To startup or not to startup?

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Silicon Valley HBOMy last job was at what I will always refer to as “a small company.” I don’t know that I would call it a startup given the age of the company. I reside in Silicon Valley (always have!) so upon my dismissal from my last job, inevitably I have been asked “so do you want to work for a startup or a big company?” I have had the benefit of working for bigger Silicon Valley companies as well as helping out with a friend’s husband’s ground floor startup so I have some pointed opinions about the benefits and problems of working at a startup. I’ll try to share them in an organized and respectful fashion. As context to this posting, I interviewed at a startup yesterday and decided not to continue on in the process at this particular firm.

Silicon Valley is starting to feel a bit like Hollywood these days– in the sense that each day, bright eyed and bushy tailed young people hightail it to the area from their nondescript places of origin to make it big. They’ve learned about the magic of the place in the media– the bright lights! the money! the parties!– and they too want to MAKE IT BIG. But like Hollywood, the truth is that few will make it big. And like Hollywood, despite the depressing statistics, everyone will still think that they are the exception and not the rule. I’m trying not to be a Debbie Downer about this, but as a 10+ year veteran of Silicon Valley who has worked or has insight about working at “hot” companies, I’m just a little bit less dreamy about it all.

The pros: I actually think there are a lot of pros to be working at a startup. A lot of it has to do with being surrounded and having more direct access to some of the most exciting things about the tech industry. You feel alive because you work with people who exist in the mindset that: yes, together we can make a difference! We can make things better! WE CAN CHANGE THE WORLD! Having worked in some of the most unevolving industries (publishing and console-based video games come to mind), where status quo is the business model, I can understand the allure of working on cutting edge projects with really smart and innovative people.

The cons: I don’t know if “cons” is the right word for this. I think it’s more caveats, and I have a few.

Young people. So I have mixed feelings about young people (right out of college or those in their 20s) working at startups. On the one hand: I think it’s a great idea. You have nothing to lose when you’re young. I repeat: nothing to lose. (Ok, maybe “less to lose” is more apt). Unless you have a huge amount of student debt (in which case, maybe you need to rethink or think more carefully about the instability of working at a startup), you should take the risk and experience the excitement of the startup life. I’m not entirely certain how startups pay for standard entry level roles compared to big companies, but my guess it might be lower or comparable. But regardless: you make no money when you’re young and you kind of don’t expect to make a ton of money. So if money is all the same, go for it! The equity part is nice but truthfully, I think about equity like a bonus: money that you shouldn’t expect to earn and if you do, you should put it right into retirement or long term, high growth savings.

For older individuals, like myself, I think the risk is slightly higher. I was talking to a friend recently about this and we both agreed: if given the choice between a lower salary and equity in a startup and a higher salary, we’d take the latter. I want a high salary. I need a high salary. This is the only thing (from a money perspective) that matters to older people like me. Potential payout from having equity in a company won’t serve as a down payment on a house. You know what will? That’s right: a high salary.

I also am personally not a fan of people joining a startup right out of college or even as a #2 job out of college. At most startups, everyone is young. Your manager will be young. Heaven forbid your manager has never worked at a blue chip company and has always worked the startup circuit. I understand that young people don’t want to work at stodgy old companies (under, let’s face it, stodgy old managers) but I feel like the Peter Pan quality of startups encourages a “let’s-never-grow-up” quality in people. My “what-a-hot-mess-nightmare-of-a-situation” example of this is the sexual harassment lawsuit brewing at Tinder where a 24-year old VP had a relationship with a colleague and now is claiming sexual harassment based on a series of terrible text messages and emails. There is too much room for young people to be young people at startups– which is basically to say, forget that it’s a work setting with work expectations and work repercussions. However you get it, I think you should first have a work experience where everyone virtually conducts themselves as strangers so that you understand that work is a different life setting and one where personal restraint is advisable.

Not all startups are the same. So I have some attributes that I look for when considering working at a startup/smaller company. I have worked on B2C as well as B2B products throughout my lifetime and prefer to continue along the B2B path. My rationale is: consumers are much more fickle so user acquisition as well as retention for a B2C product is much harder and the risk of failure is higher. With B2B, contracts bring in more money so you make bigger but fewer sales to stay afloat. Also I don’t know that I can back this up but I think it’s true: there is higher inertia with products so a company that purchases a B2B product and is happy enough will not look to change unless something goes wrong (or a really compelling new offering surfaces). (There’s a business term for this and I am mad that I can’t remember it.) I also tend to think B2B products are less about the sizzle and more about quality of the actual product so if you can make a sale, it’s more “earned” than I figure is the case with B2C.

I also am just generally critical of business models. Freemium should be avoided at all cost as it has been shown to have very low conversion. So if a company’s plan is “we’ll give it away free and then at some point charge”– this makes me kind of wary. Having had the magic of life beat out of me by 2 years of business school, I am less impressed by the magic of the technology or the disruption we (together!) may bring about. I am like a Chinese-American Cuba Gooding Jr., jumping up and down shouting “Show me the money!”

Don’t go for the sexy. I’ve worked for some pretty sexy tech brands in my day so I feel like I’ve earned the right to say this. I think most people have a list of the sexy startups that they want to join– either because they’ve heard about it so much in the news or because it’s a product that they use as a consumer. Don’t get me wrong: there is great benefit to having a sexy brand on your resume. The halo effect definitely gets you in the door later in your career and there is honestly nothing better than telling a person, “I work at {insert sexy brand}” and seeing the admiration in their eyes like you are some really hot shit (and kind of you are). But admiring a brand and being in the trenches as an employee are two totally different things. So I’m not saying don’t throw your resume in the pile at a brand you admire. I am saying don’t let this be the only thing you assess as you consider startups or any smaller company. Choose a company for the product. For the people. For the growth opportunities (and the real ones, not the ones the over-caffeinated recruiter pitches to you).

So in summary, the question is not just “am a startup person or not?” (although I will admit, there are some people who would not be able to operate in a startup setting and therefore should not. The people who fit this scenario that I worked with in the earlier days of Google ended up going to law school, if that helps you understand this character type any better). I generally do like working in smaller companies and would be open to joining a startup. But only one that passes my assessment as being a great next place for me to work (and not just the hot sexy sizzle test).

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