At the TechCrunch 50 conference Peter Thiel, Silicon Valley uber investor was quoted as saying that there is a ceiling in terms of CEO salary for a startup, beyond which you begin to “have issues”. For a more general take on CEO salaries (not tech specific) check out this article.

After spending a few days with a bunch of boot-strapped start-ups at the Office 2.0 conference I have to agree to a certain extent with his thoughts although I’d extend them further to include spending generally – not just C level remuneration.

But first a disclaimer – I’m not suggesting that startups should scrimp and save every penny – it costs money to build a brand and sometimes there are things you just have to do (spending up to go to tech conferences for example) – but startups that let go of the reins – paying themselves high salaries and hosting lots of launch parties – run the risk of burning through their cash before they have a product.

The fact is that a startup should act like a startup – leave the top shelf partying to those who’re actually making the revenue.

My role model for sensible expenditure is a SaaS business that I’ve been following for awhile – rather than being located in high rent silicon valley, they’re domiciled in a much more affordable location. Rather than big ticket offices with plush sofa and carpets, they’re working out of a converted garage. They’re also scaling pretty fast, making good revenue and deriving profits from their endeavours – while their startup brethren are out partying on their investors dollars.

I wonder who will still be around in a few years time?

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Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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