Peter Thiel: Startup CEO Salaries Shouldn’t Be Above $150,000

There's a big range between "no money for the present" and some salary at or below 150k a year. The point is that the CEO shouldn't be "getting rich" from their salary. They should be able to live comfortably, but not necessarily extravagantly (anything over 75k a year in SF or NYC should really suffice). If the CEO has aspirations of some day living extravagantly, she needs to have a successful exit.

It sounds like you're arguing that an "under paid" CEO might push for an exit quicker and at lower value than they might otherwise, if they had a higher salary. Almost every exit is successful, and not at all a guarantee. A CEO so short sighted that they take a much smaller early exit, probably is short sighted enough to fail at running a business and will likely end up with no exit at all.

As long as the CEO can pay for rent, food, family expenses and has at least 1k left over for whatever each month, that's more than enough. If a startup CEO is making a million a year, there's not as much incentive to get to a successful exit. Instead, there's more incentive to keep things going as long as possible to milk that salary. Reducing salary to a reasonable rate (I don't think anyone here is advocating ramen and a sleeping bag under the desk) and keeping incentives tied to a successful exit keeps the motivation where it needs to be.

Thiel is missing the point. The point is that you need to pay people enough so that money ceases to be a factor.

For certain people money is not a factor so it doesn't matter whether it pay them $1 or $1MM. To others $150k is just enough money to live very comfortably but not enough to do nothing.

Buffett once commented, "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing".

"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.

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.

Yeah, reading my comments does paint a picture, but it was unintended.

The main point I want to make is that keeping a CEO from making $150k, or $120k because they should be suffering for some unknown reason is being Penny wise, and Pound foolish.

I'm not advocating $200k or $300k in salary or more, I'm just saying that he should make enough where his personal income isn't the thing on his/her mind. Ideally the whole team should be making good enough money where they are not worried about these things. I also wouldn't advocate a system where the CEO was making twice what a CFO or CTO makes or some other crazy hierarchical system.

The world assumes there is a strong correlation with people's hunger and their success. In my experience I routinely see the opposite and I believe giving people more helps them perform better. Ultimately if someone is making an investment in a company they want that company to succeed and they should want that CEO to be focused on growing the business.

--This entire view point for me has changed over the past 5 years and maybe I'm right, maybe I'm wrong, but I don't see a good argument for paying a CEO $50,000 a year other than that someone thinks that is a lot of money for some reason.--