You probably shouldn’t work at a startup

Startups can be exciting places to work. But if you’re planning to change careers to tech then they’re probably not the best place for you to work. Let me explain why.

In the tech industry startups are commonly defined as recently-formed companies that intend to grow large, fast. The important points for us to emphasize here are “recently–formed”, and “grow large, fast”. If you’re the 5th hire at a software company that’s just raised their Series A round, then you’re working at a startup. If you work in Spotify’s corporate development team you’re not working at a startup. It’s an important distinction because choosing to work at a small, growth-focused startup or a more established tech company can have vastly different outcomes for your career, job satisfaction and overall happiness.

Resource constraints

Startups are inherently resource constrained. When it comes to money, they will be bootstrapped (self-funded) or they’ll raise outside investment. Either way, they need to use that money to fund growth. Yes, a good chunk of it will be spent increasing their headcount to achieve that growth, but the actual salaries they can afford to pay will usually be lower than larger, more established tech companies with mature business models, real revenue and (occasionally) profits. If you are used to earning a certain amount of money each month and are looking to maintain that lifestyle then you’ll need to go where you can get paid, and that’s probably not going to be an early-stage startup.

Now what about stock options? Startups will usually try to make up for lower salaries by offering stock options, but trading your salary for options is playing the startup lottery and it’s a game most people don’t win. Remember – you can’t pay your off mortgage or student loans with stock options.

You may not get options at larger companies, but many will offer restricted stock units (RSUs) and they can have real value. I have a video that explores how much you can make in tech and it goes into more detail about RSUs if you’d like to learn more about them.

Closely linked to pay are perks and benefits, more areas where early-stage startups usually do not have the resources to compete against the large tech companies. The likes of Google and Facebook have famously offered employees perks like free chef-cooked lunches and laundry services, and while free laundry isn’t something to base a career choice on, these little perks do add up to make your work life less stressful.

Work environment

Early-stage startups are trying to solve different problems than larger tech companies so it should be no surprise that the work environment will also be different. Importantly, it’s likely to be very different from your current job, especially if you’e a lawyer, analyst, or a management consultant at a big professional services firm. 

Startups are small and need to grow quickly or else they die. They lean heavily towards action, and reward people who can get things done, whether it’s part of their official job description or not. 

This fast-paced, ever-changing work environment can be exciting, especially when the product is working and you’re hitting your growth goals. But the constant need for growth can be very stressful. Growth is like an addiction, we always want more than we have. And that feeling only gets worse if we’re not hitting our growth targets.

The need for speed combined with the inherent lack of organizational structure and hierarchy can take time to get used to, especially if you’re coming from a more “traditional” professional field. Meetings and powerpoint presentations are replaced with Slack messages and weekly sprints. I’m sure to some of you that sounds like a positive point, and in ways it is. But it’s also going to be a big change if you’re used to an environment where you are working towards clear goals, within the structure of well-defined teams and layers of management.

What about the actual work?

And then we have the actual work. Early-stage startups cater more to generalists who will be expected to tackle a wide range of projects and tasks, especially if they are not writing code. It’s not uncommon for the early “non-technical” employees to be working on marketing, sales, support – you name it. Whatever needs to be done. 

If you’re looking to learn these skills then it can seem like a great opportunity. But if you’re new to tech then you will also need to learn about areas like technology, software and startups, so you need to recognize you’ll probably have to take a more junior, low paying, role to start. You may be a strategy consultant making $250k per year now but that doesn’t mean a startup will pay you $250k per year to learn on the job how to set up ad campaigns or answer support emails. Instead, in the junior role you’ll be making less money than you are now, trying to learn about the industry and how to do all the new tasks that are demanded of you – all with little oversight or direction. Could you do it? Yes, probably. But do you want to?

Maybe you’re not looking for a generalist role, or to learn how to do marketing, sales or support. You want to use your experience and move into a tech role at similar pay and job title levels as you have now. That’s a smart idea! And in larger companies it’s certainly an option. If you’re working in financial services now then you could very well move to a corporate development role relatively easily. Just not at a startup. Because that job probably won’t exist at a startup where it’s far too early for these specialized roles. Just think – a software company with 3 engineers is unlikely to be hiring a team for M&A. You need to make sure the role you want actually exists in early-stage startups.

If the primary goal of your career change is to move to a completely new role, for example going from finance to web development, you’re still probably going to be better off if your first tech job is in a larger company. You’ll be part of a bigger team, which will take some immediate pressure off you. They’ll be able to give you more support in the early days, you’ll have access to mentors, and greater resources for learning.

I’ve been giving you reasons why you probably shouldn’t work at a startup, but I realize many of you will still want to. I know I did. So if that’s the case, here are two ways you could make the process easier. 

First, don’t work at a startup for your first tech job. Get a job in a larger tech company in a role that’s related to your current line of work, even if mid-long term you want to change. It will be much easier for you to get that first job if you can leverage your existing experience. Once you have the job, the learning curve will be fairly flat since the work will be closer to what you’re already doing, and the work environment should be fairly familiar. After you spend some time in the larger company, learning how the industry operates and building up your skills and network, it will be much easier to move on to an early-stage startup.

Alternatively, if you really want to work at a startup then work at a later stage startup. If the company already has a good product, has achieved product/market fit, has money in the bank, is growing fast and scaling up their headcount then they’ll probably have implemented the kind of organizational structure and hierarchy that will make the career transition easier for you. 

Ultimately, you have to decide whether you think the benefits of startup life outweigh the potential downsides and risks. I’ve worked in startups and had some great times, but there were also many days where I questioned whether I made the right choice. That’s the great thing about hindsight!

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