Is a career at a start-up as big a risk as most might imagine?
More and more talents are embracing careers at start-ups. Here’s why.
There was a time not too long ago when joining a start-up seemed like a reckless gamble – one that could potentially cripple your career. In the age of unicorn companies however, all that has changed. Today, start-ups such as Grab and Lazada are dominating headlines and driving widespread industry disruptions.
Indeed, there is no denying that with the right business model, team and opportunities, start-ups have extraordinary promise.
Many aspiring entrepreneurs and employees however are understandably concerned about job insecurity and financial setback. According to Startup Genome’s 2019 report, nine out of ten start-ups fail. Failure is so common that start-up funerals were even trending in Silicon Valley.
How do the risks weigh against potential benefits? Two business leaders Wayne Chia, product director at Sentient.io and senior advisor at TBN Asia; and Rex Lam, regional product owner and director at Manulife share their insights.
“Every opportunity comes with a risk. But at start-ups, you have a large influence on the outcome and have control on that risk.”
- Rex Lam, regional product owner and director at Manulife
The Trade-off Between Earning And Learning
There is no denying that a career at start-ups comes with some risk of short-term job loss. For talented and ambitious individuals however, the real risk may be choosing not to take any risk at all.
Playing it safe often comes at the expense of career growth and the opportunity to succeed on one’s own terms.
It was this very sentiment that propelled Wayne to join digital marketing start-up Techsailor (now part of TO THE NEW Digital) as an early-stage partner and co-founder in 2007. A scholar in computational biology at the National University of Singapore (NUS), he might have enjoyed a substantial pay package and benefits had he joined an MNC. Instead, he opted for lower pay, longer hours and accelerated growth at a start-up.
“Many who join start-ups are hungry and want to cramp as much learning as they can in two to three years. Because of the very compressed learning timeline, a year at a start-up is equivalent to three to ten years in other jobs,” he notes.
“In an early-stage start-up, because you represent the leadership of the company, you often have access to the leadership of the client and talk directly to the CEO. You are a lot less likely to get this sort of exposure at an entry level corporate job,” he adds.
Building A Well-rounded Resume
In terms of breadth of experience, few companies compare to start-ups. Beyond role related deliverables, many founders and employees find themselves having diverse responsibilities from finance to human resources, taxes, contracts and business development.
For many like Rex, the breadth of experience was one of the key factors that drew him to a start-up in the first place.
“When I was working in Saatchi & Saatchi, I was very much focused on marketing. However, upon joining LKK Health Products Group as part of the founding team in 2014, I had the opportunity to analyse the industry, work on product design, R&D, source technologies from different universities, and broaden my experience beyond marketing to have a holistic understanding of how an organisation works,” he says.
“I also learnt to be very agile and reactive. We monitored the business metrics every day and pivoted our action plan accordingly. It was very dynamic and data-driven because very often start-ups are entering a new market or proposing a new solution to existing business problems. Navigating that uncertainty with hypothesis testing, quick solutioning and pivoting is one of the valuable skills I learnt,” he adds.
In fact, agility and versatility are key to thriving at start-ups, especially for rapidly expanding companies where employees are unlikely to stay in a particular role for very long. High-performers may find themselves skipping rungs on the career ladder to reach executive level much earlier than their peers. Those with entrepreneurship ambitions will also benefit from an inside view of how a company is run.
Start-ups As A Stepping Stone
While it is a common misconception that joining a start-up may hurt one’s job mobility, Rex notes that there is more cross pollination of skill sets between start-ups and corporations today. Many big corporations are adopting the agile methodology of start-ups; and value the agility, versatility and diverse experience entrepreneurs and employees acquire in the start-ups.
“Corporates are now moving towards smaller agile teams for innovations so coming from a start-up might actually put you at an advantage,” Wayne adds. “More banks, telcos and financial institutions are developing innovation teams and looking for people with entrepreneur experience. They are not looking for a management consultant with big strategies which require a 30-man team to execute. They are looking for self-starters who can work with a modest budget, get things off the ground and gain momentum.”
“Coming from a start-up, my greatest asset is the ability to start from scratch.”
- Wayne Chia, Product Director at Sentient.io and Senior Advisor at TBN Asia
Wayne speaks from personal experience, having moved to the non-profit organisation World Vision International in 2016.
“Coming from a start-up, my greatest asset is the ability to start from scratch. My skill set as a starter complemented what World Vision International wanted when building Asia P3 Hub, a start-up within the larger organisation. With the funding we received and a small team, we built WVI’s global social innovation challenge, which became the organisation’s first multi-country web-based platform that solicits innovative cross-border solutions for real problems in the local communities,” he shares.
Wayne may have been part of an inspiring success story, but he believes that even if a start-up were to fail, the experience and skills entrepreneurs and employees gain will help them pivot to new jobs and roles.
“Survivorship bias refers to the idea that we only hear success stories, but never hear from those who have tried and failed. I believe that some corporates and non-profit organisations are increasingly appreciating failure stories as well because they can tell you where the landmines are and what to avoid,” he says.
How To Mitigate Risk
That said, it makes more sense to bet on teams likely to succeed, so before joining a start-up, it is important to do due diligence. Research on the feasibility of the business idea and model, the founders’ background and track record, the start-up’s performance, and funding.
Also, consider your risk profile. “I think a higher risk profile is preferable for start-ups. However, there are also a lot of family people with medium risk profiles who have switched from MNCs to start-ups for the experience and exposure – because that is where a lot of the exciting stuff is happening. And if it does not work out, they can always leave in one to two years,” the father of 2 young children adds.
“Every opportunity comes with a risk. But at start-ups, you have a large influence on the outcome and have control on that risk,” Rex adds.
The compensation package can also help to complement each individual’s risk profile – those with lower risk profiles may opt for more income paid in salary, and those with higher risk profiles may consider opting for more equity. Assuming that the start-up is a phenomenal success, stock options will be worth a lot.
“Compared to a big corporation, it is unlikely to be a one-size-fits-all package at start-ups. Whether you prefer more stock, or more income paid in salary, have a transparent conversation before you join the start-up. The flexibility in how you’d like to be compensated is one of the beauty of start-ups,” shares Rex.
Indeed, with the right mindset and the right team, start-ups are not as risky as many imagine. In fact, they are the new hotspots to turbocharge your career and give your resume the boost it needs. Self-starters will certainly appreciate the exhilaration of getting in on the ground floor, building something from scratch, and making a personal impact on the business and industry.