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.

  • http://twitter.com/sandeshsk sandeshSK

    Really liked the way you have expressed the intricacies of working for a startup! Thanks! 

  • http://twitter.com/HuckleberryHart Huckleberry Hart

    good stuff amigo.

  • http://alexlod.com Alex Loddengaard

    First time I’ve seen you around these parts in ages, dude :)

  • Charles

    Well written article. Just wanted to make a note on point 3.

    I know anecdotal evidence doesn’t carry much weight, but I’ve worked at several “large companies” and have not really felt that I need to be some sort of specialist. In particular, my current job entails working on databases, server-side code, GUIs, and all the pieces in between. This may be a unique situation, I haven’t taken a poll. I just don’t feel like it’s a fair generalization.

  • http://alexlod.com Alex Loddengaard

    On the contrary, anecdotal evidence carries all the weight!  I hope my post didn’t offend you at all, Charles.  I’m glad you shared your opinion, though, because clearly it wasn’t a fair generalization.

  • Abdelrahman Mahmoud

    exactly!

  • Wei Yang

    I’ve always been a jack of all trades, master of none.  Maybe that’s why starting companies fit me so well. =)

  • http://twitter.com/RamaswamyC Shekhar Ramaswamy

    Alex – A counter point to being a generalist: Since startups have limited funding, don’t they need someone who is very good at the job they are being hired for? In short, a specialist with an ability to roll up sleeves and take on additional roles as needed?

  • http://alexlod.com Alex Loddengaard

    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.

  • http://kareemahmed.com Kareem Ahmed

    Great post! I enjoyed reading it.

  • Pingback: Working at a Startup vs. a Big Company « Tyson Zinn « Tyson Zinn

  • anutron

    A wonderful list, but, as I would expect with someone as optimistic as Alex, it’s mostly the up-side of things. For example, nearly all these points have a potential dark version. The Risk one for example, is being part of a startup that goes sideways and suddenly no one wants to hire you because you were involved with some crazy drama startup. The equity one talks about paying down on a house or retiring, but most startups fail, which means your equity is worthless.The one about Ownership and Leadership talks about Zuck starting Facebook, but there are many, many startups with CEOs and founders who don’t really know how to run a company (but might have a great idea for a product).

    Like any career choice, there is always risk. At a startup, I’d argue that the risks are a little more extreme. Your pay is low, often to the extreme. Your equity opportunity is high, often to the extreme. Your chance of that equity being worth zero is much higher than if you take a job at IBM and get some options, but if your equity isn’t worth zero then you probably can retire on it. But probably not in the middle; your equity is not likely to net you a few months salary like an IBM stock package might; it’s all or nothing. The CEO might be transparent and the culture really great, but at small companies it’s just as easy for management to be stingy with information, money, and compliments and there’s nothing between you and them. Personalities matter a lot more and sometimes it’s not clear until a year into it that someone isn’t who you thought they were.

    My own career has been a mix of these things; mostly good people and worthless equity. Building a company that creates real value and liquidity is very hard. My short advice is to make sure that what you do every day is its own reward and put your energy into being a good friend and coworker to those around you. Don’t bank on the equity, and don’t be afraid to change things up if it isn’t working.

  • rhaphazard

    Great article.
    Did you find that working at a startup was different from when you were an intern and after you graduated?

  • http://www.facebook.com/profile.php?id=1097702754 Antanas Ko

    first of all – quite nice article! it was easy to read :)

    second – i don’t agree with everything. i’m currently working at a startup, and there is a lot of controversial things.. One of the most important thing is an execution team – if colleagues are good to each other, then it’s perfect. otherwise – things can (and will) go wrong. especially when startup is in not-so-fluent stage – then the atmosphere becomes very intense, everybody are tired. so if you are thinking about joining a startup – be prepared. be prepared for the restless weeks of hard work, for having no free time, for coming back home brainless.

    the most saddening thing in this startup trend/movement is that you can do your best, you can sacrifice several years of your life, and there is no guarantee, that you will get what you earned, because there are a lot of other factors, which could destroy everything. bad target group (they actually don’t want to pay you for your product), too long development stage (too many requirements), or even too small starting budget, etc. and at the end, you have nothing but experience points, and big chunk of brain, damaged by stress. you can be the smartest guy in the world, but if others are stupid – you are screwed. a lot.

    i read a lot about startups and stuff, and bad thing is that there is a lot of material about successfull startups, about fame and money, but reality is that startups are RISK. HUGE RISK. if you are planning to make a family or something – think about startup twice. it’s not easy, and it’s not guaranteed.

  • Peter Spier

    Sweet post.  I’m going to be in SF for a week at the end of the month.  Would love to meet up if you have time for lunch or something.  Take care man.  

  • http://alexlod.com Alex Loddengaard

    As per usual, very good advice, Nutron :)

  • http://alexlod.com Alex Loddengaard

    Absolutely.  All of my jobs and internships leading up to startup work made me feel pretty unimportant — I was working for The Man and so far removed from the customer that I forgot the “why” in my job.

  • http://alexlod.com Alex Loddengaard

    Thanks for sharing your anecdote, Antanas.

    First, about coming home brainless or having restless weeks — it doesn’t have to be that way.  Sure, that’s the way it usually is and the way most founders operate.  But it doesn’t have to be.  I for one have always maintained a good work-life balance, even during crazy times at Cloudera or Redfin.

    The risk is indeed much higher at a startup, and I agree that most news coverage is about successes and not failures.  But being at a startup is about risk, and everything good about a startup (ownership, opportunity, responsibility, etc) comes because of that risk.  As long as you’re OK with risk, it’ll set you free to do anything you want.

  • http://www.facebook.com/profile.php?id=1097702754 Antanas Ko

    it’s nice to participate in good discussion :)

    i agree with you – it shouldn’t be that way, but it (sadly) sometimes happens :) But i understand working overtime when it’s really needed , because the whole company should put all efforts to achieve success. 
    i have a lot of topics what i would like to discuss, but i guess it should be somewhere else (maybe other post with other topic? :]] ), because this blog post is about differences between startup and a big company, not about good/bad CEOs or keeping sanity in difficult periods while working in startups :))

    anyway, good article!

  • Pingback: Startup | Pearltrees

  • Pingback: 10 Facts About Working at a Startup vs. a Big Company « Explicit Coder

  • Tom

    Interesting article and it relates a little bit to mu current situation. My best man who i have worked with before started his own company a few month back with another guy. He asked me to join him as a Senior Architect leaving my role as a Dev Manager in quite a secure Role. I first said no, but after they were still unsuccessful with someone else they hired and me helping them out fixing a few thing he offered again, saying at least i get things done and hit the ground running. Well this time i accepted for a bit under the market rate and so far only 3 of us.

    I must admit it was a very hard decision to make to leave your secure job where you might become R&D manager or similar waiting for another 5 – 10 years playing with older technologies and the mills are a bit slower compared to the new company using newest technologies and having as you said a large impact.

    Lets hope the Runway is long and it will work, as i am sure the work is already interesting.

  • Steve Spears

    I’m in the same situation, I work in a massive company and am responsible for DB design/maintenance, webservices, web GUI, desktop application dev, backend automation and pen testing for my LOB. 

  • SeattleC++

    When you work at a startup, you must trust your founder totally. No matter what paper you think you have signed, it’s easy for the founder to screw you over and keep the money for themselves. This risk has to be ok with you. There can be plenty of politics at a startup. You won’t know about them until you’ve been there for awhile. At a startup, execution is critical to success. You can’t just have a wonderful idea; If every member of the team doesn’t execute exceptionally well, it can all go sideways. Even if your founder is trustworthy and your teammates are beast, your business plan may not fly and all you’ll get is half a salary for a year or two.

  • Pingback: Working at a Startup vs a Big Company | Pathik Shah

  • Pingback: Startups vs Big Company | AESTE

  • HalibetLector

    I work for a social gaming company and my experience has been much like what is described in the post. I’m a generalist and when I started, my company was a startup and my skills were put to good use. After our acquisition by a gigantic, well known corporation, I’ve found myself involuntarily pigeon holed into one specific function. Whether I’ll be able to move to a different specific function when I get tired of it is yet to be seen, but that’s still a matter of months or years between specialties, not true generalist work.

    From a corporate view, specialists make sense more sense. There’s the perception that a specialist is going to be better at their specific task than a generalist. If you always want the best people working on a given problem, then you’re going to rely on your specialists for anything remotely difficult ie: interesting and challenging. The generalist then either gets devalued and works on bottom barrel stuff or he gets put wherever there’s a need right now (say you’re short on web developers) and from them on you’re known for that function (the web guy!)

  • http://alexlod.com Alex Loddengaard

    Sorry to hear you’ve been pigeon-holed — I know the feeling.  Thanks for the comment, though!

  • http://alexlod.com Alex Loddengaard

    FastCompany put out a very similar post this morning, with many of the same points.  Cool :)

    http://www.fastcompany.com/1824235/8-reasons-to-choose-a-startup-over-a-corporate-job

  • lax

     Very good advice and good article.
    You may look for a start-up that is in business for a year or older.

  • Stacy

    Hey there I head up the campus recruiting for a startup. Mind if I post this on our University Relations page? Great Article.. 

  • http://alexlod.com Alex Loddengaard

    You totally have my permission :)

  • Chelle bermudez

    I’m currently working on a company which has been in existence for 17 years majoring in the equipment trade. Yet, it just ventured out to software development to cater to the demand for this kind of market. After reading one point, then another, I’ve found myself being able to relate (seems like a company venturing out might be very similar to a startup). I came from a global company with a job requiring me to be blind to the general picture and be a microscope. I have no grudge against my former company, but when I’ve got this opportunity to join this new venture (I don’t know how it got to me anyway), I instantly jumped on board. And since the first day it sailed, I felt my career fall into a jumpstart. Opportunities came popping one after another. Yes, it might be very heavy in terms of the workload, but being part of this team is definitely worth it.  

  • aelassas

    Great article!

  • http://twitter.com/sarah_bailey Sarah Bailey

    Where do I sign? ;)

    Startups are sexy.

  • http://www.tellmetxt.com/ Philip Wattis

    Nice article, especially the generalist comment. You have to bring ‘many hats’ to a startup, ie. You may have to be CEO, CTO, CMO, Chief Tea Maker and the office cleaner, all in the same day!

  • johnsons531

    I’m not at a startup but a small company (6 ppl) and I find the environment comparable. I am also a generalist who was hired as a receptionist but now have the title ‘manager of it’. I had absolutely none of the experience needed when I started but was given license and resources to learn. I imagine a startup that has a good employee – whether specialist in an area no longer needed or generalist with shaky skills – it would be worth letting them learn on the job. Fits with the mentality of #1 making mistakes (while learning) that are not taken too seriously.

  • Pingback: Startups vs Large Companies | StartUpHire Blog

  • http://alexlod.com Alex Loddengaard

    I couldn’t agree more — I’m a big believing in letting people grow into roles that challenge them.  Thanks for sharing!

  • sheryl

    This is excellent! It is great how you can place yourself outside of the situation and describe it so accurately. Thank you.

  • RealEstateDealStreet

    We at http://www.RealEstateDealStreet.com will use these points in our recruitment 

  • Sulaiman Sanni

    Excellent post. Sharing it with all the members of our team. Thanks Alex

  • Pingback: A Weekly Roundup of Small-Business News - NYTimes.com

  • Pingback: This Week in Small Business: Follow the Titanic! | Leomoo.com

  • Pingback: 10 Facts About Working at a Startup vs. a Big Company

  • Pingback: 10 Facts About Working at a Startup vs. a Big Company

  • Marcoamg

    Great article, you cover very important differences between working on a startup or a big company, but I would loke to share my point of view. I have been in both and also medium companies, and something that I have learned is that is not about the company, is about yourself. If you find passion on what you are doing, a clear mind where do you want to go, and take ownership, you will find yourself in a very good place regardless of the size of the company. In the book “CEO Material”, DA Benton explains in better details this concept about finding in you the characteristics of a CEO so you can behave as such regardless the size of the company.

  • Pingback: Software Marketing Tweetables - 19 March 2012 | Smart Software Marketing

  • Cjh

    Ahhh, spoke so eloquently.  I’ve started 15 companies in my life 8 of them internet based since 1995.  I own a small software company to a niche market.  I’ve been self employed since I was 17 and Alex “NAILED IT”.  It all comes down to this…. “Do you want to change the world or make a very small fortune”.  If you opt for changing the world… you’re startup mentality. If you want to make a small fortune, Walmart is always hiring some middle management, try there and save yourself and a whole bunch of passionate people from wasting their time.

  • Pingback: on Small Businesses » Blog Archive » This Week in Small Business