Why Engineers Do Better in Startups


Credit: Flickr Creative Commons, Dierken

Credit: Flickr Creative Commons, Dierken

I agree with a lot of Bindu’s article, Why Engineers Are Better off Joining Startups. I started a fairly successful Web 1.0 company in the 1990’s. At that time we had to hand roll even the most basic infrastructure to get the service up and running. Waterfall development was the rule. It was necessary to raise a lot more money because even basic services like Paychex, outsourced HR, Hosting, etc… were not available across a spectrum of what a functional company needs.

We still had a very successful exit as investors/employees received a 27x’s money return.

I recently came back and decided to do WellnessFX, funded in 2010. It has been nothing short of mind boggling to see the breadth of technology and business services available. What’s more, the variety of venture funds available that actually service early stage and seed companies is equally mind blowing. The talent pools are diverse and incredibly smart. Also, because there are so many services and outsourced resources available, it isn’t necessary to have a huge employment base. This means less dilution to the company equity structure. This is hugely in favor of investors and employees.

While the pay and job security are perceived as being superior with a large existing company like a Google, Facebook, or even Groupon, in reality there are several downsides:
1) Usually these companies have become so large and bureaucratic they tend to limit the abilities of top engineering talent to innovate and develop world changing services and platforms. They are static, slower growing biz models.

2) The valuations of these companies have run up so much the possibility of becoming “rich” from massive upside is reduced. I actually posted on a RoR Meetup board on this topic in response to a Groupon recruiter.

With startups you obviously need to filter for a variety of risks: does the company have a good go to market strategy, do you trust upper management, have they raised enough money, etc?  However, the opportunities for personal growth are amazing as the core product/engineering group will literally own the product vision.

The conversion of corporate America still doing business using 20th century methods to cloud-based business principals is a huge opportunity that will run for the next 10-15 years. Find an opportunity and run with it. If it doesn’t work you will still “earn your degree” in startup methodology and be well positioned to succeed with the next one that comes along.

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