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21 Comments

You probably shouldn't work at a startup

  1. 19

    I had the extreme misfortune of going on a start-up ride well outside of Silicon Valley. It was 6 day weeks 10-12 hours a day, fire fighting constantly, senior management popping anti-depressants like candy, etc. we incinerated 200 million dollars in like 2 years, went from a few dozen employees to 800 and then back to probably 80 by the time the wheels came off. They went public and my options would have paid off my house like 3 months after I started if they had been vested. They went to pennies and rounds of layoffs demoralized everyone massively. During the time I only know of one person who scored in a well funded startup - he made 2 million dollars when his company got rolled up, paid huge capital gains taxes and then his wife divorced him LOL.

    At least with bootstrapping you are able to keep the focus on the service/product and the market and not have to also be sweating about investors. It also allows for "good enough" market results and outcomes versus liquidations etc. With money from outside it always seems like the results have to be epic or die without any in-between.

    1. 1

      It's scary indeed. You need the money to scale, but it'll feel like a deal with the devil at the end🤣🤣

    2. 1

      This is why I try to keep venture capital/outside investors away from the business for as long as possible. As soon as you raise capital, you have to listen to other people's opinion/vision (which can be opposite of yours) and you now have the burden of responsibility.

      Yes, bootstrapping and growing organically is harder, but if you succeed, you're business has a higher chance of surviving. It's better to work out the big question marks your company has first and THEN raise capital. Not the other way around.

      1. 1

        This is so encouraging to read. There's such pressure to hit what feels like the "Beauty pageant circuit" of pitch competitions and lining up investor meetings. It gets really hard to resist when you're still squeezing pennies until they scream.

  2. 9

    Keep in mind this unicorn outcome percentage (less than 5%) is from investors who have more knowledge than you, make their living picking startups to bet on, and typically get to make about 20 different startup investments every 2-3 years. You, on the other hand, only get one shot at a time. So if you want to pick a winner, you’d better be a damn good picker. Much better than your average VC.

    Professional investors have an entire fund they have to deploy, usually into dozens of startups. That's a lot of companies. This usually leads to a form of spray-and-pray, constrained by an investment thesis. I bet unicorn hit rates would be higher than 5% if investors could only invest in one company per fund, but of course that's a super volatile and risky strategy.

    That's where you are as an employee, though. You can only work at one company at a time, really. If you're that focused, I bet you can pick a winner more than 1 out of 20 times. But when you swing and you miss, it'll really hurt.

    1. 6

      This is also not considering the fact that due to liquidation preferences even in the case of a successful exit the employee's stock may be worth much less than they thought.

      I think a good rule of thumb when evaluating a compensation package offer at a privately held company is to completely remove the equity from the calculation because it's near impossible to accurately project the future value of that equity.

      1. 3

        Thank you. Until we get a much more liquid market around secondaries, it should factor very little into the equation, especially for anyone that needs a significant chunk of that for living expenses / necessities [actual].

      2. 1

        True. I only told a recruiter that the equity sounds great, but it won't be in my hand as quick as the bi-weekly paycheck so an increase on the paycheck would sound better lol.

    2. 1

      There are probably a hundred startups that fail for every one that gets selected by a VC for funding.

      Those startups all end up hiring employees. Maybe one in a thousand is a breakout success without VC backing.

      QED your odds are actually better with the spray and pray VC-backed company.

      The skill of the employee making the choice is likely not in picking a great company to join. Anyone who believes otherwise is likely suffering from Dunning-Kruger.

  3. 2

    Startups are probably getting better to work at

    Startupland is changing. In my last few years, I have seen founders say and do things that I never would’ve imagined them doing five years ago. There are now options outside of the historical norm of hard-nosed, hardcore environments.

    I'm in this place now at a funded startup, for the first time, as employee 8. I previously rejected the idea of working at a startup, but I do think some places are great to work at.

    I negotiated my contract to still have my sidegig(s), it's all remote, lots of respect for a global team, no weekend or long hours work expected, and generally, a focused, but human environment to be in. I do think we'll start to see more of this.

    I also appreciate not getting sucked into the business side of a startup and getting to focus on the things I love doing.

  4. 1

    I think you are not right. From my point of view, it depends on the domain and the industry actually. If you choose the right domain, you can succeed with your start-up. My brother had a great start-up back in 2017. Our entire family was really skeptical about it, but he was so enthusiastic about it that I had to support him. The idea and the business plan were interesting and with many potentials, but we had no idea how to get start-up money. Thankfully, he has used the services of https://www.cuttles.io/startup-academy/courses/what-where-and-how-to-get-startup-money, and it helped him very much.

  5. 1

    I agree with this. I don't think startups are worth it unless the founders are amazing, and you deeply believe in the mission of the startup. You wouldn't don't mind working extra hours to make their mission come true.

    There are not a lot of startups like that. It's really hard to find a startup that does something novel, interesting, and have amazing founders(on surface).

    And this is only the tip of the iceberg.

    The best thing you could probably do is not opt for the lottery and put your fate in your own hands.

  6. 1

    Yeah - the economics don't make sense at all.

    Do think the main payoff of the startup journey is in the process of building and seeing what you can achieve when you go all out for something. I've done things I didn't think I could possibly do again and again.

    So the math to me is:
    -Money is WAY less on average
    -Perks are WAY less than average
    -The personal payout from being in a challenging environment with real stakes on the table - significantly valuable and difficult to quantify...but for me and many others well worth the sacrifice of the other two

  7. 1

    I think there are assumptions made here that aren't always true.

    1. The startup is funded by a VC.
    2. The startups goal is growth at all costs.
    3. The startup is Silicon Valley based.

    For me working at a startup means working for and with other developers for the good of the startup. I'm lucky enough that our startup is a child company of an engineering group. We still are beholden to the parent company at times but for the most part we have freedom to make independent decisions.

    Not all startups are blinded by the growth at any cost model or beholden to the whims of a VC. But as a potential employee you have to do your own research and interview the interviewers to determine the right fit.

  8. 1

    lol. very true. most people should just avoid it entirely. this sums it up perfectly:

    Typically we assume that a startup is a better overall employment experience, this probably isn’t true for most people.

    eeeeeeeexactly. just not for everyone. ... 1 out of 100? 1 out of 10,000? i dunno.

    ... but for those that know, this is the only way.

    1. 3

      I believe what he means is : if you do work at a startup, make sure it's your own :D

      1. 2

        i agree with that.

  9. 1

    I haven't worked at investment-driven companies, just regular companies that make a profit to survive, but I have had a lot of friends work at investment-driven companies. From the sidelines, I never understood why someone would do something like that when you have higher chances of winning the lottery than becoming rich from working at a start-up. All start-ups usually come baked in with toxic cult-like culture, an ever-changing product vision, and no telling if you'll be able to pay rent next month - all around seems like a really bad deal for what seems to be mostly well-educated people (software developers).

    And yeah, good for you if the start-up you worked for secured many millions in funding so that you'll at least be employed for a year or two - but most start-ups do not secure millions in funding. Most, as far as I can tell, run on fumes. My friends mostly manage to work for one for 3-5 months and then have to find a new job. Doesn't exactly look good on their resumes if they have 4-5 jobs in the span of 2 years.

    1. 1

      I'd be careful using words like "ALL" homie

      1. 1

        I did say "usually" if that helps. I do take your point though.

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