Why You Must Work at Startup before Thirty Something.

Everyone talks about building their own startup. This post, however, is about working at startup, not founding one. More specifically, it”s about whether it is worth working at a startup as an employee#X (X≥10) at the age before 30. Note that aspiring Goliaths like Dropbox or Salesforce don”t count as startups here.

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image credit: mercutzzio

Startup vs. Established Companies

Before I started writing this post, I had one question: How can I reasonably compare startups and established companies side-by-side as a workplace? After minutes of thought, I decided to break down the process into 4 pieces, all of which I believe are most commonly-considered factors.

diagram1

Take a moment to evaluate both options in four aspects above. I think it”s too obvious: a resounding victory for established companies. They pay you more. They may even offer extra perks like free massage service. Workload is beautifully defined. And you won”t usually have a sleepless night thinking “what if the company dies the next morning. And they won”t commit blasphemy of failing to recognize the household names.

Yes, a startup can grow to become the next Google — at least a few will. Yes, in that case you might start off as an employee #30 and end up making a million dollars after IPO. At a high level, however, that is an unmistakable outlier. If it were so easy to spot such an aberration, VCs could sleep 2 hours more every day, or maybe we wouldn”t need them at all in the first place.

Don”t rush into a conclusion, not just yet.

Wait up! There”s one thing I didn”t take into consideration: individual competence. By individual competence, I mean ability to think things through and get them done by your own skills. Before you bring this case to a close, you should ask yourself how much work experience at established companies can contribute to your learning function. That is, how much and what will you learn?

To answer the question, I will hand over the floor to Stephen Cohen, co-founder of Palantir.

We tend to massively underestimate the compounding returns of intelligence. If you graduate Stanford at 22 and Google recruits you, you’ll work a 9-to-5. They’ll pay well. It’s relaxing. But what they are actually doing is paying you to accept a much lower intellectual growth rate. When you recognize that intelligence is compounding, the cost of the missing long-term compounding is enormous.

What we learn today very often helps us get additional knowledge tomorrow. Even if we assume the return on intelligence grows only modestly close to how compound interest works, the long-term return should be worth something substantial. It”s such an eye opener to your career decisions as it offers a logical and solid reason for joining a startup, emotions being put aside. And by the way, didn”t Einstein once say something like “The most powerful force in the universe is compound slackervision interest”?

If you”re in your twenties, and have no one but yourself to financially support, I think the choice is obvious. It should be clear, if not for everyone, for those who want to live a full life as a resourceful individual. And it”s the latter group I am writing this to. Yes, you are a mission-bearer whose job is to build the best learning engine and improve the quality day after day. The single most important criterion in making a job decision should be a learning experience. 10 times the weight on the learning factor won”t be too much.

After all, we are living in an era where our own competence is the biggest army. And competence is rarely guaranteed long-term by having a certain set of knowledge in your head, because life cycles of knowledge, especially technology, are getting compressed so fast these days.

Startup: the best education service.

At this point, you may agree with the importance of learning, but aren”t necessarily convinced of why startups are the best place to learn. Simply put, the X factor is a demanding nature of startups which challenge you to go the extra mile and get out of your comfort zone. Of course, not all startups are alike. Please bear with me. I am working on the general tendency.

Startups 1) are under-resourced and 2) have flexibility in responsibility allocation: Poor and chaotic. These two attributes will wear off, as startups scale. Hence, the following diagram.

diagram2

Y: Left-skewed startups are more likely to offer a better learning experience than those placed to the right. It”s simply because you have to fight an immediate pressure to be resourceful. You have to stick your neck out. Also you often have to wear many hats at startups. Hence you have to learn various things and fast.

Z: When you need to build a specific skill set and you can get it only from certain established companies, I think it”s okay to go for them. But you should be prepared to get out, once you learn enough of the skill. Also there are super-competent heros at big corporations whom you can learn from. But that”s not the root of the problem: You won”t get as much responsibility to train yourself until after certain number of years and it”s late.

X: If a company gets too close to the left extreme (X), the company will die away, before you learn much. It will be either because of lack of resources to continue its operation or because of the lousy management. You should be consciously do due diligence on startups and see if they have a solid ground beneath: team, product, and traction.

It will haunt you for decades…

Actually Stephen Cohen said something more:

… Then a scary thing can happen: You might realize one day that you’ve lost your competitive edge. You won’t be the best anymore. You won’t be able to fall in love with new stuff. Things are cushy where you are. You get complacent and stall.

It won”t be a subprime mortgage crisis or an economic meltdown that will rid you of opportunities. In most cases, the devastating blow will come from somewhere within. It”s the path dependence that will haunt and hold you back in 30 years from now.

What”s the point?

Put the learning experience at the front burner. Think opportunity cost of working at big companies. What do you risk losing by having 9-5 work hours and enjoying 20% family discount on a ski resort? You might say it”s an open-ended question, but to me somehow the answer is crystal clear.

learn like crazy2
image credit: citr3xS

Surely most of us already knew about this. That said, this post was just a gentle reminder: Focus on learning and do not seek blinding comfort or false sense of security. Think about the power of long-term compounding. You will know what to do.

Looking for an awesome learning experience? Now it”s time to take action: check out the listed startups and apply for Startup Life.

About DH

Self-avowed Midwife @startupsauna & @aaltoes. Co-organizer @dayforfailure. Believer in resource productivity revolution. More on http://dhfromkorea.com
  • http://dhfromkorea.com/ DH

    We have info sessions on Feb 4th and 20th, 6 PM at Startup Sauna. You will be able to learn details of the program and hear StartupLife experiences from our alumni.

  • http://www.facebook.com/raimo.tuisku Raimo Tuisku

    Good post and very good points, DH! Thank you for bringing these up!

    I believe the best knowledge is collected by combining information from both of these worlds (and elsewhere): huge and small. In the huge enterprise world, you’re able to learn the processes, best practices and realize the big picture by spectating other professionals. The best way to grasp this information for me was being a consultant: fast-paced switches between roles, you don’t have to be an employee in an organization that would keep you in one role infinitely and at the same time you see the big picture of your professional field by seeing how large organizations build their processes.

    In the startup world with possibly many roles assigned to you, you’re able to leverage the knowledge you have of large organizations and apply that information while you are in charge of many things that you have seen in the huge enterprise world.

    Whether or not you have been in either of these worlds, keep your eyes open and realize that none of the companies you work for exist in a vacuum: any company you work in almost always enables you to become familiar with thousands of other businesses. After you understand both of these worlds, you gain an understanding that is both wide (organization level) and deep (professional expertise). At that point you have a great chance to focus on your passion and start making moves towards it.

    • http://dhfromkorea.com/ DH

      Hi Raimo. Thank you for sharing your quality insight on the topic. I agree with your point that we always have to keep our minds open and learn from whatever environments we are at.

      On a personal note, however, I’d like to gently communicate a pushback on the learning value of being a consultant. First of all, I haven’t worked at one of the major consulting firms like Mckinsey or BCG. Therefore my view might be biased, but I hope you could validate it for other readers.

      I think being a consultant offers, by design, a limited learning experience, compared to working at a startup, for two major reasons.

      1) Consultant are mostly rewarded when they acquire clients and when they deliver the service. Consultants rarely get rewarded “solely” for the enhancement in the performance of a client. I understand result-bound contracts rarely work in a consulting world, but that character renders consultants half-detached from actual outcome of the consulting service, which in turn cuts the feedback loop.

      -> One of the key elements for the optimal learning environment is the feedback loop. If one gets feedback too late or even worse never, that’s devastating.

      2) The organizational-level insight becomes useful, only at a later phase of a corporate career. The meta-level insight consultants gain by shifting across different fields can be used when one reaches above a certain level at the corporate ladder. Again, there’s a huge gap between acquisition of the knowledge and application of it.

      More compelling reason: An overwhelming majority of people work in companies out of Fortune 500 list. Most work at small and medium sized companies and many of those organizations cannot afford the long-term strategy as the big corporations do. (e.g. M. Porter’s frameworks.)

      -> Another key element of the optimal learning setting is the distance between acquisition of knowledge and application of it. As for consulting jobs in general, the distance is very far.

      Thank you again and I am more than eager to hear your thoughts.

      • http://www.facebook.com/raimo.tuisku Raimo Tuisku

        You are right about the superficial value of being a consultant at a very early stage of your career. That does not provide you the shortest feedback loop for becoming a professional that delivers finished products. This is naturally a challenge, if you expect to run a company right away with no other background, but I suspect no consultants ever get hired that way. I believe the minimal learning curve to be a consultant is seeing a few product life-cycles from beginning to production. Not necessarily your first job, but one of the many.

        One of the technical problems about early-stage startups, however, is their nature of building their minimal viable product that becomes a mess in case the team is unexperienced. In a startup, your learning will be limited to one product. This means that time-cycle you learn of building a product can be at most as long as you live and only at the phase you happen to be a part of the team. If you compare this to being a consultant for, like, 12 months, during that time you may see 3-10 products in various different phases of their life-cycle and in addition learn why the products are in such a phase that they are and what actions have been taken in their history. That provides you with a great deal of data that you can leverage in a startup when you have to make decisions that have long-lasting consequences.

        • http://www.facebook.com/passioning Donghun DH Lee

          Hi Raimo! I think this comment deserves a lot more attention. I would like to refer to what you had written above, whenever I talk about this topic.

          I would like to paraphrase your point into the following: working as a consultant, in general, would provide lots of time-and-phase-transcendental and industry-comprehensive inputs which can be leveraged in any relevant verticals and environments which don’t exclude startups.

          Thank you again for the quality feedback, Raimo!

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