Start-up versus stable company culture

Introduction

There is a pretty huge difference in the corporation cultures between start ups and stable companies.

 

The jump is not as easy as it seems for many people. I think that a lot of people who work in large companies and wonder what it is like need to consider very carefully their decision. The factors that brought success in a larger organization do not always translate very well to start-up culture. That is true from line worker to the executive level. I think that many people mistaken their successes in large organizations and assume that they will easily be able to succeed in a start-up. That is not always the case.

 

Anyways, this post will discuss the key differences.

 

Key Differences

I think that there has been an excessive glorification of start-up culture within the media. The way it is portrayed, it almost seems like anyone could be the next Bill Gates, Steve Jobs, or a similar entrepreneur. This is particularly true the way the technology industry is portrayed.

 

The reality is that the overwhelming majority of start-ups fail to become truly successful and that many go bankrupt, taking out huge parts of their founder’s personal fortunes.

 

Compensation

Forget about the massive net worth you hear about a handful of founders. Remember, most start-ups fail to break even.

 

In a corporation, it is a relatively straightforward affair – you are either paid a fixed salary or are paid a fixed wage by the hour. This usually comes with benefits and may be subject to overtime, along with paid statuary holidays. Typically you will see raises in promotions and in jumping to other companies. Generally there is also a 2% or so annual cost of living salary rise as well.

 

Start-ups can be quite different. Let me list the differences:

  • Some cannot afford to pay you a fixed salary and can only pay equity. In that case, if the company fails, the equity may be worthless. If the company succeeds, you may have the opportunity to cash in.
  • In many start-ups how much they can afford depends heavily on how they did for that year along with their ability to raise money. That can lead to very unstable income.
  • Other times, they will have to pay below market salary rates and you are “in it because you want to be here” sort of thing.
  • The upside to being paid in equity is that if the start-up does succeed, you could find yourself quite well-off financially, whether it be if the company IPOs or if it is bought out and you do have equity.

 

Needless to say, this makes it harder to raise a family on a start-up. It can be done if you have savings or a spouse that has a steady income, but it makes it harder to do very well as a family. There are other reasons why as well.

The bottom lime is that in most cases, you shouldn’t come into a start-up expecting to become wealthy. There is a very high chance that you could come out with nothing if the start-up does not do very well.

 

Procedures

In general, to get tasks done in a typical corporation, there are standardized procedures. For example, if I wish to purchase something for a company, there will be a firm procurement policy, perhaps even a buying department that drafts the RFP, contacts the vendors, evaluates the options, does the accounting, and confirms receipt.

 

By contrast in a start-up, you are often making it up as you (and your peers) go. In many cases there are no set procedures on how to accomplish a certain task and nobody save your fellow start-up companions to turn to. You have to make it up as you go. There may not be something “by the book” because the book was never invented. That can be challenging for people who are not accustomed to improvisation.

 

Generalist

Large corporations, much like their procedures, when you work in a corporation, you get the following:

  • You have a fixed job title that is relatively specialized.
  • The tasks that you do are generally predictable, once you get caught up to speed.
  • Typically you will be assigned to a department or division that does something. It may be by function and you are in turn, located in a geographic region or a head office that does something for that company.
  • Each person has a fixed role and people around you do specific things to their job.

That does not mean that there are no opportunities to go above and beyond, but it does mean that your job is a bit more fixed in requirement.

 

In a start-up, it is quite different.

  • There’s a small group of people who have a set of roles (ex: Person A does the sales, Person B the IT, etc), but often the roles overlap and people routinely do what would be “outside the scope of work”.
  • Tasks and the problems faced can be unpredictable and solutions are often ad hoc. Expect to often do things outside of your job description.

In a start-up you will have much more responsibility in most cases and the opportunity to see everything. You may be expected to work longer hours too to get it done. There is a mentality of “just get it done” versus “there are procedures and other things that we have to follow”.

 

Camaraderie

One of the things that I have noticed amongst many military veterans is that one aspect they miss the most about military life when returning to civilian life is that there is a level of camaraderie that exists in the military that does not exist often in the civilian world. Perhaps that is the inevitable result of having gone through the challenges in the military together.

 

In a start-up you are going to find yourself often getting much closer than in a typical company. There’s a level of closeness that you get because you are all very committed to the start-up and its goals.

 

Certainly you become friends in a regular corporate-type job and bond, but it is often not to the same extent.

 

Commitment to cause

In general, most people who are in a start-up do so because they wanted to operate their own business or had an idea that they thought would be big. Either they preferred owning their own business or they had an idea that they thought would change the world.

 

You could argue that this is also quite different from the military in that many people who join the military do so for economic reasons – there are few careers in the civilian world or other benefits, such as state subsidized post-secondary education. Recessions tend to cause people to join the military more. That said, surveys do show that patriotism does run higher in the military than amongst civilian counterparts. So I would argue that commitment to cause or at least companions in the military does play a huge role, perhaps sometimes not acknowledged as much as it should be. It has been argued that soldiers fight not for patriotism or an ideology, but for each other.

 

I would argue that it is similar for start-ups. Most are in it because they want to be independent or they think they have a great idea. It is not so much that workers are not engaged in typical corporate jobs, it is that corporations often don’t lead to engagement or they don’t try to. Perhaps one could argue only a few truly exceptional corporations that can cause such engagement. That will start at the tone at the top.

 

Conclusions

I think that I have barely scratched the surface. I’m going to be putting together some later posts about start-ups compared to larger corporations.

The majority of people who do well in start-ups do it because they wanted to be there. Another group does very well because they cannot stand working in a larger organization. People who do very well in larger organizations do not always do very well in start-ups.I think that to an extent, there has been a tendency from the media to romanticize the realities of working for a start-up as I noted earlier that are at odds with reality. The finances part is especially difficult for certain groups. People who are not good at improvising, dealing with uncertainty especially must avoid start-ups.

As I said, I feel as if I have barely scratched the surface here and will go back later to this more in depth.

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