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> If you’re seriously considering both options — a traditional company and a startup — here are some points to consider. There are so many definitions of "star

> If you’re seriously considering both options — a traditional company and a startup — here are some points to consider. There are so many definitions of "startup", but given the common one of "VC funded trying to get big", I'd say there's a third company type between these two I dub a "starting-up". It's an early traditional company that's in the black but is not poised to go through the roof or become bloated with employees or ask a ton of its employees. Almost like a lifestyle business. Maybe it has tiny investment, but definitely not big startup monies. It has half of each including the bad (bad mgmt, unlikely riches, few benefits, etc) and the good (bit more stability, no overwork, etc). Maybe it's seen as a startup or traditional by most, but I see them as a really comfortable niche. You get to work on side projects, go home (or work from home) with decent hours, and just relax. Often if small/early enough, if they do strike it rich, you're included.

mr_tristan 8y ago
> It's an early traditional company that's in the black but is not poised to go through the roof or become bloated with employees or ask a ton of its employees Why not just call these small businesses? If they're in the black, then they can just operate using a traditional business model. The startup is about _not_ operating traditionally, but, taking a massive risk to do something different, that can _eventually_ get to that traditional model. Usually by way of turning into a publicly traded company. Which many small businesses never will achieve, by the way. Entrepreneurship doesn't mean you have to go that "insane growth" trajectory. It _can_ just mean "launch a small business". And that small business can just be private for a very long time; there's nothing wrong with it. Some idiots may have you believe that the "best entrepreneur" creates startups, but that's stupidity at it's finest. IMO the best entrepreneur can create the _right kind_ of operation. There are plenty of examples of private companies that can grow but don't require operating non-traditionally.
nostrademons 8y ago
I worked for one of those for a couple years that had started as a "startup" when I did my internships with them but had morphed into "slow-growing lifestyle business" by the time I left. I'd argue that you get most of the downsides of both with few of the upsides. You don't actually get stability with this setup; you're a couple of customer cancellations away from layoffs at any time. There is no career advancement. You pretty much don't have a shot at getting rich. It doesn't get you much of a resume boost (other than being employed) or much cred at parties. The workload is still fairly high, though not as insane as a fast grower. The one thing it does have is that your learning rate will still be fairly high, and you have a sense of independence & responsibility that's akin to what a startup would give you. For the time period I was there (first year out of college), that perhaps was just what I needed. I wouldn't recommend making a career out of it, though.
- kodablah 8y ago
  > You pretty much don't have a shot at getting rich I agree with most of your points except this one as it's very situational. Maybe not as an intern, but having real albeit small equity in one of these tiny things can be negotiated, and they can get sold. Unlikely, sure, but the possibility is there. But in general it's about what you're optimizing for. You're points are right for optimizing for intra-company career advancement, resume material, or party cred. But if you have other pursuits, especially with side projects, kids, or just general comfort it can be a good choice.
  - nostrademons 8y ago
    My point is that companies that are slow-growing are rarely sold, and when they are, they usually aren't sold for much. The eye-popping valuations for companies like Whatsapp, Instagram, and YouTube were all based on growth, and on strategic fit with the acquirer. When an acquirer wants you for these reasons, there are large time pressures and asymmetries of information you can leverage to extract a lot more money than the financials would dictate. (Whatsapp, for example, sold for something like 1000x revenues.) Small slow-growing companies almost always sell based on financials, and typically for lower multiples than an equivalent large public company would (because their revenue is more concentrated in a few customers and so they're more exposed to revenue risk). I've heard 2.5x revenues or 15x profits as numbers commonly batted around; above this and there's virtually no reason to buy the company vs. invest in public stocks or apartment buildings. On a typical 10-person company that makes a profit of about $300K on revenues of about $2M, this comes out to a sale price of roughly $5M by both valuation measures. Own 1% equity (this is generous, and would usually indicate employee #1 or 2) of a $5M acquisition and you get $50K, which is probably a lot less than the salary you forego over a few years by not joining a big company.
    - s73v3r_ 8y ago
      Most of the employees at those places didn't get rich either.
    - mi100hael 8y ago
ian0 8y ago
I worked for one of these and really enjoyed the experience. I would have earned a lot more working in other places, it was bumpy at times, but I don't regret it in the slightest. It was great to work for a company that you really wanted to see succeed. Not because of some overhyped mission, but just wanting to see this small group of people do well. Also companies like this are not used to employees in "startup-mode" but yet most have 1 or 2 that are. For them, it can be a great learning experience and still small enough to feel your contributions. Just because your not in hyper-drive doesn't mean you cant be innovative and punch above your weight.
toomanybeersies 8y ago
I was talking to a guy who was a CEO of a company exactly like you describe, and he referred to it as a "stay up". I think the company was about 4 or 5 years old and was growing, but not massively. It was just ticking by nicely, slowly expanding, but not requiring any additional investment. I think these types of companies are more common than readers here think, they just don't get the same kind of publicity. Often they serve some industry-specific niche, and the founder of the company is non-technical but has a lot of industry specific experience.
Spooky23 8y ago
I worked for a place like this briefly. Their big thing was that it was a “family company”. Cool stuff — except it’s not your family.
- throwaway66666 8y ago
  I have it as a rule to stay away from companies that position themselves as "We 're like a family". Yes this company is exactly like a family where dad keeps all the money, gets to beat us up, or put us up for adoption if he loves the other kids more.
mbesto 8y ago
> There are so many definitions of "startup" This is a bigger problem than most people think, especially when entering the job market. The nomenclature is so ubiquitous now, that it's actually really hard to determine what type of companies are. It also means many young impressionable people are duped into thinking they are at the "next big thing"TM Personally I like to stick with traditional business verticals: media, telecom, retail (e-com), business services, etc. and then assign the level of tech enabled: - Back office IT supported - Tech enabled - Tech led (aka what's commonly known as a "software company") Lastly, I'll argue this until my hair falls out - there is no such thing as a "tech" vertical, and therefore the idea that "tech startup" is an industry is always mind boggling to me.

mr_tristan 8y ago

> It's an early traditional company that's in the black but is not poised to go through the roof or become bloated with employees or ask a ton of its employees Why not just call these small businesses? If they're in the black, then they can just operate using a traditional business model. The startup is about _not_ operating traditionally, but, taking a massive risk to do something different, that can _eventually_ get to that traditional model. Usually by way of turning into a publicly traded company. Which many small businesses never will achieve, by the way. Entrepreneurship doesn't mean you have to go that "insane growth" trajectory. It _can_ just mean "launch a small business". And that small business can just be private for a very long time; there's nothing wrong with it. Some idiots may have you believe that the "best entrepreneur" creates startups, but that's stupidity at it's finest. IMO the best entrepreneur can create the _right kind_ of operation. There are plenty of examples of private companies that can grow but don't require operating non-traditionally.

nostrademons 8y ago

I worked for one of those for a couple years that had started as a "startup" when I did my internships with them but had morphed into "slow-growing lifestyle business" by the time I left. I'd argue that you get most of the downsides of both with few of the upsides. You don't actually get stability with this setup; you're a couple of customer cancellations away from layoffs at any time. There is no career advancement. You pretty much don't have a shot at getting rich. It doesn't get you much of a resume boost (other than being employed) or much cred at parties. The workload is still fairly high, though not as insane as a fast grower. The one thing it does have is that your learning rate will still be fairly high, and you have a sense of independence & responsibility that's akin to what a startup would give you. For the time period I was there (first year out of college), that perhaps was just what I needed. I wouldn't recommend making a career out of it, though.

kodablah 8y ago
> You pretty much don't have a shot at getting rich I agree with most of your points except this one as it's very situational. Maybe not as an intern, but having real albeit small equity in one of these tiny things can be negotiated, and they can get sold. Unlikely, sure, but the possibility is there. But in general it's about what you're optimizing for. You're points are right for optimizing for intra-company career advancement, resume material, or party cred. But if you have other pursuits, especially with side projects, kids, or just general comfort it can be a good choice.
- nostrademons 8y ago
  My point is that companies that are slow-growing are rarely sold, and when they are, they usually aren't sold for much. The eye-popping valuations for companies like Whatsapp, Instagram, and YouTube were all based on growth, and on strategic fit with the acquirer. When an acquirer wants you for these reasons, there are large time pressures and asymmetries of information you can leverage to extract a lot more money than the financials would dictate. (Whatsapp, for example, sold for something like 1000x revenues.) Small slow-growing companies almost always sell based on financials, and typically for lower multiples than an equivalent large public company would (because their revenue is more concentrated in a few customers and so they're more exposed to revenue risk). I've heard 2.5x revenues or 15x profits as numbers commonly batted around; above this and there's virtually no reason to buy the company vs. invest in public stocks or apartment buildings. On a typical 10-person company that makes a profit of about $300K on revenues of about $2M, this comes out to a sale price of roughly $5M by both valuation measures. Own 1% equity (this is generous, and would usually indicate employee #1 or 2) of a $5M acquisition and you get $50K, which is probably a lot less than the salary you forego over a few years by not joining a big company.
  - s73v3r_ 8y ago
    Most of the employees at those places didn't get rich either.
  - mi100hael 8y ago

ian0 8y ago

I worked for one of these and really enjoyed the experience. I would have earned a lot more working in other places, it was bumpy at times, but I don't regret it in the slightest. It was great to work for a company that you really wanted to see succeed. Not because of some overhyped mission, but just wanting to see this small group of people do well. Also companies like this are not used to employees in "startup-mode" but yet most have 1 or 2 that are. For them, it can be a great learning experience and still small enough to feel your contributions. Just because your not in hyper-drive doesn't mean you cant be innovative and punch above your weight.

toomanybeersies 8y ago

I was talking to a guy who was a CEO of a company exactly like you describe, and he referred to it as a "stay up". I think the company was about 4 or 5 years old and was growing, but not massively. It was just ticking by nicely, slowly expanding, but not requiring any additional investment. I think these types of companies are more common than readers here think, they just don't get the same kind of publicity. Often they serve some industry-specific niche, and the founder of the company is non-technical but has a lot of industry specific experience.

Spooky23 8y ago

I worked for a place like this briefly. Their big thing was that it was a “family company”. Cool stuff — except it’s not your family.

throwaway66666 8y ago
I have it as a rule to stay away from companies that position themselves as "We 're like a family". Yes this company is exactly like a family where dad keeps all the money, gets to beat us up, or put us up for adoption if he loves the other kids more.

mbesto 8y ago

> There are so many definitions of "startup" This is a bigger problem than most people think, especially when entering the job market. The nomenclature is so ubiquitous now, that it's actually really hard to determine what type of companies are. It also means many young impressionable people are duped into thinking they are at the "next big thing"TM Personally I like to stick with traditional business verticals: media, telecom, retail (e-com), business services, etc. and then assign the level of tech enabled: - Back office IT supported - Tech enabled - Tech led (aka what's commonly known as a "software company") Lastly, I'll argue this until my hair falls out - there is no such thing as a "tech" vertical, and therefore the idea that "tech startup" is an industry is always mind boggling to me.