Dear Mentor:

Should I work for a startup or for a public company?

I am in the midst of making a job change. I have one offer from a startup company, which has venture funding from a reputable venture capital firm. The company has about 15 employees. The other offer I have is from a publicly traded company, which is smaller than most large corporations, but it is significantly larger than the start-up I mentioned previously. My prior work experience has been either in management consulting or with a large corporation. I would be very interested in your views and information on how I can select between a startup and a publicly traded company (albeit not a large one). Thanks.

Atul, Danville, CA, USA

Dear Atul:

As you know there are several variables, unique and personal to you, that would determine what is the "right" job for you at this stage in your career.

The basic variables in your decision-making are: your interest in the type and quality of work, the type of work environment, and overall financial rewards relative to the risk. Obviously, you many want to add other variables, depending on your personal situation.

The type and quality of work should theoretically be independent of the size of the company, but it is not, at least it is not in our view. In a startup environment, your responsibilities are liable to have much broader range, whether officially or unofficially.

The work environments are likely to be significantly different between a startup and corporate situation. The startup environment will have nominal structure to it, ranging anywhere from authoritarian to anarchy to anything in between. The business has the needs of a typical company but extremely limited resources. As a result, your responsibilities, participation, and contributions will go well beyond your official duties, in a rapidly changing and evolving environment with a great deal of uncertainty. The ongoing level of ambiguity and complexity will be high. Significant decisions will get made in an ad hoc fashion. It will feel like you are building an aircraft while flying it. Despite all this, you will be expected to produce results, on time and within budget. If you are an individual who is comfortable with ambiguity and complexity and you are a good problem-solver, you will thrive in this environment. You will put in long hours. You are likely to have a great deal of stress, so you must be someone who would not allow the stress to reach the distress level. Instead you would leverage stress in your favor to produce high quality results.

The corporate environment, on the other hand, is likely to have significantly more structure, with better and clearer delineation of responsibilities. You will have better defined individual goals, with greater authority, control, and resources to achieve your targets. Decision-making, the key managerial activity, will be more logical and structured. You will have better business amenities like office space, secretaries, computers, phones, and so on. Life and lifestyle would be more predictable and manageable.

The risks in a startup company are high. Most startups die a premature death - they fail. So the greater equity position that they offer to employees, relative to the equity positions in the larger companies, will be worthless, probabilistically speaking. Financial compensation in cash will likely be lower. However, if you and your fellow employees can make the startup a success, the financial rewards can be phenomenal.

So you have to judge whether the risk/reward combination, the amount of effort, and living a demanding work life at the expense of personal life, are the right choice for you. We do know many people who would only work for a startup, but then we also know many who would never work for a startup. Ultimately, it is a very personal decision.

We wish you success, Atul.

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