What kind of Silicon Valley company do you want to work at?
Hi, I’m Kwin, co-founder of Daily.co and two previous startups. This post is part of my series about startups and tech. I’m always happy to be helpful to startup founders and people trying to break into tech, if I can be. Feel free to schedule a Daily.co video call with me, here.
One thing that often surprises people who move to the Bay Area is how different it is to work at:
- an early stage startup, versus
- a “post-Series B” high growth startup, versus
- a large, publicly traded tech company.
Like every industry, the technology industry has its own norms and quirks. One of tech’s is that jobs with the same title and seniority are — in a predictable way — radically different in terms of what you actually do every day, how your job changes month-to-month, the kind of professional network you become part of, and the financial trade-offs.
What’s the best kind of company to work for? Well, like most things in life, it depends on what your goals are.
First, let’s define the three types of companies a little more precisely. We’re generalizing, and definitions are pretty loose, but here are good rules of thumb. An early stage startup is a company that has raised less than $10M and has fewer than 50 employees. A high-growth startup is a company that has raised at least $20M and has between 100 and 1,000 employees. (Note the missing band between the two categories; there’s a lot of grey area between a company that is clearly early-stage, and a company that is clearly high-growth.) A large, publicly traded tech company is, well, a company like Google, Apple, Facebook, Salesforce, LinkedIn, Intel, or Oracle.
Here are some generalizations about the differences between early stage startups, growth startups, and bigger companies. Mostly it makes sense to think about these characteristics as mapping to a spectrum, with very small companies on one end and very large companies on the other.
At a startup, things change all the time.
Startups are chaotic. At an early stage company, everything is still a hypothesis. The company is trying lots of new things. It’s often not even clear, yet, how to define and measure success. At a growth stage startup, new people are being hired all the time, and every department, process, and role is undergoing the stress of scaling up.
In either of these environments, your job will change. A lot. Sometimes every month. If things are generally going well, that can be great! There will be lots of opportunities to do new and interesting things. You can have a big, direct, individual impact on the fortunes of the company. You can have much more and broader responsibility than you would at a larger company.
On the other hand, it can be stressful to work at a startup. Many people are happiest in companies that have clear structures, well defined roles and processes, and formalized internal communications. To a first approximation, all of those things are impossible for startups. :-)
At a big company you are likely to have less stress and work fewer hours. It will also be easier to evaluate both how you and the company as a whole are performing. The trade-off is that your job will be more static. And your impact on the company as a whole will be much smaller.
Big companies can pay much more than startups.
Big companies are big because they’ve figured out how to make a lot of money. In the technology industry in 2018 this means that they can outbid startups for “talent.”
There can be a $100,000 annual pay difference between a startup and a big company, for people in mid-career roles.
So how do startups compete? With upside: job opportunity and equity. As discussed above, you can advance farther, faster in a startup that’s doing well than you can at a big company. And most startups offer most employees some form of ownership shares — “equity.”
Startup equity is a bet on the future of that startup. It’s not worth anything now, but maybe it will be in the future. It’s safest to model equity you get as a startup employee as being worth nothing.
If someday it is worth something, that’s a nice bonus on top of the non-financial advantages of working at a startup.
Or, you can model startup equity as part of a long-term portfolio you build over your whole career.
Let’s assume you move to the Bay Area after ten years of working somewhere else. You have enough experience that if you take a job at a startup your pay package will include a significant equity offer. If you retire at 65, you are likely to work at five companies over the course of your career in tech. Here’s how you might project the eventual value of an employee startup equity “portfolio.”
- startup one: $0
- startup two: $100,000
- startup three: $0
- startup four: $1,000,000
- startup five: $100,000
So your startup equity portfolio translated over your career to $1.2M in cash on top of your take-home salary. On the other hand, if there was a $75,000 average difference every year between that salary and what your cash compensation would have been at a big company, over thirty years that difference totals $2.25M. You would have made $1M more working only at big companies, vs working only at startups.
These numbers are super hand-wavy, of course. But the overall point is that if your goal is to maximize your annual pay, it probably doesn’t make sense to work at a startup.
On the other hand, if you enjoy working on brand new products and business models, want to have a lot of autonomy in your job, or would like to start your own tech company in the future, it makes a huge amount of sense to take a job at a startup.
I really liked Dan Luu’s post about startup trade-offs. His math is a slightly different version — and maybe a better one — of the calculations I laid out above!
Finally, one very tactical note: you can sometimes narrow the pay gap by asking the startup for a signing bonus rather than a salary increase. Growth-stage startups often really need to keep salaries within certain bands, but have more flexibility than big companies do to offer signing bonuses for people that are critical hires.
In the tech world, a startup can be better for your resume.
This one’s a little more complicated and our previous categories aren’t quite applicable. A position of responsibility at Facebook, Apple, or Google is a terrific thing to have on your resume. On the other hand, an impactful tenure at a startup will open many, many more doors than experience at most big companies.
One way to think about this is that ideas, technologies, and companies have a shorter shelf life here in Silicon Valley than in the rest of the world. (For better and worse.) Being big, established, and profitable isn’t the same thing as being considered “relevant.”
Facebook, Apple, and Google are certainly, beyond any argument, “relevant” companies. To pick a few other examples, so are LinkedIn, Twilio, Salesforce, and Twitter, because of how important they all are to the current generation of technologies and platforms that are shaping how technology is evolving.
On the other hand, Intel — for example — is sort of a neutral signal on your resume. Oracle might even be slightly negative unless you worked in a very specialized or hot engineering discipline (like scaling up hardware manufacturing, or designing chips for routers, or — right now — machine learning or blockchain tech). Ditto for HP, eBay, and nVidia. These are all very successful companies, and can be wonderful places to work, but they aren’t generally perceived as great proof points on your resume.
Hunter Walk wrote a post a few years ago that advises new graduates to seek out a job at a mid-stage startup. His perspective is very much worth reading if you’re thinking about all of this.
Job security isn’t as different as you probably think.
Lots of people think that working at a big company means job security, and working at a startup doesn’t. The second part is definitely correct! But the first part isn’t nearly as true as it once was.
It’s definitely harder to get yourself fired for poor performance at most big companies than it is at most startups, but if you’re worried about getting fired for cause, this post wasn’t written for you.
At the margin, if job security is a big, big concern for you, it probably does make sense to choose a job at a publicly traded company. But don’t assume that big companies provide automatic job protection, these days.
There are a lot of good jobs at technology companies in the Bay Area, so people often move here from other places (and from other industries) for work.
If you have multiple job offers, or the flexibility to take some time in your job search, congratulations!
You may want to be part of a very small team at an early stage startup and learn what working towards “product-market fit” entails. Or you may want to work at a growth-stage startup that scales from a few dozen to a few hundred people while you’re there. Or you may want to work at a larger company and have the advantages of a stable, profitable company backing everything you do. There’s no wrong answer.