Startup Opportunities: Evaluate Carefully

Startup opportunities are exciting – you can learn a lot and you’ll probably get hands-on experience. But the unfortunate matter is that there’s only a fraction of a percentage chance that you’ll actually earn some good money with one, or position yourself optimally for the rest of your career. So why does a group of people known for being risk-averse see so many of its kind fall off the radar early in their careers to the riskiest of all career choices? Because you’re people, and you still make emotional decisions and you’re still looking for instant gratification – an instant senior level role and responsibilities…and instant millions.

But there have always been and always will be startups, so don’t pressure yourself into believing that the call you just received is that “opportunity of a lifetime.” We are not suggesting that startups should be avoided (if you get a great offer with the hottest show in town, take it!), but we will suggest that you think long and hard before joining 98% of them, especially if it is your first move out of consulting and will be the anchor of your post-MBA “corporate” career. The key issue with startups is that most of the time, you will work for a company that has very small revenue and scale, few resources, no brand awareness, and a small likelihood of real success. Even if the startup does succeed, what does that translate to for you? You might be able to add a ton of value to the startup; you might put some real numbers on the board, and you might help it become a decent small company with a path to being midsize over the next 5 years. But if the equity doesn’t hit a home run in that time period, then you have basically added a lot of value to the company without receiving a lot of value from it. And your resume now shows that you spent the past few years working for a company that nobody has ever heard of, developing your skills but not necessarily in a best-in-class environment. Anyone looking for a glutton for punishment will surely find you appealing, but the executive recruiters and boards of directors who are looking for the best talent for the key leadership jobs probably don’t know you exist, because you fell off of the radar.

One of the main things that consultants cite when describing the appeal of a startup is that they will have direct reports: “This will differentiate me. For a lot of the positions I interviewed for with bigger companies, they asked about my management experience.” We would emphasize that it is more important whom you are learning from than how many people you are managing in your first role post-consulting. If the startup offers you a chance to manage a team, how great a team will it be, and what will you be able to afford? Another part of the appeal of startups is usually the combo deal of a big title (small company, so you get a big title) and a broad role (like heading up Operations, Sales, Business Development, etc.). Think of your transition into a small company with few resources, an o.k. team, and responsibilities you’ve never held before. Recipe for success?

With the recent deal-of-a-lifetime sale of Instagram to Facebook, it can be especially tempting to jump at a startup opportunity. Evaluate startups carefully, because similar opportunities will likely always exist. And if you’re just leaving consulting, a flop of a startup is not the first mark you want to make on the resume you’ve worked so hard to craft.