How VCs have take all the fun out of being a Silicon Valley startup CEO

Back in the 1980s, lots of serious-minded people loudly lamented the fact that Wall Streeters were making more money than the corporate executives, and that all the smartest young MBAs were going to Salomon Brothers instead of Procter & Gamble. Then came the 1990s, when corporate CEOs made more than investment bankers, and all the cool young MBA kids wanted to go to Silicon Valley to start companies. Problem--if in fact it was a problem--seemingly solved.

But this decade, writes start-up vet Sramana Mitra, has been all about the money guys again:

It is a well-known fact that Silicon Valley startup CEOs are a dramatically under-paid bunch. For what it takes to do the job - the kind of stress, travel, opportunity cost, failure rates - many savvy entrepreneurs and executives have figured out that it isn't worth it to be the CEO of a venture funded startup (if you have other options, that is). Being a VP is even worse. Only one out of 50 startups succeed (or may be one out of 100, I don't know the exact ratio), so the equity component of the compensation package rarely pays off after the liquidation preferences, etc. are settled.

I would go so far as to submit, working for a VC-funded startup is more like having any other job, than true entrepreneurship where you actually are your own boss. Entrepreneurs / CEOs answer to a Board. There is a compensation committee that decides how much you make. You get fired and washed out of your equity stake based on the VC's whims. This may be perfectly legitimate at times, since not all entrepreneurs scale to become good CEOs of larger companies. But often, these decisions are gut reactions, not legitimate, and entrepreneurs get slaughtered due to the VCs' lack of experience or seasoned intuition.

Throughout history, it is the entrepreneurs who have built companies and shaped economies, not money managers. It is just plain wrong that we have created a system that compensates these builders at rates that are so much below the money managers.

The counterargument, made by the likes of that Mallaby guy, is that the allocators of capital (hedge-fund managers, private-equity partners, VCs, etc.) do as much to "improv[e] the productivity of the capitalist system as a whole" as entrepreneurs do. Why can't I buy that? Is it some sort of reflexive anti-Wall Street bias? Or does the current setup really shortchange the true builders of our economy?