One of the things that always made me laugh was my bimonthly check signing ritual with Tina, our Controller.
We would review the financials, and she would tell me the story behind the various checks I was signing. Once a month, I was signing an expense check made out to myself.
I don’t know why, but this just always made me laugh.
I would give Tina the expenses for my various travels. Tina would compile the expense report, and then she would have Jeroen, my co-founder and our VP Engineering, sign the expense report.
The discussion I had with our investors about my salary took about ten seconds. “What are you planning on paying yourself,” one of our investors, "Raul", asked me after we closed our funding.
I told him the number, and he said, “Sounds a little rich to me.”
I accepted his feedback and didn’t change my salary. The reality was whatever I was going to pay myself was going to be a little rich to this particular investor. That was just Raul's style.
We reviewed all of our expenses, at a macro level, during our board meetings.
Many times, investors will place spending limits on their portfolio company CEOs. Maybe it was the makeup of our board. Maybe it was the experience of the team. I’m not sure, but the board didn’t want to approve every greater than $10,000 expenditure we made.
My goodness, we were spending $150,000 every time we taped out a chip, and they didn’t want to approve tapeouts either. And I’m glad we worked this way because we would have ground to a screeching halt if we had to get investor approval before spending money.
Don't give any spending authority to your team when you're starting out.
I know this sounds pretty harsh, but bear with me. Keeping the approval for all spending with you is in your best interest and your team's best interest.
Here's why. It keeps your team out of trouble, and, at the same time, it makes sure there's no communication errors. If someone buys something without your approval, that person has made a mistake. Period.
This makes everything black and white. And it keeps everyone acting in the company's best interest at all times.
Investors are extremely busy. They are trusting you to run the company.
Just remember that you are being trusted with other people’s money. So you have a responsibility to handle other people’s money with extreme care. And, I don't know about you, but I always too this responsibility very, very seriously.
So agree to the ground rules upfront. I was fortunate that I didn’t have to get approvals for spending.
Your situation may be different. Have an open and honest conversation with your board right at the start.
Then, live by whatever rules are set up. Whatever you do, don't violate the spending rules because you will lose your investors trust in an instant.
As trust builds, the spending limits (if there are any) will likely go up quickly. Investors have too much to do.
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