3 Key Factors to Understand Before You Join a Startup
Kyle Lacy is Head of Marketing Strategy at OpenView Venture Partners, where he is responsible for building content and marketing strategy around all things OpenView. Follow him on Twitter @kyleplacy. If you’ve thought about joining a startup, you’ve probably heard about the seemingly endless (and often cliché) list of perks. Unlimited vacation. Free beer on tap. Video game rooms. Nap pods. I could go on, but you get the point. What you tend to hear about less is the not-so-glamorous aspects of working at a startup. These “anti-perks” often include:[bctt tweet="3 Factors to Understand Before Joining a Startup - @kyleplacy @OpenViewVenture"]
- Longer hours
- Lower salaries
- Less job security
This is particularly true for early-stage companies that haven’t raised venture funding or are still in the process of finding product-market fit (and, thus, a steady stream of revenue).
Now, this isn’t to suggest you shouldn’t pursue jobs with startups. Depending on who you are, what you enjoy, and where you’d like to go, working for a startup might make perfect sense. But, before you take that leap, I think it’s important to understand what working for a startup really means and consider whether you’re actually a good fit for that environment.
3 Factors that Should Play Into Your Decision:
The first thing that you should know before joining a “startup” is that there are different stages startups go through, and each one has its own unique pros and cons.[bctt tweet="Each #startup stage has pros and cons for employees - @kyleplacy @OpenViewVenture"]
For instance, a very early-stage startup (founders and a couple of early employees) will likely pay less in salary, require more hours and provide much less glamorous perks than a late-stage startup that’s generating millions in revenue or significant interest from high-profile VCs. On the flip side, early-stage startups tend to offer higher equity, greater autonomy and more room for professional growth.
Neither option is inherently better than the other. But the question you need to answer is this: which one is better for you? To address that question, there are a few key factors to consider:
Does the risk of being part of a company that could crash and burn within a year scare you to death? Or are you more of a glass-half-full thinker — attracted to the idea of rolling the dice and getting in on the ground floor of the next big thing?
Where you fall on that spectrum matters because startups have varying degrees of stability depending on the stage they’re in. If you’re more risk-averse and prefer stability, then I wouldn’t advise joining an early-stage startup. If, on the other hand, you’re energized by the possibility of making a big impact on a small team — and the thought of waking up one morning and not having a job doesn’t scare you away—then, by all means, strive to be some founder’s employee #1.[bctt tweet="Are you optimistic in the face of risk? Go early-stage. - @kyleplacy @OpenViewVenture"]
While any startup compensation structure will be very different from larger corporations, the variances in how startup employees are compensated can vary significantly based on how far along a startup is in its development.
For example, in an expansion-stage business that’s raised a Series B or C round of financing, new employees often earn more in cash and bonuses, but have less equity in the company. Conversely, if you’re among the first few batches of employees hired by an early-stage startup, you shouldn’t expect to receive your market value in salary. Instead, you’ll probably receive equity to help soften the blow and the opportunity to help shape what the company becomes. If the business eventually takes off and does well, then both of those benefits could be worth a lot more than the cash you initially surrendered.
Across the board, startups tend to offer much better work-life balance than larger corporations or more traditionally structured businesses. By their very nature, these smaller companies tend to be more flexible with hours and vacation time, and employees are sometimes granted autonomy to do their work where and when they please. If you want to leave work early to hit happy hour, most startup managers won’t judge (they might even join you).
That said, work still needs to get done at a startup. And with fewer employees to do it (and a seemingly endless to-do list), startup life can sometimes creep into your personal one. Sure, you have the flexibility to leave at noon on a Tuesday. But, doing so might also mean squeezing in an all-night coding session or staying up until 2 am to prep for a Monday demo. If that lifestyle suits you, then working for a startup might make a ton of sense. If it doesn’t, you’d be wise to consider other options.
Is Startup Life Right for You?
Working for a startup can be exciting and it can offer limitless room for growth. But, it’s a lifestyle that also tends to include a lot of unpredictability and turbulence. Things will change when you least expect them to and you may never cash in on the big chunk of equity you receive.
The key to deciding whether that professional lifestyle is right for you is understanding whether the specific opportunity you’re targeting suits your skills, goals, income needs, and appetite for risk.
If it does, then, by all means, take the leap. If it doesn’t, then I’d recommend looking elsewhere because, at the end of the day, no amount of free beer, unlimited vacation, or on-the-job naps will make up for your misalignment with the startup lifestyle.[bctt tweet="Free beer + nap pods will never make up for misalignment with #startup life - @kyleplacy"]
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