. They are rumored to be considering a direct listing. I would not be surprised because one of the requirements of pursuing a direct listing is you have to be a well-known company with a brand that people are familiar with, which allows you to forgo the roadshow process that is typically a fundamental part of the IPO process.

Crichton: That’s right. I think an interesting one – certainly, Airbnb would be a logical choice – the wild card here is WeWork, right? A huge brand name, particularly among millennials and other creative office workers but has some serious, serious debt questions.

So it’ll be interesting to see for them. Do they approach the big institutionals with a good financial story? Or are they going to approach the retail investor and say, “Hey, we’re WeWork, we’re one of the largest landlords in the world. You should be a part of this team.”

Clark: Yeah. I mean I personally hope that WeWork just goes about it in the traditional sense and doesn’t try to pursue a direct listing. I think that they should have to answer all the questions that come with completing a traditional IPO and have to do the roadshow process.

Crichton: I think one of the interesting things we’re going to have to look at with Slack is, in the context of a lot of the other tech IPOs this year – we had Uber, we had Lyft, which have not performed very well. Beyond Meat was doing super well for a period of time. Then it kind of got back. Now it’s gyrating back and forth.

I think what’s interesting with Slack, particularly with this direct listing architecture, is will it actually hit the public markets really, really well? Will people buy those shares or will they collapse after the first couple of days? Because that’s going to set the tone for a lot of the other IPOs waiting in the wings in the coming year.

Clark: Yeah, I think you’re right. Ever since Uber and Lyft’s IPOs did not perform as expected, there’s been a lot of eyes on pretty much every exit coming out of Silicon Valley or coming out of the tech industry. Then given the fact that Slack is also pursuing a different form of a public offering, of course, even more people are watching. But I’m curious, Danny, how do you think Slack’s direct listing will go?

Crichton: I think that it’s going to go better than the other ones. Slack is less – I don’t want to say it’s not an innovative company. But compared to ride-hailing or to fake-meat or artificial meat, Slack is a classic SaaS Company. It’s used by a huge number of organizations. Its numbers are very, very strong for SaaS. I mean it’s not inventing a new model to analyze it.

You can compare it to every other SaaS company targeting the enterprise that’s out there. So I think in terms of the analysts who are covering the stock, they have a much better handle on the strength of it, how to price it, how to look at growth over the coming months. And so assuming Slack actually continues its growth pattern, I don’t expect to see the level of gyration that you’ve seen in some of those other shares.

Clark: Yeah, you make a good point. An enterprise software IPO, at the end of the day, is a lot safer of a bet than a ride-hailing or fake-meat IPO. I’ve noticed this week there’s been a lot of chatter just within the TechCrunch staff and a little bit on Twitter about opportunities for Slack to be acquired today.

I mean this is the last day that could happen before it, of course, becomes a public company. Given that Slack has such a high valuation that leaves very few acquirers that have the money in the bank to make a deal like this. Who could acquire Slack and why would they?

Crichton: Yeah. I mean it’s not uncommon for particularly enterprise companies to be sniped the last midnight before the public offering. We see this often in the cybersecurity space. Cisco and RSA sometimes do this. The question is this – Slack is obviously a really unique property. It’s a social network of sorts in the enterprise.

There are acquirers. Most likely Microsoft would potentially be one of the candidates with a wild horse around Google, maybe wanting to a buttress Google Docs. But given this price point, there’s really not a large number of candidates, right?

If something goes out at $16-17 billion, that’s a lot of cash to buy all the shares. It’s still possible in the next couple of hours. So maybe by the time you hear this episode, we’re going to be shocked that someone came in.

Like if Facebook bought it, and it’s the “new Facebook Work”. We’re all going to look like morons. But I think this is going to go public. Maybe it’s a story that, in the coming year or two, you can imagine someone buying it out as it stabilizes in price. But I’d be shocked to see something happen in the next 48 hours.

Clark: Right. I mean just because no one buys it tonight does not mean there are no opportunities in the future for Slack to be acquired. But I would say, in my opinion, it’s a 99% chance that it will complete a direct listing tomorrow. There will not be any last minute deals. Although, that would be very exciting from our perspective.

Crichton: It would certainly drive traffic.

Clark: Yeah.

Crichton: As a reminder, Microsoft bought LinkedIn several years after its IPO, so it certainly doesn’t close the door. But it’s something where I just don’t think in this market there’s been a lot of sniping right before the public markets.

Clark: Now let’s move into our next topic, which is the grand scheme of things, probably a lot bigger of a deal to our general audience than Slack’s direct listing. And that is that Facebook this week finally released the details of its cryptocurrency called Libra. Danny, why don’t you just tell us the basics of what this is.

Crichton: There’s always been the search for the holy grail of cryptocurrencies, right? Which is something that’s stable, something that’s secure, something that’s used widely so you can buy your coffees or lattes, your software with one coin. While Bitcoin and Ethereum and a couple of others have tried to play that role, no one has been successful.

The excitement around Facebook Libra is that you finally have a program – it’s targeted to be a zero fee, stable currency built around a basket of fiat currencies that’s going to be accepted in WhatsApp and Messenger and a couple of partners that are working on the Libra consortium. At launch, Mastercard, PayPal, and a couple of others have joined this consortium to underwrite the model.

Facebook is targeting a public release in the first half of 2020. This is the first time we’ve seen a cryptocurrency get automatic distribution, right? Bitcoin started more than a decade ago. It got popular in the cyber-libertarian community and got more widely-known over the years, but it’s never been widely accepted.

Here is a cryptocurrency that’s going to be accepted on day one by more than a billion people. I think that this is a really interesting case study of whether crypto really is going to get popular acceptance.

Clark: Yeah, this is definitely the first of its kind in the sense that it’s such a massive platform getting behind a cryptocurrency. I just want to flag for anyone that hasn’t read it. TechCrunch editor, Josh Constine, wrote a 4,000-word story explaining all the details of the Facebook Libra cryptocurrency after he went through like a hundred pages of documents that Facebook had provided.

What I found really interesting, and you mentioned this a little bit, Danny, is the Libra Association, which is this governing association agency they’ve built. It’s a not-for-profit, which is going to oversee the development of the token. It’s basically because people don’t trust Facebook and they thought, “Well, we have to get a big team behind this in order to have more trust in the cryptocurrency that we’re developing.”

What I had noticed, of course, given that I have this VC podcast and I cover VC, is that there was a bunch of VC firms that they’ve tapped to be a part of this association. Each of these firms, as well as Mastercard, PayPal, and a bunch of other entities behind the Libra Association, invested $10 million into the project.

That was a minimum they had to invest. Some of the firms behind it are, well actually this is the full list of firms, Andreessen Horowitz, Breakthrough Initiatives, which I’ve never heard of, Ribbit Capital, Thrive Capital, and Union Square Ventures. These are some of the leading VC firms interested in backing crypto companies.

Crichton: Absolutely. I think the interesting thing here going forward is, just in the 24-48 hours since this was launched, there’s been a huge amount of attention on the part of regulators. In the US, we saw the financial services House Committee Member Maxine Waters, we saw in France the finance minister questioned whether Facebook should be even offering a cryptocurrency program, and demanded that there should be regulatory action before Facebook launches it.

I think one of the intentions with both creating this association isn’t just from the user’s perspective looking for privacy and lacking trust in Facebook. It also to head off what’s going to be a real regulatory fight in Washington, in Brussels, in Paris, in London to actually get this fully out there.

We also saw today one of our writers, Manish Singh, who is based in India said that the Indian government isn’t going to sign off on this. In the WhatsApp case, India already has a separate payments app built into WhatsApp.

That’s going to be different from the cryptocurrency Libra. It is going to be a complicated world, and I think getting as many people onboard has been Facebook’s strategy from day one.

Clark: Danny, what does this mean for all the startups who have been building blockchain businesses and cryptocurrencies for years? Are they seeing this and thinking, “Oh, shit. What are we going to do? Facebook is going to blow us out of the water.”

Crichton: I think it’s interesting to see how much the crypto community has moved past just payments, right? Payments isn’t a solved problem by any means. But outside of Bitcoin and obviously a couple of others that have tried to compete it with Bitcoin, most of the startups aren’t targeting just payments or moving into store value.

They’re trying to move into applications. So this is the Web 3.0 initiative. They’re moving into distributed computing, which is most popular with Ethereum but there’s obviously a lot of other projects in that category.

So, what you’re seeing here is like, “It’s great that Facebook wants to go do this. It’s great that the large, big tech companies coming in.” It’s actually going to empower a lot of the eCommerce brands and some of the other digital-native vertical brands that we’ve seen coming out of New York and other places.

But from the crypto world, I don’t think it actually has any effect whatsoever. I don’t think they’re going to tap into this from what I could tell. It’s obviously very, very early and maybe things will change. It’s really not much of a platform. It’s really like, “Look, you could use Stripe, you could use PayPal.

Now you can use Libra.” It’s just another tool. I think for a lot of the crypto startups, as they move into distributed computing and some of these other categories, it just doesn’t matter. You can just ignore it.

Clark: Okay. Well, like I said, I highly recommend everyone read Josh’s story. I’m no cryptocurrency expert.

The next topic we have, I am by far more of an expert on, and that is scooter startups. I heard this week from a source that Lime was out back on Sandhill Road raising its Series E round.

Lime raised a Series D not too long ago. That valued it at $2.4 billion. Now, just months later, it needs more money. Lime and Bird are spending a lot of money on hardware because scooters are expensive and they’ve been iterating on their scooters to develop stronger ones, ones that in theory lasts longer. It’s costly to do that, and they need to keep raising hundreds and hundreds of millions of dollars.

Crichton: Well, the burden rate for a lot of these scooters has just been out of control, right? So early on, when the numbers were early, it was a big idea. Obviously, it’s a huge, huge market. I think VCs were willing to look at this and say, “Hey, go take $100 million. Go for it. Take a look. See what we can get. See what data it shows. Can you build out a network of people who recharge these scooters?”

But now that I think that reality is setting in. It has been another year. There’s more data. The regulators in San Francisco, LA and other cities around the world have taken a look and are controlling the market much more than they were before. The reality is you can’t ignore the spreadsheet anymore, right?

When Lime and a bunch of others are fundraising, it’s hard to say, “Hey, our last valuation was based on really aspirational numbers for the company. Our actual numbers are very different.” VCs just cannot ignore that anymore.

I think there are two options. You either devalue the company and reset. You collapse because you don’t want to fundraise. You try to find another source of capital that’s willing to keep going. But I think it’s always a tough spot to be in right now. So it’s not surprising to hear that we’re hearing them all over the place.

Clark: Right. From what I heard, Lime’s having a hard time raising because they want to see a nice valuation step up, of course. Say they want to raise at $3 billion now and they last raised at $2.4 billion. Of course, a VC is going to be like, “Okay, how can you justify the valuation?” And they’ve only had a few months.

There’s only been a few months between those raises. How much could they have improved their metrics in such a short time? It really begs the question, will Lime and Bird even be able to close additional rounds? And if they don’t, what’s going to happen to these companies, which are the largest scooter players in the US?

Crichton: That’s right. I think there’s also this macro effect of Uber and Lyft going public, right? The two biggest transportation networks out there, who by the way don’t even need to buy hardware. Who have actually, in some ways, much better economics than the scooter companies. They just went public and got hit pretty hard by public market investors.

At this stage, the VCs are starting to look at the public markets and say, “Okay, we invest at three or four billion. What’s the storyline that gets us to a nice return in the public markets in a couple of years?”

I just don’t think that storyline is as easy. There’s been compression at the top. There’s compression from the numbers from the companies on the bottom. That’s a really tough place to be. How do you go forward from there?

Clark: Yeah, I think you’re right too. You mentioned the Uber and Lyft IPO having a big impact on this. I think that’s actually relatively understated. The role that those IPOs might’ve had on Bird and Lime’s fundraising plans.

I’ve heard from investors that I think Lime, I’m sure Lime and Bird, but in this case, I just heard about Lime, was really counting on those IPOs performing well. I mean a lot of us did think that they were going to go a lot smoother than they did. Had they had these really massively successful floats, given that they’re all leaders in the mobility space, it would have only assisted Lime and Bird as they went out and fundraised.

Now that that’s not happening, I think we can all assume it’s just going to be really tough. I would not be surprised if we either see flat valuations coming out of the next rounds or if we even see, kind of what you said, a repricing event.

Crichton: Again, as you move from the early stage investors who don’t pay any attention or very little attention to the public markets, just as you’re talking to the people who care what the public markets think, you have this so horrifically bad news.

We just saw in New York here, the launch of a new scooter company, Revel, their scooters just randomly started showing up in front of my house. There’s obviously, internationally, a lot of other interesting new scooter companies coming out of Taiwan and India, which I was just looking at in the last week.

So I do think a lot of people are still attempting to target this market. The question is – Lime might’ve been the first to the market, but are they the ones who actually are going to be able to own it? That’s going to be the story that you’re going to be able to write in the next six months or not.

Clark: I completely forgot. But I heard that New York has legalized scooters or is on the way to legalizing scooters. So you said there actually are some on the road there now?

Crichton: There are some on the road. You can download the Revel app. You sign up right on the spot, and then you can take it to go. I have to say the very first weekend that I saw them here, I was nearly run over by someone who clearly did not know how to ride a scooter. The experience of living in SF has now come to New York.

Clark: New York does not seem like the right place for scooters. I wish you guys luck, but that just seems like a nightmare.

Crichton: People are very afraid to drive with New York drivers on the road, so they come onto the sidewalks. The Revel scooters anywhere are quite powerful. They can cruise at like 25-30 miles an hour from what I could see. Seeing the pedestrians and kids in strollers, and a mad man who just figured out that his app suddenly allows him to drive like a wild car all over the sidewalk. We’ll see how that all works out in the next couple of weeks.

Clark: Well, we’ve talked enough about scooters in this podcast, so let’s move on. Another story that I wrote this week was about the co-founder of Plaid, which is a financial services startup, stepping down. I think this is interesting for a number of reasons.

Plaid is growing extremely fast. It’s one of the fastest-growing startups in Silicon Valley right now. It’s getting a lot of attention. It has a lot of wind at its sails.

It begs the question, why would the co-founder and CTO, his name is William Hockey, why would he decide now is the time to leave? I think the obvious answer there is that the company outgrew him. That’s not the story that they’re saying. He said he’d been planning to leave for a long time, but we recently saw this happen with Lime.

Clark: The co-founder and CEO of Lime stepped down to “focus” on R&D and company culture. Then a more experienced co-founder stepped in and took the lead. I’m kind of curious, Danny, what your thoughts are on this, and what you think when you see a co-founder step down just as a company is reaching new heights?

Crichton: Well, that’s always a complex set of variables, right? In some cases, the role does move far ahead of the capabilities of the person who’s holding it, right? So you started as a CTO, as a team of three. Suddenly, your engineering team has several hundred.

Some people can’t scale. Some people don’t want to scale, right? You really love that early-stage team. You love being on an R&D, and so you want to run a little skunkworks and then when it becomes a big company, it’s all meetings and not everyone enjoys that. In some cases, and this is really challenging from the VC side is, after four or six years, the founders have vested, right? They own their shares.

They have all the financials that they’re ever going to have. While founders certainly are always in love with their companies and want them to do super well, there is this, “Well, why do my sticking around not moving onto another project? I have mine. I own all the shares I’m going to own. Maybe I’m being pushed out.”

Maybe there’s a disagreement on how the future direction of the company is. It’s like, “Well fine, I’m just going to leave. I’m going to call down to my percentage points.” I think there’s always a couple of different dynamics, but I don’t think it’s easy to see, if you don’t really know the players, exactly what is taking place.

Clark: Right. From my reporting on Plaid just in the past and then with the stories, William Hockey was really well-liked and, as far as I know, a great CTO. So I don’t think he was forced out, but I do think it does happen a lot. What people probably don’t realize is how much control VCs can have in making personnel decisions like this.

Plaid has raised a lot of money. They just raised $250 million. It was like around a $2.5-$3 billion valuation. They had Mary Meeker join their board. Like I said, this is the company people are watching.

You may not have heard of it because it’s a behind-the-scenes company that essentially powers third-party financial apps like Venmo. It’s not something like Slack that you know you are using on a day-to-day basis, though you probably are.

Anyways, the point being is that this does happen a lot. Often, co-founders are forced out. I think it’s an interesting thing that goes on behind the scenes in Silicon Valley with startups.

Crichton: Absolutely. I think one of the interesting things here as well is, obviously, the focus is oftentimes on the CEO, right? And as much as VCs often talk about how “we want to protect the CEOs, we want the CEOs to grow that.”

The reality is a huge number of founders are pushed out, particularly if they’re CEO. They’re upgraded in the enterprise case. Oftentimes, it’s for their own benefit, right? I mean they own shares as much as anyone else. So if you can pull in, a multi-time, extremely-experienced exec to take over the company, that can work out really well.

It’s rarer, from my perspective though, to see a CTO get pushed out. Mostly because the VCs or the board is usually focused on sales numbers. They’re usually focused on the growth of the company. That’s all under the CEO label.

They oftentimes don’t have the authority, not authority legally, but the authority in the sense of credibility to say, “Well, I think the CTO really needs to be replaced because he’s not doing a good enough job on the technical roadmap.”

Again, I have a feeling it’s a couple of different dynamics. But clearly, he’s out. He’ll keep his shares. There are worse things to have than to have a lot of shares in Plaid.

Clark: No, exactly right. I think we’ll probably see him start a new project maybe in a couple of years. Like you said, he’s vested. I also want to say, I’ve been saying William Hockey, I think that’s how you pronounce his name. But if I’m wrong, I’m very sorry.

Let’s move on to our final topic, which is an interesting story. It’s not news-driven, but an interesting story we had published on Extra Crunch this week about startup founders’ salaries.

Crichton: Talking about founders and compensation, our correspondent, Ron Miller, talked to a bunch of VCs to ask how are founders paying themselves today? Obviously, the cost of living in the Bay Area, in New York and other startup hubs has increased dramatically.

So VCs have had to become acutely aware of their founders’ financial means. One of the things that really came out of this survey though, from my perspective, was just how high the numbers are. We surveyed a small number. We put it out in the interviews.

It came out to post-Series A people are starting to get paid around 200K. But the numbers, even a couple of years ago, I seem to recall was like $120 was the magic number around the Series A, $90K if you had a serious seed fund and like $60 to $80 if you are just getting started.

But the numbers that we saw out of this were significantly higher. I think that shows a lot about how the cost of living has just continued to creep up in San Francisco and in New York.

Clark: Yeah. I think the point is made in the story. If you live in San Francisco and you’re paying a mortgage and you have kids, of course, you need to make six figures really to get by, which is just an unfortunate reality. I can’t say I was surprised by how those salaries looked. Seeing $125K for a founder, if anything, I thought was maybe a little low.

But it reminded me of, nearly a year ago at this point, when I wrote something on how much VCs are paid. I had written it based off data that was provided to me from a consulting firm. People were just up in arms at what I had written because, and I understand looking back, I think it grouped VCs together as VCs who work at really big funds who are getting the 2% carry out of a multi-billion dollar fund and who are paid a lot more.

And there are of course VCs who run seed funds or any kind of fund. There are many different sizes of VC funds. Some VCs actually don’t have a salary at all and are up against the same challenges, if not even more difficult challenges, of a startup founder.

Crichton: Well if you have a $20 million seed fund and you’re getting 2% management fee, which is fairly typical, you’re talking about $400,000 a year. That includes rent, utilities, legal costs to cover the fundraise and the fund formation, the limited partner agreement. It covers your travel. And so you’re only getting the residual salary.

If you have two partners, which is fairly typical for a lot of those early-stage seed funds, you’re dividing that by two. Let’s say you had $250K in expenses, including taxes and everything. You have $150 left over, you’re dividing by two, so you might only be making $70-75 top line, right?

Obviously carry, particularly for the seed funds, unfortunately, takes years and years and years. If you invest in Slack’s early rounds, a decade later, you’re starting to get that check in the mail.

It can be really tough. And much in the way that startup CEOs at the seed stage are probably being paid in the tens of thousands of low hundreds of thousands. But by the Series D, they’re probably up into $4 or $500,000. VCs, the salaries are all over the place. The early ones are probably poorer than a lot of the startup founders they are investing in.

Clark: Right. And they might go for years without getting a salary at all. As much as we can try to write these stories and gather anecdotal evidence or can ask people to provide us some data, this industry is just so opaque. It’s so difficult to really know how much money people are making.

It’s a frustrating thing to try to cover, but I do like that Ron did the story. Even my efforts about a year ago to write about what VCs make despite them not being received particularly well in the VC crowd.

I think it’s worth it to attempt to do it because people who are trying to enter these fields just have no idea what to expect, and it’s just really tricky.

Crichton: Well, I think there’s been a lot of concern obviously. If you look at the social economic backgrounds for a lot of founders, they obviously come from either wealthy backgrounds or have made personal wealth at maybe Google or somewhere else.

I think as part of opening up this market up to as many people as possible, you really have to ask, “What does it take? What are the requirements to allow more people to participate?” The key one here is, “Can you live?” It’s great if you get millions of dollars from your last startup or you had stock options in a large company you grew up with and you’re just paying out of pocket. But if you’re a new college grad, if you come from a different background, those salaries are really critical.

I think it’s just great to see that more and more VCs are aware of that challenge, and are paying attention to it, or actually just asking as part of the deal-making process. Oftentimes it’s not uncommon as part of the term sheet negotiation, or at least through the diligence to actually have that conversation, which is, “Hey, what do you think should be the salary for the next round, for the next year and a half?” I’m just pleased to see it. I mean it’s probably not fixed, but it’s definitely better than it was a couple years ago.

Clark: Yeah, at the end of the day, founders need to be comfortable in order to really do their best work. So I think that’s what VCs might be finally realizing.

Crichton: Exactly.

Clark: All right, well, I think we’re out of time, so thanks so much Danny for filling in for Alex this week. Hopefully, we’ll have you on the podcast again soon.

Crichton: Hopefully, if I’m not run over by a scooter.

Clark: All right, bye.

Crichton: Bye, Kate.