LOK 📖

    The Problem With Cash Compensation

    A company does better the less it pays the CEO

    • In no case should a CEO of an early-stage, venture-backed startup receive more than $150,000 per year in salary.
    • High pay for a CEO incentivizes him to defend the status quo along with his salary.
      • Not to work with everyone else to surface problems and fix them aggressively.

    A cash-poor executive, will focus on increasing the value of the company as a whole

    • If a CEO doesn’t set an example by taking the lowest salary in the company, he can do the same thing by drawing the highest salary.
      • So long as that figure is still modest, it sets an effective ceiling on cash compensation.
    • High cash compensation teaches workers to claim value from the company as it already exists instead of investing their time to create new value in the future.

    LOK: 4. Management
    RL: Zero to one
    IDEAS:     Startups Companies Management