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Working at a Startup vs. a Big Company

69 points by alex_lod 15y ago

I’ve spent the last few weeks trying to recruit friends of mine to come work with me at my super early startup. In doing so I’ve had to educate a lot of my friends on what it’s like to be at a startup, and why you might want to join one. This post is a summary of all that advice. My hope is that I can inspire more people out there to quit their job at Google, Facebook, Microsoft, The Man, and join a startup :).

jasonkester 15y ago
Startups are a fun place to work, but don't fall for the fallacy in point #8 (the only one in the article that's wrong). Your market value is your market value. Sure, a startup will ask you to take a pay hit, but that doesn't obligate you to do so. Having "good people" is way more important to a small team than a large one, so if you fit that description you absolutely can negotiate a good bill rate. You'd be silly not to, since they definitely need you more than you need them. If they make grumbly noises, be sure to point out that you're happy to trade in your lottery tickets for a competitive wage. As has been discussed here endlessly, startup employee shares are pretty close to worthless even in the best case. Tell them they can keep them, but since they're hiring real computer programmers they're going to need to pay a real computer programmer salary.
- emmett 15y ago
  Your compensation for any given job can be broken down into an equation that looks something like: Compensation = Equity + Salary + Bonus + Benefits + Training + Credentialing + Interest Level of Work... Clearly some places (Academia, for example) pay you mostly in Training, Credentialing, and Interest level. Big companies pay you almost entirely in Salary and Benefits. Hedge Funds pay you mostly in Bonus, with some Salary. Good startups pay you pretty good in Salary, and pretty good in Equity. Great startups pay you almost ENTIRELY in equity on a percentage basis, because that's the part that makes you rich (Google, Facebook, ...) Of course it's hard to tell if you're working for a great startup ahead of time.
  - aaronblohowiak 15y ago
    Startups that start off being run by well-intentioned people you trust can turn into places with management that has no problem diluting or otherwise devaluing your equity. Also, most startups use a little trick: they tell you that your equity is enough to make up for the difference in salary. Some of the clever ones will even do this using the valuation at the last fundraising event. VCs will agree that startups are a risky investment, and they seek 10x return on their investment because most of their investments fail. If you know that most investments fail, then you should really be compensated at a risk-adjusted amount of equity (ie: you should get waaay more equity at the current valuation than the discrepancy with the market rate to compensate you for the risk that the equity will be worth 0.) Additionally, there is the chance that after starting employment you discover the personality fit isn't there or you otherwise have to leave before the first year is up; if you don't reach your one year anniversary you take a 100% loss on the income discrepancy because you have no equity. To add insult to injury, you ARE NOT BEING GIVEN THE AMOUNT OF STOCK IN YOUR PACKAGE; an "option" is just the right to purchase at a set price. So really, people are "paying" you the difference between the current valuation of the company and its future growth, so you are getting a much worse deal than the last round of investors.
    - emmett 15y ago
      Equity is not a sure thing, by any means, but it's worth something. And that something means that on average startups will pay less salary than big companies.
j_baker 15y ago
For starters, the article is mistitled. A more accurate one would be "10 opinions About Working at a Startup vs. a Big Company". Although "platitudes" might be even more accurate than "opinions". But there's one thing in particular that annoys me here: And by the way, if you’re a good engineer you’ll have zero issue finding another job. Zero. You'all have zero issues finding a new job if you're a good interviewee, but not necessarily if you're a good engineer. I know lots of people (myself included) who are at least decent engineers but terrible interviewees.
- eitally 15y ago
  The ironic thing is that you'd probably have zero issues finding a job at a BigCo, which don't often use the same interrogation techniques as startups and tech companies.
  - natesm 15y ago
    I've only had one job search so far, but I got much more "where do you see yourself in X years" and "tell me about a time..." nonsense at larger companies. Startups were much more interested in what I had done, and they actually looked at my Github account.
- alex_lod 15y ago
  I'd hire you if you were a good engineer but not a good interviewee :). My hope would be that a good interviewer can see through an interview in the same way that a good teacher gives good grades to good students, not good test takers.
  - diego 15y ago
    If you can tell that a bad interviewee is a good engineer, you've cracked the elusive interview code that everyone has been trying to figure out for decades. A teacher has an ongoing relationship with a student, so time is on their side. An interview is the opposite.
  - koos42 15y ago
PakG1 15y ago
I think this paints a too rosy picture and doesn't nearly touch on all the startup horror stories that can exist, especially for points from #4 to #9. This post speaks well about startups done right. It barely says anything about startups done wrong. Likewise, although the examples are much fewer, there are big companies done right and big companies done wrong.
- alex_lod 15y ago
  Very good point. I suppose I've only worked at startups that have done very well (Redfin, Cloudera), hence the bias here. While we're here, though, could you share some of the negative parts of working at a (failing) startup, apart from the obvious: you're out a job?
  - adovenmuehle 15y ago
    If you were trading salary for equity and the startup fails you're out that. You're also out time which you could have been advancing at a different company. However, because working at a startup is gambling, you have to treat it as such. If you can't live with losing out on salary you could've made at another job, you shouldn't work at a startup.
    - tlipcon 15y ago
      Early in your career, trading salary for experience is a smart move. In my case, I turned down a Google offer to work at a startup after college (taking a 15%-30% pay cut) and my equity ended up being worth less than I paid to exercise it. But, in the two years that I was there, I learned way more than I would have at Google, and got a much bigger network, both of which helped immensely when I interviewed for my next position. I agree, working for peanuts is dumb. But 20%-40% less than what Google offers is hardly poverty -- it's still much more than what most non-engineers make out of college.
      - twelve45 15y ago
        Second this. Right after school I passed on a higher-paying job to work at a startup. It didn't do well, but I learned a whole lot about what is involved in running a startup correctly, from the perspective of a mid to late stage employee. Forward many years, and I have my own thing going and I appreciate the failed startup experience because it gives me some framework on which to base my decisions. And I hope I'm doing things better... (and that a few years from now that junior dev we just hired will do a better job with his/her company!)
greyman 15y ago
I don't think #1 about where you have bigger impact is universaly true. I worked in BigCo on a big (and commercialy successful) software project used in hospitals. More than 1,000 people (soft devs, QM, sales&marketing) are employed by BigCo to work on it. Even when I contributed less than 1/1000 to the project, I believe my contribution to the world is still quite big, since the software is deployed to 10,000's of hospitals and assist with (sometimes life-saving) procedures every day.
- chauzer 15y ago
  That's true. But personally, when I think about the impact I make at a startup vs at a bigger company, it's how far away are you from that direct impact. I think with anything, you can somehow relate it to making an impact in the world. I could say working at a consulting company who's on a project for a car manufacturer, on a project that improves the data quality of owners of cars - i'm making an impact because with better data, people are getting the right information / advertisments for cars that are right for them, thus improving their lives by helping them choose the right car. Obviously, this employee is many layers away, but he could still say that he is still making an impact in some super small way. I think it really is just up to the individual to see what they believe is enough of an impact for them personally.
wbkang 15y ago
> Politics I am not sure about this. This can start even with a three-person company. This is a gross oversimplification.
dmd149 15y ago
Funny that you posted this today: I just wrote a blog post titled "Entry Level Start-Up Job or Entry level Big Company Job + Side Project." http://dalethoughts.com/2012/03/entry-level-start-up-job-or-entry-level-big-company-job-side-project/ http://dalethoughts.com/2012/03/entry-level-start-up-job-or-... The combination of working at a big company while having a side project may outweigh the benefits of working at a start-up (at an entry-level gig). At the entry level, the pay-cut you're taking by working at a start-up can be significant on a personal level. For someone who recently graduated college choosing between a 40k gig at a big company and a 35k gig at a start-up, that 5k will be much more significant than an engineer taking a pay cut from 85k - 65k.
- alex_lod 15y ago
  I've never been able to find the time or motivation to do side projects, probably because I'm more of an all-in kinda guy. But I agree that side projects could be a good way to scratch the startup itch and have a great time, too.
  - dmd149 15y ago
    Do you think you'd have the time and motivation to do a side project if you worked at a big company? I'm also curious to see how stressed you were working at a start-up. If you're getting as much stress as the founders without the potential upside, it seems like in many cases it may not be worth it.
    - alex_lod 15y ago
      I've worked at big companies before and I could never go back. I'm not a 9-5 kinda guy, which is what I meant by "all in." Stress is something that comes with doing exciting, scary things. Sure, having a comfortable day job and working on a side project on the side might be fun, but it's probably not scary and big, unless of course the side project becomes something big. At which point you'll be stressed again.
- perokreco 15y ago
  The entry level for a new-grad software engineer is 75-100+k in US. If you are working for 35-40k you are doing it wrong unless you chose to live in middle of nowhere where 40k is actually a nice salary.
dtennant 15y ago
I know this is a startup biased crowd, but the claim that this is a comparison article is pretty thin. I'm not going to claim that working for a big company is the perfect solution for everybody, but it has some great advantages. My favorite is that I can actually be just a software engineer and not an engineer/tech support rep/sysadmin/manager/etc. I actually think I spend more time on technical challenges at a large company than I did in my time at a startup. I also think that point #10 is really dependent on the company. Is working at a social gaming startup really "being part of something bigger than you"? If you work at a company and you believe in their vision, that's way more important than the size of the organization.
cramaswamy 15y ago
I disagree with the generalist comment. Startups have limited $$ in the bank and want a specialist who can hit the road running. However, startups also want someone who is willing to take on additional roles and help out in the overall growth of the company.
- alex_lod 15y ago
  Let's take the following hypothetic example, which by the way isn't so hypothetical: Your company decides it wants to build its business on mobile phones. You go out and hire the best iOS developer you can find, and she builds the app. Then, once you have a few thousand users, you realize that actually this app should be a website. You pivot the company to become a website before an iOS app. Now you have an expert iOS developer and nothing for them to work on. You'd be in a better position to have a super awesome programmer who can (and has interest to) learn new things. The above example happens all the time. The earlier a company is, the more likely they'll make big pivots.
  - cramaswamy 15y ago
    Alex - I agree with the above example, but my definition of a generalist is someone who knows a little bit of everything - engineering, sales, marketing etc. An awesome programmer is still a deep expertise in my opinion. But I get your point.
bicknergseng 15y ago
While Larry Smith isn't necessarily the best presenter, I think this article misses or doesn't address any of the points he makes on a good vs. great job in the first few minutes of his TED talk (http://www.ted.com/talks/larry_smith_why_you_will_fail_to_have_a_great_career.html http://www.ted.com/talks/larry_smith_why_you_will_fail_to_ha...). I would argue that none of the 10 points Alex makes in his article matter if you don't care about what your company does. People still seem to have a hard time understanding that the size of a company has nothing to do with the company's mission, and forget that proximity to that mission becomes more difficult as the company grows and the mission is diluted.
jes5199 15y ago
I have to disagree with #9. In a large company, there is an HR department and a hierarchy that balances power. In a startup, you may have to deal directly with the personality of the founder - which can be an overwhelming and socially bizarre experience on its own - but, worse, that opportunity can attract sycophants and yes-men and backstabbing and all sorts of politicking that can't happen in your minor engineering department in BigCo, because at BigCo there's no access to powerful people, so no way to try to manipulate them. Sure, BigCo has politics in the executive lounge, but I don't have to hang out there.
freerobby 15y ago
I disagree with the idea that startups are inherently riskier. Sure you may only have 12-18 months of funding, but you also have much greater knowledge of the funding situation going in. Big companies have layoffs all the time, and as an employee you are much more likely to be kept in the dark about the circumstances leading up to them.
hn_reader 15y ago
Thanks for the post Alex. One of the things I do like about being a developer at BigCo is that it's possible to keep the politics at an arm's length - something that I think would be almost impossible in a startup with a handful of people. (Whether this kind of hands-off approach is actually good for one's career is another matter.)

69 points by alex_lod 15y ago

jasonkester 15y ago

Startups are a fun place to work, but don't fall for the fallacy in point #8 (the only one in the article that's wrong). Your market value is your market value. Sure, a startup will ask you to take a pay hit, but that doesn't obligate you to do so. Having "good people" is way more important to a small team than a large one, so if you fit that description you absolutely can negotiate a good bill rate. You'd be silly not to, since they definitely need you more than you need them. If they make grumbly noises, be sure to point out that you're happy to trade in your lottery tickets for a competitive wage. As has been discussed here endlessly, startup employee shares are pretty close to worthless even in the best case. Tell them they can keep them, but since they're hiring real computer programmers they're going to need to pay a real computer programmer salary.

emmett 15y ago
Your compensation for any given job can be broken down into an equation that looks something like: Compensation = Equity + Salary + Bonus + Benefits + Training + Credentialing + Interest Level of Work... Clearly some places (Academia, for example) pay you mostly in Training, Credentialing, and Interest level. Big companies pay you almost entirely in Salary and Benefits. Hedge Funds pay you mostly in Bonus, with some Salary. Good startups pay you pretty good in Salary, and pretty good in Equity. Great startups pay you almost ENTIRELY in equity on a percentage basis, because that's the part that makes you rich (Google, Facebook, ...) Of course it's hard to tell if you're working for a great startup ahead of time.
- aaronblohowiak 15y ago
  Startups that start off being run by well-intentioned people you trust can turn into places with management that has no problem diluting or otherwise devaluing your equity. Also, most startups use a little trick: they tell you that your equity is enough to make up for the difference in salary. Some of the clever ones will even do this using the valuation at the last fundraising event. VCs will agree that startups are a risky investment, and they seek 10x return on their investment because most of their investments fail. If you know that most investments fail, then you should really be compensated at a risk-adjusted amount of equity (ie: you should get waaay more equity at the current valuation than the discrepancy with the market rate to compensate you for the risk that the equity will be worth 0.) Additionally, there is the chance that after starting employment you discover the personality fit isn't there or you otherwise have to leave before the first year is up; if you don't reach your one year anniversary you take a 100% loss on the income discrepancy because you have no equity. To add insult to injury, you ARE NOT BEING GIVEN THE AMOUNT OF STOCK IN YOUR PACKAGE; an "option" is just the right to purchase at a set price. So really, people are "paying" you the difference between the current valuation of the company and its future growth, so you are getting a much worse deal than the last round of investors.
  - emmett 15y ago
    Equity is not a sure thing, by any means, but it's worth something. And that something means that on average startups will pay less salary than big companies.

j_baker 15y ago

For starters, the article is mistitled. A more accurate one would be "10 opinions About Working at a Startup vs. a Big Company". Although "platitudes" might be even more accurate than "opinions". But there's one thing in particular that annoys me here: And by the way, if you’re a good engineer you’ll have zero issue finding another job. Zero. You'all have zero issues finding a new job if you're a good interviewee, but not necessarily if you're a good engineer. I know lots of people (myself included) who are at least decent engineers but terrible interviewees.

eitally 15y ago
The ironic thing is that you'd probably have zero issues finding a job at a BigCo, which don't often use the same interrogation techniques as startups and tech companies.
- natesm 15y ago
  I've only had one job search so far, but I got much more "where do you see yourself in X years" and "tell me about a time..." nonsense at larger companies. Startups were much more interested in what I had done, and they actually looked at my Github account.
alex_lod 15y ago
I'd hire you if you were a good engineer but not a good interviewee :). My hope would be that a good interviewer can see through an interview in the same way that a good teacher gives good grades to good students, not good test takers.
- diego 15y ago
  If you can tell that a bad interviewee is a good engineer, you've cracked the elusive interview code that everyone has been trying to figure out for decades. A teacher has an ongoing relationship with a student, so time is on their side. An interview is the opposite.
- koos42 15y ago

PakG1 15y ago

I think this paints a too rosy picture and doesn't nearly touch on all the startup horror stories that can exist, especially for points from #4 to #9. This post speaks well about startups done right. It barely says anything about startups done wrong. Likewise, although the examples are much fewer, there are big companies done right and big companies done wrong.

alex_lod 15y ago
Very good point. I suppose I've only worked at startups that have done very well (Redfin, Cloudera), hence the bias here. While we're here, though, could you share some of the negative parts of working at a (failing) startup, apart from the obvious: you're out a job?
- adovenmuehle 15y ago
  If you were trading salary for equity and the startup fails you're out that. You're also out time which you could have been advancing at a different company. However, because working at a startup is gambling, you have to treat it as such. If you can't live with losing out on salary you could've made at another job, you shouldn't work at a startup.
  - tlipcon 15y ago
    Early in your career, trading salary for experience is a smart move. In my case, I turned down a Google offer to work at a startup after college (taking a 15%-30% pay cut) and my equity ended up being worth less than I paid to exercise it. But, in the two years that I was there, I learned way more than I would have at Google, and got a much bigger network, both of which helped immensely when I interviewed for my next position. I agree, working for peanuts is dumb. But 20%-40% less than what Google offers is hardly poverty -- it's still much more than what most non-engineers make out of college.
    - twelve45 15y ago
      Second this. Right after school I passed on a higher-paying job to work at a startup. It didn't do well, but I learned a whole lot about what is involved in running a startup correctly, from the perspective of a mid to late stage employee. Forward many years, and I have my own thing going and I appreciate the failed startup experience because it gives me some framework on which to base my decisions. And I hope I'm doing things better... (and that a few years from now that junior dev we just hired will do a better job with his/her company!)

greyman 15y ago

I don't think #1 about where you have bigger impact is universaly true. I worked in BigCo on a big (and commercialy successful) software project used in hospitals. More than 1,000 people (soft devs, QM, sales&marketing) are employed by BigCo to work on it. Even when I contributed less than 1/1000 to the project, I believe my contribution to the world is still quite big, since the software is deployed to 10,000's of hospitals and assist with (sometimes life-saving) procedures every day.

chauzer 15y ago
That's true. But personally, when I think about the impact I make at a startup vs at a bigger company, it's how far away are you from that direct impact. I think with anything, you can somehow relate it to making an impact in the world. I could say working at a consulting company who's on a project for a car manufacturer, on a project that improves the data quality of owners of cars - i'm making an impact because with better data, people are getting the right information / advertisments for cars that are right for them, thus improving their lives by helping them choose the right car. Obviously, this employee is many layers away, but he could still say that he is still making an impact in some super small way. I think it really is just up to the individual to see what they believe is enough of an impact for them personally.

wbkang 15y ago

> Politics I am not sure about this. This can start even with a three-person company. This is a gross oversimplification.

dmd149 15y ago

Funny that you posted this today: I just wrote a blog post titled "Entry Level Start-Up Job or Entry level Big Company Job + Side Project." http://dalethoughts.com/2012/03/entry-level-start-up-job-or-entry-level-big-company-job-side-project/ http://dalethoughts.com/2012/03/entry-level-start-up-job-or-... The combination of working at a big company while having a side project may outweigh the benefits of working at a start-up (at an entry-level gig). At the entry level, the pay-cut you're taking by working at a start-up can be significant on a personal level. For someone who recently graduated college choosing between a 40k gig at a big company and a 35k gig at a start-up, that 5k will be much more significant than an engineer taking a pay cut from 85k - 65k.

alex_lod 15y ago
I've never been able to find the time or motivation to do side projects, probably because I'm more of an all-in kinda guy. But I agree that side projects could be a good way to scratch the startup itch and have a great time, too.
- dmd149 15y ago
  Do you think you'd have the time and motivation to do a side project if you worked at a big company? I'm also curious to see how stressed you were working at a start-up. If you're getting as much stress as the founders without the potential upside, it seems like in many cases it may not be worth it.
  - alex_lod 15y ago
    I've worked at big companies before and I could never go back. I'm not a 9-5 kinda guy, which is what I meant by "all in." Stress is something that comes with doing exciting, scary things. Sure, having a comfortable day job and working on a side project on the side might be fun, but it's probably not scary and big, unless of course the side project becomes something big. At which point you'll be stressed again.
perokreco 15y ago
The entry level for a new-grad software engineer is 75-100+k in US. If you are working for 35-40k you are doing it wrong unless you chose to live in middle of nowhere where 40k is actually a nice salary.

dtennant 15y ago

I know this is a startup biased crowd, but the claim that this is a comparison article is pretty thin. I'm not going to claim that working for a big company is the perfect solution for everybody, but it has some great advantages. My favorite is that I can actually be just a software engineer and not an engineer/tech support rep/sysadmin/manager/etc. I actually think I spend more time on technical challenges at a large company than I did in my time at a startup. I also think that point #10 is really dependent on the company. Is working at a social gaming startup really "being part of something bigger than you"? If you work at a company and you believe in their vision, that's way more important than the size of the organization.

cramaswamy 15y ago

I disagree with the generalist comment. Startups have limited $$ in the bank and want a specialist who can hit the road running. However, startups also want someone who is willing to take on additional roles and help out in the overall growth of the company.

alex_lod 15y ago
Let's take the following hypothetic example, which by the way isn't so hypothetical: Your company decides it wants to build its business on mobile phones. You go out and hire the best iOS developer you can find, and she builds the app. Then, once you have a few thousand users, you realize that actually this app should be a website. You pivot the company to become a website before an iOS app. Now you have an expert iOS developer and nothing for them to work on. You'd be in a better position to have a super awesome programmer who can (and has interest to) learn new things. The above example happens all the time. The earlier a company is, the more likely they'll make big pivots.
- cramaswamy 15y ago
  Alex - I agree with the above example, but my definition of a generalist is someone who knows a little bit of everything - engineering, sales, marketing etc. An awesome programmer is still a deep expertise in my opinion. But I get your point.

bicknergseng 15y ago

While Larry Smith isn't necessarily the best presenter, I think this article misses or doesn't address any of the points he makes on a good vs. great job in the first few minutes of his TED talk (http://www.ted.com/talks/larry_smith_why_you_will_fail_to_have_a_great_career.html http://www.ted.com/talks/larry_smith_why_you_will_fail_to_ha...). I would argue that none of the 10 points Alex makes in his article matter if you don't care about what your company does. People still seem to have a hard time understanding that the size of a company has nothing to do with the company's mission, and forget that proximity to that mission becomes more difficult as the company grows and the mission is diluted.

jes5199 15y ago

I have to disagree with #9. In a large company, there is an HR department and a hierarchy that balances power. In a startup, you may have to deal directly with the personality of the founder - which can be an overwhelming and socially bizarre experience on its own - but, worse, that opportunity can attract sycophants and yes-men and backstabbing and all sorts of politicking that can't happen in your minor engineering department in BigCo, because at BigCo there's no access to powerful people, so no way to try to manipulate them. Sure, BigCo has politics in the executive lounge, but I don't have to hang out there.

freerobby 15y ago

I disagree with the idea that startups are inherently riskier. Sure you may only have 12-18 months of funding, but you also have much greater knowledge of the funding situation going in. Big companies have layoffs all the time, and as an employee you are much more likely to be kept in the dark about the circumstances leading up to them.

hn_reader 15y ago

Thanks for the post Alex. One of the things I do like about being a developer at BigCo is that it's possible to keep the politics at an arm's length - something that I think would be almost impossible in a startup with a handful of people. (Whether this kind of hands-off approach is actually good for one's career is another matter.)