I have a hard time believing this.
I came across this Techcrunch article last night when a good friend mentioned it on Twitter.
I have a really hard time absorbing this at face value. Here’s the relevant quote from the article: (emphasis mine)
The lower the CEO salary, the more likely it is to succeed. The CEO’s salary sets a cap for everyone else. If it is set at a high level, you end up burning a whole lot more money. It aligns his interest with the equity holders. But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks. In practice we have found that if you only ask one question, ask that.
Alright, so if you’re looking to evaluate a startup’s chances of success, just ask them how much the CEO makes. Right.
I respect Peter Thiel, but I just can’t seem to digest this one. Granted, he does also say “…it goes to whether the mission of the company is to build something new or just collect paychecks.”, but it seems like that is, in his mind, secondary to the CEO’s pay rate.
What ever happened to looking at the team, their vision, their track record, how well they’re executing, is the product solid, etc. Do those things matter when trying to predict the success (or not) of a young company? I guess not. I do believe that CEOs of early stage companies should not be taking gargantuan salaries, but to say that that should be the only factor when evaluating a startup’s chances of success, well, I just can’t stomach that one.
Amusing, too, that Techcrunch goes on to say:
In Startupland, everybody should be working towards the same goal: that big juicy exit.
This could easily become another post unto itself, but what kind of mentality is that? What about building something that positively impacts people’s lives? Building something game-changing? Building a thriving business that generates — gasp — actual profit? Nah, just keep pushing for that exit, because that’s all that really matters.
Come on.
