Why Entrepreneurs Hate Working at Big Companies | Hacker News Reader

Why Entrepreneurs Hate Working at Big Companies

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46 pointstrevor9949 comments

This article has the right idea, but is obsessed with money. Money is not the fundamental motivator for all entrepreneurs. There are plenty of people who would rather work for themselves and barely be able to pay rent for the rest of their lives rather than work for a large company simply because they will be more happy doing what they love and barely managing to feed themselves than they will doing something they hate and having all the money they ever wanted. They don't care about the money, they care about doing what they love to do. So long as they can feed themselves and find a roof to sleep under, being able to work on something they love to do will trump everything else.

That's _exactly_ right, you nailed it. At least for me, that describes my motivations perfectly.

I didn't intend it to be about money. I also said that entrepreneurs want a 1% shot at ruling the world (king vs. rich). It's really about perception of control and perception of fairness around hard work.

A 1% shot of ruling the world is pretty useless. That's a 99% shot at failure. Also, who wants to rule the world? All taken, it's a pretty fucking ugly thing and it has some awful people in it. I know some people have that ambition, but not me.

A 75% shot at never having to take goddamn orders, on the other hand, is something I'd do things I can't put in print for. That's what I'm aiming for. I don't want to be some despot or extortionist telling others what to do, nor do I want to be told what to do. I want to have the opportunity to lead, if others will follow, without entitled and artificially empowered jackasses (i.e. typical corporate management) getting in the way of that.

I belive the 1% example is referring to trust your heart even when people discourages you but you know your idea should work...

Also i belive, being able to take orders is very valuable to the team, even if you are the ultra master chief... Closed to not taking orders? Then you are starting with your left foot in being a leader...

Just my thoughts...

Actually, I think part of being a good leader is not ordering people around, but inspiring, guiding, and teaching them.

I don't mind taking direction, but traditional management turns me off.

Yeah, you're right, that's a better approach

both an engineer and an entrepreneur are compelled to solve a problem, it seems though that difference is the entrepreneur is also compelled to profit financially from the solution.

Engineers profit financially too. Anyone that's acqhired is leaving entrepreneurship for engineering for the promise of a big financial payoff.

I'd say the main difference is that an entrepreneur "shifts resources from areas of low productivity to high productivity", while an engineer comes up with the most viable technical solution to a problem. In other words, an entrepreneur's job description includes opportunity costs, while an engineer's job description leaves that for an executive or product manager to worry about. Profit is a natural consequence of that, since if you are successfully shifting resources from areas of low productivity to high productivity, the difference can be captured as profit.

As someone in a 'big company', I'm often frustrated (although not surprise) that entrepreneurs seem to see this is a binary problem.

This piece did touch on the real issue startup founders have with big companies - but only touched on it.

The issue is not compensation, the issue is an inability to understand how to traverse the system in order to execute and achieve what you want (and that can include 10x returns).

This ability is about understanding how to identify the problems/opportunities within a business that need to be addressed that nobody is attending to. This ability has nothing to do with office politics.

I've seen several people who have managed this. In fact I've seen 5x more people achieve amazing things in big organisations than I have seen entrepreneurs truly succeed. People within big organisations can also make it a non-binary choice - working with and often working on companies outside their 'big company' (I spend ~1 day a week working/advising some amazing startups as part of my job).

The inability to execute in a big company may not simply be due to oversight by entrepreneurs - it may be that the type of person that is successful at one cannot be successful at the other. But I don't believe that's true all of the time, and I find it shortsighted that so many successful entrepreneurs seem to see it as the truth.

Is it really an "inability to understand", or just an "unwillingness to tolerate"?

"tolerate" makes it sound like it's a negative system.

My experience is that corporations contain systems which startup founders would absolutely love to utilise given the chance.

I have built technology within organisations that within months is in use by multiple clients who have $1B+ market caps. I've seen projects funded with higher risk profiles than most VC's would tolerate because those funding it truly believed it was a good idea.

The idea that corporate systems are something that should be tolerated vs. something that can be navigated and leveraged for a positive outcome is, as I said above, terribly shortsighted.

I disagree. Though I find the binary application of the "big" vs "small" label to be a real over-simplification (there's a hell of a lot of difference between your typical mature publicly-held Fortune 500 company, a young startup with a few hundred employees, most mom &pop businesses, small consulting/service organizations, etc) and will agree that some personality types may vastly better in larger organisations and vice versa, you are much too quick to dismiss entrepreneurially-minded folks' objections to "big companies" as simply being one of not knowing how to work the system.

There are, simply put, structural reasons that truly big companies tend to be deeply dysfunctional and annoying to work with that have nothing to knowing how to play the game in an efficient manner (I mean, yes, maybe you can sometimes bring about change with enough hustle, but often the red tape or extra baggage imposed by the big corporation is so large that it makes it impossible to efficiently pursue most opportunities).

As a simple empirical matter big companies are rarely dynamic in that sense. They rarely change and when they change it tends to be knee-jerk, late responses (e.g., acquiring some startup at a large premium late in the game after they've proven it works). No doubt big companies succeed and small companies succeed (since we're over-generalizing), but they tend to succeed for very different reasons and in very different ways....*

Big companies often "succeed" largely because of inertia, stable cash flows, and pools of capital that they can readily tap. They generally do OK at hanging onto their key product/service areas for a few decades, but very few manage to leap into new areas successfully on net. Big companies rarely take that sort of risk-- or at least not until someone or something has effectively forced the issue.

Big companies are kind of like a big cargo ships where it can take miles to stop and even turning ability is very limited due to inertia. Even the best captains only have very limited ability change the trajectory in the short run and it's very hard for outsiders to tell how effectively the captain is doing his job by simply looking at where the ship is and its current trajectory.

To generalize, this situation means that the feedback loop for senior management tends to be much delayed such that they are often not held accountable on a timely basis (and when they are it's often in an erratic fashion--to find a scape goat, to send a signal to markets, etc). Likewise, this high inertia arrangement tends to greatly amplify principal-agent problems that exist in all organizations (small companies have it to some degree to, but they can't afford much of it). A senior manager may well privately agree that some risky plan demonstrates a great IRR for the shareholders/company, but rationally avoid this knowing that the culture of their organization is such that the personal rewards for taking such a risk are much smaller than the career risk attached to the project if it fails.

There are also, quite frankly, a lot of diseased big company cultures that look down upon key employees since they lack a certain pedigree or aren't in an area that's perceived as being sufficiently valuable by people (though part of this is often lack of ability to understand what's important and why). Conversely, many of these same organizations tend to fast-track certain people that they believe are high potential -- but even if the individual really does have the potential to truly contribute they are often unknowingly denied the opportunity to get the depth of exposure necessary in any area of the company as they're moved around from area to area (many of these people are truly dangerous since they're often very naive about key issues and don't know how little they truly know)

On a related note, these entrepreneurial concerns are particularly true if you work in an area that's not really part of the big company's business line. If you work in sales and marketing or if you're working in a key product area you can do pretty well for yourself at many large companies providing you're willing and able to play the right games, but if you work in, say, IT or some other cost center in a company that's not really in the IT business... you'll typically do much better for yourself and for the world in a company that's actually effectively competing in that area where your contributions have much more of a direct and visible impact on the bottom line.

* NOTE

There are some well functioning large companies (especially certain divisions within them) and some terribly managed small companies, but as a general rule--to compare, say, the Fortune 500 to your typical high growth startup or small-to-medium sized well capitalized business-- this holds pretty well.

Oh and just to clarify-

I absolutely believe that we need big companies and that small companies are not always better than big. Big company scale and maturity is often necessary to efficiently deliver products and services. Even where both are possible, the inherent loss of agility or individual responsiveness that comes with this scale can often be an a socially optimal tradeoff (for some things, in some areas, etc).

Likewise, I believe there is such a thing as too much "entrepreneurship" or simply mal-investment (e.g., too many me-too companies or people mindlessly an area that's doomed to fail).

But this really don't change the fact that large organizational scale is strongly associated with a certain type of dysfunction to a typically much greater degree than smaller organizations that make startups an utterly crucial part of our economic development or that certain individuals can simply be much more socially productive in smaller more entrepreneurial organizations (I think you kind of acknowledge it when you allude to knowing how to traverse the system-- this effort is definitely non-zero and takes real time and attention away from dealing with issues that can often be dealt with much more efficiently in other organizations)

It is that simple : if I really trust my idea to be so good, why waste my time with a system that will at best not fight against my idea, and will not let me reap the full benefits of it? If I success, I'd rather keep everything (or most of it!) for myself!

There is a very small subset of problems, where, needing some very specific resources for my project, it is more logical to seek them from within an existing corporation, ie joining it, than from myself or the market.

I could live with the idea of japanese-style corporation, where loyalty goes both ways. It would be logical then to accept the idea of sharing in a system where others will share with you. Unless you have some serious deadweight, sharing would reduce the variance of your profits, but not the mean.

But if employees are resources to be used and discarded, companies are likewise resources to be used and discarded.

Basically, if the social contract is uphold, it is logical to share with others, knowing they will too share with you.

For a game theory analogy, when one breaks one's word, cooperation is no longer the best strategy, but defection.

The rise of entrepreneurship may have some link with the end of the traditional corporation, where one had a job until retirement, put a real effort in it, and was appropriately compensated.

>I could live with the idea of japanese-style corporation, where loyalty goes both ways. It would be logical then to accept the idea of sharing in a system where others will share with you.

IMO there are very few companies even in Japan who are truly like this anymore.

A social contract is a good thing, but I don't need a corporation. I can make a free choice.

Yet even if I like the concept of workers being compensated at their marginal productivity, it's a sad thing this choice will no longer exist for most of the people who are now graduating, and that entrepreneurship becomes a choice by default.

Diversity (as in having many choices - to work for a big company or for yourself) usually is a good thing.

Of course, you may still work for a big company, but if you know you are to be poorly treated anyway, while bother doing more than the bare minimum? If you have a good idea, why bother sharing its profits?

I disagree with most of this because I don't think it is about money, but this part in particular underplays what in my mind is the largest reason entrepreneurs cannot stand large organizations:

>Corporate politics and bureaucracy are just another obstacle that can be learned and overcome

You can learn to navigate politics and bureaucracy, but you can't overcome them without becoming management - in which case your hands are generally bound to the same metrics that your previous bosses were as well.

If it takes 4 levels of review just to see if my project can be begun or to build a team to begin even MVP development, I don't want to be near that. It's too slow, access to resources, if available, are so tightly scrutinized that if there is any failure you can kiss future chances goodbye, attaching new hardware or software is a nightmare because the systems need to all be compatible on this network etc.. etc.. all make the large corporately integrated system terrible for the fast paced error>revise>error>revise cycle that entrepreneurs want.

This is why the Valve model of flat organization is so appealing to many and spoken about in terms like "future of the workplace."

Enterprise companies are built in a way that slows the process of getting shit done to an absolute crawl (red tape, politics, approvals, process and god-knows-what other nonsense that somebody in a position of authority has decided they're going to throw at you that afternoon), and that kind of environment is simply noxious to the kind of person that has the audacity to think they can start from nothing and build a company that employs hundred(s) and pulls in millions in just a few years.

It really is that simple. You can even find some small companies that entrepreneurs wouldn't last a second in, because they have this same mindset.

The point at any company where getting things done becomes less important than making sure people (and by induction, the company) follow orders or don't screw up, is the point at which entrepreneurial minded folks can no longer thrive at said company.

>The answer is compensation. Not that big companies don’t compensate them enough, but that the compensation structure is not aligned with an entrepreneur’s world view.

As far as I can tell the dominating decision factor for everyone I know who runs their own company seems to be "freedom from management". That's why people work for years at an expected value of a below-market wage. That's why people leave a year into their four year vesting schedule post-acquisition.

In the anglo corporate culture there is little to no room for co-determination; and I would wager that's especially grating to those in the position to do something about it.

You're right to pick this quote. The central thesis, which is about money, rests on the assumption that entrepreneurs are categorical idiots, unable to accurately assess the wealth of data that clearly indicates the vast majority of entrepreneurs earn less than corporate careerists.

that's what a lot of people say, but I think it's more of an excuse/laziness around explaining the actual problem. any entrepreneur who raises a series A will be managed by his investors. if he is not the CEO he will be managed by the CEO and the investors/board.

You will always have to compromise with people. That will never go away. But the social relationship between you and your investors - and definitely not with your fellow c-levels or co-founders - will never be quite like to that between a regular employee and their boss.

Your mileage may vary if you're on the brink of collapse, of course.

One critical difference between investors and management: investors have a lot of other things to do, so they're more inclined to stay out of your way on technical details. I can't imagine a VC telling a CTO what programming language to use. Managers are under pressure to spend 40 hours per week telling others what to do, so a lot of them get trader boredom (zero-expectancy noisy activity) that adds annoying process and micromanagement.

The problem with a lot of bigger companies is instead of nurturing and encouraging their workers to think outside of the box, they keep them as sterile as possible through contract clauses that prohibit their employees from working on any idea that is even remotely close to the companies particular niche (some even prevent you from personal projects full-stop) and non-compete agreements when they leave preventing them from finally being able to chase their entrepreneurial dreams.

Larger companies only innovate when their competitors do, they have obligations to meet (stockholders, customers, management executives) and doing anything different or trying anything new is a risk that could jeopardise profits of a company. Entrepreneurs who start out with nothing really don't have as much to lose as a company does, two different paths and ways of thinking.

I think it's because they have a dream, and know that if they tried to accomplish that dream in a big corporation, they'd have to sell it to people at multiple levels of bureaucracy whose job description often includes killing dreams. Even if it was accepted, it would no longer be their dream, it would be the corporation's dream, under corporate control and ultimately susceptible to being morphed into something totally unrecognizable or killed at the corporate whim.

Entrepreneurs feel to their bones that their dreams are too great a part of themselves to so totally put under other people's control. And they don't believe anybody but themselves can truly understand their dream or pull it off.

Working at big companies sucks for many reasons which have nothing to do with compensation. Many people might prefer to work in a less constraining environment regardless of the pay.

The author appears to have a strange definition of "entrepreneur" which is some kind of personality trait and not a business role. I suppose he must be using the word "entrepreneur" as shorthand for "person with high tolerance for the risks involved in starting a new business", i.e. a potential entrepreneur.

I disagree. Many entrepreneurs would love to work for a big company IF they were at the controls and not the cogs.

Steve Jobs. He had full control over Apple and could tell it to build whatever he wanted. He worked for a big company. From what I've read, he was happy working there.

Larry Page and Sergey Brin, they seem happy working for a big company.

Larry Ellison loves working for Oracle. I have yet to hear any disappointment from him about working for a big company.

All in all, I think many entrepreneurs would love working at big companies - as long as they are in the top 1% of the company who have control over the rest.

Oh my god... this explains so much.

I am an entrepreneur. And I now work in a big company. It has been 10 months since they acquired my company. As far as I am concerned this article is completely inaccurate. I don't give a damn about compensation. IBM gave me enough money for my kids to retire - I don't need more money from them.

It's not easy though. My number one issue is inefficiency. My number two is politics. But I wish I could make it work as within a company like IBM I have the potential to do things that I couldn't have dreamt to do in my own company.

It's naive to make blanket statements about entrepreneurs. "Entrepreneurs" are not a homogenous group. It appears the author believes that entrepreneurs generally are overconfident, find insolvency to be an acceptable outcome so long as they have a lottery ticket in hand, and fashion themselves as arbitrageurs.

First, it's worth pointing out that arbitrageurs seek to exploit opportunities that are, in theory, risk free. So to suggest that entrepreneurs are looking to "arbitrage the system" while at the same time shooting for the stars when the odds are "slim" is a curious and entirely inconsistent argument.

That notwithstanding, if you look beyond a small group of 20-something entrepreneurs in the Bay Area, you'll find plenty of people who have started businesses who worked at mid-sized and large companies for years. For some, the knowledge and experience gained allowed them to spot the opportunity they're pursuing. For many, the relationships established and good money earned during those years of service put them in a position to pursue the opportunity with far less risk than they would have taken on if they tried to start a company before they had domain expertise, a professional network and financial resources of their own.

It's sad to see folks reduce entrepreneurship to short-sighted risk-taking by individuals who somehow can't or won't function in an organization that isn't their own. Smart entrepreneurs take calculated risks, start businesses in industries they know and don't begin their journeys with a few thousand dollars in the bank.

Best quote: It’s because they perceive the best case scenario as being a waste of time. They see a better opportunity outside the system.

is it just me thinking this also could apply to what college has become?

This article makes me think there are only two kinds of people: entrepreneurs and non-entrepreneurs. And all entrepreneurs hate work at big companies... You see the problem? The article didn't recognize that there are variations about entrepreneurs and there are variations among big companies.

No feeling in the world is worse for an entrepreneurialy minded person than seeing a severe problem, knowing how to fix it to the point of demonstrating the solution, but being forbidden from doing so because of trivial politics.

You will find this by the dump-truck full at BigCo.

Insane determination when you are building a dream does not always map into insane determination when [whatever you are asked to do in big company].

Consider that many entrepreneurs grow out of even their own company - their own baby - when it moves from startup phases to an x year old mature company.

I think the biggest issue for me is the fact that I have to work with people who should have been fired a long time ago instead of some co-founders that know how to execute. Working at a company that has never had a lean year can be very frustrating, people can have little motivation outside of CYA and a paycheck, it's the lack of desire to build something focused and exciting and to push back against bad ideas. This is not every large corporation, but it is many.

Word "Enterpreneurs" should be replaced to "author of this post".

Way off the mark. It's not about compensation (if you succeed, VCs will tear you to shreds via multiple liquidation preferences and horrible terms). It's about autonomy and career development.

Working at a big company makes sense if you can get allocated to a great project, and it's hard to tell from outside what the good projects are. Otherwise, you have to deal with red tape and approvals and resource requests and headcount issues that will eat your soul and turn you just as lazy as the middle managers who create such processes (who do so because they've become demoralized and lazy and realize that dysfunctional bureaucracy, like undocumented code, provides job security).

>>It's not about compensation

Sorry, it is about the money. It has always been about the money.

As I get older, I realize nothing apart from money even matters.

Sucks to be you. Money is important. But is is not everything.

>>Money is important. But is is not everything.

People generally say that when they have all the money in the world. Or they have never felt a deficiency of it.

>>Sucks to be you.

It sucks to be without money.

You are right.

Consider Maslow's hierarchy: money solves physiological needs, helps with safety needs, may ease but cannot really solve love/belonging needs, helps a little with esteem needs, and does almost nothing for self-actualization needs.

Money is important - you have to solve your basic needs - but money is not everything, because it cannot solve your most sophisticated needs.

Maybe having lots of money indicates that you have achieved self actualization by solving your most sophisticated needs ?

The word "entrepreneur" is getting used as a blanket term way too much to the point that anyone with an idea, CRUD app or working at a startup is an "entrepreneur."

Agreed.

Way too many people start a company these days because they want "Founder", "CTO" or "CEO" title... rather than because they see a real need and want to solve a real problem.

The fact that anybody with Google or Stanford on their resume can raise a $500K or $750K seed round doesn't help things either.

This is silly. An entrepreneur is someone who takes a financial risk to organize and operate a business. It doesnt matter what they are doing.

Add the words 'lean' and 'disruptive' to that list. Is there any startup that doesn't claim to be lean and disruptive?

I've worked at small to mid-level sized companies my whole adult life (I'm quitting in two weeks to work on my business full-time).

Working at any company always starts out well. I have so many ideas, thoughts, and energy I want to put into my position. For me, it always fades after about 6 months.

The politics, managers, ridiculous ideas that I'm forced develop, long hours that could have easily been prevented with better practices usually ruin it for me.

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