A lot of people join startups. There are a broad range of reasons, but it usually falls somewhere into some of these:
- Startups are fast paced, with everyone wearing many hats, so you will learn a broader skillset, and more rapidly, than if you had spent the same time at a BigCo.
- Startups give you the ability to have an impact: you can be a big fish in a small pond, and easily bring in new skillsets that it is likely nobody already has.
- Startups often are about big bets, which means taking risks with very high upside potential. Even if the mean compensation may be less than BigCo, it means you have a chance at a moonshot, even if not in compensation but rather in impact on the world.
- Greenfield product development. Startups often don’t have much in the way of product, infrastructure etc, so this is a great chance to set everything up from scratch in an environment where there is less momentum towards an ‘old’ way of doing things.
- Startups typically have less bureaucracy. This means more time getting ‘real’ work done, learning new skills, delivering value to customers.
- The romance of it. This might be why people join, but this really can’t be a long-term strategy since eventually people will figure out that even in a startup, work is work.
It’s important to remember that people join startups despite the considerable downsides:
- Lower compensation
- Less job security
- Rapidly changing and potentially stressful work environment
And BigCos, well, people join BigCos for very different reasons:
- Better compensation, and typically any stock based compensation will actually be liquid, instead of waiting for some future liquidity event as in a startup.
- More stability. This can be broken down into:
- Better job security. Things take a lot longer to change, and a successful company doesn’t turn into a failed company nearly as quickly.
- Projects typically have longer lifespans, so for people who want to stick with the same project for a long time, this is the right place.
- More specialization: due to the larger number of people, there is more space for people who are super specialized in a topic relevant to the company. You don’t need to be a generalist to be able to succeed, or at least not to the same degree as in a startup.
Somewhere along the line, for startups that are successful, they grow into scaleups, and eventually BigCos. The question is, which of the desirable startup characteristics do they lose first, or can they bring in the benefits of the big company while maintaining their startup spirit as long as possible?
As the company grows the important things to bring along first are:
- Improve compensation. It doesn’t need to be all the way to F500 levels, but as a small company the talent you attract is even more critical to your company’s success, and despite every PHB’s desire that people are smart in their role yet stupid in understanding their compensation, this obviously puts a ceiling on who you can hire, and who you can retain.
- Allow deeper specialization. You now have enough people that it makes sense for someone who is an expert at something to actually focus on that topic. This might mean that you need to offload some of the generalist work to other people, and this might be painful, but it will pay off in letting that deep specialist work become a differentiating factor for your product.
- Longer overall project lifecycles. The low hanging fruit, at this point, has been picked. Getting the next level of value will require deeper investment and more focus than in the past. New features aren’t going to take a week anymore (or whatever it was), because all those week-long features have already been implemented. Either you move your product into an unexplored space to make implementing new features easy again, adding breadth to the product, or you slow down your project lifecycle to account for the additional effort required as you go deeper. Assuming you choose more depth, it can also make sense here to go back and make sure all the infrastructure from earlier days is super robust, otherwise you’re going to be fixing lots of bugs from the entire projects history as you try to add the new, more complicated features. Debugging bugs from a different part of the system than the work is meant to be happening is a quick way to kill your project’s speed of progress.
However, it’s easy for other things to sneak their ways in first:
- Deep reporting lines. Across each reporting level, you need a roughly 3x - 5x reduction in speed of changing direction, reprioritization or replanning, to account for alignment, project completion etc. across all of the different levels. Keeping it shallow makes your org move faster. A key symptom to look for here is if the people making the decisions aren’t actually working on the problems anymore. If managers have enough time to be making decisions instead of just coordinating things, there are probably too many of them.
- Too much bureaucracy and red tape. Not every mistake you made in the past is worth adding a (manual) process to prevent [automated processes are usually ok]. As the most obvious example, mistakes made by juniors often won’t be made by seniors, particularly if the senior is the junior who made the mistake in the past. Often here the cure is worse than the disease, with the many processes that prevent mistakes also preventing innovation, never mind the extra compliance effort.
- Forgetting the early customer connection and the importance of generating customer value. Too much separation between sales and engineering gives the same slowdowns in reacting to changing market requirements that deep reporting lines do.
- Monopolistic thinking. This is how you can squeeze the last drops out of your company value, but this is achieved at the expense of any future growth in the existing market. And that potential is lost at all levels, so even if not from customer perception, then from internal mindset change, where this growth isn’t valued or invested in at multiple levels.
Of course, you can’t escape growing pains entirely. Bigger organisations move slower, will inherently have deeper reporting lines, and will possibly even come to dominate their markets and truly end up in monopolistic situations where adding further customers isn’t a viable growth strategy.
Note that this specifically doesn’t cover a number of important points that are possible to have in both startups and BigCos. Claims have been made that many of these aren’t possible in either a startup or a BigCo, but there have been enough exceptions on both sides that, at this point, these are just excuses and not going through with these is leaving potential on the table:
- Building functional, well bonded teams.
- Using good industry practices.
- Having people with broad industry experience in leadership roles.
- Open and direct internal communication strategies.
- Managing company reputation proactively via honesty, reliability and responsiveness.