You Probably Shouldn’t Work at a Startup

TL;DR

• This article is for someone trying to decide whether to work at an early-stage, venture-backed startup.
• There is a romantic vision of startup employment that doesn’t hold up under close scrutiny. 
• Business model risk is extreme and the financial opportunity cost is significant.
• Typically we assume that a startup is a better overall employment experience, this probably isn’t true for most people
• There are some circumstances where working at a startup makes sense! But it is important to go in with open eyes.

If you work in Silicon Valley for long enough, you will have your own near-miss story. This is when, through unfortunate circumstance or innate stupidity, you reject or ignore a startup opportunity that would have paid off big. We all have them. I blew off Allbirds in early 2017 (who needs more ugly sneakers? Turns out everybody, apparently). My editor Nathan did some freelance work for Coinbase in their first year, never really followed up (whoops), and asked to be paid in USD (double whoops). 

Equity comp and being mission-driven are the startup world’s ideological red pill. The lionized riches of founders and early employees who celebrated their IPOs with ice sculptures and yachts, combined with cool words like “matched incentives” and “mission-driven culture” make an equity-based offer pretty hard to ignore. Join a startup and change your life.

The basic proposition is this: “we raised a lot of venture capital and plan on becoming an enormous company. Join us, take a haircut on salary, but earn way more in the future in the form of equity.”

Today, I stand before you to deliver a consummate contrarian message, rarely seen or heard of in these parts: 

You probably shouldn’t work for a startup.

This is the napkin math for the masses, the people who, through no fault of their own, believe that joining a startup isn’t a huge mistake.

There are a few select cases where startup employment makes sense! But they are so rare, and it’s so easy to fool yourself into thinking a bad opportunity is a good one, that I recommend extreme levels of caution before signing anything that’ll bind you to a fledgling company’s fate. 

Before we dive in—I am obviously a hypocrite. I am currently working at a SaaS startup and write this newsletter via a media startup. My hands are dirty, too, with that sickly sweet VC money, as I have advised VC funds on potential investments in the past, and still do. In acknowledgement that I am an active participant in the industry I am going to take a tough stance on today, my goal is to allow you, my readers, a clear-eyed view of the tradeoffs of startup employment.

And you'll see what I learned from my own experiences in startups and how I plan to evaluate opportunities going forward.

So let’s explore the trade-offs and separate the myth from the reality—first, by exploring the financial returns of working at a startup, then, looking at the emotional ones.

Business model? Where we’re going, we don’t need a business model

When I first started learning about technology companies in college, someone showed me a video of Elon Musk buying a one-million-dollar McClaren supercar after selling his first company. The clip is a classic of startup lore. He states that three years prior he was “sleeping on the office floor,” and now here he is buying one of the world’s most luxurious vehicles.