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.
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.
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 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.
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.
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.