Joining a startup vs a job : what's different?

Sameer

The startup ecosystem has done a pretty poor job of getting the whole point of joining/doing startups across. Folks get taken in by the sexiness of it all, and want a startup stint on their CV, and come in and ask for market+20% salaries! Defeats the whole idea, doesn't it?

Would be good to share different perspectives on what it means to join a startup - from the points of view of (early) employees, co-founders, recruiters, and the startups themselves. What do you think goes on right now, and what do you think it should be?

I, for one, believe that as long as you call yourself a startup, you should NOT offer market salaries or above. In return, play/innovate on other variables - ownership (equity), ownership (decision making), flexibility and variety of roles - stuff you just cannot get in a regular job. In return, look for buy-in, self-driven-ness, street smarts (more than "ninja"-ness), and the desire to learn and push oneself outside of comfort zones.

If you were working in a big software services organization, or an MNC, what should you be looking for and looking at. And if you were to hire from these relatively "cushy" places, what's the message you'd like to get across?

Gaurav

Thanks for bringing this up Sameer.

I was in a startup in the US where i enjoyed a lot of what you talk about (equity, decision making, flexibility, seeing the impact of my work). Fortunately the startup did well (acquired by VMware) and my equity was worth something, but that was really just icing on the cake. The true value for me was the experience and learnings of building a product from scratch, playing different roles (including sales engineer and tech-support) which taught me about customers, and the fun i had with the people in my startup (It's like being in the army - 'being at war' brings people together).

I've just started up my own company and I really do believe in bringing on people who understand (and want) the real benefits of a startup and not market salary. But i admit that i haven't even started hiring, and so i would love to hear what has worked for other startups.

naman

Adding to @sinha:

How many companies in India have taken a typical startup route, are successful without giving any ESOPs. The point is you have to give ownership of work and company because that is the only thing that will pull it off.

I have worked for 4 startups(2 well known, 2 defunct) and from what I know from colleagues/friends, the only thing that makes them stay is ESOPs. When there is work beyond the responsibilities that were mentioned on paper but no ESOPs, it is the good guys who leave first. Bad employees rarely have options.

Also, one other thing, although we keep saying startup as fancy organisation and that refers to a particular culture. What we forget is that the culture is driven by people and most of the decently bootstrapped startups are started by people who were themselves working at a corporate enterprise until yesterday. They are the ones that have capacity to offer more salary but don't have people/product culture. They dont understand ESOPs themselves or dont want to take the pain of being transparent and organised themselves. They believe ESOPs are bonus add on and not that it is a compensation against low cash. They are still called startup. They are the ones who destroy the ecosystem. A typical case of wrong "tagging"*.

*Self plug - My article on what I mean by tagging http://www.pluggd.in/defining-your-product-category-297/.

Roshan

The irony is companies which are bashed by most in Indian IT, infosys, mindtree etc have created the most wealth for early employees.

nileshgamit

if one is only money oriented, start up is not good option.
if one is knowledge seeker and can do any type of challenging work in any condition to learn things without concerning much about money or ESOP, start up is good.

don't join start up because of ESOP or money, join if you believe in start up, if you like the idea, if you like the team and eventually u will get work satisfaction and on long run may be money satisfaction ;)

for MNC, money is good (still don't overlook at ESOP options) and chances are you might not get complete work satisfaction, but at the end if money is the king then don't leave MNC to join start up.

Boni

Well,

One should be very clear that start-ups are not here to pay big checks, they have just began to do something out there, which is yet to be achieved.
Hence expecting big pay checks is not clever

Big MNC's are the perfect place to demand.

Boni Satani
http://www.flickstime.com

Sameer

@sinha Good point - its a 2 way street after all. But the point about "why would they take the risk" is not on - I mean nobody's forcing anyone to do/join a startup. There needs to be a sharing of both risk and reward, and journey itself is very very rewarding even if you're part of the 90%. If you don't believe in the dream/story/idea - you're in the wrong place already, and are merely making it worse for the startup.

sinha

@kunalkant - that's a very short term thinking.
The startup (where I made some money via ESOPs)'s success was result of 5 year of effort. And frankly, if one doesn't have that kind of patience they shouldn't join startups.
Even those who made LOT (LOT as in LOT) of money in Infy stayed with the co. for atleast 10 years.

sameerparwani

There have not been many large exits of startups where hundreds of early employees got rich in India. So, there isn't a sexyness around joining a startup for a lower salary in India as compared to the USA where you have companies like Microsoft, Apple, Google, etc who have created immense wealth for hundreds of early employees who were given stock options.

sinha

well said @Roshan. I have heard of horror stories of startups not giving ESOPs (though promising at the time of job interview).
Agree that Infosys alone has defined the ESOP culture in India.

I joined a startup in the early days (was emp #3) and did things beyond my imagination - right from playing the role of HR manager to managing sales team. Looking back, it was a wonderful decision and learned a lot - now that's something IBMs of the world can never teach you.

Sameer

Exactly @sinha - its all been reduced to "compensation" (I detest the word - its used for accident victims) and the other attributes are hardly discussed/pitched at all.

Semil

Taking a job in startup really need guts.. Job is somewhat secure as compare too startup job.

dkawasthi

There isn't any doubt about things you learn in a startup. It's also true that only those who have passion for new ideas and go beyond their limits to make things happen are best fit for a startup (since you might have to wear different hats at times).

But, its also true that everyone is out there in a startup to make money at the end. From founders to employees, no one is there just for charity. ESOPS, flexibility, freedom of decision making- all these things are very important. These things give everyone working in a starttup a sense of ownership and keeps them motivated to strive hard to make the startup a success.

Sameer

@dkawasthi - of course everyone's trying to make money - but thats one of the variables. And the sense that what one makes is one's fair share of what the collective makes needs to be very strong. In a larger org, "someone else" provides the structure, manages the risk, and is responsible for paying you. A startup job is way less parasitic in that sense, and we need to get that message across so people join for the right reasons.

dkawasthi

@Sameer totally agree. That all comes with the sense of ownership.

Navin

Everything starts at some point. IBM, Infosys, Wipro, Google, Microsoft, each one started someday.
I hope it's our time to do the same.

Ofcourse you can only reach that place when you believe in your idea and ready to work extremely hard on it.

Navin Kumar Singh, Delhi
www.jusbill.com

sinha

Qn: How many of you (startup founders) have given ESOPs + Responsibilities to employees? While we look at this issue from startup perspective, but employees know that
1. 90% of startups will fail.
2. 90% of the time, ESOPs will have no significant value
3. Compromised Lifestyle for the next few years

So why would they take the risk when the cumulative learning of being in a startup doesn't add to a MUCH significant value prop.

archelons

Taking risk on money is VC's job and they are playing their part. Professionals come out of their comfort zone by handling multiple roles, stretching themselves (and enjoying it) etc. and not necessarily by cutting on salary. Founding team does sacrifice on salary.

Sameer

@archelons Salary, esp in a startup, *must* be a function of what the startup can realistically generate - at least in the foreseeable future. Funding can support salaries to some extent, but its a bad model to fund market+ salaries when there's no visibility into the former. Sure, its worked out in a few big-name cases, but what you really want is folks determined to make things work and "give themselves a salary" - the chances of your success and participation in rewards go up significantly.

Nikita

[ Edit : Job post, so removed. @Nikita, welcome aboard - we've taken a stand against job posts on this board so we have more meaningful discussions about various aspects of the ecosystem. The PI Job Board will be active soon, and focus on recruitment needs. ]

Nikita

Oh alright - that's cool. Thanks for informing.

unentrepreneur

In this context I have found this article particularly interesting.

http://www.guglanisam.me/startup-jobs-are-not-for-the-weak-hearted

I sent this to the interns I was looking to hire and tried to see if they understood what this means.

kunalkant

My thoughts

Year 1 of startup: less salary, ESOP (Transparent about how much, vesting period)

Year 2 of startup: Equal to market salary ( If startup not able to make money at 2nd yr, no point), Small ESOP

After onwards i feel startup move to SME or whatever and should give above the market salary.

ESOP attract when employee feel that he will get exit and also get good valuation. Most of startup dont get exit. What he will do with that ESOP.

ForeverHungry

@sinha

Apart from the fact that ESOPs don't have any value until you stay with the company till they go public, there is added factor whether the company will actually honor the ESOPs they pledged. Even with equity until it has been registered with the govt. and you have been listed as a shareholder, there is no guarantee that the company will find a way out to renege on the agreement. Look at the case of Pandora and Skype

Given there is so much uncertainty, some prefer to have money now and invest it on their own.

Sameer

@ForeverHungry - the company you describe is either not a startup any longer, or one should not be joining it if one doesn't believe in both the idea/product/business as well as the people doing it.

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