In a recent MarketWatch (Feb 20, 2015) article, the unemployment rate for college graduates ranges between 4.5% - 10.3%, depending upon your area of study. In addition, graduates carried over $1 trillion in debt for Q4 2014, up $77 billion on the year. As you contemplate your first job, or even changing jobs, the question of working for a startup versus a larger corporation will occupy a good chunk of your mind.
I happen to love startups. They are exciting, demanding, consuming, rewarding, and the most thrilling kind of company to work in, but they aren't for everyone. If you're considering working for a startup versus a more established business, here are a few things to consider:
You won't be making the big bucks - a startup, by its very nature, is often tight on cash. To reduce risk, investors will put just enough capital in to get to a major milestone and mitigate risk. This makes for a tight operating budget. Now there are exceptions to this in frothy markets, but in general, expect a lower base salary and some amount of stock to lessen the sting. You've just bought yourself a ton of learning opportunity and a lottery ticket.
You might win the lottery - in the early days of Bill Gates' company, a bit of stock made for a life changing event. Microsoft was founded in 1975 and IPO'd in 1986. The subsequent rise in its share price, created three billionaires and an estimated 12,000 millionaires from its employee base.
You won't work 40 hours - the idea of work-life balance in a startup is a myth. A startup needs to make its capital last by hiring the fewest most adaptable employees. The ensuing workload means nights, weekends, and sometimes super-human effort, especially for product delivery schedules, and business-critical customer support. These long hours set the stage for a thriving and sustainable business model that benefits everyone - customers, employees, and investors.
Your job may not survive - startups do fail and in a recent HBS study, 75% of startups failed to return investors’ money, some estimates take this figure higher. Failure does happen, but even with its disappointment can come the greatest learning. To mitigate your risk of failure, ask questions of the company pertaining to; amount of funding for the business, prior experience of the founding team, compelling product or service characteristics, and successful execution to date.
You'll have an impressive resume - succeed or fail, learn from the experience and appreciate the many hats you had to wear during your experience. If you can successfully thrive in this controlled chaos, your resume will make for very compelling reading in a future role.
A startup isn't for everyone, but I believe the rewards outweigh the risks. Experiencing the crucible of a startup leaves you with strong bonds, an unforgettable story, and the passion to do it all over again.