17 Pithy Insights for Startup Employees

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17 Pithy Insights for Startup Employees


For some reason, one of my articles titled “Startup Hiring:  Why You Should Date Before Getting Married”  continues to be ranked #1 on Google when searching for startup hiring.  As such, it seems there is some interest in this topic and there isn’t nearly enough written about it.  Many people write about starting companies and being a founder – much fewer write about going to work for a startup.

So, along the lines of my also popular “17 Pithy Insights For Startup Founders”, I thought I’d write one of my “pithy” articles for startup employees – or those thinking about joining a startup.

17 Pithy Insights For Startup Employees
  1. If you’re just looking for a job, you’re probably better off looking elsewhere.  

  1. Seeks signs of potential future success early.  Working for a growing, thriving startup is much more fun.

  1. If the value of the education does not exceed the value of the salary, you’re doing something wrong.  

  1. Working long, hard hours is not mandatory, because working for a startup is not mandatory.

  1. You probably won’t have a boss.  If you want or need a boss, work for a big company.

  1. Learn to balance risk.  Working for all equity or all cash is not likely the right answer.

  1. If you’re not building something you think you’ll be proud of, it’s not worth it.  Life is short.

  1. Be informed.  Learn the basics of things like shares, options, vesting schedules and dilution.

  1. Remember that the number of shares/options you get means nothing.  Think percentages

  1. Be passionate about building a product, not building your resume.  If you do it right, an exceptional product will become your resume.

  1.  Startup founders are usually quirky people.  Get used to it.

  1.  Wear as many hats as possible.  Help out where you can. 

  1.  Don’t worry too much about being fired.  Most startups need their employees more than the employees need their startup.

  1.  Go beyond just equity ownership, take emotional ownership.  

  1.  Take lots of photos and keep all memorabilia.  You’ll probably want these someday.

  1.  If you’re not having fun, you’re in the wrong place.

  1.  Try to make the experience a success, even if the startup isn’t.

Which of the above is your favorite?  Do you have any of your own to add?  If I get enough, I’ll post a follow-up article with reader contributions.

Posted by Dharmesh Shah on Fri, Sep 29, 2006


Winner post. No guts no glory. No learning really bad!

posted on Friday, September 29, 2006 at 11:17 AM by Sheamus

Become a sponge. If you're working for a startup more than likely you have the aspirations someday to own your own. Most of the startup CEO's have been around the block and may have several contacts in the industry. Pay attention to these details; you're not just an employee, you're a future startup founder in training!

http://www.runfatboy.net - Exercise for the rest of us.

posted on Friday, September 29, 2006 at 11:37 AM by Jim Jones

" When you want something the whole universe conspires to help you achieve it" -- paulo Coelho - The Alchemist

This so true for someone who wants to work for a startup.

posted on Friday, September 29, 2006 at 11:58 AM by Amit Desai

Before you join, ask the difficult, factual questions like "how much cash do you have? how much cash are you burning?" And take projections with an enormous lump of salt.

posted on Friday, September 29, 2006 at 12:37 PM by Bo Brustkern

Why do startups always hide the number of shares outstanding when making offers. They always make you ask for it, which I find to be incredibly insulting. They may as well tell my that I'll get a salary, but not specify how much. I should be a crime to not include number shares outstanding in an offer letter. Given all the equity laws we have, I honely don't know why it isn't.

posted on Friday, September 29, 2006 at 12:39 PM by johnrob

Sorry for the types, that was written in haste!

posted on Friday, September 29, 2006 at 12:42 PM by johnrob

Sorry for the typOs, that was written in haste!

posted on Friday, September 29, 2006 at 12:42 PM by johnrob

"Don’t worry too much about being fired. Most startups need their employees more than the employees need their startup."

I recently lived through that one. I held a job for two days at a small warehouse before the owner proved himself ignorant about how Google works. After insisting that a page would go up in rankings if it contained a word a thousand times and refusing to take my word that they base it on incoming links, he said that I needed to be open to the opinions of others. I asked if that applied to him and he told me to go.

It'll be interesting to see how their web site and IT infrastructure turn out. He talked about how he wanted something polished and simple like an Apple product. To bad he kept on saying that he wanted to duplicate a competitors site which was a typical online store.

Perhaps that should be another point in your post: watch out for the founders who fail to recognize reality.

posted on Friday, September 29, 2006 at 2:49 PM by Nolan Eakins

Abent extraordinary circumstances, don't do startups with academics, much less someone like your grad school professor. Not only are you taking on a subordinate role from the get-go, but things will happen too slowly and too expensively for a startup environment. You have much better chances starting something with fellow students.

Also, I would suggest that (except in high-capital circumstances) you should be able to make a beta version of your product in your free time surrounding a regular job. If you cannot build the basic technology with that amount of time, then you likely won't have the time you need to focus on business aspects even if you quit your job and focus on the startup 100%.

posted on Friday, September 29, 2006 at 5:00 PM by Anonymous

I've rejected every startup that's approached me so far. They all seem to be run by complete amateurs, people who don't understand the technology, the market, or basic business. Add to that the fact that joining a startup is inherently risky since most of them go under, and I'd say any early-stage employee would be well within reason to expect a partner-level position from the get-go.

posted on Friday, September 29, 2006 at 9:24 PM by Chris

This article lionizes startups, startup founders and even startup employees to some extent. If you believe this article, you're probably in for a lot of big surprises, disappointments and pain. Other posters have already called out a lot of the problems.

The contents of this list is "what founders wish working for their startup is like".

posted on Saturday, September 30, 2006 at 9:30 AM by Dan Howard

My start up is just 30 days old today. Our team has average experience of 6 years in top 5 Indian IT companies in areas as diverse as sales, technology, operations, systems design and development.

We have decent sized projects to keep us busy for 6 months and seed fund to keep us kicking

What does our forum members think would attract employees

Business model
Our background and experience
Current Client list
work culture

i know people would evaluate all of these but can there be a single largest factor ?


posted on Saturday, September 30, 2006 at 11:43 AM by Amit Desai

Probably "work culture".

People (or at least developers) who join startups often join because they want to be in a certain environment. It can be very superficial: if they have friends that work there, they might work there just to be with their friends. They might work there because they all come from the same ethnic group or went to the same school. Or they might be interested in a particular technology that you are using, like Ruby or .NET. Or you might just be the one who offered them a job when they happened to be looking.

Although there are some savvy (skeptical) job seekers out there who will dive into business concepts or try to negotiate themselves into being a partner, most people join a startup with very little interest or knowledge of the business as a whole. They just look at the pay, look at the job title, maybe look at a coolness factor and then take whatever job comes out on top.

posted on Saturday, September 30, 2006 at 2:46 PM by Dan Howard

The comment about always having fun is definitely my favorite, that's something you can really only get in the small atmosphere of a startup.

Great article!

- BIll

posted on Monday, October 02, 2006 at 1:42 AM by Bill D'Alessandro

Thanks Dan/Scott/Bill

I thank your for your practical views. at this point in time we are 8 founder memebers and the equity is divided between all of us in certain %. at this time we are not looking at someone who wants to come in as partner as now we have left a little aside for a strategic investment later on or at a later stage if we wish to get in a domain or a vertical expert.

but yeah i agree to you guys its probably the culture and the attitude that is most important

posted on Monday, October 02, 2006 at 3:18 AM by Amit Desai

14. Go beyond just equity ownership, take emotional ownership.

I've done this at past startups, only to find that at the end of the day my emotional ownership and dedication meant less than nothing to the equity-holders calling the shots.

These days, I don't get emotionally involved unless I have a significant equity stake.

posted on Monday, October 02, 2006 at 1:50 PM by fly on the wall

"Go beyond just equity ownership, take emotional ownership."

I can see both sides.

From the employer's side, you really appreciate it when an employee cares. As an employer, you can sometimes get a bunker mentality: everybody's against me. So, you can appreciate when an employee says, "I'm not against you; I really care and I'm on your side."

But, from the employee's side, fly on the wall has a point. Lots of employers divide the world into two groups: my friends and people to take advantage of. Emotional involvement is a lot to ask out of an employee and he might still end up in the "people to take advantage of" group. An employee only needs to invest emotionally once or twice and get totally burned to just say, "I'm never emotionally investing ever again."

An emotional investment ending in a disappointment (not to mention a betrayal) literally damages the psyche of the employee. It can literally change the employee's personalities. To suggest that an employee make himself that vulnerable, well, that's something that I find hard to suggest.

posted on Monday, October 02, 2006 at 3:38 PM by Dan Howard

I like point 3 best :)
As for point 11, it should work both ways. Startup employees are also quirky in some ways. So, employers, get used to it!

posted on Tuesday, October 03, 2006 at 5:34 AM by Dita Sardjono

I agree with most of this list - joining a startup is essentially joining a vision. You're not there purely for the job, your resume, or the cash - but rather the chance to be involved in something exciting and potentially big.

Much better to look back and say "I was a key part of that company and as a side-effect I made a nice tidy sum of cash too", than just saying you were employee no. 1545 for company X.

Be prepared for fun, take some risks, get used to quirky founders, and take a share options and a lower salary - then enjoy the ride!

posted on Tuesday, October 03, 2006 at 12:48 PM by Philip Wilkinson

Go beyond just equity ownership, take emotional ownership.

I would really advise against this particular insight. The others are fine but this leads to burnout when the employee is taken advantage of or feels taken advantage. Sure, there are a few startups where the money and success make the emotional investment worthwhile but the number where the opposite happens is immense. I've been through burnout because I did this when I was younger and it really sucks, quite frankly. It's hard to maintain proper perspective when you're emotionally involved also which I think can cloud judgement. Just be careful.

posted on Friday, October 06, 2006 at 12:23 AM by Mike Bosch

So I've been surfing blogs looking for advice about joining startups and the main thread seems to be making sure to get equity in the deal but no concrete numbers on exactly how much is a fair amount. If the offer is mostly cash, is 0.5% a microscopic amount? Is asking for 5% or more insane and greedy? Any kind of advice about specifics (if possible) would be immensely useful.

posted on Thursday, November 16, 2006 at 4:46 AM by Al Abut

For an employee, 5% is probably the max. To get over 5%, you are probably a co-founder.

Percentages can be highly variable. You might start off with 2% and, three years later, that might only amount of 0.5%. The dilution comes from other employees vesting, additional employees being hired, additional grants to founders, new investors or acquisitons. It is very easy to issue new shares in a corporation; it's all perfectly legal and ordinary.

You might get 5% if you are the very first (not second) employee who joins a company with one founder. If there is more than one founder, the founders are more self-sufficient and can handle more on their own (as well as there being less percentage available because there are more people already). With multiple founders, 2% or so is probably the best that you can expect, if you are there very first hire.

Clueless founders might give way too much in the beginning, although I'm not sure that you want it if the company is clueless. But you might get more than 5% is some cases and it might even work out in the end.

When you are the second or third person (or beyond), less than 1% might be the best that you can do, if there are multiple founders. Also, if you are being paid a decent salary, less than %1 is probably the best that you can do: either they are paying your salary out of investor money so the investors took a big percentage or they are paying you out of their own profit/pocket which means that they find it easier to find good employees while also not needing you as much.

At less than 1%, the percentages become pretty meaningless. 0.5% is obviously better than 0.25% but that's just saying that if the company is sold for $100M, you'll make $500K instead of $250K. At that point, you are hoping to be successful by being a super-long term employee who builds a percentage over time or that the founders become billionaires such that even tiny percentages are worth a lot.

posted on Thursday, November 16, 2006 at 10:22 AM by Dan Howard

Wow, thanks Dan, that's easily the most practical advice and concrete numbers I've heard so far. I've been weighing the risk/reward ratio of joining a startup and have been put off by the econ/business jargon, this'll go a long way towards making a more informed decision.

posted on Thursday, November 16, 2006 at 11:28 AM by Al Abut

It's worth just stressing too that these will probably be "stock options" rather than pure shares. This means that if you leave the company before x number of years, then you will lose those share options. A price will be set on them at the time they are given to you and then you get the "option" to buy them at that same price in the future and hopefully sell them straight away at their greatly increased price (if the company has done well).

posted on Friday, November 17, 2006 at 12:45 PM by Philip Wilkinson

Yeah, I've also been learning about other stuff like "liquidation preferences", which means the minimum amount the company has to sell for before non-investors can sell their shares, which also gets into preferred versus common stock. There's a lot to learn but yeah, in general I'm thinking that you have to at least be swayed by the coolness and business potential of the product they're building and then like anywhere else in life, trust that working with good people means you won't get screwed at some critical juncture.

posted on Friday, November 17, 2006 at 2:28 PM by Al Abut

Don't be afraid to walk away... no matter how much time and energy was invested.

Founder of myfoodcount.com
Free & Anonymous Health Monitoring

posted on Thursday, December 21, 2006 at 5:45 PM by Jon

Also, there is a lot of pop "Dogma" associated with startups and entrepreneurship. A sort of romanticized view of reality, where success growth increases lockstep with the amount of work put in. This sort of dogma is especially strong with americans, I've found, maybe because of the rise of self-help and business pop psychology dogma books.

posted on Tuesday, February 20, 2007 at 3:47 PM by Brad

negotiate your percentage upfront, when you have leverage.

posted on Saturday, September 27, 2008 at 12:13 PM by j

Hi Folks, 
From an employers perspective, it is very important to get in a guy who is motivated on factors other than monetary benefits.  
So employees must look at startups only if they can be self motivate themselves or motivate themselves using other factors like building a great product, etc. 

posted on Thursday, April 09, 2009 at 9:05 AM by Jinen

I kind of agree with Jinen but it does depend on the startup. 
In a VC funded startup, it can be easier for employees to get higher salaries than at bigger companies. The reason being that overpaying vs underpaying only keeps the startup going a month or two longer so there's not much point. Better to overpay and get the employees that you want, rather than noodle around to get the best-band-for-buck employee and have it take a really long time. 
In a self-funded startup which starts off broke, you can only really afford people who want to trust you. The people that want to wheel-and-deal, be it percentages or personal contracts or sliding compensation systems, usually don't want or need the risk and are better off with a steady paycheck.

posted on Sunday, April 12, 2009 at 1:23 PM by Dan Howard

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