Many employees want to work for a startup for the opportunity to build something from the ground up, to gain a diversity of work experiences, and to work on a team that is free to experiment and take bold risks. But there are also drawbacks to the startup lifestyle, ranging from heightened expectations resulting in less work-life balance, to lower average compensation and less job security.
While some say the decision depends on what stage of life you’re in, others believe the choice is based on personality.
For Qaiser Habib, working for small companies was a great way to start his career. Mr. Habib worked for a handful of startups since immigrating to Canada from Pakistan in 2010, including one he founded, which was eventually dissolved.
“Early in my career, I was inclined more toward smaller companies because I was young and more open to risk,” Mr. Habib says.
He then went to work for e-commerce giant Amazon.com Inc, then food delivery app DoorDash before landing in his current gig as director of engineering and Toronto site lead for Snowflake, a mid-sized cloud-based data platform.
“Now that I have a family and my experience is more specialized, I find the sweet spot is in the middle; not the very big companies and not the very small ones,” he says.
In his experience, the decision of what sized company to work for often comes down to values alignment, financial stability and risk tolerance.
“You’re making a big bet on your career [at a startup], but in the process, you’re learning a lot, and with that comes some downsides in terms of financial stability,” Mr. Habib says.
“In big companies, you’re a very small piece of a big machine, so your responsibilities may not be as big – even at a senior level – however, there’s a lot more stability.”
Experts warn that working for a startup can be very different from a larger, more established company.
Josh Brenner, chief executive officer of recruiting software firm Hired, says there are benefits to working for both a larger and smaller company. “A lot of times, the decision has to do with what phase of life you’re in,” he says.
In general, Mr. Brenner says some younger workers tend to be attracted by the fast paced-culture of the startup environment. And since startup roles are typically less defined, he says employees often gain a wider breadth of experience in a shorter period.
“Startups tend to perform better in terms of the engagement,” he says. “That’s what a lot of younger talent cares about – being connected to the purpose of the organization and buying into what they believe in as a company.”
However, startups often have fewer resources, which means new hires are less likely to enjoy a well-structured onboarding and training experience, which some may value in the earlier phases of their careers.
Also, smaller companies typically can’t match the salary and benefits offered by larger organizations, though that gap might be closing. According to data provided by Hired, the difference in salaries between small and larger employers shrunk from more than 9 per cent in 2019 to just under two per cent in 2021.
Salaries for those employed by larger organizations also tend to be more predictable and more rigid, while compensation for startup employees can be more fluid, according to Daneal Charney, an executive in residence at the MaRS Discovery District in Toronto.
“In the corporate world, after three years, you might be in the same role,” she says. “In a startup, you’ll move around, you’ll get the opportunity to be promoted, so your salary potential is going to grow quicker, and your titles are going to change faster.”
Ms. Charney warns that startups tend to be more demanding on their employees’ time and often struggle to provide employees with a strong work-life balance.
“In the startup world, work and play are integrated; you tend to spend all your time with these people,” she says
Ms. Charney argues the decision on what type of company to work for should be based on their personality. For example, she spent the first third of her career working for large organizations but has worked with startups since.
For startup employees, she says, “you have to have a bit of an appetite for change and shifts, and really be more of a doer than a thinker, and be a person who likes to experiment, learn and pivot.”
Marcus Bush, director of Canada sales at online job site Monster, warns that employees transitioning from a startup to a larger corporation should be prepared for a potential downgrade in their position since job titles tend to be more rigid in the corporate environment.
“If you work for a startup that’s really small, your accomplishments might not be on par or on the scale of what a larger company might be expecting, and it might be harder to get a job at that level,” he says.
For people who aren’t sure what type of working environment best suits them, Mr. Bush recommends they spend the early part of their career working for different-sized companies to determine the best fit.
“It’s either love it or hate it, and you figure it out pretty quick,” he says.