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CEOs are hugely expensive – why not automate them?

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Re: CEOs are hugely expensive – why not automate them?

#291

Post by thehappypm »

jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

Kyle's dad is the coach of your soccer team, right? Kyle's dad gets really really excited when you do well. He makes it fun, and you love going to practice! And you guys seem to win a lot!

Do you remember last year, when Mike's dad was the coach? He yelled a lot, you hated going to practice, he made you cry? And you never seemed to win?

Because Kyle's dad is a better coach, you win more. He's worth more to the team. Even though Kyle's dad isn't actually playing on the field, he makes you guys win. That's what a CEO does -- he makes a team win.

Re: CEOs are hugely expensive – why not automate them?

#292

Post by Griffinsauce »

hammock wrote: post #137
MattGaiser wrote: post #118

Earlier quoted context omitted.

You need profits for stock buybacks. Buybacks are just superior to dividends as a way to return capital.

>You need profits for stock buybacks. You merely need capital. Lots of buybacks are funded by debt

> funded by debt

Or recently, government support packages.

Re: CEOs are hugely expensive – why not automate them?

#293

Post by jordanpg »

thehappypm wrote: post #291
jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

Kyle's dad is the coach of your soccer team, right? Kyle's dad gets really really excited when you do well. He makes it fun, and you love going to practice! And you guys seem to win a lot! Do you remember last year, when Mike's dad was the coach? He yelled a lot, you hated going to practice, he made you cry? And you never seemed to win? Because Kyle's dad is a better coach, you win more. He's worth more to the team.…

Right, lots of wins are good, but why does the coach need to get paid $100M? Why is $1M not good enough?

Let me guess: because being a coach is so hard, and requires so incredibly much smarts and talent that only a precious few people have?

Re: CEOs are hugely expensive – why not automate them?

#294

Post by rybosworld »

koonsolo wrote: post #249
rybosworld wrote: post #184

Earlier quoted context omitted.

Agreed. If anything, this study makes the case that one person with sweeping decision power is at best a liability.

In that case, take away the CEO and see what happens. It can't be that hard. You don't know any companies without CEO's? Exactly!

A famous one is DPR Construction: https://www.dpr.com/media/blog/wsj-ceo

They have 3 people (the co-founders) sharing the role/responsibilities of CEO.

Re: CEOs are hugely expensive – why not automate them?

#295

Post by nunez »

thehappypm wrote: post #291
jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

Kyle's dad is the coach of your soccer team, right? Kyle's dad gets really really excited when you do well. He makes it fun, and you love going to practice! And you guys seem to win a lot! Do you remember last year, when Mike's dad was the coach? He yelled a lot, you hated going to practice, he made you cry? And you never seemed to win? Because Kyle's dad is a better coach, you win more. He's worth more to the team.…

Amazing ELI5 on the value CEOs bring to the company.

Only difference: instead of coach Kyle making just _you_ feel great, he's actually running the US Olympic Junior Team and has to hire five or more coaches under him that make _you and your teammates_ feel great and perform well.

That's why CEOs get paid well: their impact has a much wider scope.

Re: CEOs are hugely expensive – why not automate them?

#296

Post by koonsolo »

jordanpg wrote: post #284
koonsolo wrote: post #260

Earlier quoted context omitted.

That is simple: because CEO's need to be the best of the best. Most professions require an average performer. Building my house didn't require the best of the best. Programming software doesn't require the best of the best. But there are other professions where you need (to be) the best of the best: athletes, musicians, authors, ... . Coincidentally also the professions where the top performers make a crazy amount of…

I don't agree that they are the "best of the best." Or at least it's not obvious to me that they are, in the same way a talented musician or athlete is. The supply/demand theory only explains the high cost of CEOs if there is an extremely limited pool of them. Because I reject the premise that they are just so incredibly talented , there shouldn't be a limited pool of them. I suspect the pool is limited, but not beca…

Let's say you invest $10M in your company, and I also have a competing $10M company.

I go the traditional route and hire a top CEO with a big chunk of money. The rest of the workforce gets what they get elsewhere.

You hire a CEO that is "fairly" compensated. You will basically need to make a bet on someone non-established, and hope they can perform. With the extra money, you can either hire better talent or hire more people.

The success of a company is so reliant on where the leader takes it, that 9 times out of 10 you will lose.

And that is why my company will survive and have a CEO that is grotesquely compensated.

Funny part is that when you win, either your CEO will be snatched away for a grotesque amount of money, or you will have to pay that amount to keep them.

Re: CEOs are hugely expensive – why not automate them?

#297

Post by koonsolo »

rybosworld wrote: post #294
koonsolo wrote: post #249

Earlier quoted context omitted.

In that case, take away the CEO and see what happens. It can't be that hard. You don't know any companies without CEO's? Exactly!

A famous one is DPR Construction: https://www.dpr.com/media/blog/wsj-ceo They have 3 people (the co-founders) sharing the role/responsibilities of CEO.

Strange reasoning: "Show me a person without a car". "Here you go, this person has 3".

So 3 founders are running the company, nothing special about that.

Please show me a company without a CEO.

Re: CEOs are hugely expensive – why not automate them?

#298

Post by chrisseaton »

k__ wrote: post #283
chrisseaton wrote: post #256

Earlier quoted context omitted.

Rich people's evil plan to give other people money and drive wages up. Got it.

People are always talking about the free market as if it was some kind of self regulating physical law of nature that could never be wrong. What's so absurd to think that people from one class (CEOs/VC/etc) want to help people from that same class even if it's against the laws of the free market? If I help someone who kinda identfies with me, it raises the chance that they will help me/my friends/my family in the fut…

> What's so absurd

Because it goes against Occam's razor.

People pay CEOs a lot. Why do they do that?

Likely: because they have to.

Unlikely: global conspiratorial private welfare programme.

Re: CEOs are hugely expensive – why not automate them?

#299

Post by ThalesX »

lotsofpulp wrote: post #276
klyrs wrote: post #178

Earlier quoted context omitted.

Because they're also getting overpayed in a similar situation at a different company. It's in their direct interest to raise the "market rate"

So a significant portion of owners employ each other at each others’ companies?

You're talking about employment as if they're working 9 - 5 in construction. These people are amplified by their networks, they don't work for eachother. The better their networks performs, by connections, or by value, or by whatever metric you want to monitor, the more they perform...

Re: CEOs are hugely expensive – why not automate them?

#300

Post by makapuf »

koonsolo wrote: post #249
rybosworld wrote: post #184

Earlier quoted context omitted.

Agreed. If anything, this study makes the case that one person with sweeping decision power is at best a liability.

In that case, take away the CEO and see what happens. It can't be that hard. You don't know any companies without CEO's? Exactly!

Let me take away your keyboard and let's see how you fare at c++ or Javascript.
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