Engineers, Don't Start Your Career at a Startup
Hardware engineers: it’s a bad idea to start your career at a startup. I’ve cautioned this in private several times, to several different people, and I’ve decided that it’s time I release this hot take to the world.
I’m specifically talking about your first job out of college - jumping straight from university to a startup job is not something I’d advise. The rest of this post talks about a few reasons why it’s a bad idea.
You’ll be Underpaid.
Here’s a fun fact that many college graduates don’t appreciate: the salary of your first job is one of the biggest determinants of your total earnings in your career. Why? It’s very, very rare for you to get paid less over the course of your career. Pay raises are one of the easiest ways for companies to poach talent away from other companies. This is because - well, it’s kind of hard to get people to leave a stable job for less money than they’re making now. With a little skill in negotiating, you can turn these pay bumps from job hopping into large, meaningful gains in your compensation each time you change jobs. Patrick McKenzie wrote the book on salary negotiation in his excellent post “Salary Negotiation: Make More Money, Be More Valued”. Patrick briefly mentions that there is an anchoring effect to these negotiations. If you’re not familiar with the “anchor” phenomenon, Wikipedia describes it thus:
The anchoring effect is a cognitive bias whereby an individual’s decisions are influenced by a particular reference point or ‘anchor’. Once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor. For example, an individual may be more likely to purchase a car if it is placed alongside a more expensive model (the anchor). Prices discussed in negotiations that are lower than the anchor may seem reasonable, perhaps even cheap to the buyer, even if said prices are still relatively higher than the actual market value of the car.
In practical terms, this means that the final, agreed upon value in a negotiation tends to land close to the initial number offered. Patrick correctly advises that this effect is the reason that you should never, ever, ever disclose your salary during a job interview or a negotiation. I’d actually extend this logic one step farther: there is an ur-anchor of salaries to which most others in your career are pegged: the starting salary of your first job. Whether or not you disclose it to a prospective employer, this number is the one that you’ll be comparing subsequent job offers to. As a result, starting your career at a sub-market rate can make later, sub-market rate job offers seem attractive to you, just as long as they are more than what you’re getting now. The net result of this is getting paid less over the course of your career.
Most early startups are too cash strapped to pay market rate salaries. It’s also not unusual for a startup to have little or nothing in the way of retirement support. This isn’t bad in and of itself. Many people make a conscious choice to work at a startup at some point in their career. My emphasis, here, is that it is a conscious choice. Lots of people go to work for a startup because:
- They want to take on responsibility in an area they aren’t quite qualified for.
- They want to rapidly advance their career - either to management, or a senior technical track.
- They want to have an observable degree of impact in their work, and this is hard to see in a BigCo.
I emphasize this being a conscious choice because the people making this decision later in their careers are more conscious of this choice being a trade rather than an absolute win. Fresh university graduates, in my experience, are not very conscious of things that you might give up by working at a startup. A few common examples of the tradeoffs you’ll make by working at a startup include:
- A market rate salary
- A retirement plan with an employer contribution and low management fees
- Healthcare options with a low deductable, or no deductible at all
- Education reimbursement
- Options for childcare or childcare reimbursement
Vacation time is another tradeoff you can expect, but this one takes some explaining. Startups often don’t have enough slack in schedule and manpower to allow you to use your vacation days. This is something they won’t necessarily tell you about when you sign up, by the way. You’ll see some startups offer “Unlimited PTO”. On face, it’s awesome! In practice, it’s generally a trap. Employees tend to take less vacation when PTO is unlimited. It also means that your employer doesn’t accumulate debt when you don’t take a vacation. Did you know that? Your vacation time accrues on your companys books as debt. If your employer tracks PTO days, then they have to pay it out to you when you leave if you haven’t taken all of it. That’s a fun accounting fact I didn’t learn until I was quite a ways into my career.
What’s worse than making these trades, however, is the fact that most new graduates don’t properly understand why these things might not be things worth giving up. If my tinfoil hat was just a little bit tighter, I’d say that there was some sort of active conspiracy among companies to help suppress wages through insidious societal memes. (“But this is America! That’s illegal!” you cry. Doesn’t mean it’s never happened.) However, my Marxist conspiracist rant is so detailed that it threatens to derail this essay, which is already getting a bit long winded even by my standards.
I’ll instead be blunt: taking a startup job straight after university typically means you’re doing two things:
- Accepting a lower-than-market salary, which can hamstring your salary growth over the whole of your career, and
- Missing out on retirement contributions at the point in your life in which they are most valuable - i.e., early in your career, when they have the most time to grow.
As an aside: if you have any debt from student loans, car payments, credit cards, or anything else that normal people have, it’s generally a better idea to pay this debt off sooner, rather than later, to avoid paying excessive interest. (This is especially true for credit cards.)
Wanna know an easy way to get rid of that debt quicker? Get paid more. You can claw your way out of the hole, build up a safety net, and start reliably building real wealth in the period of your life in which that money is most valuable.
If you don’t understand why money earned in your 20s is the most valuable money you will earn in your lifetime, I’d strongly recommend reading William Bernstein’s “If You Can: How Millenials Can Get Rich Slowly”.
Your Network Will Be Small
I originally wrote this as “support network”, but upon reflection, there are two networks you should be caring about in your early career. The biggest is your Professional Network, which is the sum total of all people you’ve ever worked with, and would work with again. A subset of that is what I call the Technical Network, and I’ll focus on that first, because I think it’s a more pressing consideration for engineers thinking about jumping to a startup as their first job.
I think of a “technical network” as a subset of your professional network. It’s a crowd of people that nominally work on the same thing as you. They understand what problems people with your skillset are paid to solve, the hard parts of what you do, and the pitfalls you can get into if you’re not careful. For example: one of my prime technical specialties is high speed digital design. My technical network are people who care about things like circuit board layout, stackup design, and signal integrity. If you happened upon us at a meetup, you’d likely find us chatting about ways of characterizing trace impedances with TDR, or complaining about signal integrity/compliance tradeoffs over beers.
That’s a great way to detect who your “tech tribe” is: what would you swap war stories about at a meetup?
It’s unlikely you’ll have many peers working on the exact same thing as you in a startup. Sure, you’ll probably be working on the same product, or project, but not in the same discipline. There likely won’t be any senior engineers on staff who do what you do. This means you won’t have anyone to bounce technical ideas off of, to check your work, or teach you about dumb mistakes that you might make due to inexperience. In some cases, you might be hired as a “handoff” - you’re expected to take some chunk of work off another employee’s plate, so that they have more time to spend on higher leverage tasks. (This becomes more true the smaller a company is. The first few engineering hires tend to be people that free up the founders’ time to do more sales, hiring, and strategy stuff, rather than day-to-day technical implementation.)
Whatever the case, being the sole technical expert on your subject matter is hard. For one thing, it’s lonely. Nobody you work with really gets what you do! On top of that, running into a problem at work becomes that much harder. You’re on your own to solve it, with relatively little backup from other people. To cite my own experiences here: I got really, really stumped the first time I ran into a practical clock distribution issue, and also the first time I ran into a radiated emissions issue. If I hadn’t had more experienced colleagues to ask for help, I’d have been up shit creek sans paddle. This is a real possibility in a startup context. You will be working on hard problems, and you may not have anyone else on staff to help you with them.
Hand in hand with this lack of a support network is not knowing “the right way” to do stuff. There are best practices in almost every field of engineering that are simply not taught in schools. Frequently, they are bits of localized knowledge handed down internally. There are really only two ways to get this knowledge: 1) hacking your way through the problem by trial and error, or 2) by joining a group with enough knowledgable people to learn from. Option 2 is without a doubt the faster and less painful way to acquire this knowledge. Without it, you unwittingly build more bugs, the company unwittingly ships more bugs, and development velocity eventually slows as focus shifts to bugsmash rather than feature development.
I cannot overemphasize how much I love Patrick McKenzie’s take on most things to do with career trajectory and professional development. This excerpt from “Don’t Call Yourself a Programmer” nails it when it comes to startups and professional networks:
The high-percentage outcome is you work really hard for the next couple of years, fail ingloriously, and then be jobless and looking to get into another startup. If you really wanted to get into a startup two years out of school, you could also just go work at a megacorp for the next two years, earn a bit of money, then take your warchest, domain knowledge, and contacts and found one.
Working at a startup, you tend to meet people doing startups. Most of them will not be able to hire you in two years. Working at a large corporation, you tend to meet other people in large corporations in your area. Many of them either will be able to hire you or will have the ear of someone able to hire you in two years.
(By the way - if you’ve never read “Don’t Call Yourself a Programmer”, scoot on over to Patrick’s site and read up. It’s written to focus on software engineers, but his advice generalizes smashingly well to hardware people, too!)
Your Growth Track Will Be Poorly Defined
Promotion tracks typically don’t exist in a defined way at startups. Why? Well, the highest goal of nearly every startup is shipping. Resources are tight at every startup. Many are pre-revenue, which is a nice euphemism for “we aren’t selling anything, so there’s no money coming in”. You only have so much time to bring in some new cash before the company runs out of money. As a result, the highest priority is to generate revenue, which generally translates to shipping product. Almost everything at a startup takes a backseat to shipping.
A result of this emphasis on shipping is that startups tend to attract people motivated by shipping product. This does not necessarily overlap, in either skillset or interest, with mentoring other individual contributors. If you do have the luxury of having someone who can mentor you technically, you will be lucky to get much of that person’s time. Everyone is overworked at a startup, so time for mentorship is hit or miss.
These facts in tandem mean it’s really unlikely your career growth is going to get explicit attention. On top of this, I’ve never seen a promotion track at a startup be better defined than “Well, this person has been here a while, they’ve shipped a few important things, and they might leave if we don’t give them a title and/or pay bump, so we should probably give them a promotion.” Since priorities can (and frequently do) change rapidly in a startup context, it’s entirely possible you can spend months on a project or feature, only to have it dropped like a hot potato as the org whiplashes to the next hot opportunity. If this happens to you enough times, management can start to think you’re not contributing to the product - conveniently forgetting that you have, in fact, been diligently toiling on features they simply later decided weren’t worth shipping.
You will learn broadly, not deeply
A natural tendency of BigCos is to produce technical specialists. After a while as a technical specialist in a big company, you end up being less someone who does the work, and more someone who knows what to do in a given situation regarding ( insert specialty bit of tech in which you have expertise here ), and consults when a problem in that area arises. These types of human informational repositories are valuable to big companies, especially in areas that prove challenging for them to get right or valuable to their bottom line. Boeing has a material interest in hiring people who are experts in creating lightweight, very strong structures out of carbon fiber. Qualcomm has a material interest in hiring the premier architects of CMOS RF circuits. Facebook has a material interest in hiring
coke dealers disguised as digital technologists user experience designers who can create highly addictive engaging user interfaces. When companies can’t hire the talent they need, they make it themselves. Over enough time, people inside the org end up developing this talent through experience. You get this experience by engaging with that technical specialty day-in, day-out, over the course of a few years.
In my experience, specialists can generalize more easily than generalists can specialize. I’d rather hire someone who’s really good at two or three things than someone who can just get by at a dozen things. I’ll paraphrase Randy Nelson from Pixar, who said this most eloquently: “The clearest indicator that you can get really good at something and produce great work, is the fact that you’ve already gotten really good at something else.” Spending a little time at a BigCo gives you a chance to start specializing in something, and doing a lot of it every day. It’s sharpening your general purpose work skills at the same time, too.
Caveat: you have to be a little bit careful about what you get good at. Will Larson described this well as a trapdoor: if you build up a specialization in a certain thing, it can be hard to get paid working on something else. Will wrote his advice in the context of software engineers, but it’s doubly true for hardware people. Big companies tend to hire you in at senior or principal roles for your expertise on some particular technology or hardware widget. Straying outside that specialty starts to look like a reset in compensation once you’ve gotten far enough down the track in your career.
Since I’m doling out Further Reading/Watching, I highly recommend taking a few minutes to watch Randy’s talk about collaborative work at Pixar.
Demographics will work against you.
I’m going to take a moment to speak about diversity, equity, and inclusion at startups. I am fully cognizant of the fact that I am a white, cisgender, straight male from a very affluent upbringing. The observations I’m including here are my attempt to map my own anecdotal experiences onto trends that other folks have written about in the industry. My intent is to serve as an ally to groups that have been historically underrepresented in startups, not to speak for them. I will happily bend my ear to anyone who feels that this section misses something or gets something wrong - don’t hesitate to email me or tweet me (@cushychicken) to set me straight.
Several times in my career, I’ve observed a belief that startups give you more space to be your authentic self at work. I’ve heard this from folks from several historically underrepresented groups.
Maybe this is correct. However, I suspect that this might be startup hiring marketing distorting reality in order to improve diversity in their hiring pipelines. For all the talk, I’ve never seen a small startup that had a Black employee group, or an LGBTQ pride group, or a women-in-engineering group. Definitely not a women in engineering group. Most startups are terrible at hiring women, and terrible at retaining them when they actually manage to do so. (Source: every woman I have ever personally spoken to who has worked at a startup.)
Structural factors overwhelmingly favor white, heterosexual men from affulent backgrounds to receive startup funding. These founders, through a completely understandable network effect, happen to know a bunch of other straight, white, affluent men as part of their personal and professional networks. Startup hiring hinges heavily on personal networks; getting your existing employees to hire from their networks is the cheapest and most dependable way to get competent people to work for you. You can see where this is going. People hire who they know. When who they know happens to be a pretty demographically homogenous bunch, you end up with a company that is very demographically homogenous.
I haven’t come out and said this yet, but working at a startup carries risk. Primary among these risks is the possibility that you won’t have a job in eighteen months. It’s much easier to chase a startup if you aren’t really concerned about debt, retirement, healthcare, childcare, location, accessibility, and a host of other factors. These are risks that many privileged white men tend to be well insulated from.
On top of all this, I must reiterate that a startup’s prime directive is to ship product. I am deeply suspicious about the capability of an organization that is fighting for its life to care about much beyond its continued existence. When said organization is made up of a homogenous, privileged in-group, it becomes easier to bring in more folks like the in-group, and to view folks outside of it as, well, outsiders.
Is this a cynical read? Yes. Yes it is.
Does it reflect what I’ve seen in the market? Yes. Yes it does.
So what can I do?
So glad you asked.
- Be transparent about what you’re paid. Use one of those after work happy hours to clue a junior engineer into how much you make.
- Try hard - at BigCo, or startup - to be a good teacher to folks who are just starting their working lives.
- Read Better Allies, by Karen Catlin. Seriously. This might be the best book on workplace culture written this decade.
Early Career Engineers
- Understand what the market salary and local cost of living is when you are considering applying for your first job.
- Learn a bit about compound interest. It’s super helpful to understanding why investing in the stock market and saving for retirement are so powerful during your early working years. Bernstein’s PDF that I linked earlier is a great intro resource for that. I also recommend looking into the FIRE community if you’d like a more radical idea of what saving and compound interest can do for you.