Considering Your Technology Career. Part 2 of 4: The Start-up Company

In Part 1 of “Considering Your Technology Career,” I described a model for assessing satisfaction with your current employment situation, and I urged the reader to consider what is truly satisfying in their career. Remember that the four dimensions that I chose (Interest, Compensation, Bureaucracy, Prospects) were of special meaning to me. There may be other dimensions that you wish consider that have special meaning to you. In this article, I will describe a prototypical start-up and provide some anecdotes based upon my experience. I will then apply the satisfaction model to the start-up company. Along the way, I will discuss some more subjective elements of a start-up that you may want to factor in when considering if joining a start-up company is right for you.

Let’s go.start-upOK, I’ll admit that I’m biased when it comes to start-up. I was employee #2 in a teleradiology startup many years ago where the founder and I developed the first all digital teleradiology system called DigiRay. From the perspectives of innovation and pure software development fun, it was the best two and a half years of my technical career as a software developer. It was a seminal moment in my career because I put myself into unknown territory. There were many aspects of the business that I had to learn quickly, and there was no place to hide. If the founder and I didn’t do it, it wouldn’t get done. I not only developed software, but I wrote parts of a patent application and application to the US Food and Drug Administration. I went on sales calls to hospitals and support calls to doctors homes late at night. The experience quickly disabused me of any latent fears that I had about my capabilities. Working for a start-up was exhilarating and confidence building. In 20/20 hindsight, I don’t think I could have advanced into a technology leadership position without having worked for TeleScan. On the flip side, our start-up didn’t make it. We were good engineers who built a great product, but sales and marketing were not our strength. Further, our shoestring budget had us chasing investment, and we just ran out of time.

Taking my anecdote as an example of a prototypical start-up, there are common threads. Start-ups are just that, companies that are starting out developing what their founders think is a good idea that will provide a benefit and make money in the process. In the case of the DigiRay product, previous teleradiology systems transmitted facsimile images to the doctor’s home for reading. The doctor still had to go to the hospital to do a “wet” reading at the imaging console to confirm the diagnosis based upon the source data. DigiRay transmitted the CT, MRI, Nuclear Medicine, Ultrasound, and X-ray source data to the doctor’s home and provided the imaging console controls on a PC to allow a “wet” reading without the need to travel to the hospital. The benefit to the patient was that the product allowed for “wet” readings sooner which could save lives. The other benefit was less travel for the doctor. Both of these features are now common in teleradiology using the DICOM standard. We were about ten years ahead of our time!

A limited budget is next feature of a prototypical start-up. Typically, start-ups are self-funded by the founders. Alternatively, there may be an “angel” investor behind the scenes who is helping to fund the company. A current trend is to seek investors via crowdfunding sources like  IndieGoGo and Kickstarter. Big money investors tend to arrive when the start-up has a demonstrated product, client pipeline, and revenue stream. In any event, money is limited, and where it exists, it’s poured into product and business development.

Finally, those that join start-ups are typically asked to wear a lot of hats. In my example, I found myself doing far more than just developing software including regulatory and legal filings, marketing and technical documentation, support, and sales. This was the allure of the job for me but might not be for everyone.

So let’s apply the satisfaction model to the prototypical start-up.

start_up_interestThe main reason most technologists join start-ups is because the proposed product and business domain is interesting. In my case, I spent the years before joining a start-up developing software for defense applications for various branches of the US military. The work was interesting, and I felt like I was making a difference. But when a colleague approached me with his teleradiology prototype and asked if I would like to join him in “productizing” it, the thought of getting into telemedicine where I could make a difference in human health was very appealing. The interest level was off the charts!

And so it is with most start-ups as reflected in my “Interest” rating above. There are enthusiastic founders and a cool idea. These are usually “greenfield” projects where a product is built from the ground up. Greenfield projects are rare in the life of a software developer. I’ve experienced such projects a handful of times in my long technology career.

start_up_compensation.pngI’ll put this simply; most start-ups can’t afford to pay premium wages. The financial promise of a start-up is not in the salary but lies in the possibility of the future success of the company. The prospect for a high starting salary is low, and I reflect that in my “Compensation” rating above. I do note some variability in the rating because salary like anything else is open to negotiation if you are extraordinarily valuable. Don’t sell yourself short but don’t price yourself out of a great opportunity if you feel passionate about the start-up.

However, there are ways to hedge your compensation bets when joining a start-up. Since you are getting in on the ground floor and accepting significant risk in helping to ensure the future success of the company, you are correct to ask for an equity stake in the company. This usually takes the form of receiving stock in the company that becomes valuable if the company succeeds. Explaining the finer details of negotiating an equity deal as a founding or early employee is beyond the scope of this article but great sources abound with a brief search.

Finally, the notion of total compensation as described in the first installment of this series can be highly variable with a start-up. Start-ups may or may not offer good healthcare and paid time-off packages. The founders decide what is offered, and there are many differing points of view.

start_up_bureaucracyIn my opinion, bureaucracies emerge as the number of staff in a company grows and the initial tight alignment of common business intentions diverge. Put another way, where there are smaller numbers of people committed to a common vision and direction, bureaucracies aren’t needed. As the company grows and the vision and direction diversifies and become more complex, bureaucracies form to impose orthodoxy and control. This is a fancy way of saying that start-ups are usually a free of bureaucracy and low on politics, and I reflect this in my “Bureaucracy” rating. In exchange for functional segmentation imposed by bureaucracies, employees are typically asked to wear many hats to make the business work. For example, in a larger company, an IT department would procure computers and configure and deploy them. Those tasks would fall on the employees of the start-up. Clearly this is a mixed blessing. In my case, I enjoyed doing a variety of technical tasks and learned a lot from it. That may not be that case for all employees.

start_up_prospectsWorking for a start-up is not only an interesting experience but can boost your career by exposing you to aspects of a business that you might not otherwise see. On the other hand, the risks are high since most start-ups fail within a few years. If you’re in a position to accept the risk that the company might not be around in a few years, then I think you will find the experience of working for a start-up interesting and exhilarating. Like I said at the start of this article, I’m biased since my experience working for a start-up was a career booster for me.

My “Prospects” rating reflects the extreme variability inherent in risky ventures. If your goal is to do something really interesting and possibly give your career a boost even if it means that you might not get rich doing it, then your prospects in a start-up are high. If, on the other hand, your intention is strike it rich, then the variability for your prospects is very high. Only you can judge why you should join a startup and estimate how the company might do. A lot of that depends on the competence and business savvy of the founders and their judgment about the market for their product ideas.

What’s Next?

If a start-up makes it past the first few years, it’s probably because the principals managed to develop a good product, build client pipeline, and a generate revenue. In these cases, the next goal for a small company is to grow the business at an accelerated pace. This is called the “Take-off” phase and frequently requires and infusion of cash well beyond the ability of the nascent pipeline to support.

In part 3 of “Considering Your Technology Career”, we will examine the “Take-off” company and use the model for assessing satisfaction to explore possible sources of satisfaction and dissatisfaction.

Stay tuned!

 

Best,

Charlie