What are the advantages and disadvantages of working for a startup versus a large corporation? Having done both multiple times, I am frequently asked this question. When it comes to where you are in your job, where you reside, and a variety of other considerations, there are many things to consider and a lot of “it depends.” Here’s how I see the tradeoffs from my perspective.
Putting aside your industry preferences and your feelings about the products your company is developing (both of which are critical! ), the majority of the differences between a startup and a mature company are fairly obvious. You’ll probably have more role models to learn from and stronger teams to interact with within a mature company, as well as a defined strategy and a mature board. The position you’re considering may have a limited scope, but it could provide you with more in-depth training and, of course, excellent benefits, compensation, and other perks. You’ll also get a sense of what good (or awful) looks like at scale, as well as a lovely CV brand.
Startups can provide you the opportunity to do anything, which can be a blessing or a curse depending on your hobbies. You may be without peers to cooperate with, forced to hunt for mentors and role models outside of your firm, or have a limited budget to get the job done. However, you may be able to obtain high-value equity in return for a lower-than-market salary. If you’re still undecided about which startup to join, I recommend Jeff Bussgang’s book Entering StartUpLand, which delves into the many positions at companies and how to get your foot in the door.
Leadership
When looking for a new job, it’s easy to overlook the leadership of the organization you’re considering. Someone with limited real-world experience will take a different strategy than a serial entrepreneur. In addition, mature firm executive teams can be world-class or “legacy” executives who are unable to adapt to changing circumstances. When it comes to deciding whether to be a startup or a mature company, there are numerous considerations to consider.
Serial entrepreneurs founded the company. If you want to learn from individuals who have “seen this movie before,” this is generally the best-case scenario. They most likely had little trouble raising funds and were choosy in who they chose as investors and board members. They’ll know how to get the flywheel moving after making mistakes or failing in the past.
“When I started my fifth company I knew exactly how I wanted to build the team. So, on day one I hired a head of recruiting to get things off to a strong start. I also knew market adoption would be critical to fundraising so (we) focused on growth very early on—before we even had a product!” – David Cancel, CEO, and co-founder, Drift
Serial entrepreneurs may also attempt to overcorrect in areas where they failed the previous time, such as overanalyzing or postponing choices, being excessively cautious with the capital flow, or putting too much emphasis on scalability too early in the product development process. When interviewing a serial entrepreneur, it’s always a good idea to inquire about the lessons they gained from their previous enterprise and how they’re applying those skills to their new firm.
“I joined Drift in part because I wanted to learn from the experience of the co-founders. They’ve seen it before so they anticipate issues, they know when (and how) to hire experts to level up the team, and they know what’s “normal” for a hypergrowth company. It’s the best of both worlds: you get the rollercoaster startup experience with some of the more measured leadership and strategic characteristics of a bigger company.” – Maggie Crowley, Product Manager, Drift
Veterans of the industry launching their first venture. Founders with little startup experience may have big business confidence, be excellent at hiring and directing teams, but lack the tenacity to push a Minimum Viable Product (MVP) out the door and work toward product-market fit.
“At our first startup after a series of roles at large enterprise software companies, we tried to force a big company perspective on how we did employee feedback and reviews. We were too structured with this initially and quickly cut back to a more loose feedback and review process with our team.” Izzy Azeri & Dan Belcher, co-founders, Mabl
They may also be too accustomed to having teams of people and systems to handle the more routine aspects of running a business, and they don’t want to get their hands dirty. On the other hand, they frequently know how to put those procedures in place and who to recruit to operate them, so once the flywheel is spinning and money is in hand, they may swiftly gain traction.
“Earlier in my career, I hired a small team within a large corporation that was scrappy and had entrepreneurial mentality. At my startup, I quickly realized the benefit of once having a corporation behind me when things weren’t working out. The impact of a bad decision or process was much greater with no safety net.” – Karen Young, CEO, and founder, Oui Shave
With no prior leadership experience, a startup is formed. It may be a lot of fun to work with a talented set of entrepreneurs who are leading teams for the first time. It may be quite rewarding to not just work from the bottom up, but also to work alongside these entrepreneurs as they expand, if you bring some experience to the table. However, if you find yourself figuring things out on your own because no one in the firm is willing to coach you, it can be irritating. If you’re patient, these settings may be highly lucrative, and if outside mentors and advisors aren’t available at this type of startup, you can always find them elsewhere.
“When we started, we got a lot of advice like stay focused, don’t expand too quickly, be careful that experienced hires match your culture. All good advice, but we discovered there’s no real substitute for learning the hard way. The lesson just doesn’t sink in until you feel the pain of doing it wrong.” Wombi Rose, CEO, and co-founder, LovePop
The organization is mature, but the leadership is inexperienced. If they’ve made it this far, they’re either extremely intelligent, extremely fortunate, or both! They’ve probably surrounded themselves with strong, experienced executives, investors, and/or board members as well. Joining a company like this can teach you a lot, but they are extremely rare! When businesses grow too quickly, they risk putting people in positions where they have outgrown their experience. More on the impact of Hypergrowth circumstances can be found in an article written by my Reboot colleague Khalid Halim for First Round.
Companies that have been around for a while and have a proven track record of success. These organizations have all of the expected features. There will almost certainly be more politics and process than at a startup, but the benefit of exposure to outstanding role models and best practices can be beneficial. These larger firms can sometimes expose you to the “dark side” of leadership and systems, which can be valuable lessons in what not to do in your next position or company. Companies that have been around for a while and have a proven track record of success. These organizations have all of the expected features. There will almost certainly be more politics and process than at a startup, but the benefit of exposure to outstanding role models and best practices can be beneficial. These larger firms can sometimes expose you to the “dark side” of leadership and systems, which can be valuable lessons in what not to do in your next position or company.
In your journey, which comes first?
There’s always the question of which should come first for people who are planning their early career paths and know they want to work for both a startup and a mature corporation at some time. When hiring managers at early-stage organizations see someone with too much experience (five years or more) at established companies, they may be concerned about the candidate’s ability to transfer to startup life. It’s not impossible, but it’s something to think about.
I recommend emphasizing any scrappy “ground zero” work these candidates have done at their companies to demonstrate their ability to deal with ambiguity and take risks. I’m also a great (and admittedly biassed) supporter of folks who have joined firms early and grown with them. They’ve learned a lot from previous experiences, and while they can start small, they know how to scale up. Win-win.
Someone with a lot of startup experience, on the other hand, can have a hard time adjusting to a mature organization. A recruiting manager at a larger firm could wonder if a candidate with only startup experience can withstand a slower pace or won’t be able to navigate a complex organizational structure that necessitates political and communication know-how. You may have to give up a title and possibly pay to get a foot in the door at a larger institution, where your previous role, which may have been quite senior at a startup, may be viewed as fairly junior if those around you have decades more experience. Those with startup expertise, on the other hand, can be beneficial to a team that needs to shake up, take greater risks, or break new territory. Those who sacrificed position and income when they first started often make up for it as they advance up the corporate ladder.
There is no one-size-fits-all approach to getting started. Much relies on how you define your abilities and how willing and patient you are to adapt in any scenario. Much depends on who hires you and how they run their business. I’ve seen some people bounce back and forth between the two types of situations, some who can’t manage startup life and should just keep to that world, and others who have startups in their DNA and should just stick to that environment.
“At a startup, every job matters and you can see almost daily that you are creating something that wasn’t there before. You have the ability to learn quickly and have a fast feedback loop to let you know how you’re doing. It’s very different working at an established company vs a startup, but you can learn a lot at both – you’ll just learn very different things.” – Rebecca Liebman, CEO, and co-founder, LearnLux
Questions To Ask
Whether you’re a seasoned veteran or a recent graduate, there are a few final factors to consider when deciding whether to work for a startup or a mature company:
- What are some tools you’d like to add to your toolbox? Will the position allow you to hone existing abilities or learn new ones?
- Who would you like to learn from and how would you like to learn? Experienced colleagues and mentors can teach you a lot, but terrible role models can also teach you a lot about what not to do. Similarly, if you are a seasoned employee joining a startup led by novice founders, you may desire to learn through mentoring or educating these newcomers. Taking the abilities you’ve acquired during your career and applying them to a new circumstance can be enlightening in and of itself.
- To whom would you like to collaborate? What role does the size and culture of the team you’ll be working with play? Remember, regardless of the size or nature of the organization you join, you’ll probably spend more waking hours with these folks than anybody else in your life.
- What are your priorities? At the end of the day, do what you love and choose a career that allows you to stay true to who you are and who you want to be!
Do you have any further suggestions for deciding whether to work for a startup or a well-established company? Please share your thoughts in the comments!
