Don’t Go Chasing (Startup) Waterfalls

This post was first published by on October 30, 2013. See the original article here.

At least once every month, I get a very familiar sounding email from one friend or another at a big company. It usually starts with: “Can we meet for coffee?” and it often coincides with some rumors about reorgs or layoffs at said big company.

After some small talk, we inevitably get to the real reason for the meeting: “I’m thinking about going into the startup world – you do that type of stuff, right?” I typically sigh, followed by the speech I’m about to give you now.

First, let me say that far too many people go into startups for the wrong reasons and end up coming away disappointed. This is particularly true in Silicon Valley, where entrepreneurship is so (rightly and wrongly) celebrated. Here’s my take.

5 Bad Reasons To Join A Startup

  1. Money now: This is the sucker move and most of you are too savvy for this one. You’re really excited about joining a startup but you need to make sure it can match your base… and your bonus… and your car allowance – and maybe even give you a little bump. Um, yeah… not so much. If you are making your decision on short-term financial maximization, there is no reason to join a startup.
  2. Money later: You’re way more sophisticated than to fall into the situation above,,right?  You know it’s about the long-term. The upside. The equity. The exit. The IPO. Your friend’s cousin’s niece was an administrative assistant at Facebook and is now driving a Maserati. That can be you. Except it probably won’t be. The unspoken truth is that in the vast majority of great (multi-hundred million dollar or billion dollar) outcomes, most non-founder/exec employees would have made more money staying in their big company job – not even adjusting for the risk.
  3. The career value: In the old days, you went to work at Goldman Sachs or IBM to check the resume box. Nowadays, I speak to far too many people who are trying to get “startup cred.” While it does help to have worked in a startup for the sake of working in a startup, if you want to go back to a big company, your failed startup (aka “learning experience”) won’t get you too far.
  4. The fame: We are all Jack Dorsey. Except we’re really not. Our Gawker startup celebrity culture has created this false feeling that working at a startup is like working with Hollywood actors and actresses. And it sort of is – if Hollywood actors and actresses weren’t very attractive and if no one recognized them.
  5. The coolness: On a related note, Twitter, TechCrunch and The Social Network have made startups out to be way cooler than they actually are. They haven’t made many films about reviewing Google Analytics reports, restarting EC2 instances or buying really cheap office furniture. And while startup reality TV was attempted, Silicon Valley is no “Duck Dynasty.”

5 Good Reasons To Join A Startup

  1. Making an impact: So now that I’ve depressed you, why work at a startup? Try to get anything done in a large corporation and you’ll see why. Try changing the product, launching a marketing campaign or even making a sale. It’s just fundamentally difficult, no matter how well run the big company is. And because of this difficulty, many employees at large organizations regress into a milieu of inertia and unfortunately, acceptance of this. For the right people, going back to a startup makes them feel free again.
  2. Passion about the space: Just as important, if you pick the right area, you can work on something you care about. The best startups are mission-driven. They are early in their life and haven’t faced the harsh realities of compromising values and stock earnings management. As such, startups can even bring the innocence and purity of youth-driven dreams and aspirations (space camp, anyone?).
  3. Learning: While you won’t always be hoarding resume credentials at a startup, you might get something even more valuable – actual knowledge and skills. Yes, it’s true. If you’re self-directed (a big if), you can learn so much from working in a startup, because you have freedom to try things outside of your comfort zone. If you’re an engineer, you can make the marketing video. If you’re a marketer, you can teach yourself to code.  Good startups give employees a lot of rope.
  4. Money way later: If you’re really patient and spend enough time at good companies, something will eventually pay off – or it won’t.  But portfolio theory eventually starts applying as you have options at enough companies. More importantly, you become more attractive to other startups with each successful role and thus can command more equity in better companies over time.
  5. Belonging to a true karass: My friends who love working in small companies inevitably articulate a joy. It’s the bliss of feeling a common purpose and connection with the people around them. Many of us are searching for this bond. Startups create a true karass, to paraphrase Kurt Vonnegut, while many large companies often devolve into granfaloons.

So would you be willing to trade money and credentials for a bunch of stuff that can’t be quantified and probably won’t turn into anything monetary? If not, it’s probably best to stick to the big company rivers and lakes that you’re used to.

But if you want to throw rationality to the wind, join a startup and remember the best Albert Einstein quote: “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” Especially stock options.

Nick Mehta

As a huge sports fan, Nick thinks of his job as being like that of a head coach. His role is to help bring the right people together on the team and put them in the best position to win for our customers, partners, employees and their families. He’s a big believer in the Golden Rule and we try to apply it as much as we can to bring more compassion to our interactions with others. And he talks way too fast and overuses the word awesome like it’s going out of style. Before coming to Gainsight, Nick was the CEO of awesome leading Software-as-a-Service E-Discovery provider LiveOffice through its acquisition by Symantec and prior to that was a Vice President at VERITAS Software and Symantec Corporation.