Apr 7, 2021
Should You Leave a Big Company for a Startup?
The fact that you’re considering joining one is a sign that change is needed
If you’re reading this, the door is already open. Maybe you’ve been at a big tech company a few years and it’s not as exciting as it used to be. Maybe a founder reached out to you about an open role and you can’t get the idea out of your head.
Either way, you’re considering joining a startup. You know that a young company would offer you new opportunities that you can’t get at your current job. You’re inspired by people like Eric and Rita:
“I left Uber to join Vareto, a seed-stage startup. It was a difficult decision because I loved my team at Uber and the work was interesting. However, in the half year I’ve been at Vareto, I’ve been given much more ownership than I ever would have gotten at Uber. I’ve worked on more challenging problems (from scratch), launched projects in weeks instead of months, and been given opportunities to grow my responsibilities (without having to wait on an annual review cycle).”
— Eric Li
“After spending 4 years at Google, I joined Grand Rounds, a startup where I had the opportunity to grow quickly with the company. It was there that I discovered a passion for managing and mentoring, which inspired me to later become a leadership coach. I’m grateful that each career move has helped me learn more about myself and my interests, and led me to where I am today. “
Even though the prospect of joining a startup feels exciting, the decision to leave feels like a war between emotion and logic. You want to go for it but you’re still uncertain.
If you feel this way, you are not alone. While recruiting for Vareto, I’ve spoken to dozens of people in this exact situation. It doesn’t matter whether you’ve got two years of experience or twenty. It doesn’t matter whether you’re just starting your career or leading an organization. People have similar questions and concerns.
This post is a summary of those concerns. Only you can decide, but hopefully, this helps you frame that decision more clearly.
“I can’t make as much money at a startup.”
Let’s start with the single biggest reason people are hesitant to join a startup: less money.
It’s true. No startup can pay you as much as a FAANG company is paying you right now. But, do you want to spend the rest of your life at a big tech company? If the answer is “no,” then you’ll need to take that temporary pay cut at some point.
I’d also encourage you to assess how much money you actually need. Would the pay cut impact your ability to pay your rent or mortgage? Would it impact your quality of life in a drastic way? If you’re the sole earner for a whole family or have other immediate financial obligations, maximizing your current earnings might make sense. But if you’ve got enough to live on, consider betting on yourself and optimizing for the long run instead.
Whether you go to an existing startup or start your own company, there’s going to be less cash flow at first. And, unless you join as one of the earliest employees, the expected value of your big company comp package over the next four years is likely higher than that of your startup equity. However, it’s over the 10-year time horizon that things get interesting and a startup career will likely net you a better outcome, both financially and career-wise.
Think about it: even if your first two startups fail and your third one succeeds, you’ll still be way better off having made that jump. That’s because when a startup succeeds, it’s a 100X return that more than makes up for your lower salary. And that’s purely from an economic perspective– the impact it’d have on your career more broadly and also on your life perspective is priceless.
“I’ll leave after I become a Director, or maybe after I’m a VP.”
Many people tell me that they’re waiting to make the jump. They want to become a Director, a VP, or reach some other milestone before joining a startup. But as you progress in your career, it actually becomes more difficult to leave. You’ll have larger projects and teams you’re responsible for, and you’ll be making even more money.
On the flip side, joining a startup might actually enable you to take on these big roles sooner than you otherwise would have. As one example, Stacey Wang joined Ironclad as the 10th employee, after starting her career in big law and switching gears into marketing. Later, when a product leadership role opened up, Ironclad’s CMO decided to give Stacey the chance to build the team rather than hiring externally. Stacey did an incredible job ramping up, was promoted to Director less than a year later, and now leads the whole PMM function.
One more thing on timing: be aware that sometimes staying at a big company longer to achieve a Director title might actually make you less desirable to startups. Since early-stage companies require everyone — including the founders — to roll up their sleeves, they typically hire senior ICs (individual contributors) and might view your latest experience as a Director as less relevant. Some founders might also wonder if you’ve been coasting or doubt that you have the entrepreneurial spirit required to dig in at a startup.
“Startups are inherently risky. Don’t most fail?”
That’s right. But a) you’re not joining most startups, b) even if it fails, this is still a great learning experience (and not as bad on the cash side as you might think).
Let’s unpack that a bit. First: you’re not joining most startups, you’re joining one you believe in. One where the founders know what they’re doing, the company is well-capitalized, there are strong investors and advisors on board, and there’s a clear vision and product roadmap. This startup might still ultimately fail, but it will be around for another 1–2 years, enough for you to get solid experience and learn a ton.
Second: even if this company does fail, you can either join another startup, start your own, or go back to a big company. If your startup has a really strong team, there’s even a good chance you’ll get acqui-hired, which would more than offset the earlier pay cut.
“It’s the ‘dream’ to work at my company. What would my friends and colleagues think?
Big tech companies are often great places to work. That makes it a tough decision to leave. But if you’ve been there a few years and are starting to feel your personal growth plateau, then maybe it’s time for something new. Often the door is cracked open and people emotionally feel they are ready for something new before they can cognitively accept it.
It can also be hard to leave because of the people around you. From your perspective, they aren’t thinking about joining startups. They’re talking about expanding their teams, getting promoted next cycle, and earning more RSUs. In their personal lives, they’re building houses and buying Teslas.
“I should want this,” you think. “I should be happy.” And yet, you still want to make a change.
As Bill Burnett said in Designing Your Life, you’ll feel most fulfilled when you align your actions with your values and interests. The fact that you’re considering joining a startup is a sign that change is needed. Maybe that change is something else, like switching roles at your current company or leaving tech altogether, but in any case, it’s time to reflect. Let go of those social expectations and figure out what’s best for you.
Some additional considerations
- Working at a startup is a different type of job. If you left your large company to become a life coach, work as a teacher, or head up a nonprofit, you wouldn’t expect to make the same salary you do now. Although you may continue to work in tech, working at a startup should be seen as a different type of job, one that comes with a different set of benchmarks. Negotiate your equity package, but don’t join because of it.
- There are many ways of assessing risk. Risk is not just about cash and equity. It’s also about the big picture of your life. What’s the bigger risk– taking a temporary paycut to work at a startup or spending years in a job that isn’t fulfilling?
- “Careers are a jungle gym, not a ladder.” This is one of my favorite quotes from Sheryl Sandberg. Her point is that careers aren’t linear. To get to the top, you’ll often need to make some moves sideways or even down. Joining a startup might feel like a “down” move in an economic sense, but the experience it gives you can set you up for a future role you’d never have landed otherwise.
It’s a big (and very personal) decision to leave a large company for a startup. I hope this article helps you reflect and explore your interest. What is it about working at a startup that appeals to you? What do you want to learn and experience next? If now isn’t the right time for a change, then when?
