I was recently advising a couple of friends who were considering leaving larger companies to join startups. Sharing the main points of our discussion here.
Before diving in, I'll lay out some definitions. Pre-Series A startups are typically those that are still figuring out product-market fit. A Series A startup is one that has found product-market fit and is starting to scale growth and develop a business model. A Series B startup has a working business model and is starting to scale revenue. A Series C startup starts to resemble a regular, mid-size company - it's scaling growth, revenue, and maybe investing in some new product lines. When I say startups in this post, I refer to Series A or B startups.
1. Are you interested in the startup's space and mission (not just your functional role)?
You can succeed in larger companies by focusing just on your function. In startups, you succeed by making the startup succeed. That may require going outside your functional role, wearing multiple hats, understanding the business and space. So think about whether you will enjoy discussing this space, talking to users, following news and research about it, working with constraints/regulations, etc.
2. Are you confident about the startup's approach in the space?
You can influence a lot of things in a startup, but it's hard to change the core thesis, strategy and product of the startup. So make sure you understand that and have fair confidence and excitement for that approach.
3. Are you confident about the integrity and ability of the team, manager, and founders? Do you like the team?Unlike larger companies, individuals have an outsized impact on culture, processes, and decisions. There aren't many established rules, processes or direction - so you will be trusting your manager and senior members of the startup to do the right thing. You also want to work with a team with similar values and that's open to rational discussion to make decisions, define principles and processes.
Also, there are fewer people in startups - so you will have to be comfortable working with most of them and you'll have to be confident that you will learn from them.
4. Is the business growing 50-100% YoY in users or revenue? Is there an opportunity to become a large business?
Your success, learning and growth is tightly coupled with the company's success, and at Series A, the startup should be growing quickly. And typically, the way employee equity compensation in structured in VC-backed startups requires the startup to 10X to match a large company compensation.
Before diving in, I'll lay out some definitions. Pre-Series A startups are typically those that are still figuring out product-market fit. A Series A startup is one that has found product-market fit and is starting to scale growth and develop a business model. A Series B startup has a working business model and is starting to scale revenue. A Series C startup starts to resemble a regular, mid-size company - it's scaling growth, revenue, and maybe investing in some new product lines. When I say startups in this post, I refer to Series A or B startups.
4 questions to consider before joining a Series A or B startup.
You can succeed in larger companies by focusing just on your function. In startups, you succeed by making the startup succeed. That may require going outside your functional role, wearing multiple hats, understanding the business and space. So think about whether you will enjoy discussing this space, talking to users, following news and research about it, working with constraints/regulations, etc.
2. Are you confident about the startup's approach in the space?
You can influence a lot of things in a startup, but it's hard to change the core thesis, strategy and product of the startup. So make sure you understand that and have fair confidence and excitement for that approach.
3. Are you confident about the integrity and ability of the team, manager, and founders? Do you like the team?Unlike larger companies, individuals have an outsized impact on culture, processes, and decisions. There aren't many established rules, processes or direction - so you will be trusting your manager and senior members of the startup to do the right thing. You also want to work with a team with similar values and that's open to rational discussion to make decisions, define principles and processes.
Also, there are fewer people in startups - so you will have to be comfortable working with most of them and you'll have to be confident that you will learn from them.
4. Is the business growing 50-100% YoY in users or revenue? Is there an opportunity to become a large business?
Your success, learning and growth is tightly coupled with the company's success, and at Series A, the startup should be growing quickly. And typically, the way employee equity compensation in structured in VC-backed startups requires the startup to 10X to match a large company compensation.
Working at Startups vs larger companies
Scope
Scope at startups is typically larger. You'll have to cover more areas, sometimes cover for missing roles. You'll also play a role in defining processes, hiring, etc.
At larger companies, the scope is narrower, but you go deeper. You have to coordinate with more teams and build within existing products. The bar for quality, level of detail and complexity that you need to pay attention to is higher.
Learning
At larger companies, the scope is narrower, but you go deeper. You have to coordinate with more teams and build within existing products. The bar for quality, level of detail and complexity that you need to pay attention to is higher.
Learning
At startups, you learn by doing and by having larger scope. You may work more closely with experienced execs and learn from them. You'll get more familiar with running a business as you'll see the outcome of your work.
At larger companies, you learn from operating within established best practices and by having access to multiple experts and leaders.The outcome of your work may not be easily visible on the business.
Career Growth
At larger companies, you learn from operating within established best practices and by having access to multiple experts and leaders.The outcome of your work may not be easily visible on the business.
Career Growth
Your career growth at startups mainly hinges on the startup's growth and your ability to keep up and drive that growth. If both happens, you'll do well.
Larger companies have well-defined career ladders and growth paths. Performance reviews and promotion decisions aren't always transparent or rational. There may be some politics as you go into senior levels.
Larger companies have well-defined career ladders and growth paths. Performance reviews and promotion decisions aren't always transparent or rational. There may be some politics as you go into senior levels.
Quality of work
Typically there's less red tape and B.S. at startups. But that also means there are fewer processes and more ambiguity.
At larger companies, the processes may be well laid out, but you may have to deal with more bureaucracy, politics, and layers of hierarchy.
Money
The base pay for startups and large companies are somewhat comparable. Startups typically don't offer performance bonuses or 401K matching.
The equity portion of the compensation is pretty different. Startup equity is illiquid for a long time and harder to evaluate. With Series A or B startups, it's rare that the equity amounts to anything, but in some cases, it can can match or exceed what you'd get at larger companies.