Working for startup companies

[MGRJob]

I was just wondering are there any benefits for working at a start-up company as opposed to established companies? For example if the start-up company suddenly becomes very successful what does that mean for the employee?

 

[businessfunding]

The main advantage is the feeling of 'being in at the beginning'

In theory your career should take on in line with the company fortunes.

If you are lucky (clever) you could also have a shareholding

Obviously there are risks and downsides too.

 

[MGRJob]

What are the risks to me? Obviously the company might not be successful, but how does that really affect the employee, other than needing to just look for another job?

 

[Paul_Rosser]

I worked for a software startup and there was more a feeling of being there at the start, promise of shares if things went well etc.

On the minus side quite a few months got paid very late and in some cases not in full also as the people running the firm were working 80+ hours a week they expected the same from employees without having to pay overtime.

 

[Ryan McFadyen]

I'd say there is much less stability in all aspects. I've done 3 projects in 8 months for one startup before, they kept pivoting the company and finding new investors for new directions. I can't imagine what that's like for the people who work there, interesting to work on new things I guess but it must also be disheartening to think everything you do could be thrown out in a few months to try something else.

 

[businessfunding]

What are the risks to me? Obviously the company might not be successful, but how does that really affect the employee, other than needing to just look for another job?

Its a bit of a generalisation, as there are strong start-ups and weak established businesses

However, overall it is likely in a start-up that things like career structure, training and support will be far less available. Typically things are a bit 'mix 'n' match' so whilst you might be there in a technical role you could find yourself manning the phones, for example.

Also, if the company is not successful there might well be a phase of uncertainty, and possible even missed pay-days when you have to decide whether to stay or go.

That is a negative picture - in my view it is an exciting journey, but it certainly isn't for every one.

 

[Gecko001]

I worked for a software startup and there was more a feeling of being there at the start, promise of shares if things went well etc.

On the minus side quite a few months got paid very late and in some cases not in full also as the people running the firm were working 80+ hours a week they expected the same from employees without having to pay overtime.

In startups, "promises" are just that. Nothing more. It depends on the way the business goes and other decisions outside your control.

 

[Paul_Rosser]

In startups, "promises" are just that. Nothing more. It depends on the way the business goes and other decisions outside your control.

Indeed and if the company fails then any shares are worth nothing. Depending on the size of the start up though you may have more say in the way the business goes than in working for a more established business.

 

[mhall]

"If you haven't got a dream you will make a good employee for someone who has"

and you should get every penny you earn for as long as the company can afford to keep you on

If you have got a dream, grab some shares and work just as hard as the others - you may not get paid so regular, or even at all sometimes, but you cannot beat the excitement and, if it all works, you will be far better off in the long run.

But if you want security, predictability and a boring life - don't work for a start up.

 

[MGRJob]

So does that mean that the startup company should offer us shares? Is there any risk if I have shares? I mean would I lose money (I mean out of my own pocket)?

 

[Gecko001]

"If you haven't got a dream you will make a good employee for someone who has"

.

Talking about having a dream reminds me of the following video "American dreamers with Al Murray"

http://www.youtube.com/watch?v=GiKc37mhy58

It is funny.

 

[Deleted member 162294]

So does that mean that the startup company should offer us shares? Is there any risk if I have shares? I mean would I lose money (I mean out of my own pocket)?

If you paid for shares with your own money then you would lose those shares if the company goes under. Owning shares means you get dividends if and when the directors decide to pay them out.

In a scenario where there are 2 directors (who are also shareholders) with 45% shares each and you have 10%. If the directors are split on a decision then you as the remaining 10% can be the tie breaker. Still its not an ideal situation because the losing director will probably resent you and the other director, probably thinking you're conspiring behind his back.

Then to make matters more complicated companies can opt to use alphabet shares which I won't go in to detail.

 

[mhall]

There is no "should"

If they have any sense they will get you as cheap as possible. It is down to you to negotiate.

 

[MGRJob]

So does this mean that if I get lucky I can potentially earn a lot of money?

Also, are there any warnings for employees when signing contracts? I might open a new thread for this question but I really want to know does an employee have anything to worry about when signing contracts? Mostly the answers seem to be with regards to notice period, but the worse case scenario for these seems like not getting paid for our last month. Am I right?

 

[Deleted member 162294]

So does this mean that if I get lucky I can potentially earn a lot of money?

In a private company your shares are worth whatever people are paying for them, and shareholders agreements (something I am not really familiar with) can dictate the amount of control you get within the company in regards to voting rights and what you can do with shares in regards to buying and selling them.

So you can potentially earn a lot but its a little more than luck. The director could give you some shares but then decide to never pay a dividend and instead just raise his own salary, but once you've got a share I'm pretty sure no one can take it away from you.

 

[hipwuk]

Going in at a much higher position than you would at a larger and established competitor, better leverage when it comes to negotiating you employment terms (including benefits, salary, holidays, etc.), share options.

 

[Davidcooper]

My experience at working at a start up company were great compaired to an established company. For example, from day 1 I was an important part of the team, whereas when i worked at an established company, I was just another "cog in the wheel" ( not sure if that is the right expression). But I felt more valued being at a start up company.

 

[bsummers]

There are risks in working with a start-up. As what the other forum members have said, you have to deal with the uncertainty of tenure. If you get lucky, you might become part of something big in the future. Just be ready for failure, since the start-up business environment can be full of it.

 

[aronpaul_martins]

Hi there,

Many start ups offer their employees with ESOPS (Employee Stock Ownership Plan). The company offers it so there is no downside of it. You get the opportunity to learn a lot when it comes to start-ups. From product knowledge to selling skills can make to ready to the next challenge if the business goes bust. You also learn to deal with difficult situations and multitask if you are comfortable with the whole idea. Finally you grow with the company both in designation, seniority and experience but this would depend on your adaptability skills as well. Overall a good option but long working hours area given when it comes to start ups so be ready.