Work at startup vs. established business
Nowadays startups can be pretty big from the get go. If they take on massive funding and tackle the biggest problems in industries. Picture Uber, which became gigantic very quickly. But it can still be considered a startup when looking from the perspective of profitability and their end goal. In this case position at such company might be more comparable to the position at the established business regarding salaries, specialised teams and similar. Specific benefits greatly depend on specific company, because they are constantly competing for the best talents in the industry, and tweak their compensation packages and work conditions accordingly. But, also big companies need more structure and processes to function properly and have everyone aligned with company’s mission. In choosing between role in startup and established business, personal preference of industry and type of products are very important, it all boils down to your personality and what you’re looking for.
Interesting fact, Amazon still acts as a startup.
What is a startup
Startup is an early-stage venture that’s in search of a profitable business model, most often one that can be scaled up rapidly as demand for the product or service grows. Startups usually decide to take a shot and try to solve a complicated problem. By Steve Blank, a startup is a “temporary organisation designed to search for a repeatable and scalable business model.”. Tech startup owners usually want to grow their startup into a large companies able to disrupt the market or industry.
According to Blank, they have 3 main functions:
- To provide a vision of a product with a set of features
- To create a series of hypotheses about all the pieces of the business model: Who are the customers? What are the distributions channels? How do we build and finance the company, etc.
- To quickly validate whether the model is correct by seeing if customers behave as your model predicts (which he admits they rarely do).
Once the business modal has been proven, the organisation changes its form to produce the outcomes and profits using its model. This leads to diminishing agility and innovation, and more structure and well-known and established processes.
Roles in a startup might include everything it takes to get a product or service ready for customers. Developers, designers, developer operations(devops), DB experts, sales and marketing people, project mangers, product developers, analyst, data engineers. Some of them might be industry experts and veterans. Startups often pivot, and you might end up working at a different position than you’ve signed up for in the beginning. Expect to take on more responsibilities than what you were hired for initially. Time spent in a startup will teach you things few times faster than a comparable corporate position. At startups things change rapidly since focus is on finding a profitable model as soon as possible — build an initial product, make sure someone needs it and sell. Role and responsibilities change and evolve frequently, even multiple times a year. Within few months, you might be doing something significantly different from the things you were initially doing when you got the job. That means you’ll need to adapt and learn fast. Type of work changes based on the organisation’s current challenges, whether it’s launching a new product, building a prototype, or working with the first clients. Generally, the smaller the startup, the more frequent the changes can be, because there is fewer people that can tackle any given challenge. Early stage startups most likely won’t have specific company departments like human resources and accounting or personnel hired for that specific types of work. Rather, for them it often makes more sense to outsource that kind of work, or to have some members of the team cover that types of tasks in addition to their main duties. Prepare to be a significant part of the decision-making process. Many things are being done for the first time and most of the people learn as they go. You’ll need to be proactive, committed, and use your own initiative to get something done. Startups are very mission-driven, and they attract people who are passionate about the product potential.
Day to day work
In small startups you’ll often be on your own as there is usually smaller amount of people doing a specific type of work. Sometimes no one will be able to help you solve hard problems and you’ll have less chance of deferring tasks to someone more skilful or knowledgable like you’d be able to do inside larger companies with established and specialised teams. The plus side of that is having more autonomy and freedom to learn it yourself. Nearly every problem for the business can be seen as an opportunity for you to step in and add value or help out. The business owners will probably appreciate such, problem-solving and self-driven approach more than inside of an established business. Generally this also means there’s less chance of being micromanaged. People simple won’t have time to manage you, so you’ll have more autonomy and independence. You’ll basically need to learn to manage your own work. This means trying to hit certain deadlines, bringing up any roadblock and problems to your team members, planing your future tasks, etc. You’ll carry the responsibility to do your work effectively and often times be solely accountable for the outcome. This can be empowering experience and make you more invested in the things you do, but it can also equal to more stress and pressure. If you perform well, you can be given more responsibility by taking a higher role in the company. Startups need to grow fast, and thats a good breeding ground for innovative ideas that enable greater effectiveness or productivity, cutting down on repetitive or costly work and similar. No one will hold you back if you figure out how to cut corners while in the process of building or shipping stuff. You might need to adapt and learn quickly as every developer’s performance counts and factors into the success of a business. How you perform can largely affect on the final outcome of the company, and that can bring a bit more pressure as more responsibilities fall onto your shoulders, but this also means you’ll feel proud and have a sense of ownership of the final product. There can be only a few days from initial idea to having some raw and unpolished solution out and tested on target customers. The results of your work are almost immediate with better recognition in case of project success. You might be the only one building solutions at the specific project that turns into success story and that way you stand a chance to become a headliner of your startup’s success and get promoted to lead a team or similar. Your work and your action are kind of amplified in this kind of environment, and good decisions might make you well-known pretty quickly.
Startup role can help you gain skills and insights into multiple positions. You’ll acquire new skills simply because you have to to get things done and move fast. It’s a great way to gain as much new skills as possible. There are more opportunities to experiment and broaden your skill set by trying new things. If you are in a search for a dynamic and fast evolving environment joining a startup might be a great choice for you. It’s especially great for the beginning of your career when you want to find out what is the type of work you’re best at. It often means less known brand name for a CV, but it can be all paid back by satisfaction of building something new from the scratch. Startups need to be agile and have an advantage over established businesses and bigger companies when it comes to the adoption of new technology and changing directions. Whole team can quickly adapt to a new tool or methodology being used, while this can prove to be impossible at large organisations. Startups can also quickly react to changes and industry trends.
Work hours can usually be much less predictive than in an established business or at the bigger company. Which can sometimes mean working longer hours or fixing an immediate problem for your first clients.
Downside of working for a startup is that you are taking on more short-term risk. There is always a possibility that the project the company has been working on gets replaced by a new advancement in technology or a competing product or service before your company manages to ship its product/service. Startups can disappear pretty quickly or fire people if their model doesn’t prove to be working out. If you are searching for stable and long-term position, startups might not be the right choice for you.
Money isn’t everything, but it’s definitely important. Compensation packages are usually lower in general than it would’ve been for a comparable position at an established companies, but there are some rare exceptions to that rule and it’s usually the case with startup unicorns that go after the best talent possible. The whole takeaway package is usually much more limited than in established business in terms of benefits, salary, work life balance etc. Combine this with a possible longer hours and more stress from time to time and this makes it a riskier investment if you aim for the long-term. Plenty of startups give their employees equity in the company or stocks that benefits the workers if the company takes off. It’s also one type of incentive to do their best work and make the company profitable as soon as possible with their contributions because all the hard work might be additionally rewarded by owning a part of the company. If you happen to be one of the early employees and have significant contributions to the growth of the company and its business model, you might end up being promoted to a strategic position, and this could happen in just a few years. At established businesses, stock options get capped maximally because they need to offer them to a big number of employees. On the other side, you can own a significant portion of startup equity if you join it right at the beginning. This is why some people work really hard at startups, knowing that it can pay off big time if the startup turns out to be a major success. At a well funded startup, your starting salary might be similar to the one in the established business or even a large corporation. But established business often offer an additional range of perks like stock options, retirement matching, bonuses and end up being of higher value. But not everything is black for startups. You can consider personal development as a much better pay than a monetary compensation, especially early in your career. Developing the skill set for the future position you will be aiming for might prove to be invaluable.
Startups are comprised of people passionate about building a certain kind of product or service and getting it out in the open for other people to use. This often means there are dedicated people willing to stay longer hours to make sure the company succeeds at its mission. Long term success of a startup greatly depends on the hard work of each of its individual employees. If the leadership changes it can deeply affect the whole team due to flat hierarchy and higher relevance of interpersonal relationships.
- a lot can be learned and fast
- a slight chance of a much higher return through equity and acknowledgement in the industry
- more flexible approach to work, one of the things startups can offer to accommodate for smaller salaries or less benefits overall. Work from home, free lunches/meals etc.
- possibility to own equity, or more equity in a company that you would be able to at already established business
- you get to build something from the ground up and possibly make a dent in the universe
- high-value equity in exchange for lower-than-market-level pay
- can be an emotional rollercoaster for everyone involved
- can bring more stress and pressure, risk of burnout if desire and dedication is high
- lack of work-life balance
- lack of structure? pro/con
- job stability/security, more volatile
If the fast-paced environment, “think outside of box” mentality, risks and downsides of working for a startup don’t intimidate you, you might take on position at a startup to broaden your skillset and generally work in a more dynamic environment. It can be a great option to quickly gain multiple valuable skills that you can put on your resume. So, even if the things don’t work out as planned at the startup, you’ll walk away with resume that’ll leave you with a broad set of options. Who knows, maybe you turn out lucky and reap the high returns based on the equity.
What can be considered an established business An established business is one that has obtained a reputation for a specific product, service, process, or platform for which they’ve been operating for some time. Most established businesses continue to operate in their industry and rely on models that have been proven to work.
Tasks and responsibilities are already defined and set. In most cases you’ll know exactly what you need to do and in what timeframe. For some people this means less stress, since you won’t need to figure out what to do every time. At established companies you might do the same work for multiple years, until you get promoted. This has changed in recent times and HR departments more often re-asses your work and accomplishments in order to retain their talented and skilful workers. Most roles are specialised, and when a problem occurs, it gets addressed by a team or specific person with most experience in that field of work. You’ll most often solve only the problems you specialise in, and leave the rest for someone else with a different skillset. Usually the roles are more direct and specific. If you already know the role and career path you want to pursue this can be great and you can focus to grow in that field without distractions in sense of other responsibilities. Since everyone is more specialised for the kind of work they do, working on a problem can be much more straight forward, as you get used to the types of the problems you might encounter in your field of work. Additionally there might be more people that work on the same kinds of things as you do, so you can consult with them or reach out in case of a problem.
Day to day work
You are generally given time to train and adapt to the companies systems and processes. At bigger companies there is mostly no immediate pressure, because they rely on many other people. One developer’s performance won’t make or break the company. A single individual doesn’t have as much influence on outcomes of the company, especially at large companies. It’s mostly an entire team that influences the company’s success. Results of your work grow steady with time. It can take several months, or even years to accomplish a goal or finish a project since there are procedures and guidelines to follow and more is at stake, so everything is more carefully planned and controlled. Even if the project you are working on turns out to be a success, the full value of your contribution might not be recognised as easily as in the startup environment with less people on the team. There is likelihood you won’t be able to influence business and product decisions. Adopting new technologies and approaches/methodologies can prove to be impossible in a large organisations. Working hours are usually more stable and less volatile. At larger companies or corporations you’ll work on a large scale, and might have the possibility to make a global impact. Micromanagement is a real possibility in bigger companies. There can be multiple management levels, and managers have a responsibility to keep an eye on the team and its performance. Beginner managers tend to lean on the side of micromanagement because of their own insecurity and inability to trust their team. Larger companies have a bunch of people involved in every task so you can feel like a tiny cog in a massive machine. To some people this can be frustrating, since it’s hard to notice the impact their own work has on the outcome of the product or company’s success.
If you already know the role you want or direction you want to go in, this type of environment may be a great choice, since you can hone the specific skill set you are after. You’ll have more role models and mentors to learn from. Having a well known company name on your CV can also help you a lot in future job searches. But that doesn’t mean much long-term if you are not passionate about what you do. In well established and bigger companies switching roles or position inside of a company can take more time. You may be extraordinary good at your job but this doesn’t necessarily mean that you’ll get promoted to a position you might hope for. There might be other brilliant developers in the company, or other people that are longer in the company, know it inside out, including the people that have been dedicated to it for a long time. In startups, you are, by default one of those people. You’ll be able experience what good or bad means at scale or when the company is already profitable.
Salary and benefit packages are generally better and more straight forward at established businesses since they are operating at lower risk, less uncertainty and are already profitable with steady revenue streams. Sometimes benefits will include private health care, paid holidays, pension packages, recreational programs, educational packages, equipment expenses etc. Generally perks are more concrete than at a startup. On the other side startups offer that “low chance of high return” through equity, but that is often times just like buying a lottery ticket.
Established companies are less willing to take on risk and try out new ideas, even if they might end up beneficiary in the end. In most cases main focus in on growing model that have already been proven to work. Because of that, they are more rigid and slower paced. Usually, this means less risk for you, because you are joining a proven business and will be helping it grow.
- job stability/security
- better compensation in most cases
- slow and steady growth, well-known trajectory and processes
- less or no influence on business and product decisions
- having more people around you which can act as your role models or mentors
- less stress
- predictable working hours
- slower career progress
If you are attracted by the idea of job stability, higher starting compensation, steady growth and progress, clearly defined structure and process where you’ll know exactly where your place is, working at a well established company might be a good choice for you.