What is the value of one hour of a startup founder’s time?
Consultants know exactly what their time is worth: their hourly rate. As they say, it’s how much “the market will bear.” When a consultant intentionally doesn’t work for an hour—whether to be with family or to work on a new startup—they’re giving up an hour of potential earnings.
If being a consultant is your goal, this is indeed how you should value your time (although beware the traps of that business model). But when you’re in a startup, the math is completely different.
Let’s suppose you are a consultant who normally charges $150/hour, and you stumble upon a weird client who asks for the following terms:
“We agree your time is worth $150/hour. However, we can’t pay you for four years, at which time we will pay you in one lump sum.”
It definitely has to be increased, not just because of the interest you could be making on it, but because you can’t live off money you don’t have, which means you’ll need other work too. You must demand a hefty premium to make this inconvenience worthwhile.
