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Okta’s 7 year path to IPO (source: Equityzen)
In part 1 and part 2 we explored the different types of startups (consumer, enterprise, SMB etc.) and the various marketing roles. In part 3 I want to address the stage of a company. It shouldn’t surprise anyone that working at Facebook is very different from working at Strava, After School or Appcues.
What kind of startup is right for you?
Startups tend to be broken into four stages that correspond to their financing:
Early stage: No funding to series AMid stage: series B and CLate stage/Pre-IPO: Usually series D and abovePublic: I’m combining Public and Pre-IPO here to simplify
By now I’ve worked at all stages from founding to IPO (via 4 different companies)in marketing and product growth roles. They all have their pros & cons so I developed this simple framework in the familiar pick 2 triangle: Impact, Money, and Experience to help you think through your career choices.
The company stage tradeoff — 3 pick 2
Let’s explain the three pillars
Your ability to come in the office every day and do something that helps the company survive, reach its full potential and in general wouldn’t get done without you. You also very likely care about the mission of the company. Impact usually results in a meaningful and satisfying role.
Your ability to develop your skills, knowledge (best practices) and a network of mentors and peers. The company you work for will also be recognizable and help further your career.
The amount of money you will earn. There is no golden rule but if you adjust for risk, Pre-IPO and publicly traded companies are best. Non-risk adjusted: early stage can be very rewarding but those are rare cases.
Early stage startups are where you go when you want to have a material impact on a company and you want to play the startup lottery. You might know a lot, but it’s much more likely that you have plenty of energy to get stuff done around the clock. Your equity grant won’t be worth a lot of money, but will be much larger than a mid stage startup on a % basis. Imagine when your 10 person company becomes a 100 person one. You now have 90 more people contributing to the growth of your company: that’s massive leverage (note: this is why employee growth is a very important metric).
Mid stage startups are still small enough that you can have a material impact on several aspects of the business early on in your career and enjoy a broad role. Most importantly, you will be surrounded by other people (mentors, peers, managers) who will help you grow. The hardest thing I experienced while running the business side at my startup was that I couldn’t validate what I was doing or sanity check my results against historical results. Only when I joined Facebook did my startup experience receive validation. The downside, is usually the companies are sufficiently advanced that the equity grants aren’t very sizable (especially at the entry level) and while the risk of a complete write down are much lower, the chances that they become one of the famed unicorn remain low. This is a great place to be if money isn’t your top priority but want some level of financial stability.
Pre-IPO and public companies are great for many reasons — they are:
Recognizable: Recruiters and hiring managers love that — and so do your parents.Experienced: Functions are developed across and the talent is strong. If you are curious you’ll get the chance to learn how other functions run and in general how to run a great tech company.Liquid (or close): Tech companies take 7–10 years to go public, after which the shares are subjected to a 6–12 months lock up period. That’s a very long time to wait. Public companies are liquid on day 1. And most private companies simply are not. (I’m ignoring secondary markets on purpose).
The special case of high growth startups
Every once in a while, there’s a startup out there that defies gravity. Dropbox, Stripe, Segment, Slack. When you see a company like this, just get in.
“If you’re offered a seat on a rocket ship, You don’t ask what seat. You just get on.” — Sheryl Sandberg
If you need some inspiration, head over to the breakout list to find interesting companies.
This wraps up my three part series. Let me know what you thought here or hit me up on Twitter @hlth