The lower the CEO salary, the more likely it is to succeed.
Sure, but this an obvious "correlation is not causation" situation and the reason for this is unpleasant.
If you're from a middle-class background, you have to take full salary because that's the only money you have to live on. If you're from an upper-class background, taking full salary hurts your relationship with investors, and will possibly hurt your bargaining position in future negotiations.
People from middle-class backgrounds cannot afford to pay themselves under $50,000 per year in San Francisco. As for the upper class, if they have trust funds, they can and probably will accept low salaries, just as there are publishing interns all over New York, making what would be poverty wages, and who live on their trust funds.
People from upper-class backgrounds are more likely to have the connections that will make their startups succeed.
That is the reason for the correlation. It's just another incidence of (unintended?) VC classism.
This post will be downvoted to hell, but I have been wanting to say this for a while and can't find a way to contact you. (My email is my HN handle at gmail)
You may or may not be right about this or the rest of VC-istan. But I LOVE the fervor and color of your posts. I love hearing a contrarian view. And I would love to buy you a cup of coffee or beer to say thanks for making my time of HN so much more interesting.
Edit: Thanks for the reply, and I'm relieved to hear others share my sentiment. I have seen you refer to rankban elsewhere, but this was the first time I understood what you meant.
Also, yesterday I published research about Everpix shutting down and I got two groups of feedback:
1) From startup founders generally positive comments or clarifying questions. All were constructive conversations.
2) From VC-connected people generally defensive FUD and ad hominems.
It was very interesting to watch, and you are certainly not alone.
I'm one of those who commented on your post yesterday, and I'm sure you placed me on the second bucket. I'm in no way connected to VCs. However, my post was overly snarky, so I'll take this opportunity to elaborate.
I thought your post had interesting content and a thorough analysis. But the tone of your post was off-putting. You had a condescending tone and spoke in absolutes: "Everpix should have shut its doors immediately as it never could be a viable business". Particularly when taken in the context of swisspol's reply it's obvious that your commentary missed the mark.
The comparison to your own photo startup felt like an unnecessary addition. The constant assurances that you had done the right thing in aborting your launch felt like self-justification rather than something that was added for the reader's benefit.
I actually was just counting the 38 emails I got. I didn't feel like I could tell one way or another from HN comments or twitter, and I appreciated your thoughts. The snark was earned! (And I upvoted you)
About the tone -- I think you're right to criticize it. I liken the situation to competing against a sports player who uses steroids when you do not. The other player gets the press, the accolades, and the reputation even though he cheats. So when the player gets caught with a failed drug test and suspended from the sport, of course it feels great to be vindicated.
The Everpix team was dumping its product on the market and either lying or ignorant about it. They and the others left my team with the very hard decision to abandon our own sweat and blood for no fault of our own. We loved our product and wanted to be able to compete, but we saw we would not get a seat in this game of musical chairs. We resented the other competitors and their high capitalization, and we prefer to limit VC pitch tours. Failing to include that bias would have been dishonest, and the resulting tone was cathartic. I have no apology for it.
Swisspol's reply reinforced to me that the team was unaware of their underlying failed business model -- nothing in my analysis assumed constant costs or even distributions as suggested -- and selling a product for less than variable costs throughout 2013 was major business sin. It's forgivable for the first months or so, but the fact it persisted until the day they closed the doors is very telling. And yes, they should have closed their doors "immediately" when it was obvious from very early in the data they could not get positive margins, just as we did. Remember, this was a paid product and not an Instagram clone. My analysis was not hindsight, it was confirmation of hard work I did in April 2013. The VC-related emails had a similar tone attacking the analysis as "unfair" or "inappropriate" for a web-based startup.
Everpix should be a cautionary tale for other startups to make sure their gross margins are positive! My other research has a much more neutral tone, but in this case photos are very emotional.
Agreed. I've gained a lot from his comments even if I don't always agree with them. I think at the very least many of his observations are incredibly astute and intellectually interesting, even if some may turn out to be ultimately wrong. That's just my opinion, and maybe I just enjoy the fervent contrarian narrative amidst the hoohah of HN, but I think his karma suggests that many others enjoy it and derive some meaningful insight from it as well.
This post will be downvoted to hell, but I have been wanting to say this for a while and can't find a way to contact you.
Actually, it's at +9 [ETA: changed during writing of reply] right now. [+12 as of 11.56 PST]
The reason my posts tend to end up at the bottom is not (in general) downvoting or low karma scores. Of course, I've had some posts get downvoted, and a smaller number that deserved it. (Who hasn't?)
The ranking system was revamped around summer 2013 to include personal penalties that seem to have hit a large number of the top-100 posters (including respected ones, and less controversial ones than me). It's called "rankban". I also experience "slowban", which is 20x worse latency when logged in than in incognito mode.
Rankban is supposed to make us go away, I presume, but it actually had the opposite effect on me. I post more on HN post-rankban. It suggests that my anti-VCistan writing is in danger (as perceived by PG) of actually being effective. I'd probably be restricting myself to technical articles only (I don't care that much about VCs) were it not for rankban.
Is this really supposed to be a punishment or just to mitigate that "famous" posters may more often get voted up on name alone, where an equivalent comment from a less well known person wouldn't receive as much attention?
Sure, but this an obvious "correlation is not causation" situation and the reason for this is unpleasant.
If you're from a middle-class background, you have to take full salary because that's the only money you have to live on. If you're from an upper-class background, taking full salary hurts your relationship with investors, and will possibly hurt your bargaining position in future negotiations.
People from middle-class backgrounds cannot afford to pay themselves under $50,000 per year in San Francisco. As for the upper class, if they have trust funds, they can and probably will accept low salaries, just as there are publishing interns all over New York, making what would be poverty wages, and who live on their trust funds.
People from upper-class backgrounds are more likely to have the connections that will make their startups succeed.
That is the reason for the correlation. It's just another incidence of (unintended?) VC classism.