Salaries can be a touchy subject, but as a potential investor in the company you have a right to know how your money is being spent.
First, it’s important to understand that a significant portion of money spent on salaries is in fact an investment in content. It’s not a cash investment like we made in Mandy, Bad Samaritan, or Colossal—it’s a sweat equity investment to develop, package, and sell internally-developed projects like Girl With No Name, “Evermor,” “ICONS,” “Stan Lee Celebration,” “Pitch Elevator,” “Malice,” “Stunt Team: Drive,” etc. We have a LOT of internal projects like these in the works. These internally developed projects are much more speculative (e.g. higher risk/reward) than the cash investments, but they are made with time and energy rather than with cash. And if they are successful, they can potentially be much more lucrative.
Second, we should establish that while $175K is a lot of money, it’s not a very high salary for an experienced executive in Hollywood or Silicon Valley. The cost of living in the San Francisco Metropolitan area is so high, in fact, that the U.S. Department of Housing and Urban Development (HUD) considers a family with four children to be low-income if they make less than $150,000.
Additionally, Paul and Jeff (our cofounders) both took significant pay cuts to work at Legion M. If you look at the S1 filing for MobiTV (a previous startup that Paul, Jeff, and one other person co-founded in 1999) you will see that Paul has taken more than a 60% pay cut — from what he was making 9 years ago. Both Paul and Jeff were willing to make large financial sacrifices because they believe so strongly in Legion M, and because they will receive financial benefit in the long run if Legion M is successful – in the same way that all investors will.
Finally, we suggest that rather than focusing on individual salaries, a better metric to look at is the overall burn rate of the company (the total amount of money spent each month). With Legion M, we intentionally have an extremely small (but senior) staff, and we do almost everything ourselves, which is an extremely powerful way to keep the burn rate low. For example, we built and continue to maintain the website, respond to our social media communications, fly coach class on discount airlines, double-up on hotel rooms (or even crash on friends’ couches) to keep costs down. Terri Lubaroff, who is a Bar-certified lawyer, often saves us thousands if not tens of thousands of dollars a month by handling our legal work. Furthermore, everyone works from home so that overhead costs -- rent, furniture, utilities, maintenance, HR, middle management, IT, etc. – are almost zero.
If you could go back in time to 1999 when they cofounded MobiTV, you could hire 28-year-old Jeff and Paul for a lower salary. But today they have 20 years’ more knowledge and experience than they had back then, which will be invaluable as they lead this company in doing something that has never been done before.