I recently made the jump from startups to bigger co. For me there were a few considerations:
1. We’re at the end of a bubble and doing a slow pop. Multiple companies that have raised a lot of money don’t have the revenue or unit economics to be sustainable. Employees with compensation tied up in stock aren’t going to do well. Had a friend leave two companies within 6 months (didn’t bother vesting) that both raised over $100 million because the executive teams were celebrating $900 deals.
2. Startups don’t exit anymore. Waiting 8-10 years for an exit is unacceptable. It might be okay for founders who take a couple million off the table at the B round or VCs who keep the IRR on their books, but for employees it’s a fail.
3. Founders as rockstars. The narrative is hurting the industry. People I like and respected raise money and become narcissistic assholes. Last founder I worked for who I considered a friend told me “he was like Elon Musk or Larry Paige, a technical genius, and not to question his leadership”. This was after he fired his cofounder and chased off the one other employee of our seed stage startup.
4. Risk vs. Reward. As an employee with founders trying to keep 50% of the company to be like Zuck, companies never exiting, and no idea what the terms of later rounds are, working at a startup is becoming stupid. Saying it’s about the mission, it’s about learning not earning, when the VCs and founders are doing great is disingenuous.
We’re at the end of the cycle. I’ve seen 3 now: 2001, 2008, 2016. Hopefully in the next round the powers that be will figure out how to better reward everyone who takes risk working at startups. Right now employees take almost as much risk as founders for much less reward.
The way startups run today and the way compensation is often structured just makes startups a bad deal economically in the best of times.
Imagine for a second that you become employee 10 in a new startup that you believe in. You dedicate it 15 hours a day for 5 years, everything went awesome, and now the company is worth 5B. Your stock options would be worth millions in case of a liquidity event. Great, right?
The thing is, it's 5 years later the company is probably 300-800 people now, and therefore is a very different company than the one you joined, and if it's still growing, it's be a different company still next year. But there's no liquidity event: You cant exercise your options because you can't pay the taxes. If you want to exercise anything, the company has to go public, and you sure don't control that. So you either wait in a job that probably doesn't fit you anymore, or your stock compensation was worth nothing. Therefore, whether the startup does great or not, you have to apply the 'I might want to quit' discount. If I am assuming 8 years to IPO, which is not insane that discount is going to be huge by itself. I'd not rate my chances of staying in a job for 8 years as 1/10. And that's without considering that, career wise, you'll be learning more changing jobs every couple of years or so.
Let's compare this to a public company: Their stock compensation has none of that complexity, especially now that RSUs are the way to go. You can sell them for cash immediately at the stock price that day. The downside is minimal, and chances are your first block of shares comes after one year, so if you hate your job, you sit there a year, sell your shares and quit.
Given how much stock the bigger companies are awarding developers, you have to completely ignore compensation to go to a tiny startup: You kind of have to bet in the world around you changing to make exercising options early to be more or less free, along with believing that the startup will go the distance. Those are odds I'd not take
I have to wonder if part of the trend is that a generation of software developers came out of college and jumped into the startup scene during its most recent run. These folks are now forming relationships and starting families, or wanting to spend more time doing not-software dev things. They are realizing that stability in your job lets you do and plan other things in your life.
Given that there is no economic certainty in working for a small start up in a city with an astronomical COL, many are deciding the risk isn't worth the rewards.
It's also possible that there are really large challenges being undertaken which require resources that actual start-ups with 10 million in VC can't do. Things like autonomous cars (Uber isn't a start-up anymore IMO), rocketry, aerospace, energy, foundational biology. Is it possible that many great minds see these as more worthwhile pursuits?
I've worked at 3 startups (~50 employees, ~300 employees and ~120 employees) and 1 big company. I'll definitely never be working at a startup again unless I own it. I didn't realize how underpaid and overworked I was until I joined the big co. Nor did I realize how narcissistic and demagogic my leadership was. Of course there were some benefits like less bureaucracy, but the pros of working at a big company far outweigh the cons.
I've worked mostly at smaller companies my whole career. Two years ago I joined a company with 4k employees, which merged with a 50k+ employee company. It's a very uncomfortable situation for me.
I absolutely hate how political and bureaucratic my current company is. It's so difficult to get anything done, because of the micromanagement and second-guessing for the sake of "collaboration." It's dreadfully slow. Nearly all management has family and kids; most of my direct coworkers don't. Two are engaged, one is married with two kids. I'm gay and am not planning to ever have kids. So I have a ton of free time in comparison to my straight coworkers.
My plan is to start my own company in a few years. I don't think I can tolerate an atmosphere where I can't set my own pace. I'm a pretty competitive person who likes quick results. I get the feeling I'm out of place in my current environment.
There are tons of small companies / startups out there that pay well and/or don't overwork. There are also lots of large companies that don't pay well, and lots that have a crazy overwork culture.
I love how this article manages to contradict itself completely in the space of two paragraphs.
Paraphrase #1: Salaries at startups aren't very high, without considering options.
Paraphrase #2: Yelp is having to raise compensation to compete against startup job offers.
Past the very early stage, the first statement is untrue. I sincerely doubt that Uber is paying less base salary than GE. Certainly it is in the ballpark -- because every well-funded startup out there (there's a lot of them) pays "market rate" which nets out to "we match salaries for everyone except Google employees."
I don't think its a contradiction: every tech company has to raise salaries to get talent, including startups. But the total compensation may be lower by startups.
Uber/Yelp are no longer startups. I think the article is referring to companies much earlier in the life cycle.
Yelp was founded in 2004, Uber in 2009 - they are not startups anymore. I think the statements are still holds true if we consider startups new companies that are less than 4-5 years old.
Yea, I was confused by this narrative. Startups are raising so much money but they are paying lower salaries than the big cos. Where is that money going?
I think part of this is perhaps a shift in strategy among big non-tech companies. They used to be extremely aggressive about outsourcing and offshoring tech roles. My sense is that this strategy is changing among many of them as they come to see technology as a core profit center for them.
The only time technology is a core profit center is if technology is the actual business. Just because a business requires technology doesn't mean it can be turned into a profit center. Most businesses just shuffle paper but now they do it digitally. At best that's a cost saving strategy. You need something else to make it a profit center and few businesses are in a position to do so and even fewer decision makers have the willpower and foresight to make it happen at said businesses.
I work in Merchandise Mart in Chicago home to 1871 (start up hub) and a number of large companies like Allstate, Motorola, Yelp, Braintree (paypal) and its interesting to see the shift in where people are taking job. It seems the large companies have shifted to creating new exciting teams and thus snatching up a lot of talented engineers that I have seen going to start ups over the last couple years.
I agree that working at a startup for equity is akin to the lottery, but the perks of startups are so much better than big companies. Catered lunch, free food in the kitchen, kegs onsite, etc. I could never go back to a cubicle with no windows in sight!
> Catered lunch, free food in the kitchen, kegs onsite, etc.
Without getting into the relative availability of these things (I think you are underestimating how available they are in big companies).
These are extremely cheap to provide. The perks that cost a lot for companies to provide, health insurance, better pay, better retirement options, education reimbursement, etc. Are where real comparisons between perks should be made. In my experience those are systematically more common in big companies than small ones (that is governmental policy makes it easier for big companies to provide these).
A lot of big cos offer office space with windows. In fact it's pretty standard. Even a few of them give you private offices by mostly default, like microsoft!
None of these perks are really all that interesting.
Free lunch/snacks/drinks might save you a couple hundred dollars a month, max, if you use them everyday. A little resourcefulness with leftovers, brewing some coffee at home, etc, and that perk is worth way less. It's worth little compared with your paycheck.
After doing different office layouts, I have come to enjoy cubicles or separate offices, more and more. Open concepts are not unique to startups, anyway.
Many big companies that are doing well financially give their employees many perks (apart from decent to good pay). And this is not even a new thing. Goes back to my dad's or grandfather's time or even earlier. Source: personal experience and heard from family and friends (including of previous generations, like older cousins, uncles, etc). And I'm talking about both Indian and American companies - had / have some family background in both (as employees).
I work at a mid-size (~500 employee) telecom. "The [company name] 15" is a meme here because there's always so much free food in the kitchen. Every time anyone meets with clients/partners/etc., they always have way too much food catered, and the leftovers get put out for the rest of us. New employee orientations are especially awesome because they always order like ten times as much food as the newbies can eat. And we get donuts and klobasneks in the break room every Friday morning... plus every day, the break room is stocked with cereal and milk.
I like to post about the stuff I find in the break room on Facebook, and I've had multiple people tell me they gained 15 pounds just reading my posts.
> I could never go back to a cubicle with no windows in sight!
That's a mixed blessing. I consider cubicles a perk, and while windows are nice, the lack of windows isn't a deal-breaker for me, and they have their downsides.
At my last employer -- a 12-person defense contractor that put the "small" in "small business" despite having been around for 20 years -- I sat facing the window. We had four people in the room, with an empty seat for a fifth, none of us with our backs to the walls: we all faced the edge of the room. Three of us faced plate glass windows. Yeah, sure, the view was pretty. We worked on the 12th floor. I faced a freeway and a light rail line, with a rail station visible as well. It wasn't uncommon for us to stop work so we can gawk at a nasty accident on the freeway, so we can speculate on why the police have the freeway closed off, or to marvel as a hawk flew in front of our windows. That's the good. The bad is that the glare could get blinding at times. And all of us were afraid of closing the blinds because we didn't want to interfere with somebody else's view, so we just sucked it up and worked in glare on various days.
And then there was the office layout itself. Nobody had any privacy, and we could all see each other's monitors from our desks. I never worked on the same project as two of the people in my room (and they usually were on separate projects themselves): it wasn't uncommon for other members of their teams to walk into our office and have an impromptu design meeting with them while the rest of us tried to tune them out. And, no, we had no meeting rooms readily available to us: we rented a handful of offices in an executive suite that we shared with other companies, so any meeting rooms had to be booked well in advance and cost us $$$.
Now, at my current employer, I work in a cube farm, and I love it. I have my own space, I can see when someone's coming up to me, my cube doesn't get used as an impromptu meeting room, etc. Sure, I don't have my awesome view anymore, but it's not terribly important, and I'm no longer dealing with glare. If I really need to look outside, there's a window not too far away from me anyway, and when the weather gets bad, a lot of us gather by that window so we can check out the storm.
> “It does me no good to get rich when I’m 45 when I’m 30 now,” goes the thinking of many prospective hires these days, he said. That’s helped him make some hires out of companies that would have been tough to recruit from a year or two ago, including Uber and Airbnb, he said.
This part doesn't make sense to me. Wouldn't it be the opposite? Doesn't the "want to get rich now" crowd prefer the start-ups and the "want to get rich later" group prefer the larger, stable companies? (Spoiler: Chances are, neither of these groups are going to "get rich", sorry.) The people that big companies ought to be going after are the ones who TRIED to get rich early, ended up holding worthless lottery tickets, and are content to toss them away for a little stability.
> The people that big companies ought to be going after are the ones who TRIED to get rich early, ended up holding worthless lottery tickets, and are content to toss them away for a little stability.
Why? Broad generalizations really don't help here. Here is a counter: Its likely that people who have worked at BigCo's are better at working with their bureaucracy, they know that they won't get immediate results but understand the system and are willing to work with it to get things done. So they are more likely to succeed in that environment.
Given the stacks at BigCorps (at least here in Chicago), I would say "it depends". Working in an enterprise environment where everything is older and battle-tested, probably not, given most of the camps gloss clean over the details, opting for training against the MEAN stack or variants thereof as far as front-end options go, that would enable someone coming out of these camps to hit the ground running.
It'll be an interesting observation to see if that comes to pass, but insofar as I'm concerned, they're training front-end students for startups building platforms.
[+] [-] poof131|9 years ago|reply
1. We’re at the end of a bubble and doing a slow pop. Multiple companies that have raised a lot of money don’t have the revenue or unit economics to be sustainable. Employees with compensation tied up in stock aren’t going to do well. Had a friend leave two companies within 6 months (didn’t bother vesting) that both raised over $100 million because the executive teams were celebrating $900 deals.
2. Startups don’t exit anymore. Waiting 8-10 years for an exit is unacceptable. It might be okay for founders who take a couple million off the table at the B round or VCs who keep the IRR on their books, but for employees it’s a fail.
3. Founders as rockstars. The narrative is hurting the industry. People I like and respected raise money and become narcissistic assholes. Last founder I worked for who I considered a friend told me “he was like Elon Musk or Larry Paige, a technical genius, and not to question his leadership”. This was after he fired his cofounder and chased off the one other employee of our seed stage startup.
4. Risk vs. Reward. As an employee with founders trying to keep 50% of the company to be like Zuck, companies never exiting, and no idea what the terms of later rounds are, working at a startup is becoming stupid. Saying it’s about the mission, it’s about learning not earning, when the VCs and founders are doing great is disingenuous.
We’re at the end of the cycle. I’ve seen 3 now: 2001, 2008, 2016. Hopefully in the next round the powers that be will figure out how to better reward everyone who takes risk working at startups. Right now employees take almost as much risk as founders for much less reward.
[+] [-] hibikir|9 years ago|reply
Imagine for a second that you become employee 10 in a new startup that you believe in. You dedicate it 15 hours a day for 5 years, everything went awesome, and now the company is worth 5B. Your stock options would be worth millions in case of a liquidity event. Great, right?
The thing is, it's 5 years later the company is probably 300-800 people now, and therefore is a very different company than the one you joined, and if it's still growing, it's be a different company still next year. But there's no liquidity event: You cant exercise your options because you can't pay the taxes. If you want to exercise anything, the company has to go public, and you sure don't control that. So you either wait in a job that probably doesn't fit you anymore, or your stock compensation was worth nothing. Therefore, whether the startup does great or not, you have to apply the 'I might want to quit' discount. If I am assuming 8 years to IPO, which is not insane that discount is going to be huge by itself. I'd not rate my chances of staying in a job for 8 years as 1/10. And that's without considering that, career wise, you'll be learning more changing jobs every couple of years or so.
Let's compare this to a public company: Their stock compensation has none of that complexity, especially now that RSUs are the way to go. You can sell them for cash immediately at the stock price that day. The downside is minimal, and chances are your first block of shares comes after one year, so if you hate your job, you sit there a year, sell your shares and quit.
Given how much stock the bigger companies are awarding developers, you have to completely ignore compensation to go to a tiny startup: You kind of have to bet in the world around you changing to make exercising options early to be more or less free, along with believing that the startup will go the distance. Those are odds I'd not take
[+] [-] johnm1019|9 years ago|reply
It's also possible that there are really large challenges being undertaken which require resources that actual start-ups with 10 million in VC can't do. Things like autonomous cars (Uber isn't a start-up anymore IMO), rocketry, aerospace, energy, foundational biology. Is it possible that many great minds see these as more worthwhile pursuits?
[+] [-] pyrrhotech|9 years ago|reply
[+] [-] Cranzatz|9 years ago|reply
I absolutely hate how political and bureaucratic my current company is. It's so difficult to get anything done, because of the micromanagement and second-guessing for the sake of "collaboration." It's dreadfully slow. Nearly all management has family and kids; most of my direct coworkers don't. Two are engaged, one is married with two kids. I'm gay and am not planning to ever have kids. So I have a ton of free time in comparison to my straight coworkers.
My plan is to start my own company in a few years. I don't think I can tolerate an atmosphere where I can't set my own pace. I'm a pretty competitive person who likes quick results. I get the feeling I'm out of place in my current environment.
[+] [-] bryanlarsen|9 years ago|reply
[+] [-] sulam|9 years ago|reply
Paraphrase #1: Salaries at startups aren't very high, without considering options.
Paraphrase #2: Yelp is having to raise compensation to compete against startup job offers.
Past the very early stage, the first statement is untrue. I sincerely doubt that Uber is paying less base salary than GE. Certainly it is in the ballpark -- because every well-funded startup out there (there's a lot of them) pays "market rate" which nets out to "we match salaries for everyone except Google employees."
[+] [-] pm90|9 years ago|reply
Uber/Yelp are no longer startups. I think the article is referring to companies much earlier in the life cycle.
[+] [-] maxlamb|9 years ago|reply
[+] [-] pj_mukh|9 years ago|reply
[+] [-] megablast|9 years ago|reply
Yelp has to pay a lot more, not to beat their startup salary, but their expectation of a big payout.
[+] [-] werdna123|9 years ago|reply
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[+] [-] jordanb|9 years ago|reply
[+] [-] dkarapetyan|9 years ago|reply
[+] [-] samfisher83|9 years ago|reply
[+] [-] AlwaysRock|9 years ago|reply
[+] [-] toomuchtodo|9 years ago|reply
There is nothing innovative going on in Chicago unless you're in the financial speculation industry, and its at least well paid.
[+] [-] cx1000|9 years ago|reply
[+] [-] kasey_junk|9 years ago|reply
Without getting into the relative availability of these things (I think you are underestimating how available they are in big companies).
These are extremely cheap to provide. The perks that cost a lot for companies to provide, health insurance, better pay, better retirement options, education reimbursement, etc. Are where real comparisons between perks should be made. In my experience those are systematically more common in big companies than small ones (that is governmental policy makes it easier for big companies to provide these).
[+] [-] Excluse|9 years ago|reply
Pretty much every Big Co. in SV offers these perks and more. And yes, they also have windows.
[+] [-] youdounderstand|9 years ago|reply
[+] [-] mahyarm|9 years ago|reply
[+] [-] rfrey|9 years ago|reply
My father-in-law started a psychological testing firm in the 80s that had all these things. With no programmers, imagine that!
[+] [-] bdcravens|9 years ago|reply
[+] [-] jly|9 years ago|reply
Free lunch/snacks/drinks might save you a couple hundred dollars a month, max, if you use them everyday. A little resourcefulness with leftovers, brewing some coffee at home, etc, and that perk is worth way less. It's worth little compared with your paycheck.
After doing different office layouts, I have come to enjoy cubicles or separate offices, more and more. Open concepts are not unique to startups, anyway.
[+] [-] bpicolo|9 years ago|reply
[+] [-] mercurysmessage|9 years ago|reply
[+] [-] vram22|9 years ago|reply
[+] [-] amyjess|9 years ago|reply
I work at a mid-size (~500 employee) telecom. "The [company name] 15" is a meme here because there's always so much free food in the kitchen. Every time anyone meets with clients/partners/etc., they always have way too much food catered, and the leftovers get put out for the rest of us. New employee orientations are especially awesome because they always order like ten times as much food as the newbies can eat. And we get donuts and klobasneks in the break room every Friday morning... plus every day, the break room is stocked with cereal and milk.
I like to post about the stuff I find in the break room on Facebook, and I've had multiple people tell me they gained 15 pounds just reading my posts.
> I could never go back to a cubicle with no windows in sight!
That's a mixed blessing. I consider cubicles a perk, and while windows are nice, the lack of windows isn't a deal-breaker for me, and they have their downsides.
At my last employer -- a 12-person defense contractor that put the "small" in "small business" despite having been around for 20 years -- I sat facing the window. We had four people in the room, with an empty seat for a fifth, none of us with our backs to the walls: we all faced the edge of the room. Three of us faced plate glass windows. Yeah, sure, the view was pretty. We worked on the 12th floor. I faced a freeway and a light rail line, with a rail station visible as well. It wasn't uncommon for us to stop work so we can gawk at a nasty accident on the freeway, so we can speculate on why the police have the freeway closed off, or to marvel as a hawk flew in front of our windows. That's the good. The bad is that the glare could get blinding at times. And all of us were afraid of closing the blinds because we didn't want to interfere with somebody else's view, so we just sucked it up and worked in glare on various days.
And then there was the office layout itself. Nobody had any privacy, and we could all see each other's monitors from our desks. I never worked on the same project as two of the people in my room (and they usually were on separate projects themselves): it wasn't uncommon for other members of their teams to walk into our office and have an impromptu design meeting with them while the rest of us tried to tune them out. And, no, we had no meeting rooms readily available to us: we rented a handful of offices in an executive suite that we shared with other companies, so any meeting rooms had to be booked well in advance and cost us $$$.
Now, at my current employer, I work in a cube farm, and I love it. I have my own space, I can see when someone's coming up to me, my cube doesn't get used as an impromptu meeting room, etc. Sure, I don't have my awesome view anymore, but it's not terribly important, and I'm no longer dealing with glare. If I really need to look outside, there's a window not too far away from me anyway, and when the weather gets bad, a lot of us gather by that window so we can check out the storm.
[+] [-] Naritai|9 years ago|reply
[+] [-] ryandrake|9 years ago|reply
This part doesn't make sense to me. Wouldn't it be the opposite? Doesn't the "want to get rich now" crowd prefer the start-ups and the "want to get rich later" group prefer the larger, stable companies? (Spoiler: Chances are, neither of these groups are going to "get rich", sorry.) The people that big companies ought to be going after are the ones who TRIED to get rich early, ended up holding worthless lottery tickets, and are content to toss them away for a little stability.
[+] [-] pm90|9 years ago|reply
Why? Broad generalizations really don't help here. Here is a counter: Its likely that people who have worked at BigCo's are better at working with their bureaucracy, they know that they won't get immediate results but understand the system and are willing to work with it to get things done. So they are more likely to succeed in that environment.
[+] [-] werdna123|9 years ago|reply
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[+] [-] Yhippa|9 years ago|reply
[+] [-] bdcravens|9 years ago|reply
[+] [-] vanadium|9 years ago|reply
It'll be an interesting observation to see if that comes to pass, but insofar as I'm concerned, they're training front-end students for startups building platforms.
[+] [-] hiou|9 years ago|reply
[0] https://www.launchcode.org
[+] [-] bdcravens|9 years ago|reply
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