In the life of every serial entrepreneur comes (at least) one hair-raising moment of truth when he or she, faced with survival, must decide: Am I in or out?

For Kent Plunkett, founder of Salary.com, that moment arrived in 2001, just two years after he started the Boston-based provider of compensation management data. The company had just finished laying its foundation, aggregating its salary data, and launching a robust consumer Web site that quickly gained fans and was roundly praised as a commercial product. But just as the company was poised for takeoff, the Internet tech bubble burst and financing evaporated. Plunkett grew anxious — until one of his original investors volunteered an additional $2 million and told the CEO to relax and stay on course. “We continued running it as if we were going to have more capital available to us,” Plunkett recalls. “We grew from fifteen people to thirty — and then we got a phone call. The investor explained that he couldn’t get the money he had promised, and withdrew the commitment. It was at that moment that I had a pretty significant CEO gut check.”

Plunkett decided to commit. He mortgaged his house, emptied his investment accounts, and wrote a personal check for $3 million to the business. This gamble — or what Plunkett prefers to call a “pragmatic investment” — paid off. Today 8,000 companies rent salary.com’s on-demand software to help them manage their compensation process. The site boasts four million monthly visitors, and individual job-seekers have grown dependent on the company’s vast database to find out how much they’re worth on the open market. Company sales last year reached $23 million, and Plunkett expects that number to hit $35 million this year. After a successful IPO last February, the company’s share price, while off its high thanks to a jittery market, was hanging tough as of this writing.

But salary.com’s most significant achievement may well be the way its offerings have changed the balance of power in employee-employer salary negotiations. “Our business model was to make accessible compensation data that had historically been locked up in the HR department,” says the 46-year-old Plunkett, who came up with the idea when he was trying to hire a new secretary at a previous start-up and could not find any reasonably priced data to guide him regarding salary. Only big corporations could afford to pay for expensive compensation surveys, he notes, and as a result, discussions about pay were largely one-sided because prospective employees didn’t know their relative worth. “We broke down that barrier,” says Plunkett.

Today anyone can search salary.com’s database of 3,500 job titles to find out how much their skills are worth locally and across the country. (The company even put a value on the average stay-at-home mom’s job — about $138,000 per annum — delighting Plunkett’s wife and mother of their two young children.) The greater openness and visibility around compensation has fostered greater trust among employees, Plunkett says, and has made it easier for companies to hire and keep the best talent. “At its essence, pay is about fairness. If you think you’re being paid fairly, you’ll be happy in your job. If you think you’re underpaid, you’ll just be frustrated.”

Taking the next step, salary.com has begun offering software to help commercial clients manage the performance process by setting clear job descriptions, goals, and responsibilities, and then identifying the gaps in their employees’ skills and the opportunities for development. Plunkett is quick to point out that salary.com is not a consultancy. “We try to take the best practices that a consultant would tell you to put in place and then build software tools and data sets that apply that knowledge to the product,” he notes.

Commercial customers also like the salary.com experience because they don’t have to shell out tens of thousands of dollars for software that needs to be installed, maintained, and updated. Instead, the on-demand model allows clients to essentially rent the software at the Web site, where new features automatically update on the client end.

Given the relatively low cost of the software, the salary.com model puts the company in good stead, even in times of recession. “It’s really like a magazine subscription,” says Richard Davis, managing director at Needham & Company and an analyst who covers the stock. “The economy may be weakening, but companies are not going to respond to that by throwing out a small subscription.”

Plunkett is also reaching outside the U.S. by building similar software for companies in Europe and Asia. To that end, in May 2007 salary.com bought ICR, a provider of global compensation data and software. Having the deeper pockets to make significant acquisitions is just one of the many advantages of being public, says Plunkett. At a time when onerous regulation has made even big blue-chip companies nostalgic for the days of privacy, Plunkett’s enthusiasm for going public may be unusual. But for salary.com, he insists, the expense of the regulatory requirements is well worth the competitive advantage. “We sell more because we’re public — companies can trust us,” he says, adding that the move has also allowed him to instill good financial discipline and maintain control of his growing company. “And I’m attracting better talent because we’re public.”

Plunkett spends the lion’s share (about 80 percent) of the company’s revenue on people, something he’s done since the earliest days. In fact, it was this practice that was one of the chief reasons he refused offers of venture capital money in 1999; he knew that reliance on financiers wouldn’t allow for the kind of employee ownership he fervently believed in. Soon after starting the company, Plunkett set up a stock-option plan, funded with 30 percent of shares outstanding — a high number compared to the more typical 15–20 percent for start-up tech companies. “Just prior to going public, two-thirds of the stock was held by shareholders who walked in this door every day to go to work,” says Plunkett. “That made all the difference in surviving from 2002 to 2006.”

Today, post-IPO, every employee receives shares of restricted stock; Plunkett believes this is more employee-friendly than options, which can go south in difficult times. “Culturally, it gives everyone a strong sense of alignment — where they know they need to do the right thing by the company, because in the end they’re owners,” says Plunkett, whose family owns one-fourth of salary.com.

Thanks to his own large stake and the successful IPO, Plunkett has been able to replenish his accounts and pay off his mortgage. And though this is, by far, his longest stint at any one of his seven start-ups, he plans to stay for a while; his itch to start new ventures is largely satisfied by designing and launching new products at salary.com.

“That being said, I have a few domain names and business plans sitting in a drawer, just in case I suddenly find myself with a lot of free time.”