No, there are some things that happen in startups which absolutely don't happen in established businesses in North America. I've seen fraud, overt sexism, early-stage employees fired the week before they vest, and tyrannical abuse of underlings.
That said, the author of the post works only in the LA area, so I think all his experience has been with media-oriented startups. I have a feeling there's a higher degree of frat boy douchiness in that world. San Francisco startups tend to have a more placid, nerdy, bike-rack-in-the-lobby atmosphere, although they can ultimately be just as cruel.
Big companies have fraud, just look at Enron. The sexism isn't overt for legal reasons, but that doesn't change the end results. One very big, very old company I worked had a manager who loved hiring attractive female interns and another who almost exclusively hired people from his home country and all but openly admired to preferential hiring based on nationality.
When someone at a big company is conveniently let go before their green card is approved or that big bonus is paid out, it isn't a "firing," but a "layoff" as the company "right-sizes." Bad bosses abuse underlings when they think the job market lets them get away with it and will not hesitate to punish those who step out of line.
Come to think of it, I've seen everything you describe at some of the many Fortune 500 companies I've consulted at. Sadly, human nature defies corporate size, and bad behavior can even creep into very big companies.
That's true, but what's also true is that virtually every bigco has checks and balances to address that problem, whereas the job of HR in a post-A-round startup is mostly to screw you on health insurance.
Whether those checks function well or not, there's usually nothing you can do about an irrational or abusive CEO or VP/Eng at a startup.
The sexism isn't overt for legal reasons, but that doesn't change the end results.
Hmm, Oddly enough, I think that laws on sexism, racism and reasonable behavior by employers actually influences their behavior. There may still be sexist attitudes, say, at a large company but the norm is to make a serious effort prevent them. Believe it or not but laws actually matter... Laws don't prevent bad behavior but they certainly mitigate it. Also, I suspect that one sees bad behavior most often the very top of the large corporations, since those with the most power are naturally mostly likely see themselves as above anyone's else's laws. But the top of a large company is a small area compared to the vast middle.
Big companies have infinitely more to lose. Something else I've seen repeatedly in my career: even frivolous claims of harassment are settled with cash, because the cost to fight them is too high.
You can't do that with a tiny startup because there's not enough to sue for.
Well, they clearly don't have infinitely more to lose, that is ridiculous. Don't throw that word around, it make you look stupid to mathematicians, and you don't want to make a mathematician angry, They understand the language of the universe.
Indeed! Never exercise options without a full understanding of preferred vs common stock, and what sort of preferences the founders and investors have. Naive founders may end up signing deals with ridiculous liquidation terms.
Also beware offers of significant amounts of stock in exchange for sticking around for an acquisition. The investors likely know the company won't reach its liquidation preference and thus whatever shares they give you are actually worthless.
+1 - I dunno how many times I can say "the plural of anecdotes is not data". This guy either had bad luck or was really terrible at vetting the startups for product quality/traction and founder quality (or both).
Seriously, how do you vet a startup for "founder quality"? The entire tenor of the company can (probably will) change after the next funding round. Seen it happen, heard it happen, it clearly does happen. Steve Blank wrote it up really well.
In cases where the founder has started other companies before or the current company has been around for a while, you can (and should) ask former employees of the company how the founder and the work environment are. This saved me a ton of grief when I took my first job. A very helpful former employee told me all about the company and told me which group to join (I had some choice in the matter).
Sure, there is no guarantee this won't change, but there is no reason to believe you can't vet for founder or team quality at least initially.
And if/when the dynamic changes, quit. It is true that as an employee in a startup you don't usually have much control over how much you make from your options. But you do always have a choice - whether to continue working there or quit.
The same way you vet any employer. Find references. Talk to people. Go to LinkedIn and find 3 people who worked for the guy and ask for their opinions.
Yeah, shit happens. But what you want to vet for is what this guy experienced. Ethics, loyalty, temper, commitment, smarts, cooperation, etc. That doesn't guarantee that you won't have a bad experience, but it helps a lot.
If you go into ANY job knowing nothing about your employer/manager/leader other than what you read on their web site and heard about in the interview, you're doing yourself a disservice. Going into a startup like that is like a professional equivalent of a mail order bride.
I couldn't agree more. Actually, it doesn't even have to be funding that changes the dynamic of the team. I worked at a startup that had 3 people (2 founders and 1 employee) in 2007, and 15 by 2008. That changed everything.
This sounds suspiciously like what one tells oneself to avoid considering that startups might have different and more severe risks than big companies. If those terrible risks weren't there, why would startups have this mythical "upside"?
Also, while there are shitty bigco's out there, you can switch bigco's with less career friction than you can switch startups. You have lots of choices, and a lot more information about company culture with bigco's; the founders of a startup probably can't reliably tell you what the culture's going to be like next year.
Startups have risk associated them, sure. But that risk is different for different parties, in general those that are in control experience much less risk than the small time stockholders.
The pay can be lower in return for 'options', but whether or not those options are ever going to be worth anything depends on how the company is run and how ethical the management will be when vesting and/or buyout time comes around.
It's not rare for small time shareholders to be totally screwed in that case.
A good way to protect against such trouble is to make sure that a mid sized shareholder and your interests are suitably aligned.
That way you're not the only one fighting, and the other party has a lot more clout to make their point than you do. So if you're going to be in that position make sure your type of stock and conditions match that of a larger shareholder.
You've missed the main point of the article, which is that startups can become pathological work environments in ways that are not an option for large companies.
shareholder meetings, properly run AGMs and the SEC are pretty good at weeding out boards who zig-zag or bicker. million dollar plus investments in companies with very little oversight are a different story. This is why it's called high-risk, and VCs accept it- but in reality if 9/10 listed companies crashed-and-burned after IPO...
There are shitty, corrupt, nepotistic, lying corporations and there are also sterling start-ups. The world's not black and white.