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Why Working For a Startup Isn’t So Risky
Monica O’Brien is a guest writer from Twenty Set, a blog about personal and professional development for millennials.
One of my friends graduated in June 2007 and was headhunted for a startup after posting his resume on CareerBuilder. He was 20 years-old and had a choice: do the startup or take the other, much safer offer at a larger company. He chose the startup and joined a team of nine employees who built robots for large firms - in the CEO’s father’s basement.
What I failed to mention is how I met my friend - we’ve been coworkers for the past four months. The startup company was doing great business by building the top robots in the industry - but went bankrupt five months after my friend started due to lawsuits from the CEO’s old company.
But my friend survived his first affair with a startup, and you can too - because startups aren’t that risky. Here are three reasons why…
You Can Find Another Job Easily
Startup goes under? Sure, it’s tough to see something you worked so hard at fail; but you’re awesome and you will find another job easily.
How do I know? Because if you’re not awesome and great at personal branding then you don’t get recruited for startups in the first place. So even if the startup goes under, you still have yourself and your fabulous skill set. Oh, and you have a startup under your belt, which makes for a pretty impressive resume builder.
So you can do one of two things:
- Get into another startup, which you already have the experience and connections for
- Reenter corporate where they are looking to recruit people with awesome resumes like yours (Hat Tip: Ryan)
Neither is better or worse. In fact, I have another friend who moved to Chicago from Silicon Valley last August. He worked for a few different startups, including this little one called Facebook, and now he’s an investment banker (of all things).
But that’s the great thing about careers these days - there is no clear-cut path to where you want to go. The playing field no longer looks like a game of Chutes and Ladders; it’s more like a football game, where there are lots of different plays that can score a touchdown.
Job Security Sucks These Days
The economy is not so good and companies are changing hands - this means that people can get laid off in a blink. This happens in the public sector when companies get acquired. This happens in the private sector when companies go under.
It doesn’t seem to matter where you work anymore; good people are let go from their jobs every day. It starts with a hiring freeze and progresses to layoffs, often around performance review time. Since job security in the traditional sense is nonexistent at most companies, you may as well work where you want and stop worrying. For many of us young go-getters, that’s a startup.
Working For a Startup is Like Starting a Business 101
I want to start a business someday, but pretty much every entrepreneur I know tells me I need to do a startup first. I’ll admit I thought this was dumb the first time I heard it; but 15-people-giving-me-the-exact-same-advice later? It would be foolish of me to think I know better.
So if you want to start a business someday, you have two choices:
- Stay in corporate America for awhile and then start a business with no entrepreneurship experience
- Do a startup (or a few), get experience starting businesses, then start your own business without repeating the same mistakes
Which one sounds riskier to you?
24 Comments
Justin Nowak said on March 24, 2008
It is much safer to be in a start up these days. I think diversifying yourself onto a few projects if possible takes most of the risk away because if one fails you have others to fall back one.
Also I think building a good investment portfolio including paper investments, real estate, businesses, and commodities is the smart way to secure your future.
Its a fine line to walk, you to want to spread yourself to thin, but you don’t want to be screwed if one idea fails and you need to start from scratch.
Monica O'Brien said on March 24, 2008
Yeah, I think you are right Justin. Diversifying your income streams is a good way to mitigate the risk of a startup.
I was talking to my friend in the first anecdote and he mentioned that the way he survived was budgeting. He went into the job knowing that there was risk of the company going under - so he saved as much of his paycheck as he could just in case. He was able to survive for two months after the company collapsed and found a job within one - so he didn’t need help from his parents or anything during the unemployed break.
The last thing I wanted to add to this post was that you can negotiate a lot more in a startup. For example, I would give up $5,000 of my current yearly paycheck just to bring a dog to work. So if you figure out what’s really important to you and what you need to survive if the startup goes under, you can probably make it happen.
Lawrence Lugar said on March 24, 2008
two words: Jump In!
…then learn how to swim, while you’re drowning.
If you’re a fast learner - you won’t drown. But the important thing is that you’re in the water.
Some people think too much, and the variables change - and they’re now dead before they start.
Monica O'Brien said on March 24, 2008
Lawrence, absolutely. People think that a corporate job is safer than a startup, but I’m starting to disagree, especially the longer I stay in the workforce. Corporate jobs still carry a lot of risk in terms of job security. Certainly not as much as startups, but since personal branding is becoming more important than ever due to variables changing, startups are not so risky for stellar personal branders.
Lawrence Lugar said on March 24, 2008
Start something, just…start something.
people go to school, college, etc etc…enter the rat race, bueurcracy, red tape, office politics, glass ceilings, never ends.
then you collect your retirement - after ’serving your time’, then die.
are you happy…doubt it.
be happy - escape it, Start your own whatever you’re into.
if the entrepreneur gods are on your side, you’ll end up a millionaire…if not, you have the rat race to save you from becoming homeless
Top Entrepreneurs Are Not Young Women | Twenty Set said on March 24, 2008
[…] I wrote on Young Go Getter how every entrepreneur I know tells me I need to do a startup before I start my own business. What I failed to mention is that every entrepreneur I know is a guy. This seems strange because women are starting more businesses than men are… sort of. Actually, older women are starting more small businesses than men are. Younger women aren’t starting the businesses that make it big; they are sitting in their cubicles, scared, thinking about how they might start a business someday if they can just figure out how to mitigate the risk of it. Like me. […]
Sarah said on March 24, 2008
It is amazing that people still believe big companies offer security! I work for a fortune 500 firm and I receive emails everyday about who is getting laid off… I could lose my job tomorrow. There is no reason not to work for a start up as you said or to start your own. I just created an internet business in december and I am already seeing income roll in. Of course even when you take risks you can be calculating as I run statistical analysis on my site all the time with Muvar ( a software that lets me test out all my variables), and there is a chance to lose it all but the risks are just the same at the big firm.
Monica O'Brien said on March 24, 2008
Sarah, I completely agree. I worked for a Fortune 500 before too and they talked about job security all the time - but really your job security meant they’ll hold a job for you wherever they need you and doing whatever they want you to do. So if my division was eliminated they could relocate me to China and put me in a role that made no sense with my career. It’s definitely better than just firing someone, but still, it’s far from true job security.
Side businesses are a great way to go too. I have a few myself and they’ve paid decently. Certainly not enough to live off but it’s nice to know I have other options if necessary. Thanks for the comment!
Ben Yoskovitz said on March 24, 2008
A good “inside look” at working for a startup and what it’s all about. I don’t consider working for a startup that risky - although that doesn’t mean you should take a job at one if you can tell it’s on shaky ground. You don’t want a resume littered with quick failures - not because it’s really a reflection on you personally, but it does look odd. Even in startups, it’s nice for your next employer to see some stability.
Monica O'Brien said on March 24, 2008
Ben, thanks for visiting, and I love your blog. I agree, you shouldn’t flitter from project to project - but then again, if you become a serial entrepreneur, do you ever use a real resume again anyway?
From what I hear of Silicon Valley it’s pretty laid back. Do a startup, move to another one a few months later… so maybe flitting works for some areas. It sounds like the key might be to have some successes with startups before moving to another. Thanks again for the comment!
Terra Andersen said on March 25, 2008
Working for a start-up also renders a wonderful opportunity to network and learn the ins and outs of starting a business yourself. I always recommend this to my younger friends who eventually want to start a business. I say “work for a start-up! Watch their mistakes and learn from them”.
John Peden said on March 26, 2008
On the bottom rung, SMEs will generally offer much more experientially. As a young, low-level employee, it is too easy to be ‘forgotten’ in a larger firm. The vast majority of people studying my engineering degree will graduate with no work-experience. Since I began my studies, I have obtained 2 industrial placements and over 6 months relevant work-experience. Furthermore, I have been working within a startup at my University.
Regardless of how you feel about the experience; the ability to use it to augment your CV/resume is a valuable skill.
Dan Schawbel said on March 26, 2008
This is a great piece and it’s true, if you aren’t visible with the right skills, you won’t be recruited for a startup and will have to make your own startup (if thats what your interested in).
btw…Monica is one of the up-and-coming blog superstars…you just wait!
Monica O'Brien said on March 26, 2008
Terra, your advice speaks well to my third point. It’s nice to know others feel startups are a good way to get a handle on your own business.
John, I agree, you can get a lot of experience in a smaller firm. Having worked for both a small company and a large company I much prefer the small one.
Dan, thanks for the support. Personal branding is huge if you want to start a company.
Thanks for the comments!
holly hoffman said on March 28, 2008
My first job out of college was for a start-up and I stayed there for almost 3 years. I was laid off due to a 2/3 reduction in budget (!) with 8 other workers and the remaining 4 were either laid off or quit within a few months of that.
As you stated, it was like Starting A Business 101. I learned exactly what NOT to do. I moved into a corporate job after that where I have learned valuable business lessons on the ‘other’ side. I still have the start-up itch though. Unlike my first job, though, as an entrepreneur I’ll get educated first, remain nimble, and grow slowly.
So many lessons to learn. Don’t be afraid of start-ups. It was the best paying and most invigorating job I’ve ever had.
Mike Michalowicz said on March 31, 2008
I completely agree with going with a startup over an established big firm. The small startup will give you exposure to so much more and at so many more levels.
One other comment though, I still believe that launching your own business from day one is a better choice. Clearly there will be more stress initially but you will learn very quickly. Plus the early you start the sooner you “arrive”.
MrPositioning.com (Stanley Bronstein) said on April 2, 2008
Excellent post. Startups are riskier, BUT if you hit the right company, you might just be rewarded VERY well.
It sounds like in your case that the people who started the startup might have left their previous company in a “less than perfect” manner. That’s what led to the problems.
The 2 main things you DO get in a startup are EXPERIENCE and OPPORTUNITIES. And, like the article said, you don’t necessarily have any better job security at a non-startup company.
Mr. Positioning
Stanley F. Bronstein
Attorney, CPA, Author & Professional Speaker
Monica O'Brien said on April 4, 2008
Sorry I haven’t gotten caught up on these comments yet.
Holly, really interesting story. You want to start a business, right? How are you like corporate having gone with a startup at first?
Mike, I do understand your comment about starting your own business right out of the gate. There are many benefits and a lot of people have seen success with this method.
But I also believe that everyone should get a taste of corporate before going straight to entrepreneurship, because not everyone will dislike corporate. In fact, it’s very easy to stay in corporate now that I’m here… but that’s almost better. Because if I leave it’s because I really wanted to, because it’s so easy not to.
And sometimes arriving isn’t the end goal. I’ve found many times when I get things to quickly or too easily it’s almost deflating. The build-up and tension of whether you will make it or not are the best parts of success.
Stan, I agree wholeheartedly. I switched from a huge company to a company that was .6% the size, and I definitely noticed I had much more responsibility and opportunity. The larger company was very traditional and had this ridiculous path you had to follow if you ever wanted to do something interesting in the company.
Still, more responsibility isn’t for everyone. If you want to go to work every day, put in your 8 hours, have reasonable job security, and get a nice fat paycheck, larger companies are the way to go. It’s so easy to stay status quo as long as you don’t rock the boat.
Tammy said on April 4, 2008
Hi,
Great stuff…
Have you promoted this blog on Fast Pitch!(www.fastpitchnetworking.com)? It’s an online business network that has as one of it’s features a way to promote your blog to their audience of small business owners.
FP was actually just named Website of The Week by MSNBC’s ‘Your Business’ show for small business owners.
If you’re already on another network (LinkedIn, etc.) - no problem. Fast Pitch! takes a completely different approach. Compare Networks: http://www.fastpitchnetworking.com/comapre.cfm
Keep up the good work!
Tammy
Mike Michalowicz said on April 4, 2008
Just another thought… they announced today on the radio that America has its highest unemployment rate in 5 years now. It’s definately time to start your own company!
Monica O'Brien said on April 8, 2008
Mike, interesting. It’s certainly a good time to start a new company part-time at least.
Aaron said on April 12, 2008
Are we going for 1 month without a blog post? Get some guest posts lined up or something I mean almost 1 month is pretty lame.
rob said on April 17, 2008
Come on guys, nothing in a month. You spoke about big plans when you took over the site and no doubt you’re trying to put those plans in place, but while you do that the blog is dying from inactivity.
Mark Parbus said on April 20, 2008
I am 48 years old and have spent 20 years in a large pharmaceutical company. I have since been consulting for small to midsize companies. I have not taken on any large companies because I believe that the future of business and the world lies with the small company.
I have observed the large company going from an organization that trains, develops, retains and rewards top performers to becoming organizations that worship the next quarterly report with no loyalty to the people that make it happen. Many of the older and very experienced executives are leaving big corporate America and looking to help smaller companies who have a passion for what they are trying to achieve.
In some company out there, there is a compound or product that can solve many of the world’s problems.
There is a company that I am friends with the founder that has developed a small implantable chip that monitors radiation levels in breast cancer patients receiving radiation.
Working for companies like this not only helps the pocketbook but also helps to take breast cancer closer to extinction.
I am also a cancer survivor and want my kids not to have to worry about cancer.
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