Working at a Start-up vs. a Large Company
Don’t let anyone tell you that one is strictly better or worse than the other. Both have their charms and their cracks.
Here are the key differences:
1) Responsibility, accountability, impact: At a start-up it’s unavoidable to have lots of responsibility and accountability. There’s no doubt, too, that being at a start-up will put you in a position to make a huge impact. If you do amazing work the entire company and all of its customers will benefit from it. And you’ll be loved for it. You’ll get notes from the CEO and other leaders complimenting you on how awesome your work is. On the flip side, if you make a big mistake, the whole company pays for it. But keep in mind that most start-up cultures prefer agility and speed to cautiousness. It’s likely that your mistake won’t actually get you in trouble, as long as you were trying to do the right thing.
2) Risk: working at a start-up is riskier. The start-up likely isn’t profitable, and probably only has at most 12-18 months worth of money in the bank (this is called the start-up's runway). If the company does very well, the CEO will raise more money and extend the runway. You’ll still have a job and each round you’ll get a salary closer and closer to market rate (more about this later). If the start-up doesn’t do well, you’ll be out of a job when the start-up runs out of money. But you’ll be forewarned if the CEO is transparent - most of them are in earlier stages. A start-up is risky because you’re building something from nothing. You’re doing something ridiculously hard because you believe in it and want nothing more than to see it succeed. You’re not failing even when all the odds are against you. You’re the underdog in many ways.
And by the way, if you’re a good engineer you’ll have zero issue finding another job. Zero. Every company in software, big and small, needs more good people. This trend won’t change for a long, long time, either.
3) Opportunities for generalists: Generalists don’t do well at big companies. Big companies want you to be really, really good at that little thing you spend all your time on. Not at a start-up. Although specialization is still important at most start-ups, there are far more opportunities at start-ups for generalists. I’m defining generalists as people that have interests in one field or many fields. For example, if you want to be an engineer and work on the website, the data infrastructure, and the mobile app, you’ll love a start-up. Similarly, if you’re an engineer and want to get your hands dirty in marketing or recruiting or whatever, a start-up is also a great place for you to learn and grow. To be totally clear, I’m not saying specialists don’t do well at start-ups - they do incredibly well. Generalists, however, don’t do well at large companies.
4) Ownership and leadership: At a big company you need to wait years and years to become a true leader with big ownership. Not at a start-up. If you’re awesome you’ll be able to grow and move up in your career far faster. Mark Zuckerberg would have never been given a CEO role at a big company he started working for after college. The only way he could find himself at the top of an organization is by starting it, or in the general case by joining a super small team. Your career will be accelerated in a major way by joining a start-up.
5) Transparency: Start-ups usually have far more transparency than big companies.You’ll know why the CEO decided to raise a new round of funding, or why a VP of marketing was hired, or why the company decided to open a new arm of business, or how the CEO did the recent round of investment. There will always be information that isn’t shared, though, for example salaries and equity compensation, certain board meeting information, and certain sensitive investor information. But in general every other decision made about the company will be transparent. You’ll get to see how the company grows, why certain decisions were made, and how the company reacts to competitors and business plan changes. All of this will teach you about business and prepare you to do your own start-up one day.
6) Company culture: You get to help define it. A company will be, for the most part, an extension of the founders’ personalities. But especially in the early stages you’ll have a huge impact on the culture of the company as well. You’ll be in a position to define company-wide celebratory goals, or traditions that the team rallies behind. At the end of the day a start-up is just a few people in a room. If you’re one of those people your personality will rub off on everyone else and you’ll help create a company that is as much a part of you as you are of the company.
7) Hiring: You’ll do a lot of interviews, and you’ll be part of the decision to hire or not hire someone. You’ll interview engineers, marketers, sales people, anyone. You name the position, and you’ll probably interview any potential candidate. Even if you’re right out of school you’ll still be asked to interview. Of course, if you don’t like interviewing, you’ll only need interview potential teammates. Read: if you’re an engineer you’ll only interview other potential engineers.
8) Financial incentive: In general your salary will be lower than at a big company, but your equity, or ownership in the company, will be significantly bigger. Depending on the stage of the company you join, you’ll be granted anywhere from a few percentage points to a micro fraction of a point. If the company is bigger, you’ll get fewer shares and your salary will be more inline with the market rate. If the company is smaller, your salary will be smaller and your equity will be far greater. Equity has a long, long tail, meaning the first 5-10 employees get significantly more equity than all other employees that follow, with certain exceptions for executives. This is especially true for the first and second hires, though.
A little more about stock: If you join a company that is already doing incredibly well, you probably won’t get enough stock to retire unless the company turns into the next Facebook or Google. In most cases, you’ll only get retirement money if you’re one of the first five employees. Otherwise you’ll get a large down payment on a nice house, assuming the start-up does well of course :). Let me say that all again: except in very rare occasions like Facebook or Google, you can’t expect to join a company that is already killing it and hope that you’ll retire on the money your equity brings.
9) Politics: I’ve never heard of a company with more than 50 people that didn’t have politics. Politics are a necessary evil whenever a company reaches a certain size. The point of no return is when the first middle manager is hired - or when the first job opens up that is about controlling people and nothing more. Small start-ups can have politics, too, but in the early days there’s generally too much camaraderie and too much daily work to worry about power or any other bullshit like that. Oh yeah, and while I’m here, unless the leaders of a start-up are lame, there won’t be any bullshit. Everything is pragmatic at a start-up, or at least should be.
10) Be a part of something bigger than you: At a start-up you’re a part of something much bigger than just what your job asks of you. Sure, you need to write code, publish blog posts, whatever, but you’re doing much more than that. You’re building a company. It’s hard to describe what that feeling is like, though. Being a part of a small company is somewhat like creating a community or finding new best friends. You’re making something from nothing, with people who are in it for the same reasons you are. You’re at the apex of what might become something big, something meaningful and different. And the excitement is amazingly powerful.