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Moving from corporate to startup: what are the pros and cons?

There are some obvious facts: working at a corporate means nice salary, benefits and a strong financial and operational back. Moving to a startup means taking a risk. Sometimes even a very big risk. In some cases, salary is not granted at early stages. From the other hand, taking a risk (and equity) can be very rewarding. What else?

13 Replies

Shardul Mehta
1
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Shardul Mehta Advisor
Serial Product Guy, Entrepreneur, Product Management Executive
Besides the obvious ones you mention...

Pros:
  • You're your own boss.
  • Don't have to deal with lots of stakeholders or the corporate bureaucracy.
  • More creative and innovative freedom.
  • As a founder, what you make is yours.
  • Real opportunity to build a business from the ground up, which can be really exciting. In a corporate job, you coulddo the same, but be more conservative in terms of risks to the existing business model.
  • Possible "fame" (if you're into that sort of thing and if you're successful).
  • Opportunity to learn about lots of things very fast -- examples: how to build a team, how to market and sell (if not you're strong suit), how to get investors, good finance and accounting practices, etc.
Risks:
  • At a corporate job, can rely on existing processes, structures, business model, strategy, and teams to execute on things. A startup often has none of that or is still trying to figure out.
  • At a corporate job, you can focus on a specific project, domain or job, and rely on others to get other things done. At a startup, you're often doing many things, and focus becomes a challenge -- high switching costs.
  • Money is a constant worry at a startup.
  • There is no "9-to-5" at a startup.
  • Have to sort through a lot of noise on what an entrepreneur "should" and is "expected" to do.
I'm sure there are more for both lists.
Mike Robinson
0
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Mike Robinson Entrepreneur
Chief Commercial Officer at VideoEngager
Financially, the main trade-off is that you are trading away salary security for a chance at getting an equity home run. But be realistic about two things:
1) Most startup equity never pays off. That's just a fact. When it works, senior players get millions. When it doesn't (which is more often), the equity is worthless.
2) At a ground floor startup, there is tons of pressure for people to work for starvation wages for many years. If you are starting from scratch, assume three to four years at least before you get paid anything like a normal salary.

Beyond the financial side, the startup can be more personally rewarding because you are creating a business from scratch, with no constraints on what direction you want to take it. You will work your butt off, but you may find it more personally rewarding.

I don't like the the whole "be your own boss" story. To me, that sounds like code for one of three things:
1) My boss makes me work too hard: Well, you'll have to work even harder at a startup!
2) My boss is an asshole: If your current boss really is an asshole, get yourself a new boss!
3) I don't like taking orders: Don't kid yourself, we all take orders. If you are NOT the founder/CEO, you take orders from the CEO. If you ARE the founder/CEO, you are getting orders from your investors, your board, your customers, and your employees. If not taking orders is your reason for going to a startup, you just need to adjust your mindset.


BTW: This is all coming from a guy who has spent his career in startups and has been with two from $0 through IPO. I just want you to know that the grass always looks greener when you are looking from far away.

Thomas J. Kaled
1
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Thomas J. Kaled Advisor
Business Development Consultant @ thomas.kaled@gmail.com
Capitalization and lack of infrastructure are probably the largest challenges to start up. When you are the Chairperson and Janitor it can be both humbling and rewarding.



Ema Chuku
1
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Ema Chuku Entrepreneur
Designer. Product Developer. Founder @ NuPad
Let's assume your wanting to switch for a startup is not based on a fantasy.

Here are the "Cons":

As long as you understand the probability percentage of you NOT making that much as a startup founder within five (5) years is 80% eighty percent.

And the probability percentage of your startup not making it in first three (3) years is ninety percent (90%).

The probability percentage of you being happy is unmeasurable. Very likely, although.

So is making the switch worth the "Pros"? For me, definitely. Its all about exploring visions, taking up challenges, and a goal of creating something for the future.
Thomas Jay
2
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Thomas Jay Entrepreneur
iOS / Server Architect / IoT / BLE / iBeacon / Apple Pay
Its a complete lifestyle change.

If you have to ask don't do it.
Steven T.A. Carter
0
0
Steven T.A. Carter Entrepreneur • Advisor
Chief Operating Officer at 1PEL Inc.
Assuming you mean "go work at a startup" and not "found a startup" a lot of the cons have been covered. Lower pay due to the perception of equity compensation that doesn't pan out more often than not. Long hours, but you get those too at corporate companies. Yada, yada.

My number one reason for recommending that people work at startups, especially people early in their career is the opportunity for career advancement. If you work at Microsoft, how long would you have to work there to make it up to a VP level and have full responsibility for an entire business segment like sales, BD or engineering. At startups, it can happen much more rapidly. A good, fast growing startup is going to be changing constantly. That change is going to represent opportunity if you can seize it. I have had the opportunity to hire and mentor many young people and watch their careers grow and they are now VP's and SVP's at other startups and the same companies where I hired them.

If your question was more oriented towards founding a startup (this is FounderDating after all), then all of the other stuff surely applies. It is hugely risky. But with that said, if you do it right, win or lose, you'll gain a HUGE amount of experience you can use at your next startup or your next gig.
Andy Leventhal
1
0
Andy Leventhal Advisor
Angel Investor, Advisor and Strategy at Leventhal Advisors
I agree with Thomas Jay. If you haven't been stewing on this switch for a long time, and you haven't been working with founders of start ups on the side for the past few years, you probably aren't ready. Go advise a few start ups for a year or 2 to test the waters.

Michael Forney
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Michael Forney Advisor
Strategic Management, Business Intel and Marketing Expert & Consultant
There are a lot of good comments in response to your post, but I don't see the one, which for me, is most important. In my estimation, one does not become an entrepreneur for the money, for the fame or for any related reason. One becomes an entrepreneur because by doing so one feeds their passion, builds a business based upon purpose, a business which allows one to do the things you cannot do in a traditional employment setting - coach your son's football team, your daughter's volleyball team, volunteer as a room parent, give back to your community and facilitate change in our society. To my way of thinking, that is why one becomes an entrepreneur. I may be fortunate that I was able to do those things and still build a business - one through which I work only with clients who pursue the same goals and opportunities I noted above.
G M AL-IMRAN
0
0
G M AL-IMRAN Entrepreneur
Digital Manager at Leverson Brooke | Head Hunter
Pros:
In startup you can have the real taste of popular Japanese concept "Ikigai"(a reason for being)
Cons:
  • Clinical obsession along with severe feelings of distress & anxiety
  • There is a higher risk of having depression than typical job holder
  • Any setbacks in the way of startup journey can knock you flat
  • In startup most of the time you need to struggle silently
Mike Robinson
1
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Mike Robinson Entrepreneur
Chief Commercial Officer at VideoEngager
I want to respond to Michael Forney's post above. He suggests that you might want to become an entrepreneur so you can create...

"...a business which allows one to do the things you cannot do in a traditional employment setting - coach your son's football team, your daughter's volleyball team, volunteer as a room parent,..."

It is certainly true that if you are a founder or co-founder, you can set your own hours and decide how to spend your time. But it is also true that if you become an entrepreneur and you spend fewer hours working than you did at your corporate gig, you will fail. If you have never done it, you cannot imagine the effort it takes just to get a basic company really up and running.Startups require 60-70 hours per week from the founders in order to get them off the ground. That's why you MUST be passionate about it. It needs to feel like your passion, not work.

It's true that you can "set your own hours," so in the early days of the company you can put that 60-70 hours in at any time of day throughout the week. If you truly have the personal stamina to coach volleyball and football and be a room parent and still HONESTLY devote 60-70 hours per week to your startup at odd hours, then by all means go for it. But PLEASE don't kid yourself about the commitment. If you do not spend 60-70 hours per week on your startup as a founder, your odds of success are slim.

In other words, if "set your own hours" for you is really code for "work less" - don't even think about a startup. Think instead about various possible career changes that allow for part time work or a very well defined 40-hour work week.

Just to reiterate - I'm all for startups and have spent my whole career in startups. But I want to make sure new entrepreneurs are not naive about what it takes.

Yes, if you are "your own boss", you don't have to ask anyone's permission to leave at 3PM on Wednesday to coach soccer. But what happens when your critical first customer calls you at 4PM on Wednesday during soccer practice? Are you going to take the call or coach soccer? The choice is totally yours, but every choice you make impacts the chances of success of your startup.ALSO, let's imagine you have some success and get to hire a few people. Are you going to go coach soccer and tell your staff to keep working? A successful startup means the founders are now the bosses. Bosses need to set the example for corporate culture.

I believe that one of the reasons that 9 out of 10 startups fail is because so many people start their own business so they can "be their own boss" when in fact what they really want to do is work less. Sorry - doesn't work that way. Pioneer farmers were "their own boss" and if they didn't physically work their land 70 hours per week their families ended up starving. Startups are no different.

If you feel like you are working too hard, and you want a lifestyle change, DO NOT found a startup. Instead, you need to figure out how to tune your lifestyle to create a better life/work balance.

On the other hand, if you have tremendous passion and energy and you want to go create something new in the world that you can't do in your corporate setting, then by all means GO FOR IT! Startups are often where innovation happens that changes all our lives! And being in on the ground floor allows for tremendous upside potential, financially.

As one of my entrepreneur friends says, "We do what others won't so that someday we can do what others can't."

Just don't forget that the "do what others won't" part comes first!




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