Navigating the job market is like walking through a maze, and understanding the difference between startups and businesses can be the key to making informed decisions. But first, let’s clarify what we mean by these terms. A startup generally refers to a young company, which may be venture capital-backed (i.e. “Venture Capital Backed” for the uninitiated) or self-funded, in the process of developing its product or service and its business model. In contrast, corporations are well-established companies with stable revenue streams and often operate on a much larger scale.
In other words, when I say “startup,” think young, energetic, perhaps living off coffee and hoping that the next venture-funded dollar doesn’t slip through the cracks. Meanwhile, “the company” is this older, wiser entity, sipping a fancy latte, with processes and a good portion of staff who can’t remember the last time they pulled an all-nighter .
From my misadventures of the last 15 years – tripping over small firm stones and sometimes getting lost in corporate mazes, I have learned a thing or two.
The talk about money (because priorities!)
Startups, especially those with venture capital backing, often feel pressure to grow quickly and get ahead of the competition. This requires recruiting the best talent. Since they can’t necessarily promise long-term stability, the compensation package can be costly. Equity stock options (ESOPs) are often added to the mix, serving as potential long-term financial incentives. The goal is to give employees choices and money so they don’t even think about leaving (a classic hiring and retention strategy), sometimes called a “golden cuff.”
Businesses prioritize stability. They are more established, with structured processes and a large workforce. While they don’t always match the high salaries offered by some startups, they offer a more stable work environment, comprehensive benefits, and a longer-term association.
Bootstrapped startups or those with limited funding face unique challenges. Lacking considerable financial resources or significant external funding, they may not offer competitive salaries. To counterbalance, they often provide equity or other forms of ownership which, if the business is successful, can generate considerable returns.
Opting for a well-paid, high-risk job in a startup is a choice and not a constraint. Such roles come with their share of challenges:
Job security: The dynamic nature of startups can lead to rapid role changes and even layoffs.
Long hours: Many startups expect their employees to work long hours, especially in the beginning.
Limited HR resources: In small businesses, grievance resolution might not be as simple as in larger businesses.
Startups are a bit like a roller coaster. Exciting, yes, but also potentially nauseating. There is the thrill of rapid growth, but also the unease of job insecurity and dizzyingly long working hours. Oh, what if you have a grievance? Good luck finding someone to complain to who isn’t also your lunch buddy.
Now when it comes to business, think of it as a constant carousel. Sure, it’s more predictable and less adrenaline-filled, but hey, you know what you signed up for, right?
Startups, especially newer ones, make you wear many hats – they love to be “generalist”. But businesses? They are specialists whose departments are neat and tidy and often do not intersect. Businesses need processes to be followed by people, whereas in startups this is where people set the processes and sometimes they ignore them themselves for better results.
Beyond dollars
Culture and Environment: Startups often exude a dynamic, relaxed and flexible atmosphere, while companies have a structured hierarchy and formal framework.
Learning Opportunities: Multifaceted roles in startups offer broad learning, while corporates often offer specialized training and development.
Growth potential: Rapid personal growth is possible in startups, while companies offer defined career paths.
Employee Wellness and Benefits: Startups can offer unique benefits and a sense of close-knit community, while companies often offer comprehensive health benefits, retirement plans, and work flexibility.
Vision and mission: Some job seekers may be attracted to the ambitious, revolutionary goals of a startup, while others may resonate more with a company’s long-standing goals and broader impact.
Network and brand value: A stint at a recognized company can add significant weight to a CV, while startups can offer a close-knit community and unique networking opportunities.
Now for the hard-hitting fact that people don’t talk about. Payment always serves to compensate for something. Employees are paid for work that can benefit the organization. Startups don’t know how long they will last, so to attract talent, they might offer these enticing “golden cuffs.” But because of their unpredictable nature, they might also be quicker to let people go. This abundance of money or benefits? Often, it is simply to soften or compensate for this instability.
My suggestion: if you are aiming for the startup path (applies to all paths to be honest)
- You accumulate enough money to be able to handle negative situations.
- Don’t live like a king/queen assuming your monthly salary will always be there.
- Focus on the essentials, live frugally, save first, spend later.
- don’t increase your spending, increase your investment when you get a raise or extra money.
- ESOPs are a promise of potential wealth, not a guarantee of money in the bank. If they come to you, use them wisely, don’t spend, invest (property is an investment, rental property is an investment, family vacations are an investment)
Bottom line, whether you’re drawn to the thrill of startups or the stability of business, it’s like a warm blanket, it comes down to what makes you want to get out of bed every morning. Or at least, what makes the incessant beeping of the alarm clock slightly more bearable. So, put on those adventure boots, blaze your trail, and may the job search winds always be in your favor. 😉