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The Best Indicator of Startup Success: The CEO's Salary...

It's an interesting concept, and probably one that can positively transfer to early stage companies where the leadership teams aren't founders, but are passionate (or not) about the business they've joined and are aligned (or not) with the early mission of the company.  

Here's the quote from Peter Thiel from TechCrunch in 2008:

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.

Of course, a lot of this is related to total comp.  Equity is the best way to find people who are aligned with these interests of early stage companies.  But Thiel's statement is a good one - whether the CEO is a founder or a professional hire, the extent they defer "market rate" comp for the good of the business probably tells you a lot about where the business is headed.  I think that's also transferable to early leadership teams at emerging companies, although not in as direct of a correlation.

Think of it as the earliest indicator of a thousand micro-decisions that will follow.


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