Working at a startup can be an excellent career move. You'll learn more in less time, work on a new and exciting product, and have the opportunity to grow with the company. You'll also earn equity alongside your paycheck.
You also need to know that joining a startup is more than just joining a company. It's more akin to joining the startup career path which could mean starting a company as your first job or more commonly, working at a few startups and then starting a company.
When thinking about what to do next, think about the long game — you’ll be working with people in different ways in our industry for the next 20-30 years. So make sure you pick great people to work with and learn with. - John Lilly
What is a startup?
"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of 'exit.' The only essential thing is growth. Everything else we associate with startups follows from growth.
If you want to start one, it's important to understand that. Startups are so hard that you can't be pointed off to the side and hope to succeed. You have to know that growth is what you're after. The good news is, if you get growth, everything else tends to fall into place. Which means you can use growth like a compass to make almost every decision you face."
Why should I join a startup?
Most people I know who join or start companies do so to work on a product they love, with people they respect, and to avoid corporate bureaucracy.
We all spend a significant amount of time working, so it's worth putting some thought into where you're going to work. I've found one of the most straightforward "career hacks" to be thinking about my career early, often, and over the long-term.
"We tend to massively underestimate the compounding returns of intelligence. As humans, we need to solve big problems. If you graduate Stanford at 22 and Google recruits you, you’ll work a 9-to-5. It’s probably more like an 11-to-3 in terms of hard work. They’ll pay well. It’s relaxing. But what they are actually doing is paying you to accept a much lower intellectual growth rate. When you recognise that intelligence is compounding, the cost of that missing long-term compounding is enormous. They’re not giving you the best opportunity of your life. Then a scary thing can happen: You might realise one day that you’ve lost your competitive edge. You won’t be the best anymore. You won’t be able to fall in love with new stuff. Things are cushy where you are. You get complacent and stall."
"The most valuable compensation for working at a startup as opposed to a “normal job” is a dramatically higher rate-of-learning (ROL)."
This increased rate of learning makes it much easier to grow into a more senior role, either at the next company you join or at your existing company. I've had friends that have gone from a junior position to leading a team of people in less than two years.
Finally, think through this advice from Joe Lonsdale, co-founder of Palantir and co-founding partner of Formation 8:
"If you’re really good at what you do, and you want to buy a nice house, you have to invest well. Your main investment at 22 is your time… that’s the only investment that matters. I’d argue you should take a longer view and make sure you’re also learning as much as you can the next five years. Fortunately, you can probably do both by joining a young hyper-growth business that has lots of top people in it and pushing for a low salary and high equity. There is a comfortable myth among naive outsiders that everything here is a crapshoot and people like my friends and I just keep getting lucky lots of times in a row. There are probably lots of psychological reasons they need to believe this. And maybe they are right, and there are similarly strong psychological reasons why it’d be hard for me to accept that some of my friends and I who have been involved in several big wins are just the luckiest people vs having a good strategy or some other insight about what’s working."
Why you shouldn't work at a startup
Here are a few things to consider:
- You might have to work long hours: Startups are generally understaffed, and you might have to work longer hours than your traditional 9 to 5 and maybe even on weekends. If you're not up for that, a startup might not be the right choice for you. That said, not all startups work long hours. It depends on the company.
- Less structure and more uncertainty: Startups don't necessarily have the same level of processes or training and development in place as large companies. Depending on how early it is, the startup may not have a dedicated human resources manager to onboard you or a manager to tell you exactly what to do. In exchange for this uncertainty, you'll get to do lots of stuff. There's generally so much to do that you'll be able to do as much of it as you can handle.
- Less mentoring and management: Founders and fast-growing companies are characterised by a chronic lack of people who can manage. If you're looking to be mentored, a startup may not be right for you. That said, because of this uncertainty if you're aggressive and performing well; promotions will come quickly and easily.
- Pay may be lower than the market rate: This will depend heavily on what company you join, the stage, and whether it is bootstrapped or VC funded. That said, many startups pay at or above market rate too.
- Your equity may be worth nothing: Again, this largely depends on the company you join and the stage it's at.
- Your experience at a big company may not transfer over as well as you think: Working at a big company teaches you how to work for big companies. The way things work at a large company won't scale down to a startup. So working for a big company may often be a statement that you plan to spend your career at big companies - and lots of people are happy doing that, but I don't think that's your intention if you're reading this blog post.
How to pick a startup to work at
"If you join a company, my general advice is to join a company on a breakout trajectory. There are usually a handful of these at a time, and they are usually identifiable to a smart young person. They are a very good risk/reward tradeoff. Such a company is almost certainly going to be successful, but the rest of the world isn’t quite as convinced of it as they should be. Fortunately, these companies love ambitious young people. In addition to the equity being a great deal (you might get 1/10th of the equity you’d get if you join a tiny new startup but at 1/100th or 1/1000th of the risk), you will work with very good people, learn what success looks like, and get a W on your record (which turns out to be quite valuable). Spending a few years at a company that fails has path consequences, and working at an already-massively-successful company means you will learn much less, and probably work with less impressive people.
Incidentally, don’t let salary be a factor. I just watched someone turn down one of these breakout companies because Microsoft offered him $30k per year more in salary—that was a terrible decision. He will not build interesting things and may not work with smart people. "
If it's time to learn, look for startups that offer you one or more of the following:
- A network of talent executives and VCs
- More responsibility than your last job
- Specific industry or technical skills that will help you in what you do next
- A chance to partner with companies that will increase your industry relationships
In addition to Sam and Mark's advice, Elad Gil, founder of Color Genomics, author of High Growth Handbook, and investor in Airbnb, Airtable, Anduril, Brex, Checkr, Coinbase, Flexport, Gitlab, Gusto, Instacart, Opendoor, PagerDuty, Pinterest, Samsara, Square, Stripe, and Wish suggests that you overweight and underweight certain factors:
Factors to overweight:
- Market and Growth Rate
Factors that don’t matter as much as you think:
Get on a rocket ship. When companies are growing quickly and they are having a lot of impact, careers take care of themselves. And when companies aren’t growing quickly or their missions don’t matter as much, that’s when stagnation and politics come in. If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.
What do startups look for in employees?
Startups need all the skills required in any other industry. While some prior startup experience is helpful - and knowing about the company you are applying to is crucial - startups need help. It doesn't matter whether you work in design, engineering, marketing, growth, product, finance, operations, business development, sales, or human resources.
There's a lot of room for individuals with soft skills to contribute to non-technical roles at startups. Whether you are a software engineer, operations manager, graphic designer, worked in hospitality, service industries, sales, or are just a recent graduate, there's likely opportunities for you.
What I'm saying is that startups hire for standard roles. With that said, there are a few specific traits most startups look for in potential hires:
- Ability to learn, fast: Startup employees often need to be able to quickly research, parse, and understand new concept and markets. Even if they can't go and implement the solution themselves, most employees need to be able to communicate with engineers and learn about how the product works.
- General understanding of the market: This helps employees troubleshoot solutions and speak confidently to potential customers and hires as public-facing entities of the company.
- Curiosity: Startups change a lot, so employees need to like change and ideally be able to adapt and evolve alongside the organisation. If you choose the right startup, the role you're hired for probably won't be the role you are working in a year. It takes a particular type of person to thrive in this environment, a learning machine.
- Humility: You can make a huge impact and take on more responsibility than you'd be able to at a more traditional corporate environment - and that's one of the reasons why working at a startup is so appealing. But sometimes, you'll also need to roll up your sleeves and work on unglamorous but essential work, which could include putting together your desk on your first day.
- Passion for the product: In previous roles, my favourite new hires have been people who are already active users or advocates for the company's product or service. Not only does this mean that they're passionate about the company, but they can also provide an informed perspective about product decisions from day one.
- Researchers: Competition for talent in startups is fierce. The best talent gets the most offers, and the best companies get the most applicants. If you're applying for a hot startup, go the extra mile with your application and include a well-written tailored cover letter. Some startups will even include a hidden request in their job description to make sure that applicants aren't taking a spray-and-pray approach to job hunting.
- Builders: An engineer who says they have a passion for building but has never built anything is far less convincing than someone who has a project or two to demonstrate how much they love to create.
- Be so good they can't ignore you. If you want the job, be so good (and persistent) that the startup can't ignore you. You could develop a website that shows how you'd improve a specific part of the product, add value for them for free, create an online community about the product, or launch a small side project that compliments the company.
Where to find startup salary information
Startup compensation is generally composed of several components. You may only be paid a salary, or there may be an equity component of your compensation alongside your salary.
An excellent place to start to get an idea of potential compensation is AngelList's Startup Salary and Equity Tool. Just select the role, skill, and market to view salaries and equity information about thousands of startups.
With that said, it's essential to keep in mind that your total compensation consists of your salary, options, vesting, cliff, acceleration, bonuses, and severance pay. However, most employees will have a 4-year vesting schedule with a 1-year cliff, no acceleration, no bonus or one based on discretion, and no severance.
How to research startups
There are a bunch of places you can research startups:
- Breakout Careers: Breakout Careers is Australia's largest database of startup jobs and companies.
- AngelList: The best international job board for startups.
- Crunchbase: Crunchbase is a platform for finding business information about private and public companies.
- Glassdoor: While not solely dedicated to startups, Glassdoor can be a great place to find what a startup's employees think about the company. Do your due diligence and look up the founders to see what other startups they've been involved with and if there are any reports on what it's like to work for them.
In general, when you're searching, you want to get an understanding of:
- The company: Being part of a startup means you need to understand the past, present, and future of the company and whether you agree with the strategy. Don't work somewhere that you don't respect and admire.
- Culture: Not every startup offers impressive perks like unlimited paid leave, table tennis, and free lunch. Assumptions like these can lead to disappointment if you don't have a clear idea of where you're applying to. Only work with people you enjoy.
- Customers: What do their customers think? Do they love the product, or are they using it because there is nothing better? Don't sell anything you wouldn't buy yourself.
- Competition: If you get the job, who will you be competing with? Are they a well-funded and nimble startup or a slow, entrenched incumbent? Is the market fragmented or concentrated? Remember, once you join, they'll be your competitors too.
Where to find startup jobs
- Use job sites: Breakout Careers is the best place to find tech and startup jobs in Australia. You no longer have to move to San Francisco to work in tech. Overseas, you should look at AngelList. You'll be able to view salary and equity information about thousands of jobs and create a profile to share your work experience, projects, and relevant skills. You can also look at more traditional job boards and search for the word startup, but you'll generally have a better time during your job search by using a dedicated startup job board.
- Reach out to companies directly: Use Breakout Careers' company database to explore the hundreds of tech startups in Australia and reach out. The startup world is small, and one of the best ways to get an interview is to show to the founder or hiring manager that you are passionate about the company. One thing to consider is companies hiring may not even post to job boards and prefer to get referrals from existing team members.
- Use your network: Many people find jobs at startups by networking with their existing employees. If you're interested in a particular startup, check LinkedIn to see if you know anyone working there. Better yet use Twitter, and develop a public profile and meet people online.
- Meetups: On the topic of networking, meetups are a great place to meet new people, whether that be hiring managers, employees, or founders.
- Venture capital firms: Many VC firms now have job boards or talent programs designed to help people find jobs at their portfolio companies. In Australia, take a look at Blackbird Ventures, AirTree Ventures, Startmate, and Square Peg.
- Use social media: Follow companies you're interested in on social media, you might be able to land an interview by replying to a tweet, engaging with employees on Twitter, or via a job post on LinkedIn.
How to get ready for a startup interview
Many startups hire in a faster and less formal style than big companies. That said, they're still job interviews so you should do your best to prepare.
Here are a few guidelines to help you when interviewing at a startup:
- Stop selling and start engaging: The best way for you and the hiring manager to determine if you're a good fit is to have a thoughtful and engaging discussion. If the interview only involves the interviewer asking you questions and you giving answers that you think will impress them, you won't get very far.
- Don't talk in sound bites and buzz words: If you find yourself repeating the same stories over and over, it's going to be an unproductive meeting. While the STAR framework is excellent for answering behavioural interview questions, the most important thing is to answer the question.
- Don't agree with everything they say: Everyone is wrong sometimes. Startups want people who are comfortable with disagreeing with strategies and providing new ideas. If you agree with everything the interviewer says, they'll be left wondering how you are going to contribute when you're working together to solve problems.
- Ask tough questions: You're going to be spending a considerable portion of your time at the company, think about the risks and downsides of the company or role and ask questions to get more context.
- Ask lots of questions about things that matter to you: While reviewing a company's website before the interview can give you some background, there is nothing better than hearing it from the horse's mouth. Asking questions also helps the interviewer learn more about how you think. Read our guide on the best questions to ask during an interview if you're stuck.
- Be honest.
And while many startups are generally less formal than traditional companies, remember to make an effort in your appearance. The halo effect is a real thing.
Finally, as with any job interview, take the time to follow up with a thank-you email.
How to evaluate a startup job offer
When you get a job offer, it's essential to carefully evaluate not only the compensation package but how well you fit into the company culture. Also, it's crucial to understand how the equity packages, particularly your options, how they will be taxed, your exercise window and cliff.
A straightforward way to look at it is to consider the equity portion of the compensation as 0. Unless the startup up is highly successful, the chances are that you won’t see anything from those options. So, if you are treating them as 0, and you are most likely going to make less on the salary side, you need to consider the other benefits before you accept.
With that said, that's not necessarily true. If you pick well and you join a mid-stage startup, there is a decent chance that that equity will be worth something. It's up to you to decide how much you value equity vs. salary.
Remember, you will also have to pay for your options, they're not free. Options have a strike price which may be low or high depending on when you join the company.
In general, you should ask yourself: How does my compensation compare to my peers in the company?
Some companies pay more, some pay less, but an offer is fair if it's in line with your peers. A peer is someone who joined the company at roughly the same time as you did with the same title.
Consider all the factors that are important to you, including those that aren't strictly financial, when making a decision. Remember, this job could be a stepping stone to starting your own company or where you meet the people you work with for the next few decades.
Consider all the factors that will make this the next best step in your career when making a decision, remembering that your tenure at a tech company doesn’t have to be forever. Even if this is one of the startups that doesn’t make it long-term, you’ll have an opportunity to expand your skill set, build your resume, and acquire valuable professional experience in the tech industry.