Unorthodox Methods of Choosing the Right Startup
vicyeh.com
vicyeh.com
It is easy to discount risk until it's too late. You will have growth opportunities at large companies -- whether you do at a startup is not necessarily the case, no matter what you are sold. You will have to fight for that high visibility work, to get illiquid options, and in all likelihood, a stunted career track compared to if you had just done your early years at a good BigCo.
1. You'll always have to fight for high-visibility work, but it is far easier to get high-visibility work at a startup compared to a BigCo. Most non-senior engineers at large companies are treated as liabilities and won't work on impactful or mission-critical software.
2. Growth opportunities are much more limited at a bigger company compared to a startup. Obviously, the best engineers can succeed in either environment. But there's many developers grinding away at large companies, making marginal contributions, with no advancement in sight. Engineers such as these don't survive very long at startups. Same goes for corporate politics - there's often 7+ layers of middle management at large companies who's only goal is to make themselves look good (at the cost of the company's overall mission). On the other hand, at smaller companies, new engineers often work directly with upper management.
3. The illiquid stock options and (potentially) reduced compensation are clearly mentioned in the post. It's no secret that the upside and the downside are both magnified for a startup. People care about more than just their annual compensation, especially when you're young, don't have many obligations, and have the rare opportunity to take risks.
It's not symmetrical. The downside is much larger for a startup (you can end up losing hundreds of thousands of dollars on worthless stock), but the upside is _also_ typically smaller. The 95 percentile startup outcome (say you join a company at series A that ends up worth a billion) is about the median outcome at a bigco.
Not to dissuade people from joining startups. They can be a great learning experience, especially if you're self motivated, but financially they're almost always a bad idea unless you're a founder.
While the reduced comp is alluded to in the post, it is passed over and not addressed. It is absolutely _material_. Over the first five years of your career, you could easily forego over 500k, and if you keep staying at startups over the next 5, another 1-2M. With that money, you can easily mess around with side project ideas for a while, and go back to either consulting or BigCo life if things don't pan out properly. If nothing else, you've got the couple hundred thousand to a couple mill in the bank that's worth how many in the bush? If you apply a risk adjusted discount to the cashout case (which is rare), how much do you have to make on exit in order to break even with that much? It's a lot. It's enough where the numbers only make sense if you're coming in on the ground floor as a founder, or later on as an executive.
New engineers can work directly with upper management in the early days of smaller companies, but as soon as real money enters the picture, you will have a layer of middle management. Often times, this will get hired externally, over the heads of those engineers that joined specifically to avoid this kind of situation. If there's VC funding in the picture, this can get political very quickly, and there are many instances where an old guard from the earlier days is pushed out and replaced by a new guard. I've seen it happen multiple times.
You may dislike those 7 layers of middle management and they may be attempting to make themselves look good, but their existence also provides a formal structure for promotion and growth, and they also serve as a buffer between individual contributors who want to do their own thing in peace and the jostling nature of upper level power grabs. I lament that this appears to be the nature of the corporate beast -- nothing about startups being smaller intrinsically protects you from this. You can get screwed over if you don't play politics well enough, or even if you just get unlucky. The difference is that in a large corporation, you know what you're getting into.
Nothing stops you from taking risks when you're not young. In fact, you will likely take more worthwhile risks because you can actually gauge risk properly, and you probably won't be taken advantage of by people because you're considered young, inexperienced and not knowing any better. In fact, the older the founder, the more likely it is to still be alive after one year's time.
Taking risks when you're young sounds fun in concept. But, you never get back that time or youth back. You could be taking those risks with things that don't materially impact your upward progression in socioeconomic class -- such as through traveling, hobbies, studies, art or side projects. To conflate and tie the very healthy and human nature to experiment and take risks with one's adult ability to survive is a certain kind of gambling and dysfunction bound to end in regret and misery. I wish someone had warned me about it earlier, when I was that age. Perhaps it would have saved me a lot of headache.
In contrast, I joined a decacorn as a technical lead and shipped multiple products already. All which get huge press coverage on tech sites and impact company revenue on the order of billions/yr.
The only real difference is in compensation (~20%), but since this is the most fun I've had in ages, I'd much rather pay a "fun tax" here at the startup.
- What’s the biggest mistake that you made in the last six months? (Covering their asses, citing minor infraction, laughing at the question, saying they have not thought about it: bad; a sincere admission of a really bad call that sounds like something that will inform their management style: forwarning; either way: they’ll talk about the topic that they care about: financing, recruiting, growth, clients, etc.)
- What’s the biggest mistake that you will in the next six months? Why is it OK for you to expect that from happening? (Same as before, harder to answer; we can learn a lot from others but for some things, no one was here, and this is how we are going to make it OK if we have to: better. Same, will cover the topic that they worry the most about)
- What’s the most important thing that you won’t be able to make if I say no right now? Keep in mind, you have other candidates in the pipe, and I hope that they are good too.
- What’s the biggest problem for people in [your team, or another one that you interviewed with]? (If their answer does not match what you’ve heard from that team: bad; if it does, preferably with one level of abstraction above and a fix.)
Call customer service, and ask them how they feel about the company, preferably before your last interview. “Overworked” is good, “excited” is great. “I’m not sure why I’m here” or “There’s a list of 74 problems that I have, I wanted to raise to the CEO…” good material for your interview. “Not sure, but if you know, tell me: I am the CEO. Talk to yo on Thursday.”: presumably good.
Ask to talk to a client if it’s B2B. They might refuse: “Why?” is a good question then.
I like to ask the investor but that’s because I always go for the same investor… I know, that’s lame. I don’t ask for a name, I just mention one (other) company and ask if they are more, and then respond asking if they could rank them. Depending on the investor, I know that means technical maturity, or business potential, or management. It’s not for everyone, but it helps. You can also ask competing investor and they might let you know why they didn’t invest. Not sure about the ethics of that one though.