I'd say the majority of startup co-founders don't pay themselves until they hit a critical point where they no longer see paying themselves as a "negative" act to the company.
That critical point could be reaching profitability, or signing a large round of funding, or landing a key client.
Most of the co-founders I've talked with, or have heard speak publicly (I counted at least 2 speakers this year at startup school), borderline brag about how they went x number of years with no salary. I think sometimes it's an act. There's no way declaring bankruptcy or defaulting on your loans can feel good. Other times I feel like that's a direct influence from investors. For example I've heard verbatim the following sentence from an investor:
"We want you [speaking to an audience about investing] to live like college kids. You know, eat ramen noodles, borrow food from friends, live on your buddies couch, take the bus to the office. At no point should you rely on investor money to pay your own bills"
A part of me agrees with that mentality. You should be financially independent of investor money as a co-founder. Another part of me sees a benefit in keeping a co-founder at some level of comfort. If they don't have to worry about paying for food this month then their work performance would surely increase.
A person who is financially independent (of investor money or otherwise) enough to embark on a business without taking a salary is one who doesn't need investor money for his business anyway. That is, unless the goal is explicitly to have rocket growth and exit, lottery style (via IPO or acquisition).
On the other hand, businesses for which "rocket growth to a large exit" are feasible are not going to have their success hinge on whether the founders pay themselves a market salary once they have funding. So it seems to me the restriction you quote of an investor is more an assertion of power than a reasonable constraint.
That critical point could be reaching profitability, or signing a large round of funding, or landing a key client.
Most of the co-founders I've talked with, or have heard speak publicly (I counted at least 2 speakers this year at startup school), borderline brag about how they went x number of years with no salary. I think sometimes it's an act. There's no way declaring bankruptcy or defaulting on your loans can feel good. Other times I feel like that's a direct influence from investors. For example I've heard verbatim the following sentence from an investor:
"We want you [speaking to an audience about investing] to live like college kids. You know, eat ramen noodles, borrow food from friends, live on your buddies couch, take the bus to the office. At no point should you rely on investor money to pay your own bills"
A part of me agrees with that mentality. You should be financially independent of investor money as a co-founder. Another part of me sees a benefit in keeping a co-founder at some level of comfort. If they don't have to worry about paying for food this month then their work performance would surely increase.