Kanav Bhama (Business Operations, Dovetail), Will Dennis (APAC Commercial Finance Director, Afterpay, Rhiannon White (Chief Product Officer, Vend), Harriet Johnston (Head of Content and Partner Marketing, Brex), Amelia Crawford (Legal Counsel, TikTok), Ellen Dinsmoor (Head of Operations, Vow), Tom Bass (Cofounder of Flirtey / Growth PM Atlassian), Matt Thurin (Growth, AirWallex), Lee Lubner, Darryn Rabec (Venture GM at BCG Digital Ventures), Chris Quirk (Investment Manager, rampersand), Tim Atkins (COO, CancerAid)
The obvious risk of joining a start-up is that it may shut down, leaving you out of a job. This article looks at some of the other risks.
Joining a startup can be a pretty big commitment, at earlier stage startups you’re basically buying into the vision of Founders and team, and basically saying ‘yes I’m keen to take this plunge with you, we’re in it together, let’s do this’. The natural risk that comes up from that is not finding alignment with the company’s values, philosophy or decision-making rationale. There’s a lot of decisions to make in earlier stage start-ups, often which need to be made quickly and it’s important to find and feel that affinity early to smoothen the process.
Some of the other general risks are the startup not being able to find product-market fit, not solving a real customer problem, or running into other challenges that cause it to cease operating (e.g. running out of money). On face value this can be daunting, but it’s incredibly likely the skills and experiences you’d have picked up with that startup along the journey are valuable and transferable in another environment.
And then there are risks more specific to being a generalist joining a startup. Generalists are often underrepresented in start-ups, especially SaaS, so it can be a little more isolating compared to working on big corporate projects with ambitious people coming from similar educational or working backgrounds. That gap is really easily made up though by an awesome broader community of Operators who openly share their experiences and learnings with each other. For example, there are Slack communities for Finance folks in Tech, and an Australian Tech Startup’s CFO group. The Operator communities really rally together.
Start ups and scale-ups are usually have more ambiguous roles and role definition that larger organisations. There is a risk that the role you think you are joining to do is not the role that actually exists or is needed. Of course, this is also an opportunity as you can very rapidly identify things or areas that need attention that perhaps weren’t being focused on and reshape your own role as you see need.
A lot of the same risks you’ll have if you’re going to a big company; you want to make sure that you’re excited about their mission, genuinely understand the product, and want to work with the team. If you have flags going up on these items–it probably isn’t the right business for you. To make this more tactical here’s a quick checklist to also go through:
There can be some career risk in becoming a generalist with a broad skill set, instead of gaining experience developing a more niche skill set in another career. There is also the remuneration risk that the equity pays off less than hoped or not at all.
There are inherent risks with moving from any job: you don’t like the culture, you don’t like the work, you don’t get along with your colleagues/boss. You must remember that the interview process is just as much about you finding the right fit as them filling a role! Ask questions that are important to you. This can sometimes help identify red flags before you start. Some questions I like asking are:
I’ll flag a few potential risks:
Likely an immediate earnings hit that is meant to be offset by POSSIBLE equity upside. That is the main one.
The fast pace isn’t for everyone. A risk is joining and not liking it, and wanting to look elsewhere after a short time in the role. I also think start-ups are more likely to let people go before their probation ends.
Lack of certainty (the company may not be around in twelve months), there are countless unknowns.
Other than the obvious risk of failure, it might not be what you were expecting. Working at a startup sounds cool, but it really isn’t glamorous and there is a lot to complain about if you’re the type of person who likes everything around you to be figured out.
Joining any organisation has risks: that you hate the job, the culture is terrible, or do you don’t like the people. The key differentiator with start-ups is whether it will be around in 2 years’ time.
When I took my first role at a start-up, I had very few commitments (i.e. no mortgage nor children), which meant that I was able to assess my next role on the likelihood of it being a successful learning experience, rather than being financially lucrative.
Looking from this lens, if the company I joined had failed within 12 months and I was left out of a job (it didn’t), that 12 months would have been worth it for me, as the experiences and learnings I gained over that time outweighed anything else.
The next article to read is 'How to reduce the risk of joining a bad startup'.
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