December 23, 2019
Today, there’s an interesting startup dilemma that has become more obvious in the collective consciousness of tech employees than ever before. Put bluntly, it’s that working at most startups (in their current form) in a world full of growing tech giants like Google, Facebook, Apple, Netflix, etc. is making less and less sense for most people who qualify for these jobs. And, I’m not here to try to show you some statistics or a magic formula and convince you to choose one way of life over the other — obviously, that’s your decision to choose, and I believe everyone reading this is smart enough to decide between a startup or big company depending on a number of variables and what you value the most. There are certainly pros and cons to both.
But what I do want to focus on is the increasing burden on startups to convince good candidates to join their company. And by “good”, I mean employees who are actually useful in a startup environment. In my experience working at an early-stage startup, finding and hiring good candidates was unsurprisingly a painful experience. And, it only worsened over time as candidates became more aware of the career risks and all the money, perks, and resources they were leaving behind on the table by not joining a big company. It tells you a lot about the state of the industry when smart new grads are getting paid amounts that are out of reach for many early-stage startups. To make the situation worse, the very good engineers, the ones who could truly help build a tech company from the ground up from day 1, were getting offers so exorbitant they could not possibly fathom to turn them down. And, to be clear, I’m not saying that one should or should not place money or perks above everything, but that from my experience, money and perks are such a strong driver for most people that it’s already activated an industry-wide transformation due to the expanding resources of big tech companies and the failure of startups to keep up with them.
As a result, startups today either raise massive rounds of funding or feel they are left with very little room to entice good employees — this is especially a problem in the Bay Area. It seems that employees have either been burnt too many times or are keen enough to learn from the experiences of others and realize that their minuscule equity will unlikely be worth anything of significance. The odds are overwhelmingly stacked against them. Waving a fraction of a percent in equity in front of candidates simply does not work anymore. And the “you should work for a startup” rhetoric by VC’s and other stakeholders is rarely balanced or shows the full picture for quite obvious reasons; rather, it's a way to fuel the startup workforce and convince a maturing audience that it is still a worthwhile endeavor.
Coming into 2020, I think startups’ best bet is to make the most of the variables they can control outside of money and perks (if you lack the appropriate resources). This means being transparent and honest with candidates about all risks involved when joining a startup and factoring all this into the amount of equity they offer which should be something considerable. Equity agreements should not be intentionally confusing or designed to screw over employees. Moreover, it’s in their best interest to be crystal clear about their core values, their product, and why they think the candidate should care about the work they're doing. In this way, the relationship between a startup and their early employees is seen as what it truly is — a genuine partnership between two parties trying to make a difference.