Someone mentioned this the other day, but I don't think it was ever given a satisfactory answer - is it really worth it to work for a tiny company that will likely crash? Does the expected payoff from the tiny equity share justify the insecurity / lower comp / lack of benefits etc.? Shouldn't you be automatically suspicious of anyone that would sign on to a deal like this? If they are so great / can execute why aren't they working on their own ideas instead of yours? I don't think this article ever answers the question.
It may not be worth it monetarily, but you will meet a lot of people and learn important things like:
- dealing with high pressure
- finding a market where one might not exist
- wearing dozens of different hats
- making difficult prioritization decisions with limited info
Basically, seeing up close what a founder has to go through will show you whether you want to deal with it or not.
I've written about this here before, and though it's not a popular position on HN, I don't think that most startups offer a good return for most employees.
There are exceptions. One is the topic of this article: people who are able to move up a rung faster than they would at an established company. Leaving a grunt programming job to be a technical VP is a valid reason to pick a startup. Another is to learn how to run your own startup - of course, you'd have to be going to a position where you'll actually get that experience. Heads-down hacking for twelve hours a day doesn't teach you to run a company.
It's the rank-and-file employees who usually get the short end of the stick in a startup. There are the obvious drawbacks - low salary/no benefits/long hours - and the possibility the company will fold up. Unfortunately, there's no real upside for the average employee. The average startup is not going to hire on enough staff that early hires are going to have much room for advancement. Assuming the company reaches an exit - almost always selling the company - the employees won't get a big payday, but they usually suffer in the acquisition. I've been through several purchases, and it's usually not a happy process unless you're waiting for a large check. Even if the acquirer wants the startup's staff, the founders and a lot of the staff will probably be gone in a couple of years while whatever was attractive about the startup's culture is systematically disassembled.
Of course, many startup employees probably don't see it this way. Startups thrive on young grads looking to preserve the sense of purpose, freedom, and esprit-de-corps of college life. After all, if the last year has shown anything, it's that most people don't make decisions like strictly rational, self-interested economists.
> Startups thrive on young grads looking to preserve the sense of purpose, freedom, and esprit-de-corps of college life. After all, if the last year has shown anything, it's that most people don't make decisions like strictly rational, self-interested economists.
It's only economically irrational if you put a value on "purpose, freedom and esprit-de-corps" that's less than the difference between your salary at a bigco and your salary at a startup.
You're totally right. But for young people it's not just about the pay off on the first company. The can learn at the first company or two and earn on the third or fourth.
But the truth is that unless you hit the lottery ticket (e.g. Google) you only really make big money at startups by founding them or being a senior exec.
"Does the expected payoff from the tiny equity share justify the insecurity / lower comp / lack of benefits etc.?" -- No. Ask any veteran of the valley (bonus points if they were around for both bubbles,) and they will tell you that the money isn't the reason to join a startup.
So what's left? Is working in someone else's startup a way of "paying dues" to get connected with people necessary to form your own? Suppose that people believe that working for someone else's small company will get them connections to form their own - is this realistic? Is this a typical outcome or is it rare and only read about in post hoc businessweek articles?
You're asking me why people work at startups? It has cultural cache, a more relaxed/crass work environment, junior people can work on harder problems than they would otherwise, you wear "many hats", less large-company bs (though you trade that for small company bs,) and so on. There is an article on the front page about working for startups as a means of networking to eventually found your own, but that is a pyramid scheme.
Listen, you have a point. But for starters I think it would be hard for me to say that in a post without pissing off too many more people.
But the reality is this - for young people it's not always about the upside. I tell people, "you need to decide whether you want to learn or you want to earn." If it's the former go work as a 0.1-0.25% owner in a startup. You won't make retirement money.
If you want to "earn" you need to be there at the start or near to it.
Well I was asking about the employees not founders - it seems that working for a startup exposes you to the downside risk without paying out in the event of a win (except of course for the miraculous event of an IPO). Do the employees all know why they do it? Maybe I'm just wrong about the possible upside.
Even with an IPO, if you work at a startup as a post-money employee you are trading 60 hour weeks for what? a fraction of a percent -- assuming you don't get diluted by later rounds (which is very likely.) To make "life-changing" money, your company then has to be worth billions.
My fraction of a percent of ConvergeNet ended up changing my life. And I learned loads about startup hell. And I met people that landed me MANY projects for the last decade. And on and on...
> There are people who tell startups that they should hire the most senior people that they can find.
When I was involved in a management buyout we went to loads of people to get advice, funding, resources, etc. Without exception the funding people - government sponsored in some cases, independent VCs in others - said that we were light on management skills (which we were) and we needed to find someone to fill the gap.
They then went on to suggest people who were demanding ukp30k for one day a week, plus equity. Here we were putting everything we had into this, and these people were insisting on a full living wage for 1 day a week, plus a piece of the profits pie.
OK, we weren't exactly a startup, but this "advice" really is given.
Yes, many people tell you this, including VCs. That's why I wrote the post. The problem is that much advice you get as a startup is bad. If someone's done it before listen closely and make up your own mind whether they have the right answers. If someone has only sat on the sidelines be more circumspect.
The unfortunately reality of life is that most advice is bad and it takes people who swim against conventional wisdom to do great things.
I definitely agree that for a startup, it's better to hire someone who's looking to step up and build the business, not looking down to grab some equity.
However, I don't think someone's résumé is the only way to determine whether someone is looking up or looking down.
There are plenty of experienced guys who have been there, done that, but are looking to accomplish something really significant. These guys are perfect for startups because they're just as interested in achieving lofty goals, plus they already have money to support themselves.
I think there is too much analysis in the article because you'll never find the perfect person willing to work for little to no pay. Just only hire people smarter/better/more experience than you. When you're a 100 person company and you find that your the dumbest one in the entire building, congratulations. You have a killer team.
The point of my article is not to hire the "perfect" person - to the contrary. People will advise you to hire the "perfect" person based on what they did in the past. The point of my article was to say hire the person who hasn't done this level before but is high potential. In every group hiring discussion I've ever been in people argue for the most senior person. I always argue against it.
