A Guide To Startup Life
Increasingly people want to join a startup instead of working at a big corporation. I've done both and several people have reached out to me asking about what they should know about startup life. This post aims to provide my thoughts (as well as links to resources) to give people of all levels and backgrounds an overview of what to expect from working at a startup, and how to navigate startup life.
It’s not the end-all-be-all, but I hope you find it helpful.
Why do you want to work at a startup?
Startup life can be hard — long hours, less pay, high risk, constant change, etc. It can also be fun, accelerate personal and professional growth, and be financially rewarding. So before dedicating your time and effort to working at a startup you should know what motivates you to work at one. There’s generally a few reasons people are motived to choose startups:
Connection — the problem the startup is tackling has a purpose that resonates with you
Opportunity — to meet people, learn a new function/role, progress faster in your career
Culture — you love to build and eschew "bureaucracy"
Monetary — upside potential of an exit
It’s likely your motivation is a mix of the above so it helps to rank them; you should know which is your #1 motivating force so you have a north star when making tough decisions.
It's also important to understand where you are in your career trajectory and match the stage a startup is in with what you want out of it. For example, if you're a young engineer 1-2 years out of college and want to get a taste of everything to see where your interests lie then maybe series A where the company is figuring out product-market fit is a good match for you. If you're a mid-level engineering manager at Facebook and want to run a bigger team maybe series B or C is better. The best breakdown I have found for thinking about this is this HBR Ideacast So, You Want to Join a Startup.
What's the “Big D” problem you're solving?
At their core, startups see a problem that needs fixing and are trying to make money by solving that problem. They generally have a idea about how to solve the problem and what business model to use, but aren't sure if it will work. For this reason, over time you can expect the product and business model to change, and that's good. This change can happen fast and be jarring to some. Getting comfortable with change is key. If you have an aversion to change, you should consider joining a later stage startup. Even if you are comfortable with change it helps to know what the big deal (Big D) problem is so you can stay flexible and contribute to the process of evolving the business. Here are some tips on how to do that:
Get intimate with the problem — see, touch, hear, and feel the problem firsthand; and talk to potential customers and users.
Research the industry — who are the key players, what is the history of how the industry has evolved, what forces shape market conditions? Get obsessed.
Watch the competition — know who else is working on the problem, learn from them, and make them your bogeyman. Use competition to compare the success (or failure) of your strategy, gain insights about customers and operations, and position yourself in the marketplace, but don't blindly copy them. It also helps to have a bogeyman to rally the company. Competition can be a force for good.
What are the priorities of the business?
You will work on a lot of things in a startup and all of it matters, but some of it matters more. So it helps to know what the key priorities and associated metrics are that drive the business. These are normally driven by the founder/CEO, investors, and customers. Below are the most common priorities and some associated KPIs:
Profitability — net margin, ROIC (return on invested capital), CAC (customer acquisition cost)
Revenue — net sales booked, MRR or ARR (monthly / annual recurring revenue), growth rate, CLV (customer lifetime value), ARPU (annual revenue per user)
Product & engineering — speed of delivery, rate of on-time releases, bug rate, uptime, QA coverage
Customer satisfaction — NPS (net promotor score), CSAT (customer satisfaction score), issue resolution time, customer retention and churn rate
These might also change by the stage the business in. For example, at series A it might be purely focused on the product but by series C if there’s strong product-market fit there might be an emphasis on sales growth. So pay attention to the topics and metrics presented in all-hands meetings and be sure to ask your manager. If you're getting different answers just ask the CEO what are the key three priorities and associated KPIs they care about. Then be sure to put points on the board that contribute to those metrics in some way.
What is your role and responsibilities?
At established enterprises you have one job, the one you applied to. Here’s a secret — you actually have three roles:
Help the company succeed at the Big D goal
Do your current role
Do your next role
Number one means that you do anything and everything to help the team win. It also means the company might adjust your role at any time, without your input. It might suck, but it's a reality. Number two is all about knowing what your stated job is and what good looks like (WGLL) for fulfilling it. For this you should document your responsibilities and define below, at, and above the bar with your manager. Number three is about having a backup plan for #1, knowing how to crush #2, and getting what you want out of the experience. My favorite framework for how to think about your job at a startup comes from Reid Hoffman's concept of Tours of Duty, read it.
One additional note about roles and career progression. In a startup you should expect the nature of your role to change at least annually and your boss will likely change a few times. You also might get "layered" (a.k.a getting topped or hired above) event though you've built the function. All of this is OK, that's a natural part of startup life. Understanding your three roles will help you navigate these changes and maximize the odds you get what you want out of the experience.
How to operate in a startup culture?
Operating in a startup is dramatically different than an established company. Established companies already have product-market fit, money, and have refined their operating capabilities (i.e. people, process, and technology) to affect the Big D goal for decades. So they already have a machine to plug you into and their focus is you doing that role well. This is not the case in startups. Startup life is often about building the plane while it's flying to an yet to be determined location. So the time tested advice from corporate life is not applicable, and is often wrong. Startup environments are:
Very fast (a.k.a hypergrowth) or super fast (a.k.a blitzscaling)
Resource constrained (i.e. not enough time, people, or money)
Messy and manual
Thrilling — both fun and stressful
Learning to work in a startup is a skill in and of itself. You'll you need to develop the skillset quickly and can do so on the job. The key skills to to learn are:
Navigating the organization: Build mental maps for who can help you problem solve, navigate politics, and identify who should own what responsibilities in the organization
Comfortable failing and learning: It’s OK to fail, just not OK to not learn from it. Produce work output fast and don't worry if it's pretty (i.e. don't be ashamed of v1), get feedback, and iterate quickly. Understand the word failure is an objective measure, not a reflection of your worth.
Understand the concept of, and learn how to get, leverage
Prioritization: Understand other people’s priorities and how they relate to you. Learn how to prioritize doing the most valuable work that contributes to the Big D. You will always have more than you can do so you need to learn to let some fires burn. Try the Eisenhower Matrix.
Understand the trade-off between time and money: Sometimes you spend money inefficiently to save time and go faster. Sometimes you do work that get's thrown-away or not used. This is OK, sometimes it's part of the process of iterating on ideas to learn what really needs to be done. (Note: this is not an excuse to waste money/time, use common sense.)
Produce visible work, regularly
Do work that needs to be done without someone asking — see it, grab it, deliver it
Help others often, but not to the point it's hurting your ability to deliver on your work
Learn how to synthesize what you're doing:
Tell people the why and “so what” (i.e. the important take-away); don’t describe how you did it unless asked
Tell people the goal, where you are on the field, what’s next, when to expect it, and what you need help with
Learning to operate this way will accelerate your growth and payoff over time. It's not always easy so try to find a mentor who can guide you and give you radical candor feedback. And you wont be the only one learning so band together with your peers to swap lessons, complain to when necessary, and celebrate over drinks when it clicks and you kick ass!
Navigating the people landscape?
Working in a startup can sometimes feel like high school all over again. It's human nature to form cliques, have personality conflicts, and political jockeying, but it can also be tons of fun. Here advice for navigating the people landscape:
Get a "red team" — people you know you can trust, will support you, and give you radical candor feedback when necessary. They will help you solve problems, give you perspective when you are wrong, advocate for you, and be the people you have the most fun building with. You will have 3-5 of these max. They are the people you’ll still hang out with after you leave the company, or will work with at your next startup.
Power brokers — learn and track the following:
Who are the ultimate decision makers on key topic areas?
Whose opinion carries most weight on what and with whom?
Who is in/out of favor?
Who is honest and fair?
Who is selfish, sleezy, and/or abusive?
Go out and socialize — social credit is valuable to building relationships and that bond helps when collaborating with others. Develop relationships with people at all levels. You never know whose help you might need.
Don’t get into the gossip...and especially don’t be the gossip!
What are the compensation expectations?
Startups are inherently high risk bets with limited resources so they tend to pay below market rates and try to make up for it with equity. But $1 of equity is not equal to $1 of cash. Benefit plans may be more progressive but also not as robust (e.g. unlimited PTO but no 401K matching). So when you get an offer know what the minimum salary you need to live is, but understand that startups are generally losing money so there is probably a preset budget based upon the funding round. Also don't be surprised if people joining into the same role a year later might get more cash than you simply because of when they joined. This is often because they will get less valuable equity...startup life is not always fair. Learn to ask for what you need and advocate for yourself. Speaking of startup life not being fair, let’s talk about equity.
The founder(s) and investors will get the biggest payoff, if the startup is successful. Very few employees will get rich off the equity so this should not be your only motivator for joining a startup. Here are the circumstances when an employee is most likely to hit it big:
You join at an early stage (e.g. Series A, not Series C)
You have a good number of shares (e.g. probably Director or above — 50+ bps)
You stay long enough to vest a good portion (e.g. minimum 2 years out of a 4 year vest)
You have the cash to buy your options (watch out for the AMT tax burden)
The company hits unicorn status
You can wait for a liquidity event, which might take 5-10 years
I've seen people stay in jobs at a startup they hate just because they think they will get rich off the equity. Don't do that, the odds are low and it's not good for you or the company. But if you do have equity then you should:
Find out if you have ISO/NSOs, RS/RSUs, ESOP/ESPP, SARs and understand the difference
Understand what a 409a valuation is, how dilution works and it's impact on your equity
Make a plan to save money to pay for exercising your options
File an 83b form when you start to avoid AMT
Understand the impact of state taxes; consider moving to a tax friendly location (9 states with no income tax)
Speak with a tax advisor to learn how to minimize your tax bill when exercising and in the event of an exit
There's a lot to know about how startup life differs from traditional corporate life, but isn't for everyone. For those who want to try it out I hope this guide helps you know what you're getting into and how to maximize your experience. And remember this is only one person's perspective, seek out other people's perspectives as well. They might have more to add or different experiences with lessons. Ultimately the goal is for you to make the best decision for you.