I feel like joining startups is all the rage now because of the expected high payoff. A start up is like a lottery ticket, there is a small chance you can make it big and everyone wants to take that risk. In my Finance studies I took a behavioral finance course that analyzed peoples’ behaviors when looking at payoffs and their probabilities. The idea known as Prospect Theory proves that people weight and more often choose bets that have low probabilities and high payoffs and in a way this rationalizes the startup craze.
Obviously, the benefits of joining a startup are that it will become huge and your stock option equity in the company will allow you to support your family for the next hundred years. However, there are also extreme risks. The way startups are designed are to ensure the investors and executives get their payouts first as seen in the New York Times article, “investors and executives generally get protections in a start-up that employees do not. Many investors have preferred stock, a class of shares that can come with a guaranteed payout. Executives frequently get special bonuses so they will not leave during deal talks.” If a private company that plans to go public gets bought by another firm or a by private equity often the employees do not get to exercise the true value of their stock options and lose out on a lot of money. In startups there is also a high risk of failure and end up with no money at all. My summer after freshman year I worked at a small tech start up in Bellevue, Washington that had some really unique ideas that I was glad to be a part of on the marketing side. Seeing the stressful culture and day to day chaos of the company really turned me away from that lifestyle.
In finance, the tried and true advice I have heard from all of my mentors is to always try and go to a big company first like Morgan Stanley or Goldman Saches. They ingrained in me that those large companies have the resources in place to train and develop your skills to make you a person in the finance industry (competence-wise not necessarily better people). After spending time getting training and using the large company’s extensive resources move down to startup scale or private equity careers. This general career plan is effective because the PE firms and startups require more specialized individuals that are developed at large companies.
Joining a startup or small finance firm was definitely a part of my career decision. I knew if I wanted to become the best and most productive individual I could be in the finance industry I would need the resources of a big company. While I am not a CS major I feel the same ideology should hold true for them. By working at big company you develop programming skills and gain credibility for when you eventually go to your startup you will have experience to back up your pitch to investors.