<p>I was talking to a LinkedIn recruiter recently, and he was telling me that ~5% of people can join a startup fresh out of college and do great, but that the other 95% (i.e. most people) are better off in the more structured environment of a larger company for at least a year or two. As a recruiter for a larger company, though, he clearly has some bias.</p>
<p>Do you agree with his assertion? Any other general thoughts?</p>
<p>It could be because:
[The</a> Venture Capital Secret: 3 Out of 4 Start-Ups Fail - WSJ.com](<a href=“http://online.wsj.com/article/SB10000872396390443720204578004980476429190.html]The”>http://online.wsj.com/article/SB10000872396390443720204578004980476429190.html)</p>
<p>Start ups are often characterized by an environment of creative chaos. Someone with experience may be better able to function in that environment. A newbie could flounder around unless given appropriate direction - - there’s often little time to guide the newbie in these environments. IMO the recruiter is providing good career guidance. It’s not simply a question of whether the start-up survives (but as Chucktown notes that is a very important factor as well).</p>
<p>Even an engineering business is a business. Experienced engineers have more likely learned the business side by interacting with clients, supervising other workers, handling budgets, etc. - all things engineers fresh out of school may not know. Now, to me, the flip side is that the time to do something more risky is now when you don’t have mortgage, family, etc and if it fails you don’t lose it all. Plus you have time to devote tons of extra time which a start-up may need. Depends a little on your personality.</p>
<p>Sounds about right, because most people aren’t going to be able to pick up the line of work before they get burned badly enough for their first venture to fail. Having some experience in the business helps.</p>
<p>Cool, thanks for the responses. I would like to be part of a startup at some point, so I’m trying to figure out a viable trajectory to follow. It looks like I’ll be better off by going with a more established company for now.</p>
<p>Edit: scmom12 - You brought up a good point about doing a startup before life hits one with obligations. I’ll have to think about this.</p>
<p>I disagree with most of this. </p>
<p>Because you are forced to work so much harder, are by necessity in the critical path, and in general are forced to quickly become an expert in many different areas, joining a startup could be one of the best ways to accelerate your career. The startup can still fail miserably but you can easily get 5 years of experience in 2 years, greatly increasing your capabilities and thus your value. </p>
<p>If you view it as part of your education with the potential for serious financial upside, it can be great. </p>
<p>It has it’s risks, it’s not for everybody, but then neither is scuba, rock climbing or skydiving.</p>
<p>This is a great question and a decision that should not be taken lightly. There is a huge cultural difference between a startup and a large company. If you are the sort of person who can learn on your feet, take initiative, solve problems on your own as they arise without anyone to turn to for help, and you have the ambition to rapidly take on increasing levels of responsibility, you will probably thrive in a startup and be very frustrated with the bureaucracy in a large firm. If you want a comfortable, predictable job, avoid startups.</p>
<p>If you pursue the startup route, be prepared for a much greater level of challenge than what you experienced at any time in college. My first job was in one of the original (and now defunct) “Gang of Four” AI startups in the 80s. I had to instantaneously learn three new languages, several OS’s, and, though I had no hardware experience, how to keep archaic Lisp machine hardware up and running, and I quickly rose from building systems to test the company’s flagship product to being a member of the core development team. My tasks included building expert systems when I hadn’t even known what an expert system was, creating a Lisp compiler from scratch with native code generation for VAX, an architecture I had never seen, building a Lisp-based private network protocol from the ground up without having taken networking classes, and designing/implementing a new product UI in C for the PC in the pre-Windows days, again by the seat of my pants. Very little of the specific skills I learned in college were applicable to any of these tasks – in a startup, you really need to be able to figure things out on the job. I often arrived at work at 1pm and stayed until 3am. The development team often shared Chinese takeout at about 10pm. That was the culture. It really suited me in my early 20s. My next job was another startup, and this one was again completely different, and I found myself flying around the country building Windows UI prototypes (just after Microsoft launched Windows) to front-end the antiquated mainframe systems at fortune 500 companies. Nothing from the skill-set in my first job prepared me for this, but after my first employment experience, I basically felt I could handle any challenge. </p>
<p>At both firms, there were successive waves of rapid hiring and layoffs as the companies obtained then exhausted one round after another of financing…</p>
<p>So as ClassicRockerDad astutely pointed out, if you want to learn a lot in a short time, and aren’t overly concerned about stability, join a startup. Oh, and don’t forget that with stock options, you might do very well financially if you stay with the startup long enough for your options to vest and the company later goes public or gets bought out (both of my employers did!), even if they end up subsequently failing, as most startups do (yep, both did :-).</p>
<p>What did all this prepare me for? Launching my own startup, of course!</p>
<p>I have been involved in 3 start ups healthcare businesses. The deal with start ups is that there is no path or the “how it’s going to go” laid out for you. Start ups often rely on the strength or endurance of the people to figure it out on the fly, take risks and have strong enough skills to problem solve fast. These are qualities that one has after they have functioned in stable more predictable environments so that those skills can be applied. </p>
<p>New grads have the endurance and are likely to be able to take risks but they don’t have the knowledge or experience to make it up as they go along.</p>
<p>Let’s tackle each issue separately</p>
<p>First compare the educational opportunities of startups vs. big companies.
This is spot on. You can learn very quickly at startups. However, there is much less hand-holding at a startup. You have to be very self-directed and have to be able to self-learn new technologies if you want to do well at a startup. You will often get to build new systems from scratch using cutting-edge technologies (node.js or even ruby on rails would be examples). Don’t think you won’t find mentors at a startup, though. You just have to make the effort to ask for help (which is surprisingly hard for many people).</p>
<p>However, the advantage of big companies is that they often have structured “bootcamp” programs where they teach you their codebase and get you up to speed. Facebook does this. Google has you spend the first 3 months learning about their software architecture (an overview). In this path you get exposure to lots of well-written top-notch code. However, typically you don’t get exposed to cutting edge tech trends (using the node.js / ruby example, this would be like using Java EE or using PHP (the horror!). Facebook uses PHP extensively). Another major disadvantage with large companies is that, some large companies (but not all) make it hard to switch projects / departments. I know Google makes it difficult (you can’t choose for the first year, I think).</p>
<p>Next, compare the pay and stability of each.</p>
<p>Given the tech boom, salaries at startups are very competitive. Typically you will take a pay cut in exchange for some meaningful equity. It depends on how big/successful the startup is when you join. Larger companies will mostly definitely offer better perks, health insurance, 401(k) stuff; startups usually wont offer this (some larger startups might). An all-cash package at a larger company is typically going to be higher.</p>
<p>Do not fall into the trap of believing your equity will make you rich. Your equity is probably just a small bonus, really. 1) <em>Even if</em> the startup is successful, it is more likely to get acquired than go public, and all your equity amounts to is a small sum. To find out why this is the case, google “liquidity preference,” and “stock dilution.” Basically it’s how VCs ensure they “first pick” from the pool of money before money is distributed to other stockholders. 2) And then there’s the case of the startup failing 3)And even is the startup goes IPO, it typically takes 6+ years for an IPO to happen, which can be a loooong time to wait.</p>
<p>But then again, maybe you join the next Facebook and become a millionaire. That sounds appealing for the same irrational reason that millions of people play the lottery every year.</p>
<p>On culture, startups typically have a much closer-knit and laid-back culture. On the flip side, that probably has much to do with the long hours required. A larger company is going to be much more regular in terms of work hours. Maybe not a 9-5, but more likely a 9-6 type job. At startups there will be much heavier pressure to meet deadlines. At larger companies, because typically there are larger teams, I’ve seen that you typically will feel less pressure because “blame” is spread among the entire team. This means deadlines can often be more flexible at larger companies.</p>
<p>Approach joining a startup like an investor. You are essentially “investing” into the company the pay cut you have to take (and in fact you’re getting a worse deal than the company’s investors since you typically get a different type of stock/options with no liquidity preferences and with a one-year cliff). If you do not feel confident that the leadership of the startup know what they’re doing, don’t join. If you don’t think their product / market is going to succeed, don’t join. Etc…</p>
<p>Finally, understand the differences between different kinds of startups. There’s a world apart from a 2 person bootstrapped startup, a 4 person startup that’s raised a $1MM seed round, a 20 person startup with a Series A, and a multi-hundred person startup like Square that’s already a billion dollar company. As you approach a company like Square, it’s going to be closer to a larger company atmosphere than a startup atmosphere (though I’ve heard nothing but good things about Square). At the same time, going the other direction increases your risk.</p>
<p>You want my take? I personally think there are two best environments for a fresh college grad:
<p>With joining small startups you get an incredible amount of variation and unpredictability and little control over the outcome of playing the startup lottery (because you’re not a co-founder, you can get fired for any reason, etc). The risk-reward equation for joining a small startup makes little sense because you are getting almost the same amount of risk as starting a startup but with drastically less reward. To illustrate, lets have a hypothetical startup that’s been around for a year and has 3 people. You might get around 1-2% stock over 4 years. Yet had you joined a year ago as a co-founder, you would have gotten something like 30%. Reward is cut by a factor of 15-30 while risk might have only been cut by a factor of 5.</p>
<p>A mid-sized startup is nice because your risk is drastically cut yet you still get a decent share of equity so that the risk-reward ratio is much more reasonable.</p>
<p>Re: #2</p>
<p>Yes, most startups fail. But the equivalent risk at a big company is the risk of a big layoff, although severance packages may be better at big company layoffs than startup failures.</p>
<p>Most of the other differences (culture, benefits, etc.) have been addressed in other posts above.</p>
<p>For the first job or few out of college, what may be one of the most important questions is: which job will provide the best upgrade for your knowledge, skills, and experience?</p>
<p>Speaking of LinkedIn, I used to work for the author of this article on startups. He is now the Senior VP of Operations for LinkedIn. Some of the information in the article is dated (e.g., on the subject of competition, he wrote that only Microsoft has no competitors), but IMO, the general message is still just as valid now as it was when he wrote the article.</p>
<p>[“So</a> you want to join a startup”](<a href=“http://www.oocities.org/drhenke/startupmemo.htm]"So”>http://www.oocities.org/drhenke/startupmemo.htm)</p>