The Myth of Risky Startups
You should work at a startup. It’s a great experience. Lots of upside. Lots of emotion. Lots of learning. It’s not easy, but it’s definitely worthwhile.
Many people’s reaction to that statement is this: “Startups are too risky. You never know if they’ll be around for long…”
Webomatica echoed that exact sentiment on my post about the stress of startups: “…you have to give the job your all but always know in the back of your mind that your job could vanish at any moment.”
Perhaps, but how is that different than so many other companies? Pick up any newspaper, on any day of the week, flip to the business section, and you can find at least one story about layoffs at some large corporation. Just today I read about 4,000 Motorola employees being cut. Think they feel safe?
Absolute job security is the real myth. And the size of the company you work for isn’t indicative of your job security either. It might feel like your job is safer in a bigger company because you can hide…but thousands of people lose their jobs regularly, and most of them aren’t at startups.
Evan Prodromou (speaking about startups) said:
“It’s a heartache and a struggle more often than it is a triumph. Whether that struggle is worth it depends on a lot of factors — not all of them in the control of the employee. If you’re working for the right people, and they have the right idea, and you feel the same passion for the idea that they do, and the market does, too, then it can be great. But that’s a lot of if’s.”
And?
I’m not picking on Evan, he’s a great guy. He even bought me a gift for my son’s birth (which was a completely unexpected and wonderful surprise.) But he’s down on startups. And he’s not alone.
My answer is simple: At least you have a chance to work for the right people, on the right idea, and feel the same passion for the idea that the founders do.
Or as someone much more famous than me once said, “It’s better to have loved and lost, than to have never loved at all…”
There is risk with startups. You have to put yourself out there, be more exposed, offer more. Startups are small, so everyone stands out just a little bit more. There are very few places to hide. That’s risky.
But when we look at risk from the perspective of losing your job, being treated poorly, frustration, etc. — all of the negative things so many people lump onto startups — I don’t see much difference between them and every other company out there. And the upside of startups remains…
Ben… you are right. Start-ups are risky but so is life. And the risk can and should be managed. I mean… some start-ups are riskier than others.
I’ve done a few and I wouldn’t have missed the experience for anything.
I’ve done several posts on calculated risk. We take a risk every time we get out of bed in the morning.
My recommendation is if you’re going to part of a startup the be a *part* of it. Don’t just cruise along, head down, like you would in a typical wage slave gig and let the company roll along. Know what’s going on. Get involved.
The benefit of a startup is being a real part of the company.
specifically about Montreal, there is now a page about this at yulstart.org
http://yulstart.org/wiki/index.php?title=How_to_get_more_startups_and_more_innovators_in_Montreal
I believe one benefit of working for yourself is you know if you are doing well or badly so you know when you have to do something about it. If you are employed be happily working one day then be given notice to leave the next.
As someone who has made a career out of working with tech startups and young tech companies and this myth has never really bugged me until about two years ago.
My friends and I were looking to fund our first startup and much to our dismay, we couldn’t get our hands on any seed money from business organizations such as the BDC because either they were n00bs or they simply thought that the Internet was much too volatile. Needless to say, I wouldn’t be surprised that the myth is still alive and well within those organizations.
Thankfully, things have changed since then. I’m a little more connected and there are local investors like Garage who specialize in seed financing.
Heri — YulStart is a great idea and I know it’ll grow into a great resource as well.
Tara — I think that’s a great way of thinking about it. Often in a bigger company you don’t know where you stand, so it’s hard to gauge things, hard to find what works. When you work for yourself “the buck stops with you.”
The main problem with working with startups is that they look awful on a resume. You just spent the last 3 years of your life working for who?
And then there is the joy of watching all the good jobs go to people with big corporate names on their resume.
Owen — I don’t think they look awful, but then again I’m always hiring entrepreneurial people…
You’ve listed digg as your URL - if you work at digg, do you think that looks bad on a resume?
What about Google when it started? Or Yahoo? Or any number of other ultra-successful and even mildly successful startups?
Does seeing IBM on your resume really make a difference?
And what do you mean by “good jobs” because certainly good jobs at startups should be filled by people with startup experience…
The thought of waking up every morning for the rest of my life getting ready to go to my 9 - 5 is what makes me work my butt off to launch my startup on a shoestring budget.
Whether ultimately I succeed or not is nothing compare to the disappointment of not trying. I am blogging about the entire journey hoping that others will be encourage to come up with ideas and implement them as well.
In a big company if you think you’re going to lose your job it seems that the thing to do is get your guard up and protect.
In a startup when the pressure builds you have to fight harder.
What do you think gives the best chance for success?
Me personally, I always preferred and loved to work for start-up companies opposite for a big corporation. You have to work much harder, true, but you also have the chance to help to get the company going in the right direction. Call me weird but I always compared start-up companies to having kids. You try your best but the outcome is not solely up to you but the reward can be tremendous !
Glad to see you’re still keeping the faith! Sad to say that a lot of families can’t handle entrepreneurship as their children come along…we’ve had our share of challenges with own start up, just tonight my husband told me that one of his best clients hasn’t paid and isn’t returning calls…ouch. It’s alright though because I’ve trained myself to stock a full pantry, be creative with our resources, and recognize the gifts that our start up brings…daddy’s home with us and has been for 10 years, his salary is better than our neighbors (mostly) and we’re going to Disneyworld next week…so life is pretty great from the kids’ perspective and mine too.
Kelly - Balancing work and life is always hard, whether you’re running a startup or not.
One of the biggest challenges for startup owners, especially folks running at-home businesses is cash flow. That’s usually not an issue if you work in a big company or if you’re an employee at a startup (unless they’re not paying you, in which case you might consider work elsewhere.)
Chasing customers to pay, managing cash flow is definitely a challenge and very stressful in any situation…made even more stressful when you have a young family depending on you.
Thanks for the reply, Ben!
You’re right…cash is king. When people get behind in paying then you borrow from other resources (like your savings to pay your sales tax) and then when its time to pay sales tax if you aren’t still paid, something else gets pushed around…it’s a constant challenge/opportunity, but we love the upsides too much to choose a different lifestyle and now that I’m trying to make Start Up Princess profitable (redesign coming soon!) there’ll be more lessons ahead! Fun times. The good thing is that young families are easier to please than older ones, so I hear…my kids rather like Top Ramen!
You have to take risks in life to find success. If you don’t take a chance no one will take it for you.
Business Blogger - Let’s call it “calculated risk.” Jumping out of an airplane with no parachute is not a risk I’d take to find success. *grin*
But I wholeheartedly agree with you. I would also argue a bit further and say this, “What some call a risk really isn’t, they just see it that way.”
Ben - I have known way to many people that “wish they had.” Forget that, I’d rather take a calculated risk to achieve success than be a “wish I had.”