| How to Systematically Evaluate Your Decision to Join a Start-up |
Are You Smart Enough to Work at Google? This is the intriguing title of a business book published by American author William Poundstone in 2012, when Google was considered the holy grail of all job-seeking business and engineering students.
During my college days, besides the classic aspirations of Goldman Sachs and McKinsey, everyone was obsessed with getting into the search engine behemoth because of its revolutionary influence on the world, prestigious reputation, and industry-defining culture (free food!).
But things change quickly in the tech industry. In recent months, I have heard from Silicon Valley friends that many people, especially the Millennials and Generation Z, believe that starting their own companies or joining start-ups is the best way to jumpstart their career.
The biggest career risk, in their opinion, is joining a big company like Google (which surprisingly did not appear on Fortune’s 100 Best Companies to Work For in 2018, for the first time since 2006).
While it does sound sexy and amazing to go take on the world as an entrepreneur or as part of a start-up’s founding team, every move that you make will have a lasting impact on your career path. Therefore, it would be wise to think and strategize prudently before you make a change in your line of work.
Having jumped from well-established financial institutions to a pre-product start-up to a tech unicorn myself, I would like to share my advice and evaluation process when deciding to switch out of a corporate to join a start-up.
The Must-have Mindset before Joining
Not everyone is suitable to work in start-ups. Most start-up founders learn how to build new companies by trial and error. They attempt to build new and disruptive products and services with a limited budget, a small team that earns minimal salary and benefits, and plenty of uncertainty. They also need to run very quickly to grow their respective target markets.
Unlike well-funded, mature corporates where there are clear company policies, organizational structure and work manuals to follow, start-ups usually have fluid operational processes and their leaders may change strategies frequently.
As such, you must first figure out if you enjoy working in an entrepreneurial environment.
There are four key mental attributes which you should have before joining a start-up:
Embrace rapid changes and constant uncertainty. This could mean that changes can happen relatively quickly with your team, job title, and day-to-day responsibilities, subject to the start-up’s particular needs at a given point in time.
Expect to be a self-starter in an unstructured environment with minimal resource support. Start-ups require self-driven individuals to proactively take the initiative to help grow the business under time and resource constraints with limited guidance. Because of the need to prioritize growth and handle frequent changes, start-ups usually have a more obscure and dynamic corporate structure.
Be open-minded and let go of traditional processes and expectations. There will be occasions where you may be working for people younger than you or managing people older than you. Be adaptable and practice lateral thinking.
Possess genuine excitement for innovation and growth over near-term profit. Transforming smart and creative ideas into reality requires perseverance without getting financially rewarded for a long while. Thus, you will enjoy your work more if you have a sincere interest in the specific field that the start-up is in.
Moreover, having a strong purpose-driven mentality walking into the world of entrepreneurship will even help you flourish in your start-up career.
For further reading about the necessary mindset before joining a start-up, check out this article published by LinkedIn.
I am mentally prepared to jump from corporate to start-up, what should I consider now?
Here are my 8 essential factors to consider on job switching in general:
- Company
- Experience
- Compensation
- Team
- Career Prospect
- Network
- Title
- Location
The idea is to compare each of these factors on a standalone basis, evaluate whether making the move is “better off” for your career in each of the categories, and then look at the results holistically to see if you will achieve a “net gain” by jumping ship.
Each of these factors may have a different level of importance, subject to your career aspiration.
Let’s dive into each of these factors.
1. Company: tick the box if the new company has a stronger brand and better reputation.
Joining a bigger platform gives you more leverage on your “marketability”, which helps you secure new career opportunities in the future.
Hence, going from corporate to start-up will unlikely check the “Company” box, because start-ups are less well-known and reputable by nature.
An exception would be jumping to a gigantic “start-up”, such as going from Bank of China to Ant Financial, from Savills to Airbnb, from Boeing to SpaceX, etc.
But keep in mind that even gigantic start-ups (or unicorns) still possess fairly probable risk of failure, as some have worked, but some have WeWorked.
2. Experience: tick the box if the new role allows you gain “expansive”, career-building experience, not a purely repetitive one.
The experience that you expect to gain from the new opportunity needs to be helpful to your envisaged career and personal development. It should expand your horizon, broaden or deepen your skillset, increase your “marketability”, or fulfill your intellectual curiosity.
Let’s assume that you are the Asian auto research analyst at UBS.
Going from that team to the Asian auto equity research team in Credit Suisse or another comparable brokerage firm would not help you gain much out of your move, because your function as a sell-side auto research analyst is exactly same as when in UBS. If you are given a similar option, you may want to think twice as the jump provides almost no upside to your “experience” factor.
On the other hand, going to one of your corporate clients as the VP of Strategy or Finance, becoming an auto investment analyst at Blackrock or Baillie Gifford, or joining an auto tech start-up as the CFO would expand your professional scope further, thus enhance your overall career profile.
Joining the right start-up may just be the “expansive” experience that you are looking for, but I would advise you to conduct further due diligence on the new opportunity in comparison to your existing profession before ticking the “experience” factor.
3. Compensation: tick the box if the jump leads you to a realistically more lucrative package.
There are three key components: base cash salary, bonus (in the form of cash or share options) and stock options (or RSUs).
Practically speaking as an employee, you should almost always put more weight on the base and cash bonus portions, and less weight on share bonus and stock options.
Stock options sounds like a fancy path to get-rich-quick (as you have heard many Silicon Valley stories in the media), but the reality is that (i) most start-ups fail, (ii) the actual valuation and exit timing of the stock options are highly uncertain, and (iii) and it takes years for the options to be fully vested.
Be aware of roles that require you to take a pay cut, which occurs often when you jump from corporate to start-up. It is a bad idea to take the offer if the opportunity does not provide you any clear upside in the other 7 factors.
4. Team: tick the box if you have enough conviction that you will work well and grow better with the new team under the new leadership.
Your team plays a critical role in determining whether you will find joy or misery in the new job opportunity. While the hiring decision is theirs, it is equally important that you feel positive about the boss and colleagues that you speak to.
Having a strong and supportive team leader makes a world of difference. Avoid supervisors who have abusive, ill-intentioned reputations.
In the case of joining a start-up, it would be wise to conduct your due diligence on the founders because they are the direct representation of the start-up’s culture and potential to succeed.
5. Career Prospect: tick the box if the new opportunity gets you one strategic step closer to your ultimate career goal.
In my opinion, this is the most important factor out of the 8. Forget about the switch if the new role does not in any way contribute towards your long-term career ambition.
If you are a commodities trader in Singapore and you aspire to be the CEO of a Korean media company, it would be sensible to plan your leap by dedicating more time in the media industry and obtaining relevant operational experience in Korea, as opposed to looking for another role within the finance industry.
At the same time, be sure to consider the opportunity cost of leaving your existing role, which can sometimes outweigh the promising but unproven outlook of a new job. Relevant sub-factors to consider can be an imminent promotion as well as the strong relationships and trust that you have built with the stakeholders (superiors, teammates, clients) at your current company.
Every successful individual has a clear agenda to achieve his/her short-term and long-term objectives. If you decide to join a start-up, make sure that you are making strategic progress and paving the path towards your eventual target destination.
The last 3 factors are relatively less critical but still worth taking into consideration.
6. Network: tick the box if the job switch will expand or deepen your professional network that will be useful in your long-term career pursuit.
7. Title: tick the box if the new job gives you a promotion that entails a broader scope of responsibilities.
8. Location (if applicable): tick the box if the career change requires you to work at a place where you can better build your desired career and where you are personally interested in living or raising a family in.
If you are interested in reading more from-corporate-to-startup examples, here is a story about going from KPMG audit in Germany to becoming a start-up CFO in Hong Kong while starting an online gig.
Piecing the Picture Together
Company | Experience | Compensation | Team | Career Prospect | Network | Title | Location
A career change is all about measuring the trade-offs. At the end of the day, the basic principle is simple: if you are giving up on the upside on 1 of the 8 factors, there must at least 1 other factor that you gain back in exchange.
The number of factors that you compromise must be fewer than (or at the bare minimum, equal to) the number of the factors that you gain for the job switch to make sense, assuming all factors have roughly equal weight towards your career objective.
In the case of jumping from corporate to start-up, your company and compensation factors will likely be compromised. The question is whether your gain in the experience, team, career prospect, network, job title and location (if relevant) factors can sufficiently justify joining the start-up.
The 8-factor framework is not perfect, but it provides me a structured, logical guidance whenever I think about a potential job change.
It became very helpful when I was evaluating whether to jump from investment bank to an EV start-up in 2016, and to leap from the start-up to a “unique” opportunity that required me to relocate from Hong Kong to Latin America in 2019.
With the trend of changing jobs 4 times in the first decade out of college becoming the new normal (I happen to be an example of this trend), we are bound to face career crossroads more frequently.
It is advisable not to be clouded by the media hype and peer pressure, but to clear your mind and evaluate each prospective job opportunity rationally and systematically.
If you find my 8-factor framework helpful, I suggest you revisit this article whenever you are contemplating a career change.
A methodical decision-making approach on your professional career makes you smarter tomorrow.
Sherman
Time to Mobilize.