The Hitchhiker’s Guide to Your Next Company

Should I join a startup or large company?

“Should I join a startup or large company?”

This is a million-dollar question, which I have also been asked a million times. Even more so since I started Leap.ai last year.

Most people expect a “yes” or “no” answer, but unfortunately it doesn’t work that way. Every person values different things, so a great fit for one person might be terrible for another.

However, there are two key things that can help you decide: First, you need to gain clarity around what is really important to you. Second, you need to understand the differences between a startup and a large company.

Before I give you the full answer, let me first show you a sneak peek — I call this the Decision Trade-off Table. I will explain this in more detail throughout the rest of the article.

1. What You Value

Deciding which company is best for you starts with knowing what things you value the most at your current stage in life and what you’re aiming for in the near future. There is no right or wrong answer but being honest with yourself is the best policy here. From my 10+ years of experience as a manager, the following 7 values are the most common:

• Learning
• Career Growth
• Compensation & Benefits
• Stability
• Company Prestige
• Impact
• Work Life Balance

These values can and often will change over time. For example, an international student who just graduated might value a visa sponsorship more than anything else. Therefore, a larger, more stable company that is willing to sponsor international candidates will be more attractive to this student. However, a few years later, after gaining enough experience from a large, elite company and obtaining a green card, that same student might want to have a more direct impact on a company’s product, thus, a startup will become more attractive.

It is incredibly hard, if not impossible, for a company to score high across all of these areas. So I encourage you to first identify your top 3 values and then evaluate which type of company aligns with these values.

2. The Four Types of Companies

Now that you’ve thought a little bit more about what you value, let’s dive into the differences between startups and large companies. Classifying companies into two categories, i.e., “startups” and “large companies” is overly simplistic. For example, an early-stage startup, such as Leap.ai, is drastically different from a unicorn, such as Dropbox, although both are considered “startups.” Similarly, large companies may vary in multiple respects. Google, for instance, is still rapidly growing and would be very different from a large company that recently announced mass layoffs.

Take a look at this graph below:

I like to classify tech companies into four phases based on their growth: (1) early-stage startups, (2) fast-growing companies, (3) continued-growth companies, and (4) mature companies. At each phase, the company’s culture, growth, learning opportunities and finances are all fundamentally different so it’s important to truly differentiate between each stage.

2.1. Early-Stage Startups

• Defining Characteristic: Speed
• Values Best Represented: Impact, Learning
• Values Least Represented: Stability, Work life balance, Company prestige

What is the culture and work environment like?

Early-stage startups are typically in the Seed Funding or Series A round, with a company size of less than 100. The company’s sole focus during this time is to build and validate their product-market fit and speed is essential. Life at an early-stage startup is like a roller coaster ride — you’re constantly operating at high intensity and there are many moments of exhilaration, as well as periods of uncertainty.

At an early-stage startup, you will have visibility into virtually everything in the company, including product development, user growth, business partnerships, and fundraising. The upside is that you will get tons of opportunities to learn and try new things. There are ample opportunities to take on new challenges and if both you and the company do well, you will get to take on a significant leadership role.

What are the tradeoffs?

Early-stage startups have the least tolerance for employees who are not a good fit. Thus, the turnover rate at an early-stage startup is typically much higher than a more established company. You are also often the first person in the company to figure out how something works and need to build processes from scratch. In many cases, your solution may be sub-optimal, but you won’t have enough time to thoroughly research it before moving on to another higher priority issue.

You’ll like this if you:

• Enjoy going from 0 to 1
• Enjoy a fast-paced environment and wearing as many hats as needed
• Want to have a meaningful and immediate impact on the company
• Are open to taking risks, uncertainty, and being on a roller-coaster ride

2.2. Fast-Growing Companies

• Defining Characteristic: Scale
• Values Best Represented: Career Growth, Impact, Compensation & Benefits
• Values Least Represented: Maybe work life balance

What is the culture and work environment like?

Fast-growing companies are those that have already validated their core product and/or services in the market. These companies now quickly shift their focus to scaling rapidly and earning market share from incumbents and other competitors. They are typically post-Series B with a headcount growing at 50% or more each year. Some of them are valued at over $1 billion and are named unicorns while others have IPO’ed but continue to grow very fast.

Culture-wise, the atmosphere is often very upbeat since the company is either on its way to becoming a unicorn or is headed toward an IPO. Employees will be working on many different things and, if they perform well, their roles and responsibilities will quickly expand. For example, a superstar performer can reach the level of a Director much faster at a fast-growing company than at a more established company. At the same time, many more experienced hires will come in with their expertise and serve as a great resource for the young company to learn from.

What are the tradeoffs?

Work-life balance usually suffers as these companies seek to scale in a short amount of time and solidify their place amongst the competition. While people are still very supportive of each other, office politics will nevertheless have started to emerge.

You’ll like this if you:

• Enjoy going from 1 to 1000
• Love to have a big impact on the company’s success
• Value opportunity to move up the company ladder quickly

2.3. Continued-Growth Companies

• Defining Characteristic: Profitability
• Values Best Represented: Company Prestige, Stability, Compensation & Benefits, Learning
• Values Least Represented: Career growth, Impact

What is the culture and work environment like?

Continued-growth companies are relatively stable and enjoy a healthy growth trajectory in terms of revenue and headcount. The focus now shifts from scaling to profitability. At this point, companies will have typically gone public and carry a strong brand recognition. Some of them even command unmatched prestige in the industry. Consequently, employees are often well-paid with great benefits.

These large companies also have more time and resources to train their employees. As an employee, you will get the best training in the world at these companies and learn how to solve real-life problems at scale in a systematic way. Experience working at these prestigious companies, such as Google and Facebook, will also add a lot more weight to your profile, making you an attractive candidate to both recruiters and investors, regardless of what you choose to do in the future.

What are the tradeoffs?

Often these companies have large-scale businesses, thus, even the smallest changes can have a huge impact. Additionally, a lot more stakeholders are involved for each decision, which requires a lot more collaboration among teams. The combination of these factors make continued-growth companies move at a much slower pace, which also means slower upward mobility even for star performers. Inevitably, there will be even more office politics and complicated relationships by nature of having more people.

You’ll like this if you:

• Want to join a prestigious company to boost your resume and future prospects
• Are looking for a stable career with little risk of failure and strong compensation and benefits
• Don’t mind moving at a slower pace and navigating through more red tapes

2.4. Mature Companies

• Defining Characteristic: Regaining momentum
• Values Best Represented: Work life balance, Learning, Stability
• Values Least Represented: Career growth, Impact

What is the culture and work environment like?

Mature companies are those that are stable or heading towards a decline. They were the stars of yesterday but are now falling behind the curve as technology and the market continue to evolve rapidly. Though they’ll still have great training opportunities, decent compensation and benefits for their employees, the biggest difference between companies at this stage and others is the decline of optimism and the surge of pessimism. The combination of these factors typically make these companies less attractive unless one believes that the company has a good chance of regaining momentum or turning around.

What are the tradeoffs?

There are limited growth opportunities at mature companies and workplace politics at this point are likely to be even more significant. As the company’s growth stagnates or declines, the risk of being laid-off also greatly increases. While overall cash compensation may be high, there is likely limited or no upside in equity.

You’ll like this if you:

• Prioritize work-life balance
• Are looking for greater stability and certainty
• Value systematic learning over self-directed learning

3. So How Do You Decide?

To answer the question “Should I join a startup or large company?”, you must first understand that not all startups and large companies are the same — each phase that a company is in has its own pros and cons.

Ultimately, there is no one-size-fits-all approach and at Leap.ai we partner with companies at various phases in order to optimize for our users’ values. Thus, understanding your values should be your North Star when assessing the right choice for you. If you value career growth and impact, a fast-growing company would be your best choice. On the other hand, a mature company could be a great fit if you prioritize work-life balance and stability.

In most cases, I recommend that users optimize for learning and career growth. The world is now moving at an incredibly fast pace. Previously, it took many decades for a new technology to transition from its birth, to its peak, to its sunset. Nowadays, new technologies (e.g. AI) can penetrate into many domains in merely two or three years. This means that, as a professional, whether at an early-stage startup or a mature company, one should always be open to and constantly aim towards learning new things.