5 Cons to working at a startup

Table of Contents

Startups are often an exciting environment, filled with potential and drama. Mainstream media, such as the show Silicon Valley, often glamorize working at a startup. I have worked at several startups in my early career, and I have concluded that I will never work at a startup again.

I was naïve and young and could afford to take some risks. However, from working at several startups, I have found some common themes in the startup culture that I would consider toxic now.

A startup is a company started by an individual (or individuals), otherwise known as entrepreneurs, who seek to develop a product or service that is scalable. The intent of the business is to scale beyond the individual founders. Everyone dreams of becoming a millionaire by being one of the early employees of a unicorn startup, that is a startup valued at over a billion dollars.

Early employees usually get stock options of the company or a certain percentage of the company as part of their compensation. When these unicorn startups get a billion-dollar valuation or go public, the early employee stocks are suddenly worth millions of dollars. Although this is possible, it is also very rarely the case.

As I mentioned earlier, there are many reasons as to why I will never work at a startup again. I’ll discuss these below.

5 Cons to working at a startup

Startups are volatile and unstable

The first startup I worked at was when I was in my late twenties. I was fairly young, I was unmarried, and I had no children. So it was easy enough for me to uproot my life and move across the country to work at a biotech startup that was in my field.

I had also just graduated and was having a hard time finding a job with no experience. This opportunity opened up and I was young enough that I could afford to take some risks.

Unsurprisingly, the startup was unsuccessful and it went bankrupt in 6 months. Startups are very volatile and unstable. One of the big factors of instability is finances. A startup is not yet a business and is trying to prove itself as a business. Most of the time, it is relying on investors for capital to grow and expand, or even to sustain itself.

You are employed based on whether someone decided to invest in the company – not exceptionally reliable.

Your paychecks can also be unreliable. Your paychecks can be delayed and late with the profuse apology from the founders and promises that you will get it in a couple weeks as they are just waiting on some finances to clear or an investor that is so close to following through.

Apologies are nice and all, but you can’t pay your bills with them. You should consider looking for a new job if several paychecks are piling up as unpaid.

Unfortunately, I did not learn my lesson, as the job I moved onto next was also another startup across the country. This startup was also unsuccessful for me personally based on a variety of other reasons which I will delve into next.

Non supportive environment to develop and grow your career

Startups usually have a lack of structure. You are hired based on your expertise and what you bring to the startup immediately. You are usually the expert in the company and the go-to person for the specific field.

Therefore, you will probably have no formal training. You will probably not have much support either. The standard operating procedures and processes probably do not exist and you will probably have to come up with them as you go.

Your boss is not looking to mentor you or develop you. They will be too busy pitching to investors and making sure the company does not go bankrupt. In addition, you will get very little supervision and feedback to your performance. You will have no idea how you are doing as an employee, and often times you will have no idea what you are doing as an employee.

Your job and goals are probably unclear and will be constantly changing. There will be no clear path as to how your career will grow here.

Work-life balance probably does not exist

Startup founders are probably in C-level executives (ie CEO, COO, CFO, etc). This means that unlike other companies, management at startups are immensely more invested in the company and company performance. It is not just a job for them, but it is their entire lives. The founders have invested more into the startup than you will ever know. They will do whatever it takes for the startup to succeed and will inevitably expect you too as well.

As a result, working at a startup means you will probably not have work-life balance.

Have an investor pitch coming up and the product is not yet ready? Better be prepared to whatever it takes to get the product ready!

Production behind for an order? Hope you’re happy to stay all night many days in a row to get caught up!

Of course, all of this is probably unpaid because you are a salaried employee and you should do whatever it takes to help the company succeed.

I am not against hard work and I understand sometimes even at regular jobs, you may need to work extra hours to meet deadlines. However, this is usually an exception and not the norm.

At a startup, it is the norm. You are expected to work just as hard and care about the company’s success just as much as the founders. This will never happen because it is not YOUR company. For you, it is a job. And you will do a good job at your job. But you will not sacrifice everything because it is NOT your company!

The expectation for you to care about the startup’s success as much as the founders of the startup often result in startups being a toxic work environment. Startups often have stereotypical terms in their job posting such as “Rockstar/Guru/MVP” or looking for someone who can “wear many hats” with a “can do attitude”. These are definitely tell tale signs of a toxic work environment with no work-life balance. They are looking for a “rockstar” because you will be the go-to expert in the company with little support so you will need to “wear many hats”. But it’s ok, because you have a “can do attitude”!

Related: 3 Signs of a toxic work environment when job searching

Unlimited paid time off (PTO) is a big lie

Startup companies usually have policies that seem progressive at first glance. One of these “progressive” policies is unlimited paid time off. How great is that?! You can get time off whenever you want to go on vacation!

The reality is that unlimited paid time off benefits the employer more than the employee. Your request for time off must be approved by management and they can be denied at any time. Management will only approve your time off if it does not interfere with the needs of the company.

Considering it is a startup, it is probably understaffed and there is no one to cover your workload for you while you are gone. There is also probably always something urgent that needs to be done and you are a vital employee needed to complete the task.

Because there is no official paid time off policy, you are not guaranteed any vacation days. In addition, you will have no guaranteed paid time off days that can accrue to the following year. If you quit your job, there is no paid time off days that need to be paid out to you.

People who work at companies that have an unlimited paid time off policy can feel guilty taking the time off, and as a result only take the standard two weeks off a year or even less!

Startups can rarely keep up with market salary and your equity is probably worthless

As startups do not have a stable and consistent source of revenue, or if they do, they are not the most profitable yet, startups can rarely offer their employees market salary. Startups do recognize that their employees are taking a risk in working for them due to the volatility and instability of startups. As a result, startups usually offer their employees a percentage of the company or stock options.

When I was young, this was incredibly attractive to me – owning a percentage of a company! How exciting is that?! If the company is successful, I could be a millionaire!

If you’re in this situation right now and are contemplating working at a startup with stock options, you need to remember that these “stocks” at not yet real. They are basically very weak promises.

The stocks you will own and its value are potential, and potential is not reality. Owning 5% of a company sounds great! But owning 5% of an unsuccessful company, which is more likely to happen than not, is nothing. It is pretty much like buying a lottery ticket. You will be owning 5% of nothing. You will be owning 5% of stocks that are worth zero.

You need to decide if this is a risk you are willing to take, on top of having a below market salary.

So there you have 5 cons to working at a startup. Working at a startup isn’t all bad. There are plenty of people who have become rich by being one of the early employees of a successful startup. However, this is not the majority of people. The majority of people end up working at startups that are unsuccessful.

Leave a Comment