I think your perceptions are accurate. "Big Company" culture is completely different than startup culture. I think people tend to fit properly into one or the other, but rarely does someone fit into both groups.
In a startup you have the ability (some would say requirement) to shape the outcome and success of the organization. There is a lot on the line, and the job never technically shuts off. Your job security is reduced, but the trade-off is that when the company succeeds, your share of the winnings can be significant.
In a large organization, any one person has far less opportunity to shape the outcome of the organization. However, the job is less likely to follow you to the Caribbean (or Vegas), and you can blend in among your peers and be relatively stable as long as you don't call any significant negative attention to yourself.
Reason #5. Pointy headed bosses can't SURVIVE in a start-up! They would disintegrate quicker than an ice cube on a sidewalk in Phoenix in August. Why would most pointy headed bosses disintegrate quickly? Because they do not UNDERSTAND customer or employee value, have no INTEREST in customer/employee value and are NOT GOOD at creating customer/employee value. They are good criticizing others, playing the "devils advocate", stilfling innovation and laying blame and kissing butt. It is hard to see how pointy headed bosses are really helping a company.
I would disagree for 2 points:
1. Its a numbers game. "Large" companies have more people. The chances increase of having a pointy haired boss increase. Getting good people is hard in any place, be it a startup OR large company.
2. If you look at the numbers of big initiatives in large companies that fail and the number of startups that fail, they are comparable. There are many other factors no doubt, but the number of "not smart" people in software startups is comparable.
I do agree that startups have more skin in the game, so you get committed individuals. Being close to the customer though has nothing to do with startup vs. large company. Its an attitude of the people at the company. If you care about customers, you care about them regardless of if you are in a large or small company.
I am a new reader of your blog, and you are right on the dot with everything you said! I hate working for big companies...I hate all this "strategic" and "alignment" nonsense. All they do is talk, talk, and talk. Great post..
Great Post! Happy Birthday!!
I've worked for all sizes of organizations and the only organization that I can think of that comes close to working in a start up in three of the four points is the military at lowest levels. Because of the emotional commitment, incentives (the guy next to you, pride and more), execution (you must do your job and do it very well if lives are in the balance).
Now there are the generals and all the Pointy-Haired Bosses but it can be amazing what can be accomplished. Having said that there is nothing like being an entrepreneur. I love it and I love creating.
I completely agree. But, I have seen some really passionate leaders in a big organization setting too. The only sad thing is that in big organizations it is much harder to get people excited with your ideas and lateral thinking because majority of the management is focused on industry trends, buzz words, and short-term thinking (that yields annual bonuses). This totally jeapordizes the company's best interest in long-term, but who cares. So the few NON-pointy-haird-bosses finally get tired and move on (probably to start a company - just like you).
I think you are romanticizing startups a little. Many have folks who are first time managers: in a large company there is typically more training and support available than in a startup. If they are venture backed you can often find decisions at a board level that make sense for the VC portfolio that may or may not make sense for the founders and probably don't make sense for the employees. Most startups don't succeed; they may teach you a lot but they don't offer "career growth" in the way that an established company may. Founders can be selfish and take steps that enrich themselves at the expense of employees as often as pointy haired bosses do the wrong thing.
We work almost exclusively with startups, so I am not against starting a new company or working in a startup. But I think your assertion that there are proportionately more poor managers are in big companies is probably incorrect.
I also take exception to Dan Tyre's comment that pointy haired bosses cannot survive in a startup. It's as likely or even more likely in my experience that a startup may not survive a founder who is a poor manager.
For the most part startup founders and early employers are folks who either cannot or do not want to hold a "real job." They may be more intelligent, more creative, or more talented, but they are also many times less able to conform--get along / go along--and while they may be great at starting things they can have more trouble finishing things.
If you were to focus on a sub-population of startups that were making an operating profit and had less than some threshold of people, say 20 to 30, then I think the "close to the customer" statement is more true. I think Mukund Mohan also makes a good point about "close to customer" being as much a matter of attitude and training as company size.
Earlier stage firms, and those with VC money who have not yet figured out how to make a profit can often be more dysfunctional than the average Fortune 500 firm. It's why so many of them don't succeed. As Kin Hubbard noted "many folks confuse bad management with destiny," the primary reason that most startups don't succeed is poor management decisions.
Too funny! You have to admit there is a little, no lots of true in what Dharmesh is saying; however, too much Kool-Aid and you get pointy haired! Me, I think every organization large enough has a Catbert, Evil HR Director.
As for going along to get along, bah! Its overrated! After having been in the best startup (a very bright and shiny star) that ever crashed (with one of the characters above), I have to say that there is no quantifying or describing the feeling.
Employees own the culture in startups, somehow what they've created gets really diluted in larger companies due to the obvious reasons (liability, less ownership, homogenation, etc).
Big companies can fight that by sending pointed haired bosses packing.
In terms of strategy, the point of small companies is that everyone gets it because they are so much closer to it. Execute or die trying is the credo (more or less).
Great article. I'm in complete agreement with your points.
Large companies have institutional momentum. It's hard to turn the oil tanker. They move slowly and deliberately, which creates a comfort zone in the depths of middle management for inaction and "safety." They tend to attract the PHBs, because the skills required to navigate that environment are PHB skills.
Startups don't require the same skill sets. Knowing how to walk a purchase order through 15 levels of approvals isn't a useful skill in a startup (unless you're selling to large enterprises). In general, you'll find a lot fewer PHBs in a startup environment.
It's interesting that most commenters have conflated PHBs with poor managers. Frankly, a PHB in his element can be a very good manager -- it's what the organization wants and expects, it just doesn't make sense to the outsider. To say that some startups have poor managers doesn't say anything about PHBs in startups -- the classes don't necessarily overlap.
Lt.Draper makes the point I was also about to make. This discussion has confused two very different issues: (1) Managerial competence and (2) Big vs small company organizational style. Incompetence is bad wherever it appears. But largeness is not inherently a bad thing.
Many of the contributors here are implcitly saying that large organizations tend to have a higher proportion of incompetent managers. I would be interested to see some objective data on that, because I am not sure it is true. There are lots of incompetent managers in large organizations, but are there PROPORTIONALLY more?
I have worked in both small and large organizations, and in small divisions of large organizations (which are an interesting hybrid of the two models). I had very few incompetent managers during my time in large organizations. Organizational behavior is incredibly different between the two, and to be successful in each one must adopt very different behavioral styles.
Don't blame a boss for policies that are inherent to large organizations. For example, a small company might let a boss exercise judgement over expense reports; a large company understandably establishes firm reimbursement policies to enforce consistency across many thousands of employees.
Each type of organization has its own advantages: Small organizations are nimble with minimal overhead. But large organizations have market clout and the ability to weather business downturns. Both can be fun to work in.
With Dilbert's pointy haired boss, Scott Adams is lampooning incompetence -- not organizational size per se. He could probably do a good job lampooning entrepreneurs too if he spent any time working for one!
I think this is pretty accurate, but along with aligned incentives, I think the size of the incentives is a big factor. The rewards in most companies for the difference between clock-punching and all-out commitment are minimal compared to a startup. Also think a big factor is what Minzberg wrote years ago on motivation. The size of the job - in terms of freedom to shape what you work on and how you do it is the key to (non-financial) motivation and that's bigger in a startup than anywhere else. great blog btw. Glad I found it.