I recently started a company with my friends Andrew and Willem. I’ve long been fascinated by the transition of the printed book to digital, which is where this new endeavor will take me. We have a clear mission, and look forward to producing the best work of our lives. I couldn’t be more excited to be working on this product, at this time, with this group of people.
I’ve had some amazing mentors guiding me the past few years to get to this point. It’s these people and my cofounders that give me some level of calmness among the chaos of starting a company. I look forward to giving back in some small way by sharing my experience and lessons learned on this blog.
On that note, back to work.
One of the defining characteristics of the technology world is the pace at which innovations one day become standards the next. Twitter, Tumblr, and Facebook trained the world to understand what a feed of content was. We take this for granted now, but it wasn’t long ago that an activity feed was a foreign concept. In the same way, Pinterest offered a different take on the feed structure, deprioritizing time as the lead indicator of “interestingness,” with the result being a board structure. Soon after, lots of startups had adopted this interface.
The key lesson here is that the technology community is very observant about what succeeds and is quick to implement successful innovations into new products. Every product has core assumptions that are validated by looking to prior successes (e.g., “people like the board layouts”). And the best ones also push the limits in some variety. In other words, great products assume some things, and test others. Where Twitter had to test a chronological feed structure, a new startup may not because they believe it has proven to be a successful product feature.
This framework can also be applied to innovative business models inspiring a slew of “X for Y” companies (e.g. “Zynga for Twitter”). For every company that brings a new model to the market and raises capital, it seems 10 companies pop up replicating the model in different areas. Of course, this can have a tremendously positive impact on the pace of technological innovation.
However, problems arise when a company’s perceived success is decoupled from its actual success. It causes fast followers to assume things as fact that they should treat as unvalidated. “X for Y” is only interesting to the extent that “X” has proven successful. And when the “X” proves unsuccessful (or is simply perceived as unsuccessful), the consequences reverberate through the ecosystem. This is not to say that “X for Y” startups can’t work, only that you have to be ruthlessly honest about what the “X” startup has validated, and what it hasn’t.
Startup founders are taught to test each hypothesis they have. However, founders can easily overlook key assumptions in situations where speculation is disguised as fact, leading them to form hypotheses on top of that speculation. In other words, when they speculate on top of speculation.
For any consumer application, email is an important tool to drive engagement. Last year, Fred Wilson went as far as calling it “Social Media’s Secret Weapon.” After optimizing the Hunch weekly recommendation emails for a few months last summer, I thought it might be useful to share some of the key lessons we learned to increase user engagement in emails and acquire new subscribers.
As background, while Hunch had transitioned from a consumer destinations site to more of a B2B approach (that eventually led to an acquisition by eBay), we found that sending weekly emails with personalized product recommendations was an effective way to showcase our technology and drive interesting partnerships. So we wanted to make them good. We ran countless A/B tests on groups of 10,000 users to see what worked best. For each test, we tried to constrain by cohort and keep all other variables constant. Below are a few things we learned along the way:
3. Picture quality is important - Moving from Layout 1 to Layout 2 (shown below) boosted our click-through rates by 16%. It’s true across the web, but we were surprised by the strong effect that switching to large, high quality pictures had on engagement. Results:
Layout 1- 18% Click-out, 1.5% unsubscribe, 1.90 clicks per person.
Final Note: Everyone’s product is unique. You’ll notice if you do a quick Google search for “best time to send emails,” the advice is all over the place. The best time to send an email for a content startup sending news articles might not be the best time for an e-commerce company. It’s important to run small tests to find what’s right for your product. But hopefully the above lessons we learned will help you get started.
A lot has been written on the process of joining a startup, and I’ve written a bit on the topic. Less is written about what to do once you join. Truth is, that’s when the fun starts, and it’s important to optimize your experience from day one. There are a few things I wish someone had told me before I started, so hopefully the tips below will help you get up the learning curve faster during the initial phase of your startup job:
1. Find new projects - This was one of the biggest differences I observed moving from finance to a startup. In finance, you are a good employee if you execute flawlessly what your manager tells you. My friends tell me stories about how they’ll do nothing from 10 am to 7 pm, until their boss drops something in their laps on his way out the door, and they work on it until 3 am so that it’s on their boss’ desk the next morning. In a startup, people won’t always tell you exactly what to do. You have to identify the need and keep yourself busy. There may be weeks where nobody tells you what to do, but that doesn’t mean you can just sit there and wait for something to fall into your lap.
2. Take ownership - A good attitude to take is that nothing will get done unless you do it yourself. This may not be the case, but better to lean toward this extreme than the other. New employees are often eager to think about ways they can improve a product. This is a good thing, but be ready for the following exchange:
New employee: “Hey, have you guys ever thought about adding rainbows to the confirmation page? I really think this is the key to sending revenue through the roof.”
Generally the next part of this conversation involves the manager turning it back on the employee:
Manager: “That’s an interesting idea. Make it happen.”
Most startups give their employees a lot of power to trust their instincts and quickly take action to test something out, so take advantage of this luxury from the beginning. And don’t assume that “there’s someone else who’ll take care of that,” because that someone else should probably be you.
3. Be optimistic - The quickest way to tell someone that they shouldn’t have hired you is to tell them why something won’t work before you’ve spent any time working it. This is especially true in the beginning. Good entrepreneurs spend their days trying to figure out ways to make seemingly impossible things happen. It’s way too easy to think of reasons why something won’t work, and much harder to envision a way that it will. It’s a common trap to want to debate all day the problems with a solution rather than test the solutions to a problem. At least initially, train yourself to focus on the latter.
4. Don’t get stuck on the theoretical - This can be difficult for new startup employees. When getting acclimated to the startup landscape and before actually joining a startup, people often live in a world of theory, strategy and evaluation. You may look at other startups and debate with friends for days on end what will and won’t work. Most of the blogs you read live in the world of the theoretical. The world of implementation / operations can be much different. Now things actually need to get prioritized and built, not just discussed. Be sure to understand the line between when another hour of theoretical evaluation will be less effective than running an A/B test.
5. Find out what hasn’t worked - What you see in the current product suffers from survivorship bias. You know what’s succeeded, but you likely don’t know what features or processes haven’t panned out. Both are incredibly important to understand. Try to sit with as many people as possible and ask, “What are some of the things we pushed live that fell flat?” And don’t just stop there, try to get their opinions on *why they think it didn’t work* and *why they thought it would work*. Earlier this year Eric Ries visited Hunch HQ and said something that stuck with me:
“The main unit of progress at a startup is learning.”
Take advantage of that progress. At a startup, a lot of knowledge is trapped in people’s heads. It is your responsibility to be proactive and ask questions, not someone else’s. By learning from past trial and error you’ll save yourself a lot of time in the long run.
6. Write down your opinions - The more time you spend within the organization, the less objectively you can evaluate the company and the product. Interestingly, this makes new employees the most important beta testers because they aren’t yet biased.
After your first week, take the time to write down your initial thoughts on the direction of the company, the product, and your role within the organization. What would you do as the CEO? What product features would you add or take away? Where do you see yourself making the biggest impact? Observation is so often the foundation for learning, and asking these questions will force you to observe.
As your experience at the company continues, and you begin to loose your objective lens, these early notes will help bring you back down to the perception of someone who isn’t in the weeds of it. This perspective is an edge no matter what your role. Also, see if your initial instincts turned out to be correct or not. This can be a great learning experience in showing that your gut instincts are great, or not. It’s the same reason that new investors write down literally every thought they have on a company they evaluate - it’s a tremendous learning experience to revisit these notes years later to see where you guessed right, and where your blind spots were.
Final Note: Working in a startup environment can be a bit startling. It may take some time to understand that there is a method to the madness. These represent a few things I wish I’d taken to practice from day one. If you’ve recently joined a startup and have some thoughts, I’d love to hear from you in the comments.
Last week Chris taught a Skillshare class at the Union Square Ventures office called “Planting the Seed: How to Raise Your First Round.” The room was full of energy, with lots of first-time entrepreneurs. It was a fun event, so I thought I’d post some of the key concepts for those who couldn’t make it to the class. Enjoy!
1. The process gets much easier after getting one “yes” - Having a lead investor is an important signal to the market that *someone* has conviction in you. A lot of investors will say, “I’ll invest if you can find a lead investor.” This is basically the investor asking for a free option on the investment, so don’t make the mistake of counting it as a firm commitment. However, finding that lead investor can turn a lot of those weak commitments into strong ones.
2. Being active in the tech community will help you raise money - Investing is a trust business. The investor has to trust that if they give you money you’ll use it wisely. Being active in the community and having people who can vouch for you is key. Go to meetups, blog, and engage with people on twitter. You should try to become a known entity in the community. Ideally an investor will recognize your name when they first see it.
Every investor has filters they use to source introductions. Entrepreneurs they’ve already funded are a nice place to start because they are generally sympathetic to the fundraising process. After receiving an introduction, probably the first thing an investor will do is Google you. So understand that Google results effectively are your reputation.
3. “Come back in a month” usually means “no” - Additional information that comes with the passage of time is beneficial to investors so they will often delay making a decision to “flip over another card.” Again, they are looking for a free option on the investment. Why give up the option to invest if they don’t have to? In contrast, entrepreneurs generally have constraints that make them want to raise money soon. Less experienced entrepreneurs may mistake “come back in a month” as a positive signal. In fact, it basically means, “I’m not interested.” Anything short of, “I’ll write you a check” is “not interested.”
4. There are four main types of investors- Friends and family, Strategic investors (Someone in the industry - for example if you are a payments startup getting American Express to invest), “Dabblers” (such as the person who just made 20 million on a startup and wants to invest on the side) and venture-style investors. Try to avoid the first type - being an entrepreneur is stressful enough without having to worry about losing grandma’s life savings.
5. Understand the type of investor you are pitching - Venture investors think a lot about whether a company will be able to continue to get funding at the next milestone, and eventually have the chance to be a billion dollar company. So pitch the upside of the business, not the mean. You’d prefer to leave the investor thinking that there’s a 1% chance you’re the next Google rather than a 25% chance you’ll be a $10 million dollar company. Remember that the difference between a good venture fund and a great one can be one big exit.
The number one kiss of death to a company is for an investor to say “it doesn’t seem big enough.” Technique and bravado are key here. Simply changing the pitch or creating an emotional narrative can go a long way. And if you don’t think you have a chance of being a billion dollar company, that’s fine, but perhaps you shouldn’t be raising money from this style of capital.
6. Pitch the story, not the numbers - On the first pitch focus on the narrative, and move the numbers to the appendix. Have numbers ready but if you start with them you may lose your audience fast. The best pitches talk about how the world is changing and why the product fits well into the macro trends. You also have to answer the question “why now?” Why didn’t this happen 10 years ago? For example, now everyone has a smartphone and therefore can check-in everywhere they go. That wasn’t possible 10 years ago.
A typical deck is about 6-8 slides - Here’s a great post on putting together an investor deck. And a product demo is necessary - venture investors will demand it. But again, before showing the demo you want to frame things as a narrative form. For example “here’s why what I’m about to show you matters.”
7. In an early-stage deal the team is usually most important - The product is really a window into the quality of the team, because quite often the product changes. Also key is that the team has demonstrated mastery of the industry they’re in. Over time other metrics emerge that signal the quality of the product, such as traction and revenue. The later-stage the investment, the more these other signals matter.
8. Option pool and acceleration on change of control are key terms - Employee option pools generally come into play at the Series A. Entrepreneurs often underestimate how much the option pool will cut into their ownership, tending to focus more on money raised as a percent of valuation.
Also, acceleration of vesting on change of control is relatively easy to get and can really make a difference. For example, you can negotiate to have vesting acceleration to 3 years if acquired within the first year after the financing. This can make a big difference if it actually comes into effect.
9. Don’t get creative with the legal documents. Use the standard stuff - Gunderson, Cooley, Fenwick & West, and Wilson Sonsini are a few “standard” startup lawyers. Using standard lawyers with standard documents saves you time and money later because most investors (and even acquirers) know these documents and trust them.
The one legal book you need to read is The Entrepreneurs Guide to Business Law. It goes through the most common ways entrepreneurs mess up. For example, it discusses the “forgotten founders problem” - describing the situation when someone who helped you out early in the life of the company and sues you when you show signs of success. Ideally, you would have gotten a release from them as soon as they stopped working. Good lawyers will make sure everything is clean when you raise money.
10. Be thoughtful about how much money you raise and at what valuation - If you can avoid raising money you should. You’ll retain ownership, and not every business is a venture-style business (i.e. shooting for a billion dollar business). But if you decide to raise money you should aim to raise enough to get to an accretive milestone - be it profitability, sale, or whatever makes the company worth notably more than it is today. Figure out that milestone and work backwards. Ask, what is the team I need to get there, what milestones do I have to hit? And then add 50% to that just to be safe. Finally, remember that the valuation of the last round sets the bar for your next round. This is important, because you don’t want a down round.
Additional tip (from me):
Be completely transparent about the market and competitors. Assume the investor will do their research. And when they realize you didn’t bring up any of the competitors, or identify the main issues with the market, they’ll either think: a) you were being deceptive (see point #2 about investing being a trust business) or b) that you don’t know what you’re doing. It may help to send over some industry research from Gartner or the equivalent. An investor isn’t going to invest in an industry he or she doesn’t understand, so it’s in your interest to get them understanding the market as fast as possible. A good rule of thumb is that when in doubt, always err on the side of being upfront and open.
It’s no secret that a logged in user is more valuable to a company than a logged out user. A user must be logged in to receive a truly personalized experience, be a content producer, or make a purchase. The beauty of mobile is that once a user connects to an application, they are always logged in. We are beginning to see a movement toward this experience on the web as well.
Twitter and Facebook Connect have proven effective (yet imperfect) solutions for the “forgotten password” problem. Both are high-use products, meaning it’s likely a user is logged in to these services and therefore yours. Third-party logins help *get users over the wall*.
New product trends aim to *keep users over the wall*. In particular, Quora has been among the first to innovate in interesting ways around this concept, but they likely won’t be the last. Below are a few interesting things that signal a focus on keeping users logged in, and moving closer to an always logged in web experience:
1. Two-click logout is the new standard - It wasn’t long ago that three of the web’s favorite services - Facebook, Twitter, and Google - displayed a big “logout” link in the upper right-hand corner. Click that once, and you were out. In February 2010 Facebook began rolling out a two-click logout, where the logout link is hidden behind the “Account” drop-down. In September of 2010 Twitter made the switch, and in February of this year Google followed the pattern. The likely logic? Out of sight, out of mind. All these services aim to be platforms, and step one is keeping users logged in.
Facebook - February 2010 Update
Twitter - September, 2010 Update
Google - February, 2011 Update
Fun thing to try: Go login to Amazon and try to figure out how to logout. Now imagine what that task would be like for the average web user.
2. Two-page logout - Though not widely adopted (yet!), Quora has taken the two-click logout a step further. Although they make the logout option prominent in the site navigation, clicking does not actually log you out in the traditional sense. Rather, it takes you to another page, where you can click on your image to login, sans password.
When you return you’ll see this page. Click the image and you’re in.
Side note: When you return to Quora, the landing page shows your face. People like what is familiar, and nothing is more familiar than your name or face. This increases the likelihood the user will click to login and pass this stage of the funnel. It’s the same reason that putting first names in the subject line of weekly emails at Hunch boosted our open rates by 15%.
3. Infinite login sessions - Anecdotally I’ve seen most sites have login sessions of a few hours before they boot you off. When I logged off Quora, I got the below message telling me that I was still logged in on 27 (yes, 27!) browsers. As you can see, somewhere in Charleston, SC, I am logged in to Quora, even 17 months later. I must admit though - as someone who uses Quora every day, never having to login has made my experience more enjoyable. And they do give you the clarity and control that other sites don’t.
4. Login from email - Email is probably the single most effective tool in driving site engagement. But how many times have you gotten an email from a service, clicked on a link and then quickly closed the page because you didn’t feel like logging in? Quora allows users to immediately login upon clicking out from an email. Yipit does the same thing so that you can change your daily deal preferences. As a passive user who enjoys Yipit’s emails but rarely visits the site, I’ve enjoyed being able to quickly update my preferences without having to login. Of course, it would be difficult for a company that had a user’s credit card information to pull this off, but these sites could follow a similar model and only ask for credentials at the point of purchase.
Final Note: From a product perspective, the shift toward an always logged in experience will increase user engagement. As referring traffic from social sharing continues to rise, having an always logged in experience also increases the likelihood of serendipitous engagement. Keeping users logged in removes a step in the funnel from which a user can exit the site.
From a security perspective, I am less enthusiastic. But, if we look to history as the guide we’ll see that when these decisions come down to engagement vs. privacy / security, it is generally engagement that prevails in the market. Companies will push the envelope until the lack of privacy / security damages the user experience rather than enhances it.
The idea of joining a startup is exciting. But the overwhelming desire to leave something old to join something new can become a double-edged sword. Just because you are eager to get your foot in the door does not mean you shouldn’t be picky. You are a valuable asset, and it’s important to remember this during the search process.
Not all startups are created equal. In my last post I wrote that your experience is subject to greater variance at a startup than at an investment bank. If you get a job at Morgan Stanley, you can be fairly certain it will prepare you to be a banker. They’ve been running the analyst program for years: they have it down to a science. Startup experiences, on the other hand, will vary widely in their ability to prepare you for an entrepreneurial career.
You are an investor, but instead of investing money you are investing time. Just as a venture capitalist must make the most of a 30-minute meeting with an entrepreneur to assess the risk and potential return, you have to do the due diligence to ensure you make the right investment. Here are a few tips that may help you choose the right startup to join:
1. Make sure there are mentors - By mentor, I don’t mean someone who will hold your hand as you learn. What is important, though, is to find people who take an interest in your professional development. I recently read a phenomenal post on how bored people quit their jobs, and how managers can protect against it. But, it takes an observant and caring manager to detect boredom in an employee, and act to reverse it. You can increase your chances of happiness at a startup if you surround yourself with people that care about your development.
So, in a short interview, how can you see if there is a culture of mentorship? One way is to ask employees who their mentor is at the company. See if they stumble. Also try to observe if the interviewer takes an interest in your long-term goals. Do they ask questions like ”What would you like to be doing 5 years from now? 10?” or ”What do you want to learn through this job?” or “What is your motivation in wanting to work at a startup?” Do they dig deeper by asking thoughtful follow-up questions that are tailored to your answers? All of these are positive signals that the interviewer cares about your development. They don’t just see you as an interchangeable part in their startup machine.
2. Understand the stage - People throw around the word “startup” to describe everything from Twitter to a 2-person startup launching at a hackathon. So, it’s important to scrutinize exactly where a startup is in its lifecycle, and what that means for your experience. First, it affects the risk you undertake. Four main elements that de-risk a startup are: raising capital, finding product/market fit, having revenue, and being profitable (the trump card). The more elements a startup has, the lower their risk of failure, and the less risk to you. *Warning* - a lot of startups will say they have product/market fit, but few do. Form an objective opinion by doing your own research.
Second, different stages require different roles. For example, if a company has not yet achieved product/market fit, your job will be more exploratory, and there’s a greater chance your role will change dramatically as the company evolves. You could be working on two very different projects in the course of a few months. Also, the larger the company, the less likely you will be exposed to different parts of the business and be able to “wear many different hats” - and the more likely you’ll be a specialist. Neither is objectively good or bad, but it’s important to know they are different experiences.
3. Meet the founders - Recruiting is one of the main roles of the founding team. So, at a startup with fewer than 30 people, there’s really no excuse for you not to be able to meet with at least one of the founders. What should you look for? Honesty in the founding team is probably the most important thing. It’s a positive sign if the founders are open about the hurdles they still have to overcome. In the same vein, if you do receive an offer and have an equity allotment, ask what percentage your shares represent. When asked, most will tell you the percent. If they aren’t open with you about this I’d worry they aren’t being open about other things too.
Also look at whether the founders are inspiring. Great startups require great people, and if they can’t inspire you, they likely won’t be able to inspire other prospective employees or investors. This is also a good time to ask “high level” questions. See if there is “vision alignment,” or an alignment between your vision for the company and founder’s. Be sure to distinguish between where you see it going and where they see it. You may be surprised to find that you and the founders see very different paths for the company. Interestingly, this is a mistake some investors make - investing in their vision for the company, not the founder’s - only to regret it later.
4. Analyze the operating history - Ask the hard questions, most important among them ”Has anyone left the company?” If the answer to that question is no, that is a positive signal. If yes, try to find out why the person left. The answers you receive likely will be telling. If employees left to join other startups, that’s a negative signal. If they left to start their own company, that’s a pretty neutral signal, and potentially a positive one. Employees who left to pursue something completely unrelated (a Physics PhD, for example) is also pretty neutral. And, of course, If an employee left to work at a bank, run. I’ve never seen that happen, so something weird is going on there :)
Also, it may be interesting to ask the founders how they funded the business prior to raising capital. It will give you a sense of how good the founders are at managing cash. This is a requirement of good CEO’s (one main reason startups fail is because they run out of money). So if the CEO tells you they worked odd jobs for a year just to keep the company running, all while growing the business, this is a sign that they are good at managing cash. Also ask what their current runway is - it may surprise you to hear a founder tell you they only have 6 months of cash left in the bank.
5. Spend significant time in the office - Startups will often ask potential employees to undertake a project before hiring them. This is a great opportunity to ask if you can complete the project working out of their offices for a day or two. If you get that opportunity, be observant of the day-to-day culture of the company and see if it matches what you want.
Some people like quiet working environments. Others like loud. Some love to discuss the latest technology trends as well as new product releases or partnership announcements of other startups. Others are less interested in the larger tech landscape outside of their market. A nice signal that the former environment exists is if people at the company tweet or maintain a blog. These are little signs that employees have unique ideas, and more importantly, that they are eager to share them and *get feedback*. If this isn’t the case, it’s not necessarily a bad thing - it’s just different. And it may not predict success, but could predict if you’ll enjoy the work environment. You’ll see a lot of the details you may otherwise overlook by spending a full day or two in the office.
6. Ask the happiness question - Be upfront and ask employees direct questions such as “So, you love working here?” or “What’s your favorite part of the job?” It’s hard to describe in words how an unhappy employee will answer these questions, but when you see it, you just know. If unhappy, they’ll likely give short, terse answers like “Things are good - I like what I’m doing” and offer other formulaic responses. Kind of like when you ask a friend how they feel about someone they’ve been dating for a couple months, only to receive the lukewarm, “Yea, things are pretty solid, they’re a very nice person.” Most people who love their jobs and the product they are working on will seemingly talk about it for hours if you let them. Pay attention to the nuances in how employees at different companies answer this question.
7. Find a problem you are passionate about solving - In your interview ask, “What are some interesting problems you are trying to solve right now?” Use this time to be visibly inquisitive about the problem, so you understand all aspects of it. After you leave the interview and have had a chance to unwind, does your mind wander back to these problems and consider potential solutions? If so, congrats - you’ve found a problem you are interested in solving, one that you’ll likely be passionate about.
Solving problems is a combination of both active and passive thinking. I see active thinking as problem solving that is done at work where you are consciously trying to solve the problem. Passive thinking is what you do on your walk home, or when taking a shower, and often the biggest breakthroughs come from these times. If you work on a problem you are truly interested in, you’ll maximize your passive thinking time as your mind keeps wandering back to the problem, and increase your chances of coming up with creative solutions.
Final Thought - Everyone I’ve met who wants to join the startup world is incredibly eager to do so. This is a great thing. The startup community has marketed itself well - and I think has a great product to offer! But during the search process it’s important to pause, take a step back, and make sure you are joining the right company. Because joining the wrong company will likely result in a worse outcome than pausing until you find the right match.
After I wrote my last post, a surprising number of people emailed me asking why I decided to join a startup after graduating from Duke. Many of those I heard from face similar decisions today: either they are college seniors choosing between a big company and a startup, or they are recent graduates who work at a big company and are thinking about making the switch. What’s interesting is that most are already leaning towards the startup career path: it seems they just want someone to assure them it’s a rational move. Their friends and family are skeptical: “How can you turn down a job at Morgan Stanley for a 10-person startup?” Hopefully this post will give those who want to join startups some good points to bring back to the skeptics as to why it’s a good idea to join a startup early in your career.
First, an important point: As much as I’d like to say that everyone should join a tech startup as soon as they graduate, I don’t think it’s that simple. People have different passions, and I’m not a fan of projecting my own interests onto others and assuming that what I did was somehow the “right” thing to do. So, the first piece of advice I’d give is to pursue whatever you are passionate about. What is passion? In defining it, I’ll take inspiration from Steve Blank’s recent graduation speech at Philadelphia University. This quote caught my eye:
It’s your curiosity and enthusiasm that will get you noticed and make your life interesting.
I think he nails it: passion is enthusiasm coupled with curiosity. Which leads me to the first reason to join a startup early in your career:
1. Passion is the ultimate competitive advantage - When I was an intern on Wall Street, I took a look around the room of my peers and thought, “What is my competitive advantage here? Everyone is smart and works hard, right?” What I quickly found was that those who excel in that job are passionate about financial markets. I thought finance was interesting, but didn’t have the same level of enthusiasm and curiosity about it as my peers did. I didn’t have a competitive advantage in the Wall Street world. However, I did have a passion for technology and for startups. If I could work for a startup, I could use this to my advantage.
A nice way to tell if you have a passion for what you are working on is to ask this: Do your weekends look a lot like your weekdays? When you get home from work, do you find yourself wanting *more*? Do your ears perk up whenever someone talks about a certain subject? Do you feel compelled to ask questions and really listen to the answers? That’s passion, and it fuels a competitive advantage that can’t be faked. It’s what drives you to work when you don’t have to, to think about new solutions to old problems when everyone else is spending the weekend flipping the “work” switch off.
2. Startup years are like dog years - One year at a startup is like seven anywhere else. In Hackers and Painters, Paul Graham writes, “Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for 40 years, you work as hard as you possibly can for four.” For a young and hungry person, startups provide an awesome opportunity to accelerate your career. By their very nature, high growth startups always have more tasks to be done than people to do them. This necessarily results in a lot of employee “stretching.” By this, I mean being put in a situation where you have to do work that you might not be quite ready to do. This is the best way to learn.
Companies tend to change most in their earliest stages (as opposed to later when they are executing a proven model). As an early employee, you have a front row seat to this evolution. Because your role, and perhaps even the role of the company in the market, changes at such a rapid pace it is much harder to reach a point of diminishing marginal returns at a startup.
3. Sunk costs only grow with time - A lot of people I meet reason that joining a big company will de-risk their career path. If they can get a brand name on their resume, even if they join a startup and the startup fails, they will still have that brand name to fall back on. There is a recurring question: “When do I cash in the chips I’ve accumulated and do something I really want to do?” In reality, what I’ve found in talking with older friends in other career paths is that the further you go down one path, the harder it will be to make the switch to another. The weight of momentum can be overbearing, especially when the skills accumulated in most industries outside of tech are little transferable to tech startups.
4. If you want to start a company, a startup is the best place to learn - I’ve long known that at some point in the future I want to be a founder. It’s hard to describe the effect that working at a startup has to help move that aspiration from abstract to real. Before working at Hunch, I’d always think about starting a company, but it would be in an “armchair” fashion, where I’d be thinking of everything in theoretical terms. Working at a startup allows you to observe how one startup is run, and help shape a concrete vision of how you would want to run your company. What type of person do you want to hire? What kind of culture do you want to set? How do you onboard new employees efficiently? I don’t have perfect answers to every question, but these are the types of things I’ve been obsessing over for the past year, whereas prior to joining Hunch I didn’t even know the right questions to ask.
All of this stems from the fact that at a startup you have greater access to and can better observe the actions of the founding team. At a big company I’d likely be several levels of management removed from the people I work with at Hunch everyday. I’d wager that more than half of what I learn is through observation, and its tough to learn how to be a founder sitting in a cubicle where you don’t interact on a daily basis with the people who shape the vision of the company.
5. Your experience is subject to greater variance - At a big company, your role is usually defined for you. The analyst program you go through is identical to the program the kid last year went through. Not the case at a startup. In many cases you define your role, and no two people have the same experience. If you see a problem and have a solution to fix it, you’ll likely get ownership of that problem. But that’s the key: you have to own it. Nobody will tell you exactly how to do your job, or hold your hand. Your peers at big companies will likely not be afforded the same responsibility in the earliest stages of their career. This is an incredibly exciting thought for some, and super terrifying for others who have moved from institution to institution, brand name to brand name, their whole life. But, if this idea excites you it can be incredibly rewarding, both in terms of what you can get done and what you can learn.
Final Thought - Clearly I have a ton of bias here because this is the route that I chose. And, I’m sure there are benefits to joining a big company as well. But, if you are someone who wants to join a startup but just needs an extra nudge, hopefully the above points will give you some ammunition to take back to your friends and family who tell you that you are an idiot for turning down a job at a brand name company for the chance to work at a startup.