5 Reasons Now is the Time to Join a Startup
There's a dividend in market challenges: Better run companies with more upside
At our company, Hearty, we spend all week talking with software developers about exciting startups that are eager to hire them. Over the past few months, we’ve heard a growing number of these engineers say, “I’m not sure it’s a great time to take that risk.” Well, there’s always risk in a startup path, but with a bit of perspective, the future looks remarkably bright
It’s definitely a time when tech companies are under more pressure. Their valuations are coming down, fund-raising is getting harder, and the most prominent software businesses are laying off staff or freezing salaries. And this is a very, very good thing. Sounds crazy, I know, but hear me out.
You might not remember the last recession in 2008, but you’ve surely heard of some companies founded during that financial meltdown: Airbnb, Stripe, Slack, and Square. Google, eBay, and Microsoft came out of previous recessions. If you had joined early and stayed a few years at any of these companies, you’d be sitting on a private plane heading to your private island right now. Technology, innovation, and disruption don’t stop. And in 10-20 years, we’ll be writing articles about how the startups getting Seed and Series A funding today found success despite (and maybe because) they were born during these troubled times.
Your friends or parents might think you’re crazy for taking such a risk in this market, but there are 5 compelling reasons you’d be crazy not to…
Only the Best are Getting Funded
For the past several years, we’ve seen boatloads of VC dollars going into startups of all sorts. When more money goes into the market, and there’s more competition for a limited number of companies, you see silliness happen. Too much money at too high valuations. Companies that didn’t deserve the money got it, and companies that should have raised a little got a lot—and spent it too fast.
Today, investors and the limited partners that trust them to deploy their money are being much more careful. They are doing due diligence again and can finally take their time and be picky. Generally, that means that the companies you see pop up with new funding on Techcrunch are the best of the best.
Founders are Battle Proven and Focused
I frequently talk with fellow founders to compare perspectives on the journey. Five years ago, my peers were bragging about how fast they could spend the money VCs gave them. Today, they’re bragging about being profitable and having years of runway in the bank. As a group, we’ve seen the mistakes of overspending and learned the beauty of controlling your destiny.
There’s also a growing number of founders (like our Hearty team) that are getting back in the game for the second or third time. We’ve made all the mistakes, gotten the battle scars, and are determined to build better this time.
Lower Valuations Mean Higher Upside
You’ll have to plug away for years and carefully save and invest in securing a significant financial nest egg at a corporate job. But startups offer the promise of paydays in the $100,000s, $1 millions, and up. You could buy a house 5 years earlier or retire before age 50. It takes luck, patience, and picking a great company, of course. But it also comes down to how your company and equity are valued.
Just like the stock market, you want to buy low and sell high. Today’s startup valuations have come way back down to earth, which means the equity you are granted has a lot more upside than it would have last year. If you’re smart, you can get more bang for your buck by negotiating higher equity in return for taking a lower salary. And remember, you’re betting on yourself with the (legal) inside information of someone who sees how the sausage is made. If your company looks like a hit, double down to get an even bigger payday down the road.
Demand for Knowledge Work Keeps Rising
What’s the worst thing that will happen if you take a startup leap? Well, it could go belly up, and you’d be out of a job. That sounds stressful, but in such a loss, there’s much to be gained. Guess what happens when software companies announce layoffs today? Lists go up of impacted employees, and tech recruiters like us offer up interviews left and right. That’s because the skills you have as a knowledge worker in a tech field are in such high demand.
And that’s not going to change. Macroeconomic factors are shifting in risk-takers’ favor for the next few decades, ranging from the shrinking of the workforce to the continual shift in every industry to software.
Startups Accelerate Your Career
Finally, companies of all sizes love hiring people with early-stage startup experience. They know that this is a crucible of intense learning and pressure testing. While you might not be working on an app with millions of lines of code or millions of customers, startups give you lots of ownership, force you to work well with others, and give you tolerance for stress and confidence under fire. You will learn more in a few years at a startup than you will in a decade at a corporate job.
And perhaps most importantly, you learn much more about yourself. You’ll be asked to do many things beyond a normal job description, and in the process, discover what best fits your skills and passions. Win or lose, you will be able to look back years from now and be glad that you overcame your fears and tested yourself during an age that is defined by technological disruption.
Bob Gilbreath is a 2x-exit entrepreneur and co-founder of Hearty, a curated matchmaking service that combines top software developers with early-stage, venture-backed startups.
I've always enjoyed your perspective Bob. Working at two large MNCs and two smaller startups plus living in the Bay Area I struggle with the pros/cons of Big Corp vs. Small Private. Your insights clarified a lot of my thinking.