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Comment by philwelch | Hacker News Reader

Most people with kids and mortgages get by on less than 150k. If you really can't make ends meet on 150k you've overextended yourself.

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What if they have a few kids in college? Even a public college can cost, what, $35,000 these days if out of state? What if they want to do a startup but they already have kids in private college? Sorry kids, I want to do a startup please switch to the instate public college.

My point is simply that there are other circumstances and picking an absolute number seems to be biased toward younger people with no obligations.

Most parents, even parents with kids in college, get by on less than $150,000 a year. Kids can get scholarships and student loans. Actually, a lot of private colleges give need-based scholarships, so by taking your compensation as a lower salary today followed by lucrative equity compensation after you exit, you can usually end up minimizing the amount you pay out of pocket for your childrens' tuition.

"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.

"If you really can't make ends meet on 150k you've overextended yourself."

and

"...someone's total financial situation and what their other obligations are."

Are not wholly unrelated ideas.

I don't know why you're making this personal, Larry. If it's such a struggle for you to be civil with me and discuss the facts rather than dragging our respective life histories into the conversation, you should find a better hobby than Hacker News.

Statistically, the median income for a family in Mountain View, California in 2007 was $105,079. (http://en.wikipedia.org/wiki/Mountain_View,_California#Demog...) (This is higher than San Francisco, and MTV also includes more families with children, which is why I've chosen it as a basis of comparison.) Compare that to a individual income of roughly half again as much. Unless you're asserting that more than 50% of Mountain View families are struggling to get by, you have to admit that someone who can't make ends meet on 150k has an unusually high level of financial commitment. Such a person is unlikely to be a startup CEO, especially since most startups fail and leave their employees suddenly unemployed.

I'd rather not get into your personal business, so let's speak more generally. Medical school is expensive and leaves one with a lot of debt, but unless you've made a horrible mistake, it also makes you a physician, who presumably can earn enough income to cover that debt. If not, medical school is a terrible investment. But in Mountain View, at least, the average physician apparently earns $131,000 a year (http://www.indeed.com/salary/q-Physician-l-Mountain-View,-CA...), which means our hypothetical CEO/doctor couple has a combined income of $281,000, about 2 and 2/3 times the median. I don't know anything about you or your friends, and I don't really care to because it's not a personal argument despite your constant desire to make it so, but if being unable to make ends meet on almost three times the median family income in your town isn't overextending yourself, what is?

Yes, but they have 9 to 5, low stress jobs. I want the CEO of a company I work for/invest in etc. to be focused on the business, not saving.

I want them to feel good about their personal expenses so they can focus on the business.

I really can't understand this kind of lack of perspective. Ask your waitress, or barista, or the guy that changes your oil sometime if they have a "9 to 5, low stress job". Because they don't. And no one's paying them $150,000 a year--more than three times the median household income in the United States--to make them feel better about it.

I do not have a lack of perspective. I have been a server, a security guard, worked for minimum wage at a beagle shop etc. Now my job is much better than those jobs, but I still remember how "tough it was". It was tough in the sense that stress came from uncertainty in paychecks and in social status. But, that type of stress does not compare to being the CEO of even a small company.

If you make $100k in most cities that is pretty good, in SF or NY $100k a year means you have roommates. Do you want the CEO of a company that has the potential to make billions of dollars for investors to worry about who's turn it is to clean the kitchen?

Of course not, that is the most ridiculous thing I have ever read. It literally makes zero sense.

Median family income in San Francisco is just over $81k. Almost twice that for an individual is comfortable. Make it work. Believe it or not, you can get the job done without being coddled with luxury.

You do not need roommates at $100k in Manhattan. You might get one if you feel lonely though.

You are not addressing the most important point:

Why do you want a CEO of a company who has investors' money, employee's livelihoods and the possibility to improve the world living with roommates, cooking his/her own food to save money, and wasting time when that CEO could be 100% focused on the business?

I'm not advocating we pay him/her $500,000/year, but $150,000 is very fair.

My criticism is with people who say 150k is too little. I think it's a fair ceiling.

Understood. In most cases that is more than enough, I could imagine scenarios where it wouldn't be.

Not in sf or nyc.

a low end (not dumpy, but definitely not high end with a doorman) 2 bed apartment is going to run you $650k in the decent bits of sf and more in nyc.

In sf, you end up paying approx $1100 per month per million dollars of value in property taxes. So $715 in taxes, $300 or so in insurance, a $2500 mortgage, and you can easily be spending $3500-$4k/mo (after taxes) on housing. Using the rough rule of thumb that your salary should be 40 times your monthly housing payment, that's $160K already.

It isn't hard if you're an adult, with a family, or housing obligations, or kids, etc. If you wish to restrict the universe of ceos to relatively recent college grads with no life obligations who are content to pay $1500 to share a crappy apartment, then maybe Thiel is being reasonable.

>> Most people with kids and mortgages get by on less than 150k.

> Not in sf or nyc.

It's still trivially true that most people in SF and NYC, including married adults with families, get by on way less than $150k. Even Upper-East-Side Manhattan, one of the wealthiest zip codes in the U.S., has average incomes "only" in the high 5 figures. Maybe there is a small section of Nob Hill where $150k incomes are normal, but even in most nice parts of SF that's not a typical family's income.

Part of the reason is that in areas where housing is the major cost, the 40x-your-housing-cost rule of thumb is too conservative, and would lead to a conclusion that almost nobody can actually live in the city, whereas clearly many people do. And anyway I believe the usual mortgage-company rules of thumb are 30% of your gross income on the mortgage payment itself, but up to 40% on mortgage+insurance+etc. So that'd lead to $120k in your hypothetical.

NYC is a bad example, the real estate costs really sky rocketed over the past 25 years or so...so it's very possible that someone could have gotten one of those buildings on a $40K/yr teacher's salary.

Good luck doing that in this day and age

As a matter of fact I dated such a person (UES of NYC). Her salary was, IIRC, actually about $80's. She was divorced with one child. They had a 1 bedroom and shared the same bed. And she wouldn't have been able to afford that without family help.

"Even Upper-East-Side Manhattan, one of the wealthiest zip codes in the U.S., has average incomes "only" in the high 5 figures."

I'm not sure that you can look at simply average income without knowing whether the people are single, cohabitating and if they have children and how many. Also average income I would imagine doesn't take into account healthcare costs which can run thousands. One person may be covered, another not covered, another on medicare etc. Some may have child support to pay.

Saying that someone can get by on "less than 150k" is like saying that someone can build an ecommerce website for $X.

Even Upper-East-Side Manhattan, one of the wealthiest zip codes in the U.S., has average incomes "only" in the high 5 figures.

East of Lexington, the UES is upper-middle-income yuppies. Apartments are affordable but very small: like 400 SF for $2,000 per month. Not an option if you have kids.

Also, if UES is defined from 59th to 110th street, that includes areas in the north that are low-income and more like Harlem than UES. The change is quite stark.

It is possible to live with a baby in 1br apartment, a lot of people do it in Manhattan. The real problems start later, with preschools, kindergartens etc.

That preschool shit does sound terrifying.

My question is: why? Are NYC public schools really that bad? (I have no idea, but I thought there were some good districts.) Or is the insanity just a product of it being hard to get them into top colleges coming from New York and not being prep? Because there's a solution, which is to have them move to Montana during their senior year.

There are no public preschools in New York for middle class. The private ones are very expensive and competitive to get into.

AFAIK, there are good public elementary schools. Middle and high schools are much worse if you don't get into a Gifted & Talented program.

Since when is a doorman a necessity?

Then I guess you'll just need to live outside the city and commute like millions of people do every day.

So you want the CEO of a company to commute rather than focused on adding value for shareholders?

What world do you come from where CEOs are these brittle, frail creatures who must be pampered and kept in protective isolation so that their companies don't collapse? You've made several comments throughout these comments referring to such a CEO. I wouldn't want to work for a guy who's this much of a prima donna. The person you're describing sounds like a wimp, to be perfectly honest with you.

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.--

Only about 10% of the households in San Francisco have household income over $150k

If you are right, then 90% of the households in San Francisco are living in below low end housing. I have a hard time believing that.

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