Monday, March 10, 2008

Choosing a startup or not

As the pundits ponder a recession and the IPO market continues to be soft, there are a flurry of articles about whether people want to work in a startup or not and if they do, what's the environment like.

The Wall Street Journal posits that there is a flight to safety going on in Silicon Valley with startup employees "throwing in the towel" and looking for a "safe harbor". I am sure the reporter Pui-Wing Tam did the homework, but I don't see this behavior at all. The valley is as optimistic as ever. People are inspired by the ever increasing pace of new technology from both big (Apple and Google) and small (FirstRain, Quintura, Digg et al) companies. The development platforms are more efficient than ever, venture capital is healthy at the moment and funding good ideas and so the quality opportunities abound.

At the same time the Journal also notes that Tech Execs are Still Willing to Stick with Startups. Sarah Needleman gives a couple of reasons:
- many silicon valley startups are financially sound
- there's the potential of a significant payout
- tech execs are often more entrepreneurial than in execs in other markets
- silicon valley execs may have a cushion from prior successes

These are all good reasons but I think they miss the two fundamentals - certainly none of these reasons lead me back to running a startup.

I think most of us are driven by the fun and satisfaction of growing little companies. While they can be tough on your environment and your private life (see the controversial posting from Jason at Mahalo at how to run a sweatshop - more on my opinions on this later this week), they can also be thrilling, creative and rewarding in a way that is hard to find in a large company. There is nothing like the feeling of cracking a market and building a company together with a small team of smart, driven people.

And the second fundamental issue I think all these articles miss is that being a CEO or senior exec of a public company comes with significant baggage and personal risk these days. Sarbannes Oxley has made the reporting processes, while more transparent, a significant time and money sink for companies, as well as introducing real personal liability for the CEO and CFO. I made this choice when coming back into the workforce. Not only did I know I love the process of building teams and companies, I also knew I didn't want to go straight back into the public eye and the emotional rollercoaster of a volatile tech stock. It's a different job running a public company than running a private company. Both interesting and challenging, but different and I have a number of friends who, like me, choose to rotate in and out of the public eye.

1 comment:

Daniel said...

Interesting post Penny. I am currently considering joining a startup (my first) and leaving the world of freelance consulting. It has proven to be a difficult decision, as my heart says "yes" but the realities of a significantly less salary (short term at least) and the risk of the startup not succeeding are ever present in my mind. Any tips on evaluating whether a startup is worth the risk? Thanks......

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