The plague of Startups

A friend of mine recently had the traditional annual salary negotiations at her workplace. She already knew she was being paid less than most others in her position. She had prepared many notes on her work over the previous year, and how she had taken on more responsibility and improved in her role.

                      She presented all this at the meeting with her boss and was told that – sadly – they could not bring her wages up to par with the rest of the market. The reason? They were just a startup company, and so had less funds to throw around than other, more well-established companies.

For those who don’t know, a ‘startup’ is a term that gained a lot of traction in the 90’s to describe all these new small-scale companies with dreams of becoming the next Microsoft, IBM, or McDonalds. The concept makes sense when it is laid out plainly:

Someone has an idea which, they believe, will make a lot of money in the future. But they’re just working out of mom’s garage or their studio apartment. So, they secure some funding and start small. Manually creating their product, possibly with a few employees, who will have to take on many different hats to make the company work. And any profit gets put back into the company, hiring more people, hiring machines, equipment and renting office space. Until one day, your company is on the Fortune 500 and profits are now spent on lobbying tax-exemptions hiding Indonesian child-labour from the press. A dream come true.

And this is where the lie begins. The promised path of those early employees is that once we are the big dogs on wall street, you will be the COO or board member of a company with more money than small nations. The only trade-off is that you must believe in the dream alongside us, and you have to accept lower compensation for the work you’re doing right now. Seems fair right? After all, what is 10 years of underpaid work, if you can live your 50’s in riches?

                      But you are trading what they want here and now, for something you might get in five to ten years’ time. If the company goes under in three years, because the CEO didn’t know that self-popping bubble wrap was never going to take off, they still got what they wanted from you: cheap, skilled labour. You on other hand, traded three years of your life for an entry on your resumé from a dead company which, depending on your role at said company, might look less than optimal.

                      Besides the obvious risk that not every startup is going to be the game-changing disruption in the market they all believe, we haven’t touched issues like; what if your department gets cut, as they realize they need a new direction? What if you get replaced once they are a big enough to afford someone more experienced? All this is just to say, despite what glorious career opportunities you are being promised, most of the risk is on you. You are paying up front, and they’re getting credit to pay up a decade from now.

So, are startups all bad? No. Not at all. Like I said, the concept does make sense, and while they come with issues, we probably need a vernacular to accurately describe the companies that are clearly meant to become more than they are now. If you are the manager of a clothing store, that’s one thing. If you are the manager of a startup company in the clothing industry, that’s another. Now you’re communicating, that your company is meant to grow beyond its current scope.

And startups also have some merits. You are more likely to be given new responsibilities at a place, where the number of employees is limited. And you’re more likely to be hired in the first place, for positions that you might not be as experienced in – Since they can’t afford the really experienced folk, who know how much to ask for. A startup can be a jumping-pad to more established companies, should you wish to take that route. Two years of underpaid work at a small self-popping bubble wrap company might be enough for your resumé to land a job at a large regular bubble wrap company.

                       But maybe we should be more critical of startups. One thing, I believe employees of startups should always demand, is a roadmap for the company’s future. If they can’t offer the same pay or benefits as other companies because they are a startup, then how long to they plan to be a startup? And how do they see your role change during that time?

You need to know, if you’re looking at a 70% (of market value) wage for the next three years or seven. And whether your role actually grows during that time, to make up for the lowered amount of wage. If you’re working as an office manager you might be looking at a future, where the only difference between now and then is you’ll be working as an office manager for a regular amount of pay. In that case, you’re just working for lower wages for x number of years for no real reason (other than “But we’re a startup!”).

All of this doesn’t even touch on the fact that you will be much more likely to run into poor management or general tomfoolery at startups. Since the boss is not someone hired for their managerial skills, but instead just the guy that had the idea for the product.

I have had many friends in the young-professionals-aged-20-30 tell me, the only thing they didn’t want for their next job, was a position at a startup. Whether it is bosses throwing a tantrum because they don’t understand parts of the work being done at the company and therefore cannot understand, why it can’t be done faster/better/cheaper. Or the disliked, people-averse CFO being put in charge of HR, because the law requires the company to have an official HR-position. Or even someone in upper management stealing from the company with the tacit approval of the CEO, because they’re old buddies. All these are genuine examples from my own and acquaintances’ work experience.

Ultimately startups are not inherently good or bad. They simply are. And we can make of them, what we want. Looking at what we have currently made of them however, I can only encourage that we make more clearly defined demands. If you want to start a company focused on self-driving bicycles, then more power to you. But don’t bullshit the rest of us. Have clearly defined goals, for when you’re officially an ‘established’ company. And for all the people taking jobs at startups, don’t just accept any narrative that this place will explode with business in the next decade. Be smart. Be careful. And remember: You’re already paying. They’re not.