Karl Hughes

Karl Hughes

What it's Really Like Working for a Startup

What it's Really Like Working for a Startup

After almost ten years working for startups, I’ve seen some pretty wild things.

One startup I worked for raised a couple million dollars and then hit a wall. With little traction and mounting debts, two of the founders had to push out two of the other founders to cut costs and narrow their focus. That was…awkward…to say the least.

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One of my friends worked for a startup with about eight employees. They were working on a new round of funding when one of the co-founders died unexpectedly. The other co-founder and employees floundered, and the whole thing eventually fell apart.

I once shared some office space with a startup that hit a $5.5 billion valuation shortly before it was revealed that they defrauded investors by inflating their sales numbers. The founders - who were investors in my company - were investigated and eventually indicted.

Anyone who’s been in startups has a few stories like these, but every startup’s story is different. Some are wildly transparent while others hide in stealth mode for years. Some rely on cutting-edge technology, while others are less tech-forward. Some raise outside capital from investors and others go the bootstrapped route.

My point is that there aren’t necessarily any constants when you’re working with a startup, but there are a few pros and cons that seem to be universal. In this post, I’ll offer my perspective, and I hope it helps you decide if joining a startup is the right move or not.

Note: If you’re specifically interested in joining a startup as an engineer, I’ve got another article on this topic you might like.

The Pros of Working for a Startup

Working for a startup can be a fantastic experience. At the best of times, it feels like you’re on a rocket ship that’s propelling your career to new heights.

1. You Will Help Create Something New

My favorite part about working for startups was creating something new. While working for a startup, you’ll get input into the company’s culture, technology choices, hiring decisions, and overall direction.

Working at a startup is also great practice if you ever want to start your own business someday.

“Big companies are not great at accomplishing more with less, nor are they great innovators. So it’s very easy to pick up bad habits that actually make it harder to start your own business.” - Dave Lavinsky, Co-founder of Growthink

I would never have had the confidence to start my own business without my years of experience seeing startups first hand as an early employee.

Working at a startup is great practice if you ever want to start your own business someday

2. You Will Get More Freedom

One of the other great parts about working for a startup is the freedom you will likely get. You’ll probably get a lot of flexibility around working hours, vacation time, and your day-to-day tasks. On the flip side, you might never be able to unplug completely.

For example, I’ve been the first employee at two startups. Each time, I got to decide when I came in, how many vacation days I took, and how we built our software. Unfortunately, I had to have my laptop with me on vacation just in case something went wrong while I was out of the office.

“People want autonomy and authority; they want to understand the mission of their company and be empowered. This, in turn, drives innovation.” - Daniel Odio, CEO at Armory

3. You’ll Meet Great People

People who work at startups tend to be passionate, ambitious, and interesting. Startups often hire people from nontraditional backgrounds who are hustlers or hackers in their own right, so you’re bound to meet a few characters on your startup journey.

You also might get the opportunity to develop your network of investors, founders, and future employees in case you plan on starting your own business someday. But don’t expect this to happen without some effort.

“Why widen one’s circle of casual acquaintances when there isn’t time even for urgent tasks? The answer is that these contacts provide important referrals, information, and, often, developmental support such as coaching and mentoring.” - Harvard Business Review

The other thing you’ll find is that startups leave very little room for slackers. The large companies I worked for early in my career were filled with people coasting between weekends, but people like that don’t last at startups. The pace is too fast, and the expectations too high to accommodate lax working habits.

Startups leave very little room for slackers

4. It Will Help Accelerate Your Career

Most junior employees at large companies spend years “learning the ropes” by doing menial tasks, research, and testing. You won’t get this long, slow ramp-up time at a startup. You’ll be forced to learn a lot in a very short period of time, and you will be able to negotiate for a much better job title than a large corporation would give you.

“Often, people who join a startup at the early stages and are part of its growth receive responsibilities, promotions, and job titles that they never could have dreamed of at a bigger company.” - Adrian Granzella Larssen, First Employee at The Muse

Startup employees at all levels get a wide range of responsibilties, so you won’t be pigeonholed into one small set of tasks for long. The variety of work is really appealing to some people (myself included), and it will give you some insight into how stretched founders are in case you want to start your own company in the future.

5. You Might Get a Shot at Valuable Equity

While salaries at small startups tend to be lower, you might be able to negotiate stock options or equity as part of your compensation package. I won’t dive into the details here, but in broad strokes, this means you own a small piece of the company. If it ever gets sold or goes public, you could sell those shares for a huge windfall.

Owing even a tiny piece of a billion-dollar pie will completely change your financial future.

Equity could pay off, but it's risky

That said, exchanging part of your salary for equity is notoriously risky. Very few startups ever make it to an exit event, and you’ll likely need to stay for years before your shares vest. If they’re options, you’re also on the hook to buy those shares at the strike price, meaning you need a little cash on hand just to cash out.

The risk increases the earlier your startup is:

“Raising small amounts from seed-stage investors or friends and family is not the same sign of success and value as a multi-million-dollar Series A funding by venture capitalists.” - Mary Russell, Attorney

The Cons of Working for a Startup

I’ve already hinted at some of these points, but working at a startup doesn’t come without trade-offs.

1. High Expectations

Bad Blood book cover

Founders are often under tremendous pressure - either imposed by investors or themselves - to accomplish a lot with minimal resources. This leads them to push employees to work long hours and hold them to exacting standards.

“It got daunting very quickly. The magnitude of the task ahead hit at once: my hybrid doer/leader role for a functional area, my learning curve in the health insurance space, and all the opportunities that Clover could go after in the market. Suddenly, spinning up felt more dizzying than galvanizing.” - Stacy La, Director of Design at Clover Health

If you’re a high-achieving person, you might thrive under these conditions, but unrealistic expectations can also lead to toxic behaviors. For example, the once-lauded startup, Theranos, turned out to be built on a house of cards, and many of the early employees were complicit.

2. You’ll Get Less Direction

High expectations aren’t bad on their own, but when coupled with inexperienced managers and very few established processes, many startup employees are doomed for failure before they even start.

In my experience, early salespeople often have it the worst. Startup founders set aggressive sales goals based on little data to hit their investors’ targets. Then, they bring on junior salespeople without a script or existing book of clients and expect them to replicate the founder’s win rate.

“At every single startup I’ve been a part of, I’ve created my own collateral, lobbied for tools, mentored other team members, worked with product, was a quasi therapist to the leadership team, booked my own travel, did my own expenses, created CRM rules, and more.” - Amy Volas

This happens in engineering roles too. For example, many startups rely on early-career engineers to build their products. These engineers fall into building too much without proper market validation.

“It’s not the overbuilding per se that kills them. It’s that they were building instead of talking to customers, and thus built the wrong thing. But it’s the absence of the right features that kills, not the presence of too many.” - Paul Graham

3. You Probably Won’t Get All the Resources You Want

With high expectations and little direction, you’d hope to at least get a budget to hire a capable team and purchase the right tools for your job, but again, you might be disappointed. While some startups are well-funded, they rarely have the extra capital that large businesses do, so many roles are expected to be “player-coaches” in the early days.

This is why it’s very hard for senior leaders who come out of large organizations to succeed in startups. For example, a CTO who doesn’t code would be fine at a Fortune 1000 company but would be a millstone at an early-stage startup.

If you’re hoping to give high-level advice to startups and not focus on execution, I recommend becoming an advisor instead of joining as an early employee.

4. You Might Face Ageism and Discrimination

Disrupted book cover

Some startups are genuinely open, egalitarian places that create a welcoming environment for all ages, genders, and backgrounds. Unfortunately, white men still dominate the tech industry, so while you might not find explicit bias working for a startup, implicit biases abound.

Dan Lyons’ book, Disrupted offers many sobering tales of his experience working for Hubspot in their early growth days:

“Another, a former Wall Street Journal reporter, suggests I need to change my Facebook photo to something that makes me look younger. I scan an old photo from my First Communion and make it my profile photo. There I am, age eight, wearing my First Communion robe, hands folded in prayer in front of me, looking angelic. ‘I’m trying to get a promotion at HubSpot,’ I write.” - Dan Lyons, Disrupted: My Misadventure in the Startup Bubble

In my experience, startup founders tend to gravitate towards hiring and promoting people like them. So, if you join a startup run by young, white guys, you’re likely to see more young, white men in leadership.

Changing this is a complicated problem, but if you’re evaluating startup jobs, make sure you ask about things like diversity and what the leadership team looks like.

5. Startup Jobs are Likely to be a Bad Short-Term Financial Move

While the opportunity to get stock in an early-stage company is enticing, it’s unlikely you’ll be able to liquidate it quickly (if ever). Working for a startup usually means taking a salary cut, but it also might mean giving up some of the employment benefits more typical in large companies.

For example, the last two startups I joined didn’t offer health insurance until we reached ten employees, and even then, it was pretty subpar insurance. Startups are also unlikely to give you access to a 401k for retirement savings or any matching until they get to 20-100 employees.

Finally, startups have a high rate of failure, so if you’re worried about suddenly being without a job, it might be best to avoid an early-stage startup. If you have personal savings, a spouse who brings in income, or a highly marketable set of skills, this is probably less of a concern. As a software engineer, I was always okay with the risk of working for a startup because I knew I could quickly land another job if I had to.

Should You Work for a Startup?

Now that you’ve seen both sides of the deal, it’s time to decide whether working for a startup is a good idea.

Test the waters before you commit

I’d encourage you to test the waters before you fully commit. There are three ways I’ve seen this done in the past:

  • Conduct “backdoor” interviews - Ask former employees or coworkers what the startup and founders are really like. It’s easy to find people on Linkedin, and they’ll likely give you candid information over a phone call that they wouldn’t put in writing.
  • Freelance first - Instead of immediately committing to a full-time role with a startup, consider doing some night and weekend work first. I did this with my last startup job to ensure that the founders were trustworthy, strong communicators, and good to work with.
  • Start with a later-stage startup - Startups with 100+ employees usually operate more like medium-sized businesses than true startups. They likely have some management structures, a fair idea of their business model, and can offer better benefits, but some of the people will have been around since the early days. This means their culture probably hasn’t drifted too far from how they started yet.

If you ever plan to start your own business or you value freedom or you appreciate ambitious targets, joining a startup is probably a good option. On the other hand, if cash is a priority or you’d prefer more balance and established rules, avoid small startups.

What advice would you add? Find me on Twitter to pick up the conversation.

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