6 ms·

"...Thiel believes that a CEO should not be paying themselves more than $150,000, even after a Series A investment. Anything above that shows a lack of motivati

by larrys 15y ago

"...Thiel believes that a CEO should not be paying themselves more than $150,000, even after a Series A investment. Anything above that shows a lack of motivation to the company and to the future success of the company." Anything above? Really? This assumes a few things. First that the cost of living is the same for any CEO. A CEO at a startup in NYC or SV has considerably higher cost of living than a CEO located in many other places. Second, what if the CEO of the startup is older, has 9 children and expenses? Coming up with an absolute number like "$150k" or whatever doesn't take into account a particular persons circumstances and seems to be biased toward unmarried people or people without children with no other obligations.

philwelch 15y ago
Most people with kids and mortgages get by on less than 150k. If you really can't make ends meet on 150k you've overextended yourself.
- wtvanhest 15y ago
  Yes, but they have 9 to 5, low stress jobs. I want the CEO of a company I work for/invest in etc. to be focused on the business, not saving. I want them to feel good about their personal expenses so they can focus on the business.
  - philwelch 15y ago
    I really can't understand this kind of lack of perspective. Ask your waitress, or barista, or the guy that changes your oil sometime if they have a "9 to 5, low stress job". Because they don't. And no one's paying them $150,000 a year--more than three times the median household income in the United States--to make them feel better about it.
    - wtvanhest 15y ago
      I do not have a lack of perspective. I have been a server, a security guard, worked for minimum wage at a beagle shop etc. Now my job is much better than those jobs, but I still remember how "tough it was". It was tough in the sense that stress came from uncertainty in paychecks and in social status. But, that type of stress does not compare to being the CEO of even a small company. If you make $100k in most cities that is pretty good, in SF or NY $100k a year means you have roommates. Do you want the CEO of a company that has the potential to make billions of dollars for investors to worry about who's turn it is to clean the kitchen? Of course not, that is the most ridiculous thing I have ever read. It literally makes zero sense.
      - philwelch 15y ago
        Median family income in San Francisco is just over $81k. Almost twice that for an individual is comfortable. Make it work. Believe it or not, you can get the job done without being coddled with luxury.
      - bearmf 15y ago
        You do not need roommates at $100k in Manhattan. You might get one if you feel lonely though.
    - wtvanhest 15y ago
      You are not addressing the most important point: Why do you want a CEO of a company who has investors' money, employee's livelihoods and the possibility to improve the world living with roommates, cooking his/her own food to save money, and wasting time when that CEO could be 100% focused on the business? I'm not advocating we pay him/her $500,000/year, but $150,000 is very fair.
      - philwelch 15y ago
        My criticism is with people who say 150k is too little. I think it's a fair ceiling.
        wtvanhest 15y ago
        Understood. In most cases that is more than enough, I could imagine scenarios where it wouldn't be.
- larrys 15y ago
  What if they have a few kids in college? Even a public college can cost, what, $35,000 these days if out of state? What if they want to do a startup but they already have kids in private college? Sorry kids, I want to do a startup please switch to the instate public college. My point is simply that there are other circumstances and picking an absolute number seems to be biased toward younger people with no obligations.
  - philwelch 15y ago
    Most parents, even parents with kids in college, get by on less than $150,000 a year. Kids can get scholarships and student loans. Actually, a lot of private colleges give need-based scholarships, so by taking your compensation as a lower salary today followed by lucrative equity compensation after you exit, you can usually end up minimizing the amount you pay out of pocket for your childrens' tuition.
- earl 15y ago
  Not in sf or nyc. a low end (not dumpy, but definitely not high end with a doorman) 2 bed apartment is going to run you $650k in the decent bits of sf and more in nyc. In sf, you end up paying approx $1100 per month per million dollars of value in property taxes. So $715 in taxes, $300 or so in insurance, a $2500 mortgage, and you can easily be spending $3500-$4k/mo (after taxes) on housing. Using the rough rule of thumb that your salary should be 40 times your monthly housing payment, that's $160K already. It isn't hard if you're an adult, with a family, or housing obligations, or kids, etc. If you wish to restrict the universe of ceos to relatively recent college grads with no life obligations who are content to pay $1500 to share a crappy apartment, then maybe Thiel is being reasonable.
  - _delirium 15y ago
    >> Most people with kids and mortgages get by on less than 150k. > Not in sf or nyc. It's still trivially true that most people in SF and NYC, including married adults with families, get by on way less than $150k. Even Upper-East-Side Manhattan, one of the wealthiest zip codes in the U.S., has average incomes "only" in the high 5 figures. Maybe there is a small section of Nob Hill where $150k incomes are normal, but even in most nice parts of SF that's not a typical family's income. Part of the reason is that in areas where housing is the major cost, the 40x-your-housing-cost rule of thumb is too conservative, and would lead to a conclusion that almost nobody can actually live in the city, whereas clearly many people do. And anyway I believe the usual mortgage-company rules of thumb are 30% of your gross income on the mortgage payment itself, but up to 40% on mortgage+insurance+etc. So that'd lead to $120k in your hypothetical.
    - vaksel 15y ago
      NYC is a bad example, the real estate costs really sky rocketed over the past 25 years or so...so it's very possible that someone could have gotten one of those buildings on a $40K/yr teacher's salary. Good luck doing that in this day and age
      - larrys 15y ago
        As a matter of fact I dated such a person (UES of NYC). Her salary was, IIRC, actually about $80's. She was divorced with one child. They had a 1 bedroom and shared the same bed. And she wouldn't have been able to afford that without family help.
- larrys 15y ago
  "Most people with kids and mortgages get by on less than 150k" Phil. I will say this the nicest way I can. I'd like to know where you are getting your info from? By your resume you are 4 years out of college. I'm a bit older and have 2 children, one in college as well as obviously many friends with children in college. My wife has 200k in Medical school debt to pay off. 150k is a nice salary, no doubt. But to say "If you really can't make ends meet on 150k you've overextended yourself." doesn't take into account someone's total financial situation and what their other obligations are.
  - viscanti 15y ago
    If you can't make ends meet on 150k a year, you shouldn't be a startup CEO. It's that simple. If you need more security or up front money, there are plenty of other industries and established businesses you can work in. No one has to be a startup CEO. A big part of being a startup CEO is the upside potential of the equity you get. You're sitting on potentially life changing amount of equity and your job is to make it actually worth something. If you need more than 150k a year, you've over extended yourself as a startup CEO and should probably do something else. Life is a series of tradeoffs. If you can't (or don't want to) do what it takes to be a startup CEO (and a big part of that is gambling on the future value of your equity), just go do something else. The 150k figure is for funded startup CEO's. If you build your own profitable company and want to pay yourself more, go for it. There's plenty of routes to the end. If you can't cut it on 150k a year for whatever reason (your wife's medical school debt, kids, required lifestyle, etc), just do something else.
  - waterlesscloud 15y ago
    "If you really can't make ends meet on 150k you've overextended yourself." and "...someone's total financial situation and what their other obligations are." Are not wholly unrelated ideas.
  - philwelch 15y ago
    I don't know why you're making this personal, Larry. If it's such a struggle for you to be civil with me and discuss the facts rather than dragging our respective life histories into the conversation, you should find a better hobby than Hacker News. Statistically, the median income for a family in Mountain View, California in 2007 was $105,079. (http://en.wikipedia.org/wiki/Mountain_View,_California#Demographics http://en.wikipedia.org/wiki/Mountain_View,_California#Demog...) (This is higher than San Francisco, and MTV also includes more families with children, which is why I've chosen it as a basis of comparison.) Compare that to a individual income of roughly half again as much. Unless you're asserting that more than 50% of Mountain View families are struggling to get by, you have to admit that someone who can't make ends meet on 150k has an unusually high level of financial commitment. Such a person is unlikely to be a startup CEO, especially since most startups fail and leave their employees suddenly unemployed. I'd rather not get into your personal business, so let's speak more generally. Medical school is expensive and leaves one with a lot of debt, but unless you've made a horrible mistake, it also makes you a physician, who presumably can earn enough income to cover that debt. If not, medical school is a terrible investment. But in Mountain View, at least, the average physician apparently earns $131,000 a year (http://www.indeed.com/salary/q-Physician-l-Mountain-View,-CA.html http://www.indeed.com/salary/q-Physician-l-Mountain-View,-CA...), which means our hypothetical CEO/doctor couple has a combined income of $281,000, about 2 and 2/3 times the median. I don't know anything about you or your friends, and I don't really care to because it's not a personal argument despite your constant desire to make it so, but if being unable to make ends meet on almost three times the median family income in your town isn't overextending yourself, what is?
zobzu 15y ago
if you've 9 childrens you're simply irresponsible. LOOK I NEED THE MONEY I MADE 2 MANY KIDS! Seriously? $150K is way more than most people get - and they've a life too. And they don't get the millions in stock either.
wtvanhest 15y ago
I would rather have the CEO of a company worried about hyper growth than clipping coupons. $150k is probably enough for someone in their 20s with no kids, but there is no reason why they shouldn't make a little more if they have kids etc. Even in expensive cities, NYC, SF, giving more than $150k is probably not necessarily.
vaksel 15y ago
yeah you'd think they'd want the CEO to be able to 100% focus on their startup If for example the CEO's wife lost her job...$150K is suddenly not that much for a family. Do you really want your CEO to do consulting on the side to pay the bills instead of focusing on the startup?
- larrys 15y ago
  To me this is simply an attempt by Thiel to try and limit CEO's to a) ramen hungry founders or b) founders who already have money to live on c) founders without family obligations that can dedicate themselves 100% to the startup. Using the fact that money spoils (not denying that it could be true for some people) is just a red herring. I know many people who could retire and still work 6 or 7 days a week for the challenge. Some people who win the "lottery" lottery quit their jobs. And some continue to work. This reminds me of a story that a small business owner told me many years ago. He said in his business he preferred to have Puerto Ricans work in his warehouse. But he couldn't advertise and say "looking for Puerto Ricans" for bias reasons. So he told me that he simply put in the advertisement "must speak spanish" and that got him exactly what he was looking for.
  - philwelch 15y ago
    Maybe we should take up a collection for the poor, impoverished startup CEO's who only earn $150,000 a year. That's only three times the median household (not individual) income. How do they get by!?
- philwelch 15y ago
  What if the CEO lost his job? (That's the typical outcome for funded startups--they fail, and everyone involved loses their jobs.) If you can't handle that, you need a more reliable career than "startup CEO".
qty899 15y ago
I highly, highly, highly doubt a CEO with 9 children who needs more than $150K in salary because s/he doesn't have any sufficient safety net will be taken seriously by any VC.
tzs 15y ago
> Second, what if the CEO of the startup is older, has 9 children and expenses? Does having 9 children make him a better CEO than someone with a more typical number of children? If not, then why is that relevant to what a company should pay him?

by larrys 15y ago

philwelch 15y ago

Most people with kids and mortgages get by on less than 150k. If you really can't make ends meet on 150k you've overextended yourself.

wtvanhest 15y ago
Yes, but they have 9 to 5, low stress jobs. I want the CEO of a company I work for/invest in etc. to be focused on the business, not saving. I want them to feel good about their personal expenses so they can focus on the business.
- philwelch 15y ago
  I really can't understand this kind of lack of perspective. Ask your waitress, or barista, or the guy that changes your oil sometime if they have a "9 to 5, low stress job". Because they don't. And no one's paying them $150,000 a year--more than three times the median household income in the United States--to make them feel better about it.
  - wtvanhest 15y ago
    I do not have a lack of perspective. I have been a server, a security guard, worked for minimum wage at a beagle shop etc. Now my job is much better than those jobs, but I still remember how "tough it was". It was tough in the sense that stress came from uncertainty in paychecks and in social status. But, that type of stress does not compare to being the CEO of even a small company. If you make $100k in most cities that is pretty good, in SF or NY $100k a year means you have roommates. Do you want the CEO of a company that has the potential to make billions of dollars for investors to worry about who's turn it is to clean the kitchen? Of course not, that is the most ridiculous thing I have ever read. It literally makes zero sense.
    - philwelch 15y ago
      Median family income in San Francisco is just over $81k. Almost twice that for an individual is comfortable. Make it work. Believe it or not, you can get the job done without being coddled with luxury.
    - bearmf 15y ago
      You do not need roommates at $100k in Manhattan. You might get one if you feel lonely though.
  - wtvanhest 15y ago
    You are not addressing the most important point: Why do you want a CEO of a company who has investors' money, employee's livelihoods and the possibility to improve the world living with roommates, cooking his/her own food to save money, and wasting time when that CEO could be 100% focused on the business? I'm not advocating we pay him/her $500,000/year, but $150,000 is very fair.
    - philwelch 15y ago
      My criticism is with people who say 150k is too little. I think it's a fair ceiling.
      - wtvanhest 15y ago
        Understood. In most cases that is more than enough, I could imagine scenarios where it wouldn't be.
larrys 15y ago
What if they have a few kids in college? Even a public college can cost, what, $35,000 these days if out of state? What if they want to do a startup but they already have kids in private college? Sorry kids, I want to do a startup please switch to the instate public college. My point is simply that there are other circumstances and picking an absolute number seems to be biased toward younger people with no obligations.
- philwelch 15y ago
  Most parents, even parents with kids in college, get by on less than $150,000 a year. Kids can get scholarships and student loans. Actually, a lot of private colleges give need-based scholarships, so by taking your compensation as a lower salary today followed by lucrative equity compensation after you exit, you can usually end up minimizing the amount you pay out of pocket for your childrens' tuition.
earl 15y ago
Not in sf or nyc. a low end (not dumpy, but definitely not high end with a doorman) 2 bed apartment is going to run you $650k in the decent bits of sf and more in nyc. In sf, you end up paying approx $1100 per month per million dollars of value in property taxes. So $715 in taxes, $300 or so in insurance, a $2500 mortgage, and you can easily be spending $3500-$4k/mo (after taxes) on housing. Using the rough rule of thumb that your salary should be 40 times your monthly housing payment, that's $160K already. It isn't hard if you're an adult, with a family, or housing obligations, or kids, etc. If you wish to restrict the universe of ceos to relatively recent college grads with no life obligations who are content to pay $1500 to share a crappy apartment, then maybe Thiel is being reasonable.
- _delirium 15y ago
  >> Most people with kids and mortgages get by on less than 150k. > Not in sf or nyc. It's still trivially true that most people in SF and NYC, including married adults with families, get by on way less than $150k. Even Upper-East-Side Manhattan, one of the wealthiest zip codes in the U.S., has average incomes "only" in the high 5 figures. Maybe there is a small section of Nob Hill where $150k incomes are normal, but even in most nice parts of SF that's not a typical family's income. Part of the reason is that in areas where housing is the major cost, the 40x-your-housing-cost rule of thumb is too conservative, and would lead to a conclusion that almost nobody can actually live in the city, whereas clearly many people do. And anyway I believe the usual mortgage-company rules of thumb are 30% of your gross income on the mortgage payment itself, but up to 40% on mortgage+insurance+etc. So that'd lead to $120k in your hypothetical.
  - vaksel 15y ago
    NYC is a bad example, the real estate costs really sky rocketed over the past 25 years or so...so it's very possible that someone could have gotten one of those buildings on a $40K/yr teacher's salary. Good luck doing that in this day and age
    - larrys 15y ago
      As a matter of fact I dated such a person (UES of NYC). Her salary was, IIRC, actually about $80's. She was divorced with one child. They had a 1 bedroom and shared the same bed. And she wouldn't have been able to afford that without family help.
larrys 15y ago
"Most people with kids and mortgages get by on less than 150k" Phil. I will say this the nicest way I can. I'd like to know where you are getting your info from? By your resume you are 4 years out of college. I'm a bit older and have 2 children, one in college as well as obviously many friends with children in college. My wife has 200k in Medical school debt to pay off. 150k is a nice salary, no doubt. But to say "If you really can't make ends meet on 150k you've overextended yourself." doesn't take into account someone's total financial situation and what their other obligations are.
- viscanti 15y ago
  If you can't make ends meet on 150k a year, you shouldn't be a startup CEO. It's that simple. If you need more security or up front money, there are plenty of other industries and established businesses you can work in. No one has to be a startup CEO. A big part of being a startup CEO is the upside potential of the equity you get. You're sitting on potentially life changing amount of equity and your job is to make it actually worth something. If you need more than 150k a year, you've over extended yourself as a startup CEO and should probably do something else. Life is a series of tradeoffs. If you can't (or don't want to) do what it takes to be a startup CEO (and a big part of that is gambling on the future value of your equity), just go do something else. The 150k figure is for funded startup CEO's. If you build your own profitable company and want to pay yourself more, go for it. There's plenty of routes to the end. If you can't cut it on 150k a year for whatever reason (your wife's medical school debt, kids, required lifestyle, etc), just do something else.
- waterlesscloud 15y ago
  "If you really can't make ends meet on 150k you've overextended yourself." and "...someone's total financial situation and what their other obligations are." Are not wholly unrelated ideas.
- philwelch 15y ago
  I don't know why you're making this personal, Larry. If it's such a struggle for you to be civil with me and discuss the facts rather than dragging our respective life histories into the conversation, you should find a better hobby than Hacker News. Statistically, the median income for a family in Mountain View, California in 2007 was $105,079. (http://en.wikipedia.org/wiki/Mountain_View,_California#Demographics http://en.wikipedia.org/wiki/Mountain_View,_California#Demog...) (This is higher than San Francisco, and MTV also includes more families with children, which is why I've chosen it as a basis of comparison.) Compare that to a individual income of roughly half again as much. Unless you're asserting that more than 50% of Mountain View families are struggling to get by, you have to admit that someone who can't make ends meet on 150k has an unusually high level of financial commitment. Such a person is unlikely to be a startup CEO, especially since most startups fail and leave their employees suddenly unemployed. I'd rather not get into your personal business, so let's speak more generally. Medical school is expensive and leaves one with a lot of debt, but unless you've made a horrible mistake, it also makes you a physician, who presumably can earn enough income to cover that debt. If not, medical school is a terrible investment. But in Mountain View, at least, the average physician apparently earns $131,000 a year (http://www.indeed.com/salary/q-Physician-l-Mountain-View,-CA.html http://www.indeed.com/salary/q-Physician-l-Mountain-View,-CA...), which means our hypothetical CEO/doctor couple has a combined income of $281,000, about 2 and 2/3 times the median. I don't know anything about you or your friends, and I don't really care to because it's not a personal argument despite your constant desire to make it so, but if being unable to make ends meet on almost three times the median family income in your town isn't overextending yourself, what is?

zobzu 15y ago

if you've 9 childrens you're simply irresponsible. LOOK I NEED THE MONEY I MADE 2 MANY KIDS! Seriously? $150K is way more than most people get - and they've a life too. And they don't get the millions in stock either.

wtvanhest 15y ago

I would rather have the CEO of a company worried about hyper growth than clipping coupons. $150k is probably enough for someone in their 20s with no kids, but there is no reason why they shouldn't make a little more if they have kids etc. Even in expensive cities, NYC, SF, giving more than $150k is probably not necessarily.

vaksel 15y ago

yeah you'd think they'd want the CEO to be able to 100% focus on their startup If for example the CEO's wife lost her job...$150K is suddenly not that much for a family. Do you really want your CEO to do consulting on the side to pay the bills instead of focusing on the startup?

larrys 15y ago
To me this is simply an attempt by Thiel to try and limit CEO's to a) ramen hungry founders or b) founders who already have money to live on c) founders without family obligations that can dedicate themselves 100% to the startup. Using the fact that money spoils (not denying that it could be true for some people) is just a red herring. I know many people who could retire and still work 6 or 7 days a week for the challenge. Some people who win the "lottery" lottery quit their jobs. And some continue to work. This reminds me of a story that a small business owner told me many years ago. He said in his business he preferred to have Puerto Ricans work in his warehouse. But he couldn't advertise and say "looking for Puerto Ricans" for bias reasons. So he told me that he simply put in the advertisement "must speak spanish" and that got him exactly what he was looking for.
- philwelch 15y ago
  Maybe we should take up a collection for the poor, impoverished startup CEO's who only earn $150,000 a year. That's only three times the median household (not individual) income. How do they get by!?
philwelch 15y ago
What if the CEO lost his job? (That's the typical outcome for funded startups--they fail, and everyone involved loses their jobs.) If you can't handle that, you need a more reliable career than "startup CEO".

qty899 15y ago

I highly, highly, highly doubt a CEO with 9 children who needs more than $150K in salary because s/he doesn't have any sufficient safety net will be taken seriously by any VC.

tzs 15y ago

> Second, what if the CEO of the startup is older, has 9 children and expenses? Does having 9 children make him a better CEO than someone with a more typical number of children? If not, then why is that relevant to what a company should pay him?