10 Facts About Working at a Startup vs. a Big Company

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 blog post is a summary of all that advice.  Oddly enough, I wrote a similar blog post my senior year of college while interning at Redfin.  And since college I joined Cloudera before they were funded and left when the company closed its Series C, or third round of funding.  The advice below mostly comes from my experiences at Redfin and Cloudera.  I’ve also worked at Google and Northrop Grumman.

1) Responsibility, accountability, impact: at a startup it’s unavoidable to have lots of responsibility and accountability. There’s no doubt, too, that being at a startup 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 startup 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 startup is riskier.  The startup likely isn’t profitable, and probably only has at most 12-18 months worth of money in the bank (this is called the startup’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 startup doesn’t do well, you’ll be out of a job when the startup runs out of money.  But you’ll be forewarned if the CEO is transparent — most of them are in earlier stages.  A startup 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 startup.  Although specialization is still important at most startups, there are far more opportunities at startups 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 startup.  Similarly, if you’re an engineer and want to get your hands dirty in marketing or recruiting or whatever, a startup 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 startups — 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 startup.  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 startup.

5) Transparency: startups 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 startup 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 startup 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 team mates.  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 startup 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 startups 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 startup are lame, there won’t be any bullshit.  Everything is pragmatic at a startup, or at least should be.

10) Be a part of something bigger than you: at a startup 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.

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  • http://twitter.com/Globial Globial

    Totally agree on “Be a part of something bigger than you” . Small/start up businesses will eventually be standing right next to the big businesses. Thanks for sharing this amazing article.

  • http://twitter.com/Globial Globial

     Its good to be in everyone’s shoes. This explain all the jobs in a way which cannot be explained in words.

  • http://twitter.com/Globial Globial

     Agree!

  • http://profile.yahoo.com/UE4SM5YNTNAZR2IXEZXBCR46EU River

    Not quite true of ‘specialists’ in large corporate.

    Having worked in several startups and 2 MNCs, I found MNC guys are often too narrow-scoped in knowledge/skills/responsibility and too yesmen’. Most of the tasks are maintainance work and not developing new stuffs.

    And that is a HUGE difference.

    Those in startups having to be responsible in many areas of work And doing real development work from scratch on New emerging technologies, are usually more knowledgeable and skillful.

    My view is, if you want to accelerate your knowledge and skillsets, join a startup.
    If you just want a stable pay check and relax, join MNC.

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  • Ankur

    There is a risk of getting fired at a startup.. This is not a place for students or people who are just starting out in software engineering..

  • http://alexlod.com Alex Loddengaard

    My first software engineering job was at Cloudera when we were 5 people.  It was tough, but I didn’t get fired :).

  • Andramelach

    I currently work for a startup that has expanded over a year and half although I have only worked for the company for three months. The most demanding aspect of it is getting used to the fact that the actual founders of the company have little to know actual base knowledge when it comes to logistics and shipping. I was hired because I have extensive knowledge and experience dealing in far larger quantities and value than they currently ship. However the currently employ a sort of operations manager who is my direct superior and has no knowledge of shipping but thinks that she doesnt have the experience, I do no either. I do not take kindly to being told to be quiet and work with my head down. I’ve actively tried to help improve the company and premtively prepare the company for larger volume and sales. However I am told I’m told that I don’t need to know all of the details such as shipping costs and sales projections. All of the details I need to know are basically removed from my view and I’m not included in any loops of information because this interim boss feels that I don’t know anything even then I work with the manufacturer on a daily basis while they are litterally in another country. I’m conflicted, stubborn and unwilling to bow down since I know for a fact that I’m right and this person actively impeeds the company through lack of knowledge and ignorance. I want to help, but why should I if I’m going to catch this much flack and bs from someone twice my age?

  • http://alexlod.com Alex Loddengaard

    Sorry to hear you’re so frustrated.  But your frustration seems to be more caused by shitty coworkers, not necessarily a startup environment.  Seems to me that you’re being diminished instead of multiplied:

    http://www.amazon.com/Multipliers-Best-Leaders-Everyone-Smarter/dp/0061964395

    Good luck, and thanks for sharing.

  • Rajesh Cherukuri

    Theres always a chance of getting fired anywhere you go, but the solution to avoid it is the same everywhere as well. Work your ass off.

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  • Ethan V

    I’m looking for people who are interested in the next multi billion dollar startup. The project has been in development for over a year. Our initial valuation is $1.5 million. What we need are some team players who would like to share in the wealth and the workload. This is a tech project involving social networking, end user hotness and our creativity. There is no other social network in existence like the one we are working on.

    We need…
    UI Designer
    BP Plugin Developer
    Database Engineer
    SQA & Testing Accounts Creator

    We have…
    Testing Server
    Production Server
    Former Bain Capital Business Consultant
    Creative Video Marketing Director
    Lead Developer
    Famous Spokesperson

    This project requires the best of the best. No hobbyists inquiries please.
    Work from your local testing server and have FTP access to the remote seudo-production domain.

    Once this project is ready to launch we will all split ownership based on our production.

    Contact Ethan for a Skype interview. (ethanvandal)

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  • Helen

    This is not true. There are plenty of knowledgeable students, part-timers, and entry level workers that fit right in at a startup. They are typically sponges and quick studies.

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  • Jerry Eshbaugh

    Recruiting for small companies can be difficult, everybody thinks that large companies have all the smart people. This may be true if you measure “smart” as going to a well known/respected university attendance, GPA or working for another large company. Successful small companies have something that is unique, it is called “common sense”.

    I have never seen a mid to lower level person transition well from large to a small company. It is kind of funny when you hear the questions…

    Who will write the article? You!

    Who can setup VMware desktop on my computer? You worked as the VM lead at a large company for 10 years, don’t you think you can figure it out!

    Who can I get to proof read the article? The person sitting next to you!

    I live in Westminster Colorado (a large suburb of Denver), and the largest employer in the area has a building that is 90% vacant. Whenever people were reluctant to accept an offer at my smaller company I would just tell them to drive through the parking lot of this nearly vacant building during working hours. I even took a candidate on one of these drive through myself. When you think of all the people who used to park their cars in the 50+ acres of parking (with weeds now growing between the cracks), it is very somber thought. Nobody can ever say that big companies are more secure after this. As a Detroit native, there are even more extreme examples of parking lots for people that worked at the top US car manufactures.

    Like in nature it is not the strong or big that survive the best, it is those best able to adapt.

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  • Ramya Menon

    Loved the blog. I particularly liked the part of being able to define company culture. I did not realise it, but i think we have been doing all these things unconsciously in our startup. I have written about my personal experience with a startup. Do check it out and tell me what you think :) https://medium.com/@ramyamenon1987/why-i-love-working-in-a-startup-and-why-i-m-glad-i-left-the-mnc-world-436e3e6a236f

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