Peter Thiel: Best Predictor of Startup Success Is Low CEO Pay

http://www.techcrunch.com/2008/09/08/peter-thiel-best-predictor-of-startup-success-is-low-ceo-pay/

by raghus • 18 years ago

51 53 18 years ago

jlogic772• 18 years ago

CEO pay is a very good indicator. You should also pay attention to perks. Not all compensation is in terms of pay.

A CEO to taking a lower compensation says to me they are taking the company seriously. It's another way they have skin in the game.

If they aren't willing to sacrifice a little for the end game, may mean they are either purely in it for themselves or don't have confidence in the company. Either one is not so good for the company.

jamiequint2• 18 years ago

I hope you're not suggesting you should sacrifice healthcare though... bad idea.

jlogic772• 18 years ago

I really talking more about expense accounts and other fringe benefits that don't necessarily benefit the business.

DabAsteroid• 18 years ago

If your CEO requires a healthcare-nanny in order to stay healthy during a ~4-year start-up run, perhaps you should be shopping for a new CEO. IQ codes for both business-competency and self-healthcare competency. High-IQ individuals with little money and no health insurance tend to be healthier than the average person. Linda Gottfredson details this further:

http://www.udel.edu/educ/gottfredson/reprints/pubtopics.htm#...

axod6• 18 years ago

Could always start the company is a country where healthcare is provided ;)

pc• 18 years ago

Video: http://www.ustream.tv/flash/video/698620

nishantmodak• 18 years ago

Stay Hungry, Stay Foolish! - Thats all matters I think.

Steve Jobs Speech: http://in.youtube.com/watch?v=D1R-jKKp3NA

boredguy8• 18 years ago

Is there a difference between a "startup" and "starting a company"?

I ask because, "In Startupland, everybody should be working towards the same goal: that big juicy exit," couldn't be further from my mind. I know what that means to me (as does my team) in terms of access to venture funding, but I'm not particularly interested in an "exit". I want to build a service that's beneficial and worth paying for and that is responsive to my customer's needs.

Am I missing something, or do I need to change how I think about what I'm doing?

alaskamiller• 18 years ago

startups => exits

company => provides services and products

fallentimes3• 18 years ago

haha which is why all companies were startups at some point but not all startups will be companies.

jon_dahl2• 18 years ago

Why not startup => company => provides services and products => exit?

ojbyrne2• 18 years ago

That's TechCrunch editorializing - they're all about publicizing big exits. It makes for more page views.

vizard• 18 years ago

What about performance related pay? For example, pay directly tied to profits?

jon_dahl2• 18 years ago

I think this is probably pre-profit pay. If your startup is cash-flow positive, then by all means, pay yourself a market rate!

morbidkk• 18 years ago

By YC equation (5kn founders + 5k) 4 = 1 year bare minimum salary for founding team

$100-125k is pretty good for funded startup then i.e. as good as corporate salary

ScottWhigham3• 18 years ago

I think the article either leaves out a critical part of the speech or Peter just didn't cover it. That approach may be the right approach for CEOs of new companies that haven't taken big investment (like the TC50) or for first or second time CEOs of low capital requirement companies. I know he doesn't believe that for VC-backed companies or for companies in which the CEO brings huge value to the table in terms of past performance/experience/contacts.

Bottom line: you aren't going to be able bring in a proven CEO for $100-$125k a year. I don't care whether you're in Cincinnati, Boston, Austin, Silicon Valley - you can't expect someone who has a $15,000/month mortgage (as a proven CEO would likely have) and expect him to work for $8k/mth. "Hmmmm - over the next four years of my life, I can make $600k a year plus bonuses/benefits working for ACME Corp or I can make $100k a year with the chance to take home a $3m-$5m payoff..."

ojbyrne2• 18 years ago

Maybe the best CEOs for startups aren't "proven." I.e. first-time CEOs. I'm pretty sure I've read another VC saying that's exactly what they look for.

far33d• 18 years ago

You are assuming a non-founder CEO. I think he would agree that founder-CEOs are also a good predictor of success.

staunch2• 18 years ago

If he's "proven" wouldn't he be wealthy enough to live off a measly $125k/yr for a couple years at least?

ScottWhigham3• 18 years ago

I think you didn't read this:

"Hmmmm - over the next four years of my life, I can make $600k a year plus bonuses/benefits working for ACME Corp or I can make $100k a year with the chance to take home a $3m-$5m payoff..."

anamax• 18 years ago

Except that the comparison is "$100k/year with a good chance to take home $10-15M or maybe even $50M".

BTW - $15k/month mortgage is around $2M borrowed. That's not a big deal in some places (including SV), but it's a huge deal elsewhere.

fallentimes3• 18 years ago

Thiel was definitely nervous, but what he did say was awesome and interesting. I wish Arrington wouldn't have interrupted him EVERY OTHER SENTENCE. Christ. I wanted to hear what Thiel had to say, not Arrington's cheap shots about Slide and Chess.

ardit33• 18 years ago

From pictures and hearing about him I thought he would be more of a jock, but he was more of a ultimate geek.

fallentimes3• 18 years ago

I wish I could find the link to the quote by him, but when he was at Paypal they actively tried to not hire jocks.

rrf• 18 years ago

Interesting that this is not a question on younoodle, a Thiel portfolio company (although previous salary is considered).

diego• 18 years ago

What he probably meant is that high CEO pay is a good predictor of failure. If the CEO of a startup that is looking for a big exit demands a high salary, that means he/she is not too convinced about the big payoff to come.

mattmaroon• 18 years ago

In that case, I think I'm going to be the next Bill Gates.

sgrove• 18 years ago

If the CEO sets the ceiling pay, and an acceptable range is $100-125k, what then constitutes acceptable pay for (non-CEO) founders? Is $60k too high (given reasonable funding, pre-profitability)? $80k?

Just curious at what the usual funding agreements end up at.

comatose_kid2• 18 years ago

I don't know the answer, but if I were CEO, I wouldn't care if I wasn't the highest paid person - as long as I am happy with the % of the company I owned.

So if this view is reasonable, I don't think that the CEO's salary is a ceiling.

comatose_kid2• 18 years ago

An aside, but I wonder what the stats are on the signal to noise ratio (as judged by upvotes?) vs. average indentation depth of a particular discussion thread....

Peter Thiel: Best Predictor of Startup Success Is Low CEO Pay

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