There Is Such a Thing as Too Much Incentive for Entrepreneurs
Harvard Business Review
SEPTEMBER 3, 2013
For a long time, this is exactly what most venture investors wanted: more to gain (and lose) means a stronger incentive, greater focus, and better performance - right? Let''s say you earn $4 million after 5 years on the $100K you put in; assuming you give up $500K in total salary, this is a 100% CAGR). But venture capitalists need to target a 10X return and gladly tolerate a higher chance of failure in exchange for a greater expected payoff.