Not too long ago, if you told someone you were joining a startup, they would have been bewildered. Why risk working at a startup when there were plenty of “respectable” jobs in established, well-known companies? Thankfully, these are different times now. Startups have become firmly entrenched in the mainstream.
As regional and global startups (think Grab, Opendoor, Zoom, and Pinterest) enjoy success, there is no question that doing something you love, while building a career is not a mutually exclusive choice. While they are a compelling career choice for new graduates and mid-career specialists, they also are one of the most gruelling ways to build your resume.
Not all startups jobs are equal, and not everyone may be interested in the intense lifestyle that a startup job brings.
So how do you know if you are ready to take the plunge?
But first, startups.
Startups are companies started by individual founders to search for a repeatable, scalable business model that can grow large. Startups are also designed to create a new product or service under conditions of extreme uncertainty. Successful startups often disrupt the current market reality of working. Think of Google in 1998 or Hewlett Packard in the 1980s. If that’s too far back, let’s not forget that all our existing social media giants: Facebook, SnapChat and Twitter were all once startups too!
The startup employee
Working at a startup requires someone to be comfortable with ambiguity. Startup employees have to roll up their sleeves, do the hard work and be resourceful enough to use the little they have at their disposal. Of course, the return payoff can be highly exciting and rewarding but it will be inevitably be accompanied by unpredictability. Not all startups are the same either. The processes, expectations, and rewards differ depending on which growth stage they are at.
How do I know if the startup life is right for me?
One of the best guidelines is: think like an investor. When evaluating startup job prospects, it is easy to get caught up in the thrill of finding something that speaks to your passion. Faced with your own enthusiasm, it is natural to understate the risk and overlook potential red-flags. Putting on an “investor hat” forces you to examine your assumptions, the balance of risk-reward objectively and importantly, steer you away from any assumptions you might make during your decision-making.
Here are five fundamental factors to keep in mind when evaluating a prospective startup:
1. Your Risk Appetite
It is common to sweep all startups into one big box labeled “STARTUP” but that would be exceedingly inaccurate. Early-stage startups which are bootstrapped or have initial seed funding function differently from late-stage startups. The most obvious difference lies in structure and process. Knowing your working preference helps set your expectation and experience at a startup.
2. The Leadership
The obvious must be stated: Founders and leaders determine the success of the startup. We all know the price of having a co-worker or a boss we can’t work with. Multiply that by a thousand in a startup!
3. The Finances
It is unlikely you will work at an established company without some understanding of their financial reputation, their revenue, and business model. Working for a startup is no different: Use online resources such as Crunchbase or Angel List to see if you can access any financial information. If not, don’t shy from asking the leaders. Speaking to them will give you an idea of how viable the venture is and where the company sits on the growth curve. If they are serial entrepreneurs, it would be helpful to examine their track record and see how their previous companies fared.
4. The Culture
A company’s culture is created from the way the team interacts with each other, the principles that leaders establish for conflict resolution, and the daily practices for work. In an established company, a new employee steps into an existing culture, where the norms are known. But the culture at a startup can be special, you can have a hand in creating it. Yes, some startups can have a high turnover rate. But don’t jump to conclusions - not every disgruntled ex-employee is a product of bad culture.
5. The Compensation
An easy rule to remember here is that the earlier the startup, the more likely you are going to have greater equity offered. When you are considering larger equity versus cash, ensure you have a sound understanding of success in a specified timeframe. Also, find out how many outstanding shares exist so you can determine how much of the company you actually own. Be mindful of where you are on the hierarchy of needs and if you have to put food on the table vs personal growth.
In Asia, equity is still not a popular option because the markets have not seen any major startup exits speak to the success of the startup market. However, this is likely to change as the startup market matures.
Know your alternatives
It doesn’t have to be all or nothing if you decide that the startup life is not for you. Startups are not just a job, they are a lifestyle. When you have family obligations, the lifestyle requires buy-in from your loved ones because it is a pressure cooker - the intensity is exciting but also drags stress and unpredictability into the fore. If there are parts of the startup innovation that appeal to you, consider jobs at corporations in transformation, family or smaller businesses that require digitising or even accelerators or incubators.