The Biggest Pros and Cons of Working for a Startup

Joining a startup is like setting out for the Wild West of the business world. You‘re leaving behind the safety of established trails for the chance to discover gold. But you‘re just as likely to end up lost in the wilderness.

I‘ve spent the past decade riding the ups and downs of the startup world, as both an early employee and a founder. I‘ve watched scrappy ventures blossom into industry leaders, and seen promising visions crumble into empty bank accounts. Through it all, I‘ve come to appreciate the incredible opportunities and challenges that come with startup territory.

If you‘re considering making the leap to a startup career, it‘s critical to go in with both eyes open. Let‘s dig into the biggest pros and cons I‘ve experienced from the front lines.

The State of the Startup Ecosystem

First, it‘s impossible to ignore the sheer size and speed of the startup universe. An astonishing 627,000 new businesses are started each year in the US alone, contributing to over 400 million entrepreneurs worldwide. And that growth is only accelerating, with a record-breaking 5.4 million applications for new businesses in 2021, a 53% jump from 2019.

Of course, for every unicorn galloping to a billion-dollar valuation, there‘s a herd of donkeys carrying the weight of the ecosystem. About 20% of new businesses fail within their first year, 50% within 5 years, and a staggering 65% within 10 years. Even venture-backed startups, armed with the guidance of seasoned investors, fail 75% of the time.

But the potential payout keeps entrepreneurs and talent coming back to the table. Household names like Airbnb, Stripe and Instacart were all early-stage startups not long ago. And their eye-popping equity growth has minted thousands of employee millionaires, from the C-suite to the customer service team.

The Makings of Startup Motivation

So what drives hordes of professionals to leave their cushy corporate jobs for a space where the odds are stacked against success? I believe the motivation boils down to three core human needs:

1. Impact: the desire to personally move the needle and witness the fruits of your labor
2. Growth: the yearning for exposure to new skills and accelerated career development
3. Purpose: the drive to build something meaningful that aligns with your values

A 2021 Deloitte survey of over 10,000 workers found these same themes echoing across generations. Gen Z and Millennials in particular deeply value feeling their work contributes to solving societal challenges (44%), creating innovative products and services (40%) and driving business transformation (39%).

The flat structure and fluid roles of a startup feed these motivations in a visceral way that‘s hard to replicate in a rigid corporation. When you‘re one of a handful of employees, there‘s nowhere to hide. Your effort, or lack thereof, is immediately apparent in the company‘s trajectory. That‘s both an invigorating shot of dopamine and an overwhelming hit of cortisol.

As the saying goes, with great ownership comes great anxiety. The highs are sky high, like launching your first product or landing a game-changing client. But the lows crater to Earth just as fast, like missing payroll or losing a top performer. It takes a certain type of resilient spirit to not only survive, but thrive on that kind of whiplash.

Inside the Pressure Cooker of Startup Operations

That intense sense of ownership is both a feature and a bug of startups‘ lean operations. The average seed funding for a startup is just $2.7 million, a modest budget to stretch across salaries, office space, development, equipment, marketing and more.

To make every dollar count, startup teams run remarkably lean. It‘s not uncommon for a company of 50 to be operating with less than 10 full-time employees, supported by an army of contractors and part-timers. That skeleton crew has to stretch themselves across every function, from HR to engineering to customer support.

The upside is an incredible crash course in how a full business operates. In my own startup journey, I was gifted a front-row seat to each piece of the go-to-market puzzle. I flexed from my core skills in content into product roadmapping, user research, data analysis, and even a dash of sales. It was like getting an MBA in entrepreneurship through osmosis.

But this baptism by fire comes with serious risks of burnout. "Startup hours" are notoriously grueling, with 50-60 hour weeks seen as table stakes. In a 2018 survey by Blind, over 60% of startup employees reported feeling stressed and overworked, with nearly 20% saying their stress level was "very high."

The always-on mentality, lack of boundaries, and constant pivots can quickly drain even the most passionate team. It‘s a tough tightrope to walk between sprinting at top speed and sustaining yourself for the marathon.

The Sparks of Startup Magic

But for all the chaos, there are moments of pure magic in building something from nothing. When all the late nights and blind alleys crystallize into a real product in a customer‘s hands, it makes the madness worthwhile.

As a founder, I‘ll never forget the first time someone outside our company used our MVP. Watching them navigate the product, hearing their feedback, iterating on the fly – it was a level of raw creation I‘d never tapped before. It felt like collectively willing something into existence, fueled by sheer force of belief.

That tight feedback loop is the lifeblood of startup innovation. With a small team, there are fewer layers between an idea and its execution. Decisions that would take months of committee meetings and red tape at a large corporation happen over a 15-minute stand-up. The agility is equally energizing and exhausting.

What keeps you coming back to the front lines each day is the people in the trenches with you. When you‘re spending 12 hours a day elbow-to-elbow with a handful of humans, you form a foxhole bond that‘s hard to put into words.

These teammates become more than coworkers – they‘re comrades-in-arms, therapists, inside joke generators, 2am pizza run buddies. You see each other crack under pressure, and lift each other back up. You become fluent in each other‘s feedback styles, time zone math, and Zoom backdrops.

The "we‘re all in this together" mindset creates a work culture that feels more like an intense summer camp than a 9-to-5 job. It‘s not uncommon to see employees hanging out on weekends, covering for each other during emergencies, even taking vacations together. After all, who else could appreciate the need to sneak in some code at the airport terminal?

Of course, the strength of those bonds depends heavily on how thoughtful the founding team is in building an intentional culture. It‘s all too easy for the "hustle harder" mentality to slide into toxic territory, sacrificing psychological safety for relentless growth.

The Dark Sides of the Bright Lights

Unfortunately, even the most mission-driven teams aren‘t immune to startup mortality. The rollercoaster of the early years can screech to a halt without warning.

In 2021, I watched helplessly as a startup I‘d poured my soul into shut down operations after 7 inspiring years. A painfully common story of mistimed product market fit, a global pandemic, and an unforgiving funding landscape left us with no cash and no viable path forward.

Leadership delivered the news in a surreal all-hands Zoom, desperately trying to project calm through cracking voices. Within weeks, we scattered from our hacker houses and coworking spaces into the cold arms of recruiters, shell-shocked and grieving for a future that vanished overnight.

For every fairytale acquisition that mints millionaires, there are countless startups that sputter out, taking employees‘ career prospects and financials with them. It‘s a bitter pill to swallow when you‘ve sacrificed above-market salaries and fat benefit packages for the promise of a life-changing equity stake.

According to Glassdoor, the average startup employee earns about 20-25% less in base pay than their corporate counterparts in the first 3 years. For those who don‘t already have a cushion of generational wealth, a sudden layoff can be financially devastating. And that‘s assuming you can even afford to take the initial pay cut.

It‘s a harsh truism that startup "meritocracy" disproportionately benefits those privileged enough to gamble their livelihoods on a dream. A 2020 study by Crunchbase found that only 2.4% of venture funding went to Black and LatinX founders, who then receive 41% less in total funding than white peers.

For all its lip service about funding "the best ideas," startup culture still gatekeeps its spoils to a homogenous inner circle. As an early employee, it‘s worth digging into the diversity stats, board makeup and equity distribution at a startup before betting your livelihood on its success.

The Mindset for Making It

So how do you determine whether a plunge into startup life is right for you? As someone who‘s weathered my share of storms, here‘s my best advice:

💰 Get real about risk. Can you afford a pay cut, or a surprise layoff? Do you have a safety net to fall back on? How much do you rely on gold-plated benefits? Don‘t be afraid to negotiate for what you need to protect your downside.

🧘‍♀️ Know your work style. Do you thrive in ambiguity, or crave clear structure? How much autonomy vs guidance helps you do your best work? Can you sustain start-and-stop sprints, or do you prefer a predictable pace? Shadow the team for a day to witness the workflow in action.

💪 Find your why. Are you deeply, jump-out-of-bed passionate about the problem they‘re tackling? Do you resonate with the founder‘s vision on a gut level? Would you be proud and fulfilled to devote the next few years to this mission? Spend time with leadership to lock into the big picture.

🔎 Kick the tires. Has the product found meaningful traction and revenue? How many months of runway do they have? What are the founders‘ backgrounds and reputations? How have they treated past employees during tough times? Don‘t be afraid to dig for the real story.

🧑‍🤝‍🧑 Prioritize your people. Do you genuinely respect and trust the human beings you‘ll be in the pressure cooker with? Do you feel psychologically safe to be vulnerable and give candid feedback? Do your values truly align? Grab coffee with your future teammates to feel out the vibes.

With these guiding lights, you‘re equipped to make a clear-eyed choice about whether the potential payoff is worth the risk. And if the stars align on the right startup at the right moment in your life, it can be a truly transformative launchpad for your career and character.

The Takeaway for the Starry-Eyed

Working for a startup is not for the faint of heart. It requires a special blend of resilience, adaptability, and sheer force of will. You must be willing to trade the creature comforts of a well-oiled machine for the promise of a life-altering journey.

But if you have the risk appetite and mindset to weather the storms, you‘ll be rewarded with unparalleled opportunities for ownership, creativity, and camaraderie. The bonds forged in the crucible of a startup are unlike any other, as are the lessons etched into your entrepreneurial soul.

So if you feel that tug in your spirit for a seat on the rocketship, don‘t be afraid to reach for the stars. With the right crew, cargo, and course, your startup adventure just might deliver you to a whole new world – and a whole new you.