COMMON MYTHS OF STARTUP RISKS
This just isn't true for the majority of startups as we pointed out on our home page. It is true that a startup situation can be unstable and risky if you get into the wrong one. However, there are so many startups that are stable and thriving with a very rosy future. It is up to you to be selective and do your homework. Risk factors will vary for each situation. Every opportunity where you receive an offer should be thoroughly researched.
Variables and questions to consider include:
- Who are the core founders and management team?
Where did they work before? What is their track record? How qualified are they?
- What is the business plan philosophy to bringing the product to market? What are the product development time cycles? What is the capital burn rate relative to product development time?
- Is the technology realistically feasible. Can it be proven out within the capitalized time frame. (sometimes it is difficult to evaluate this as only limited information is disclosed)
- What is the overall evaluation of competitive factors for this product over the first 3-6 months? 6-12 months?
- What are the marketing considerations? How has the supply/demand picture been analyzed?
- Who are the main investors or Venture Capitalists.
What is the level of their commitment for 2nd or 3rd rounds? Do you have access to speak to them.
The truth is that the majority of all laid off engineers in Silicon Valley over the last few years have come from the larger and more "perceived" stable public companies.
- Literally hundreds and hundreds of engineers were thrown into unemployment from these larger "stable" companies usually without any notice or warnings in many cases.
The truth is we have seen that over 80% of all engineers that had to leave a startup went immediately to another startup-and it usually didn't take very long. These engineers still recognized the benefits of going to a startup and continued with their long term plan. And in many cases the offer and stock was even better than what they had previously.
Here are some reasons:
- Hiring Directors and VP's who work at startups like to hire engineers that have the proven willingness and ability to work at a startup.
- Manager's can appreciate your situation if it didn't work out. Even if it was only for a few months they usually won't hold it against you or your resume. Many of these managers have been to more than one startup themselves.
- Startups tend to hire engineers with greater talent and experience (they often look for the "best and brightest") than public companies. Managers recognize this and consider you to already be pre-qualified to a higher standard than most.
- Startups are currently emerging in such unprecedented numbers that there is a tremendous demand being created for talented engineers. This makes finding another opportunity faster and easier.
- Larger public companies find themselves competing with all these startups for top talent, so if you are any good at all, the larger companies are usually always there waiting to take you in with open arms.
This just isn't true at all startup companies anymore. It will vary case by case, and it is up to you to fully evaluate the work environment prior to accepting the job.
Issues to consider:
- Decide how many hours you are willing to work an average week for you to even consider the opportunity. Let your prospective employee know that up front. You may be surprised at the response, especially if your skills bring value to the company. Telecommuting is also becoming a greater factor for startup employees.
- The increased demand for engineering talent has put startups into very competitive situations. The work environment regarding required work hours needs to be attractive to lure the top talent.
- Startup work mentality is moving more and more away from the "sweatshop/sleeping bag" ways of the past. Engineers just don't want to unbalance their lives anymore and are willing to "shop around" for those startups that are more reasonable.
- More and more of the top talented engineers with young children will only consider a startup if it doesn't take them away from their family.
- Cultural beliefs, and traditional work ethics may also be dominant in certain startup environments, but if it matches your background and comfort level the benefits may be worth the extra hours.
- Venture Capitalists and Investors now seem to be recognizing the need for budgets to include a reasonable work week from a sufficient staff. In fact, we are noticing a tendency to budget for very aggressive early staffing to get product to market faster in this volatile and changing marketplace.
- There will certainly be "crunch times", when you may be needed to work late or on a few Saturday's, but these are becoming the exceptions and not the rule.
- The truth is that many of the larger public companies are now requiring more and more hours from its employees to help push product out the door fast enough to keep up with the competitive nature of the fast paced marketplace. Many design groups are literally racing for their lives to get product completed on time. It is too bad that the team members don't always have the talent or dedication to ensure success. Projects can be canceled all too easily.
This is just not true anymore.
- Startups are staffing up more quickly to help develop the product sooner. This tends to buy a little time to wait for the H1B sponsorship paperwork to be completed.
- High demand for talent is leaving some startups no choice but to consider the talent pool of H1B.
- Stability is not necessarily a problem if you choose the right startup as we mentioned previously. Layoffs that happen at large public companies can be disastrous to H1B engineers.
- An engineer who is sponsored by a startup that goes public has all the chance of anyone else to fully experience "the American Dream" and earn great wealth with fully vested stock options to go along with your new green card.