I worked at two early stage startups at my first two jobs. That was a very bad financial decision on my part. The benefits were bad (e.g. no 401k); the pay was low. I didn't know what I was doing in terms of negotiating salary or how to value options. Even 11 years later, my net worth is maybe 40% lower than it would be if I'd gone to Google when I had the chance.
There are multiple levels of opportunity cost, and the ability to build a financial cushion and retirement savings is very important early in your career. The points about gaining valuable experience can be valid, but they make more sense if you have some personal or familial "cushion" to fall back on. Fresh out of school, if you're coming from a poor family and/or have significant student loans, you're not in a good position to take advantage of those learning opportunities. College was your learning opportunity, and it's time to cash in on it. Maybe an early stage startup makes sense as a second or third job for you. The money in your 401(k) from your boring job at some random bigco will continue to grow while you're working at Unicorn Rocketship, Inc., and you'll be in a much better position when you discover that your startup equity was literally worthless.
I agree with the other commenters that Series C companies may be a good option compared to early stage companies. They still have some "startup" vibes while also offering somewhat competitive benefits packages. Their stock is also less likely to be totally worthless, though it won't make you super rich either. My third job was at a series C company, and the exit after 6 years of working there paid for the down payment on my house. (That said, competitive salaries at series C companies may have been a zero interest rate phenomenon. I'm not sure what the current job market is like in that regard.)
This is exactly what I was trying to say. Thanks for sharing your experience! Nothing to add here, everyone should be aware about these realities and take decision accordingly.
I think if the goal is financial then it'll lead to burn out and potential disappointment. However if it's to learn and hone one's skill as a PM/engineer/designer than startups are a must at least once in a career. I find this to be especially true in the physical product space where one needs to see the effort required to fabricate and test something tangible.
I’ve joined a mature startup (Series C), and I think it’s a safer balance. You still have great upside, but the salary is competitive and the runway is 2-3 years.
I do plan to experience a very early startup - especially because of the growth and learning on the way. If you join one you need to know its like a lottery, you can’t really count on winning.
I agree that at Series B+ startups have the safer balance. Startup at that stage is most likely growing at fast pace but still a lot more work needs to be done in setting up systems.
That's an interesting perspective. Doing the work like an investor before joining.
You are committing time and money (money you could be earning somewhere else, goes to stocks of this startup). It's a decision to think properly if you have multiple options.
Atleast I often get this FOMO on working in early-stage startups, and I regret missing the opportunity to join some early stage startups, one of which has now become a unicorn!
IMO bet on the founder(s) (similar to how inventors also think) rather than worrying too much about product market fit initially, as long as that startup is solving a problem which you can also clearly relate to. Often you would end up building solid networking, and other skills that would benefit you in a long run. Probability to learn and grow rapidly in a startup is much higher IMO.
Again it's contingent to someones' appetite of taking risk, but if you can take that risk and you find some good early stage startups then definitely don't miss that opportunity during initial year of your career. High risk, high rewards!
To emphasize, the learning and financial freedom one can gain while working in a big tech company should not be underestimated as well.
I think we all have regrets - could've, should've etc. In the hindsight you know that the startup was a successful one but it could have been one of failed ones as well. I am just advocating to consider the average option, not the exceptions.
Great point about betting on the founder than a startup. I couldn't agree more. Startup will pivot multiple times but the real moat is the people behind it.
And yeah, I am all for working a few years in a startup during early years of your career. It won't be a huge financial setup but the learnings would be tremendous. But if your goal is make the guaranteed money, then the answer is working in a big tech company.
In my opinion, late-stage startups like Databricks or Stripe have been de-risked already.
But compensation wise, I am not sure if you would get some equity at this stage but if you do get it, it is still paper money (a better paper money nonetheless).
Also, some late-stage startups buy equity shares from early employees before IPO or any exit, so look out for that option as well.
I worked at two early stage startups at my first two jobs. That was a very bad financial decision on my part. The benefits were bad (e.g. no 401k); the pay was low. I didn't know what I was doing in terms of negotiating salary or how to value options. Even 11 years later, my net worth is maybe 40% lower than it would be if I'd gone to Google when I had the chance.
There are multiple levels of opportunity cost, and the ability to build a financial cushion and retirement savings is very important early in your career. The points about gaining valuable experience can be valid, but they make more sense if you have some personal or familial "cushion" to fall back on. Fresh out of school, if you're coming from a poor family and/or have significant student loans, you're not in a good position to take advantage of those learning opportunities. College was your learning opportunity, and it's time to cash in on it. Maybe an early stage startup makes sense as a second or third job for you. The money in your 401(k) from your boring job at some random bigco will continue to grow while you're working at Unicorn Rocketship, Inc., and you'll be in a much better position when you discover that your startup equity was literally worthless.
I agree with the other commenters that Series C companies may be a good option compared to early stage companies. They still have some "startup" vibes while also offering somewhat competitive benefits packages. Their stock is also less likely to be totally worthless, though it won't make you super rich either. My third job was at a series C company, and the exit after 6 years of working there paid for the down payment on my house. (That said, competitive salaries at series C companies may have been a zero interest rate phenomenon. I'm not sure what the current job market is like in that regard.)
This is exactly what I was trying to say. Thanks for sharing your experience! Nothing to add here, everyone should be aware about these realities and take decision accordingly.
I think if the goal is financial then it'll lead to burn out and potential disappointment. However if it's to learn and hone one's skill as a PM/engineer/designer than startups are a must at least once in a career. I find this to be especially true in the physical product space where one needs to see the effort required to fabricate and test something tangible.
💯
And I didn’t think about hardware space but that’s seems so true!
Interesting thoughts.
I think its all about luck, nothing is in our control.
E.g. who thought Nvidia would make new millionaires in 2024.
True!
However I was comparing against almost guaranteed income from base + RSUs in big tech companies.
Interesting pint of view Avnesh :)
I’ve joined a mature startup (Series C), and I think it’s a safer balance. You still have great upside, but the salary is competitive and the runway is 2-3 years.
I do plan to experience a very early startup - especially because of the growth and learning on the way. If you join one you need to know its like a lottery, you can’t really count on winning.
"lottery" is an apt word!
I agree that at Series B+ startups have the safer balance. Startup at that stage is most likely growing at fast pace but still a lot more work needs to be done in setting up systems.
That's an interesting perspective. Doing the work like an investor before joining.
You are committing time and money (money you could be earning somewhere else, goes to stocks of this startup). It's a decision to think properly if you have multiple options.
Thanks for sharing, Avneesh
Great insights, Avneesh.
Atleast I often get this FOMO on working in early-stage startups, and I regret missing the opportunity to join some early stage startups, one of which has now become a unicorn!
IMO bet on the founder(s) (similar to how inventors also think) rather than worrying too much about product market fit initially, as long as that startup is solving a problem which you can also clearly relate to. Often you would end up building solid networking, and other skills that would benefit you in a long run. Probability to learn and grow rapidly in a startup is much higher IMO.
Again it's contingent to someones' appetite of taking risk, but if you can take that risk and you find some good early stage startups then definitely don't miss that opportunity during initial year of your career. High risk, high rewards!
To emphasize, the learning and financial freedom one can gain while working in a big tech company should not be underestimated as well.
I think we all have regrets - could've, should've etc. In the hindsight you know that the startup was a successful one but it could have been one of failed ones as well. I am just advocating to consider the average option, not the exceptions.
Great point about betting on the founder than a startup. I couldn't agree more. Startup will pivot multiple times but the real moat is the people behind it.
And yeah, I am all for working a few years in a startup during early years of your career. It won't be a huge financial setup but the learnings would be tremendous. But if your goal is make the guaranteed money, then the answer is working in a big tech company.
Great share !
Always wanted to know from someone who has experienced it.
Do you think joining a company like Databricks, Stripe etc who are already big and pre-ipo has more financial upsides than Google, Meta etc ?
In my opinion, late-stage startups like Databricks or Stripe have been de-risked already.
But compensation wise, I am not sure if you would get some equity at this stage but if you do get it, it is still paper money (a better paper money nonetheless).
Also, some late-stage startups buy equity shares from early employees before IPO or any exit, so look out for that option as well.