One of the most important ideas in finance is the idea of
the “Efficient Frontier” - portfolios of investments that give you the highest expected return for a certain level of risk. Essentially, by combining different types of higher risk / higher return assets with lower risk / lower return assets, you can increase the expected return on a portfolio without taking on more risk.
Applying this framework to thinking about your career is helpful. If you have worked at a big tech company for a while, joining the right startup is a “smart risk” because you’ll likely gain many valuable experiences that will be applicable to any other job, and this will shift up the “efficient frontier” of your career outcomes.
To make this more tangible, here’s an example. Let’s say you’re a high performing senior engineer at Microsoft. You’re wondering if you should stick around for a couple years for the next promotion or join a promising early stage startup. What’s your career risk?
-
If you join and the startup becomes the next big thing… awesome! You’re set for life (both in terms of money and future career opportunities).
-
If you join and the startup doesn’t work out… bummer, that happens. But now you have experience that gives you a totally different perspective on work, domain experience in a new field, and a network of advisors, investors, friends, and cofounders if you ever want to pursue a startup again.
Best of all, if you decide to return to Microsoft, the worst case scenario is you go back to your old job. The more likely scenario is you return at a higher level on a steeper trajectory because you have new skills and experiences that make you a better engineer. Without taking on more risk, you’ve improved your expected outcomes.
4. Freedom to Focus
Starting from a blank slate is scary and incredible at the same time. It’s often unclear if you are taking the right path, but it’s also easy to move rapidly, focus on what matters, and iterate on quick feedback cycles. This applies for building both products and organizations.
One of the best parts of joining an early stage startup is picking and choosing the best practices from companies where you have worked in the past, while trying to avoid the things that made working at those other places unpleasant.
As companies grow, they accumulate “organizational debt” (e.g., office politics, unnecessary meetings, needlessly complex processes) the same way that software accumulates technical debt. Joining an early stage startup means you get to build great products that don’t come with years of technical debt, and you also get to build teams and relationships without the years of organizational debt that have accumulated at a big company.
That means you can spend your time focused on what you’re good at, instead of all of the “other” stuff that eats up people’s calendars. This is why people spend so much time talking about the pace, the culture, and the excitement of working at a startup. It’s an environment that is all about enabling people to get their best work done.
If I had to name the one most positively surprising thing about working on a startup, it’s this freedom to focus and the resulting pace and productivity. At Plus, we get so much done with a small team that I am completely blown away with our progress every month, and it’s what makes going to work so fun.
Conclusion
“The framework I found was called a ‘regret minimization framework.’ I wanted to project myself forward to age 80 and say, ‘Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.’
I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal.
I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision.”
— Jeff Bezos
If you find the right opportunity with the right team, joining a startup to build something from the ground up can be a unique, once in a lifetime experience. You won’t regret taking a once in a lifetime opportunity and, in today’s job market, it’s not very risky either.
Maybe you take a pay cut for a year or two, but your job at a big tech company will always be there if you decide to go back, and the opportunity to focus on your work, build a brand new product, and explore something with unknown potential… well, that’s really exciting. 🤩
——-
* If you’re interested in learning more about startup compensation benchmarks, shoot me a note!
——-
If you want to explore job opportunities at startups, we are hiring for JavaScript engineers at Plus (my startup)! I’d also love to connect you with other startups in the Madrona portfolio or other companies that I am connected to in the Pacific Northwest. Just send me an email.