Working at a Startup vs. a Big Company

http://alexlod.com/2012/03/12/10-facts-about-working-at-a-startup-vs-a-big-company/

by alex_lod • 14 years ago

69 46 14 years ago

I’ve spent the last few weeks trying to recruit friends of mine to come work with me at my super early startup. In doing so I’ve had to educate a lot of my friends on what it’s like to be at a startup, and why you might want to join one. This post is a summary of all that advice.

My hope is that I can inspire more people out there to quit their job at Google, Facebook, Microsoft, The Man, and join a startup :).

jasonkester• 14 years ago

Startups are a fun place to work, but don't fall for the fallacy in point #8 (the only one in the article that's wrong).

Your market value is your market value. Sure, a startup will ask you to take a pay hit, but that doesn't obligate you to do so. Having "good people" is way more important to a small team than a large one, so if you fit that description you absolutely can negotiate a good bill rate. You'd be silly not to, since they definitely need you more than you need them.

If they make grumbly noises, be sure to point out that you're happy to trade in your lottery tickets for a competitive wage. As has been discussed here endlessly, startup employee shares are pretty close to worthless even in the best case. Tell them they can keep them, but since they're hiring real computer programmers they're going to need to pay a real computer programmer salary.

emmett2• 14 years ago

Your compensation for any given job can be broken down into an equation that looks something like:

Compensation = Equity + Salary + Bonus + Benefits + Training + Credentialing + Interest Level of Work...

Clearly some places (Academia, for example) pay you mostly in Training, Credentialing, and Interest level.

Big companies pay you almost entirely in Salary and Benefits.

Hedge Funds pay you mostly in Bonus, with some Salary.

Good startups pay you pretty good in Salary, and pretty good in Equity.

Great startups pay you almost ENTIRELY in equity on a percentage basis, because that's the part that makes you rich (Google, Facebook, ...) Of course it's hard to tell if you're working for a great startup ahead of time.

aaronblohowiak• 14 years ago

Startups that start off being run by well-intentioned people you trust can turn into places with management that has no problem diluting or otherwise devaluing your equity.

Also, most startups use a little trick: they tell you that your equity is enough to make up for the difference in salary. Some of the clever ones will even do this using the valuation at the last fundraising event. VCs will agree that startups are a risky investment, and they seek 10x return on their investment because most of their investments fail. If you know that most investments fail, then you should really be compensated at a risk-adjusted amount of equity (ie: you should get waaay more equity at the current valuation than the discrepancy with the market rate to compensate you for the risk that the equity will be worth 0.) Additionally, there is the chance that after starting employment you discover the personality fit isn't there or you otherwise have to leave before the first year is up; if you don't reach your one year anniversary you take a 100% loss on the income discrepancy because you have no equity. To add insult to injury, you ARE NOT BEING GIVEN THE AMOUNT OF STOCK IN YOUR PACKAGE; an "option" is just the right to purchase at a set price. So really, people are "paying" you the difference between the current valuation of the company and its future growth, so you are getting a much worse deal than the last round of investors.

j_baker• 14 years ago

For starters, the article is mistitled. A more accurate one would be "10 opinions About Working at a Startup vs. a Big Company". Although "platitudes" might be even more accurate than "opinions".

But there's one thing in particular that annoys me here:

And by the way, if you’re a good engineer you’ll have zero issue finding another job. Zero.

You'all have zero issues finding a new job if you're a good interviewee, but not necessarily if you're a good engineer. I know lots of people (myself included) who are at least decent engineers but terrible interviewees.

eitally• 14 years ago

The ironic thing is that you'd probably have zero issues finding a job at a BigCo, which don't often use the same interrogation techniques as startups and tech companies.

natesm• 14 years ago

I've only had one job search so far, but I got much more "where do you see yourself in X years" and "tell me about a time..." nonsense at larger companies. Startups were much more interested in what I had done, and they actually looked at my Github account.

alex_lod5• 14 years ago

I'd hire you if you were a good engineer but not a good interviewee :). My hope would be that a good interviewer can see through an interview in the same way that a good teacher gives good grades to good students, not good test takers.

diego• 14 years ago

If you can tell that a bad interviewee is a good engineer, you've cracked the elusive interview code that everyone has been trying to figure out for decades.

A teacher has an ongoing relationship with a student, so time is on their side. An interview is the opposite.

koos42• 14 years ago

Hiring a good engineer that is a bad interviewee is the responsibility of the interviewer. A sufficiently good interviewer should be able to pull the necessary info out of a bad interviewee.

krupan4• 14 years ago

Make friends with other good engineers that are good interviewees. They will teach you some skills, and give personal references for you at their companies when you need a job. Personal references are going to get you the really good jobs, not applying online and going through the standard interview process.

timr• 14 years ago

That's not really true. At good companies you're still going to need to interview, even with a strong reference.

You may not need to prove yourself technically as much as someone who comes in cold, but you always need to prove that you're a good cultural fit for the team.

PakG14• 14 years ago

I think this paints a too rosy picture and doesn't nearly touch on all the startup horror stories that can exist, especially for points from #4 to #9.

This post speaks well about startups done right. It barely says anything about startups done wrong. Likewise, although the examples are much fewer, there are big companies done right and big companies done wrong.

alex_lod5• 14 years ago

Very good point. I suppose I've only worked at startups that have done very well (Redfin, Cloudera), hence the bias here. While we're here, though, could you share some of the negative parts of working at a (failing) startup, apart from the obvious: you're out a job?

adovenmuehle• 14 years ago

If you were trading salary for equity and the startup fails you're out that. You're also out time which you could have been advancing at a different company.

However, because working at a startup is gambling, you have to treat it as such. If you can't live with losing out on salary you could've made at another job, you shouldn't work at a startup.

edwinnathaniel3• 14 years ago

There are plenty negatives! but such is life when things didn't go your way right? (^_^)

It takes toll psychologically. There's that nagging feeling that "had they listen to me, we wouldn't fail this bad" for a while depending on how slow/fast you can move on.

Wasted [time & money]: you lose money, you lose time. Could've done something else, build a career, street-cred, resume, and do something else as well.

The positive part of working at a failing start-up is about opening your eyes that start-up isn't as glamour as what people perceive it to be. It makes you not wanting to work for a start-up ever again unless it is yours. So I'm not saying it kills your entrepreneurial spirit, but it does kill your youth-risk-taking-high-flying mind.

PakG14• 14 years ago

Just some off the top of my head, from my own experiences when I was still naive and ignorant (and I still am), and from observing others.

4) You can also be removed from your role a lot faster and be forced down if the team (or worse, the investors) feel you're not ready and they feel the company requires adult management. For some people, it's true. But in some cases, you can get really buried because of petty issues, or in worst-scenario cases, forced out and left hanging to dry. You may come out of the experience having learned a lot, but you may also come out of the experience very bitter. See recently submitted article about Khalid Shaikh, regarding YouSendIt, Noah Glass of Twitter, Eduardo Saverin of Facebook, etc. Yeah, all of these guys probably made big mistakes and probably didn't deserve to be one of the senior guys. But the point is that they also didn't get a lot of help to develop themselves, whereas at a big company, the structure is in place to help develop people who need it (not always, but more often than in startups where everyone has to pull their own weight or die). Another recent alleged example is Naveen Selvadurai of Foursquare, though that guy has done a good job of taking the high road if it's true: http://www.businessinsider.com/naveen-selvadurai-tried-to-fi...

5) The level of transparency and all the good stuff that comes with it is all dependent on the level of integrity of the startup's leadership. There are lots of stories of founders who lie, mislead, and misuse the startup's money.

6) You can help shape environments, but it is also a natural psychological event that your environment shapes you. If your founders are domineering, arrogant, and generally assholes, it will be hard for you to influence the company, especially since most of the early hires will either be similar or easily cowed into groupthink. If you're not up to the task of standing up, you either become one of the cowed sheeple or get pushed out. It's sad if an startup's (or any organization's) culture is like high school, but it can happen.

7) I'd say it really depends on the leadership's philosophies. If it's a business type who's like "I'm the CEO, this is my leadership group, and you guys are just code monkeys", I'm betting you probably won't see this kind of culture where everyone can be involved in the hiring across the entire organization.

8) Already addressed somewhere in these comments.

9) Politics can exist in smaller companies too. And when the group is as small and tight-knit as startups are supposed to be, if the politics exist due to poor leadership and poor culture, it will be an even more painful experience than in a big company. After all, in startups, you can often spend all your time with the team when it's crunch time. In big companies, more often than not, you have the option to go home and leave work at work. It can become a lot more personal in a startup if the culture is bad.

sks• 14 years ago

Your point #5 about transparency may not be true all the time. Strict policies force consistency and some level of transparency at big companies while the ad-hoc nature of start ups makes it really easy to hide information. In a badly run startup it doesn't take long for founders/leaders to mislead the engineers with false information.

At a startup my friend worked, he was one of the best engineer on the team and thus the founders wanted him to take on more work in return for a bigger bonus. In the end they did not make enough money to pay the promised bonus .. turned out the founders knew this all along but still kept mentioning the said bonus.

krupan4• 14 years ago

Maybe this should be used as a, "if your start-up experience isn't going like this, then it's time to get out" list.

I've been at Fusion-io for a little over 2 years now, and I worked at HP before that, and I was nodding in agreement with this whole post.

krupan4• 14 years ago

I'd really like to see the Big Companies Done Right list. I've heard the legends myself, but I'm after some time at big company done wrong and small company done right, I have a hard time picturing big company done right.

PakG14• 14 years ago

I don't think companies like Google deserve to be called startups anymore. Apple too. There are examples out there. We hear the occasional horror stories about these companies, but in general, we hear a lot more about how happy and inspired people are to work there.

greyman• 14 years ago

I don't think #1 about where you have bigger impact is universaly true.

I worked in BigCo on a big (and commercialy successful) software project used in hospitals. More than 1,000 people (soft devs, QM, sales&marketing) are employed by BigCo to work on it. Even when I contributed less than 1/1000 to the project, I believe my contribution to the world is still quite big, since the software is deployed to 10,000's of hospitals and assist with (sometimes life-saving) procedures every day.

chauzer2• 14 years ago

That's true. But personally, when I think about the impact I make at a startup vs at a bigger company, it's how far away are you from that direct impact.

I think with anything, you can somehow relate it to making an impact in the world. I could say working at a consulting company who's on a project for a car manufacturer, on a project that improves the data quality of owners of cars - i'm making an impact because with better data, people are getting the right information / advertisments for cars that are right for them, thus improving their lives by helping them choose the right car. Obviously, this employee is many layers away, but he could still say that he is still making an impact in some super small way.

I think it really is just up to the individual to see what they believe is enough of an impact for them personally.

wbkang• 14 years ago

> Politics

I am not sure about this. This can start even with a three-person company. This is a gross oversimplification.

dmd1493• 14 years ago

Funny that you posted this today: I just wrote a blog post titled "Entry Level Start-Up Job or Entry level Big Company Job + Side Project."

http://dalethoughts.com/2012/03/entry-level-start-up-job-or-...

The combination of working at a big company while having a side project may outweigh the benefits of working at a start-up (at an entry-level gig).

At the entry level, the pay-cut you're taking by working at a start-up can be significant on a personal level. For someone who recently graduated college choosing between a 40k gig at a big company and a 35k gig at a start-up, that 5k will be much more significant than an engineer taking a pay cut from 85k - 65k.

alex_lod5• 14 years ago

I've never been able to find the time or motivation to do side projects, probably because I'm more of an all-in kinda guy. But I agree that side projects could be a good way to scratch the startup itch and have a great time, too.

dmd1493• 14 years ago

Do you think you'd have the time and motivation to do a side project if you worked at a big company?

I'm also curious to see how stressed you were working at a start-up. If you're getting as much stress as the founders without the potential upside, it seems like in many cases it may not be worth it.

perokreco• 14 years ago

The entry level for a new-grad software engineer is 75-100+k in US. If you are working for 35-40k you are doing it wrong unless you chose to live in middle of nowhere where 40k is actually a nice salary.

pnathan• 14 years ago

Can you provide sources for that and locations?

dmd1493• 14 years ago

I wasn't referring to an entry level engineer. I was referring to non-tech entry level position (marketing, sales, whatever).

At 75-100k you're not losing that much happiness and stress wise if you take a pay cut at a start-up.

If you have an offer of 40k at an established company and are taking a lower salary (30-35k) to work at a start-up, that will hurt significantly in terms of your happiness, stress, and your ability to pay your bills.

dtennant• 14 years ago

I know this is a startup biased crowd, but the claim that this is a comparison article is pretty thin.

I'm not going to claim that working for a big company is the perfect solution for everybody, but it has some great advantages. My favorite is that I can actually be just a software engineer and not an engineer/tech support rep/sysadmin/manager/etc. I actually think I spend more time on technical challenges at a large company than I did in my time at a startup.

I also think that point #10 is really dependent on the company. Is working at a social gaming startup really "being part of something bigger than you"? If you work at a company and you believe in their vision, that's way more important than the size of the organization.

cramaswamy2• 14 years ago

I disagree with the generalist comment. Startups have limited $$ in the bank and want a specialist who can hit the road running. However, startups also want someone who is willing to take on additional roles and help out in the overall growth of the company.

alex_lod5• 14 years ago

Let's take the following hypothetic example, which by the way isn't so hypothetical:

Your company decides it wants to build its business on mobile phones. You go out and hire the best iOS developer you can find, and she builds the app. Then, once you have a few thousand users, you realize that actually this app should be a website. You pivot the company to become a website before an iOS app. Now you have an expert iOS developer and nothing for them to work on. You'd be in a better position to have a super awesome programmer who can (and has interest to) learn new things.

The above example happens all the time. The earlier a company is, the more likely they'll make big pivots.

cramaswamy2• 14 years ago

Alex - I agree with the above example, but my definition of a generalist is someone who knows a little bit of everything - engineering, sales, marketing etc. An awesome programmer is still a deep expertise in my opinion. But I get your point.

bicknergseng• 14 years ago

While Larry Smith isn't necessarily the best presenter, I think this article misses or doesn't address any of the points he makes on a good vs. great job in the first few minutes of his TED talk (http://www.ted.com/talks/larry_smith_why_you_will_fail_to_ha...). I would argue that none of the 10 points Alex makes in his article matter if you don't care about what your company does. People still seem to have a hard time understanding that the size of a company has nothing to do with the company's mission, and forget that proximity to that mission becomes more difficult as the company grows and the mission is diluted.

jes5199• 14 years ago

I have to disagree with #9. In a large company, there is an HR department and a hierarchy that balances power. In a startup, you may have to deal directly with the personality of the founder - which can be an overwhelming and socially bizarre experience on its own - but, worse, that opportunity can attract sycophants and yes-men and backstabbing and all sorts of politicking that can't happen in your minor engineering department in BigCo, because at BigCo there's no access to powerful people, so no way to try to manipulate them. Sure, BigCo has politics in the executive lounge, but I don't have to hang out there.

freerobby• 14 years ago

I disagree with the idea that startups are inherently riskier. Sure you may only have 12-18 months of funding, but you also have much greater knowledge of the funding situation going in. Big companies have layoffs all the time, and as an employee you are much more likely to be kept in the dark about the circumstances leading up to them.

hn_reader• 14 years ago

Thanks for the post Alex. One of the things I do like about being a developer at BigCo is that it's possible to keep the politics at an arm's length - something that I think would be almost impossible in a startup with a handful of people. (Whether this kind of hands-off approach is actually good for one's career is another matter.)

Working at a Startup vs. a Big Company

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