As new college graduates charge out into the workforce, many will hunt for jobs at startups instead of big companies. In fact, according to a 2016 survey by Accenture, only 14% of U.S. graduates want to work at a large firm; 44% want to work in a startup or other small enterprise. Going to work at a startup has perks, from an informal atmosphere to faster on-the-job learning and more autonomy, but there are downsides, too. Before you assume that a startup is going to be your ideal first employer, make sure you know what you’re getting into. Based on my work in the startup world and with recent graduates, here are a number of challenges that young workers often don’t know they’re going to face.
No standard salary and no benefits. The challenges start with the very first thing you have to do after getting the job offer: negotiate your compensation package. When you get hired at a startup, there’s typically little room to negotiate salary or benefits. If you are walking into a well-funded startup, the salary could be quite large for your position. But if you are walking into a bootstrap startup, the number could be quite small. A salary figure at a startup is going to fluctuate a lot more than at an established corporation. Benchmarking the offer they give you against salaries at other firms is also going to be a lot harder. And benefits? Well, a lot of startups don’t offer benefits like dental or health insurance or a 401(k) plan; they’re just not in a financial place where they can offer those perks. You’ll have to look beyond things like benefits and salary to decide whether you really want to work there.
The culture is constantly evolving. A company’s culture is created from the way the team interacts with one another, the daily practices they establish, the way they handle certain issues, and the way they work together. At a large firm, a new employee steps into an existing culture, where norms are established. But if you’re one of the first 20 employees at a startup, you are creating the culture. That can be a disorienting feeling for anyone, but even more so if it’s your first job. And if the company has a high turnover rate, as a lot of startups do, it can be even harder to establish any sort of culture.
Lack of structure — or even a boss. New graduates who join startups may be going from educational environments, where the goals were clear and consistent and where they were closely supervised by parents and professors, to jobs where the goals are unclear, are constantly changing, or both, and where they have to muddle through with no supervision or feedback. This is a tough scenario to handle. Young people often crave feedback and attention and find it hard to constantly perform or get better when they have no measure for success. At some startups, “lack of structure” would be a polite way to put it; a more accurate description would be “total chaos.” How do you thrive as an employee in an environment that’s always changing, where priorities are always shifting, and where the goals are changing constantly, based on pressure from founders or investors? You must be mentally prepared to walk into a very fluid environment.
And in some cases you may not even have a boss. I’ve had several conversations with recent grads in their first post-college jobs. They all expected to have a boss in their first job. But now they are starting jobs with no direct supervisor. (In some cases, they briefly had a boss, but that person left the company and wasn’t replaced.) These recent grads are left to “be the boss,” and while they appreciate the opportunity, they still want someone to mentor them, coach them, help them prioritize, offer structure, and teach them new things.
Pressure to always work. Most startups don’t have slow days. The 24/7 environment of a startup can feel like finals week, week after week. Not only will you be working for a founding team that’s working constantly to chase their own dreams (and taking on more financial and reputational risk than you are), but also you are probably working with colleagues, just slightly older than you, who have slogged through menial internships and boring first jobs to get a chance at this opportunity. The emails, texts, and Slack messages might come at night or on the weekend, and you’ll be expected to stop what you’re doing and deliver. When coworkers delegate something to you, they’ll expect you do whatever you need to do to get the job done — without complaining or asking too many questions. If you aren’t ready to roll up your sleeves and do the work, or even if you just don’t want to be “always on,” you might prefer to look elsewhere for work. For example, in a larger, more established company, schedules are more predictable, and weekends often more sacrosanct.
Lack of resources. Go work for a big company, and you’ll have plenty of resources — an HR department, a tech department, a marketing team. If you don’t know how to do something, you can tap into a training budget that will let you develop your skills at conferences or workshops in fun cities. But work at a startup, and you are the department. You do the hiring, the marketing, the strategic planning, the social media — everything. If you don’t know how to do it, you teach yourself, through YouTube videos, MOOCs, and other free resources. Want someone to help you? Sometimes it’s not a possibility. Many young people initially enjoy the creativity needed to do all this but eventually hit a wall.
Financial uncertainty. I’ve spoken to many young people who had a solid two years at a company that looked like it was taking off. They were one of the first 40 hires, had a great position, made great money…and then, two years later, the investors either pulled out or the funding dried up. Before they knew it, they were let go, along with most of their colleagues. If you’re going to work at a startup, you’ll have to be prepared for this possibility, no matter how hard you work. Even at stable startups, if you’re not moving the needle, you could be laid off. Every employee is tied to a budget, and every employee serves a purpose. If you don’t serve your purpose, if you don’t move the needle in some way, you are not essential to the growth of the company. It’s not personal — it’s just that there isn’t enough money or time to waste on someone who isn’t propelling the company forward. Be prepared to figure out ways to make a difference if you choose the startup path.