Topic of company stage and scale comes up in many of my conversations. “This company was so dull” and “This company was so disorganized, they never had resources and did not know what they were doing”. Sounds familiar? We all have strong emotions about places that we work at, and especially when our expectations don’t align with our actual experiences. In this article I want to focus on the differences between the large companies and fledgling startups. This analysis will be helpful when making a decision of which kind of company you would like to land with.
Let’s start with the definitions first.
A large company is typically a well-established player in its market. It has thousands of employees, multiple offices and a great brand recognition. The roles and the processes are well-defined and the budget decisions are made on a quarterly or annual basis.
A startup is typically a company that is still trying to find a market/product fit without any brand recognition. None of the processes have been defined yet and business model pivots can happen on a weekly if not daily basis.
First of all, I want to mention that there is nothing fundamentally wrong with how each of these types of companies are operating. To each their own, the type of the problem and mission at hand dictates the structure and operation of the company.
Secondly, your own personal preference is important to take into consideration. You might enjoy one type or the other type of environments or perhaps a mix. It is important to recognize your own desires and needs when looking for the company of the right size and maturity.
In order to make a better decision about which type of company is right for you, let’s go over some of the characteristics and dive in on their impacts.
Resources / Project Size
Undoubtedly, you will recognize that large companies have infinitely more resources available at their disposal. Be that financial, operational, real estate or number of experts, large companies are well-suited for large projects that require this kind of resource infrastructure. It is really hard, close to impossible to qualify for a multi-billion dollar project if these types of resources are not available on hand. This is clearly an advantage of a large company. Small start-ups will be definitely deprioritized when competing for these kinds of opportunities. However, if we scale down the task by multiples of magnitude, the game flips. Now startups are more qualified to execute these kinds of projects. Smaller projects require the same type of overhead as large projects at larger companies and overhead is almost negligible at start-ups. In addition to costs-savings, the timelines are also very shortened for start-ups that don't have to rely on the complex internal mechanisms and processes to deliver the project.
New Markets / Fresh Opportunities
Start-ups are extremely well-positioned to compete in the newly formed markets. As the ideas that define the market are still being developed, the agility of the entrepreneurial approach allows the start-ups to go hand-in-hand with the developing customer base. They can try new ideas daily and optimize the product/market fit on a regular basis. This also enables feedback mechanisms to be refined, by quickly implementing changes in the product that are required for better sales. Something also to consider is the learning curve of new markets, let’s take crypto as an example. Start-ups can just dive into the process and learn the rule book on the go, accelerating the learnings as they come up. This kind of speed and flexibility is unavailable at larger organizations. Large companies require more static approaches to doing business and cannot allow the “new tail” to wag the dog. Larger companies are typically laggards when it comes to experiencing new opportunities and offering solutions in this sector.
Appetite For Risk
Most of the decisions at the larger corporations have to go through multiple sets of committees and experts in order to assess the proper risk. The decisions are conservative in nature, as the new decision cannot affect the established business revenue and company’s brand. It does take a long time, but fundamentally is oriented towards risk aversion. Start-ups on the other hand don’t have established brand or reputation or revenue and are positioned to take huge amounts of risk as the bottom line is not yet defined. This opportunity could be very exhilarating for certain types of individuals. However, while it does come with a huge opportunity for reward, likely it also comes with a risk of total wipeout. There are many start-ups that have taken outrageous gambles and have been destroyed by the outcomes.
Talent and Personnel
In start-ups it is typical to hear a question from an incoming employee - “Am I responsible for this too? It was not part of my role description.” On first reflection, we can be empathetic to the new joiner that the scope of the work was not fitting their expectation. On second thought however, this discovery highlights the fluid nature of roles at start-up and the quick changing nature of small business. It is almost a requirement for the team members of the start-ups with less than 10-15 individuals to wear multiple hats in very different parts of the organization. It is an on-going negotiation with the start-up founders, what role the individual should have later on and what compensation is appropriate for these breadth of responsibilities. The working schedule could also be all over the place. The nine-to-five day, frequently flips to five-to-nine. This can be very stressful for some individuals, but opportunities and learning experience for others. It is good to know which ways of working you prefer, before making a commitment.
In larger companies it is of course many degrees more stable. Schedules, roles, and compensations are defined in great detail. Individuals stay strictly within the boundaries of their responsibilities, and delegate to others when those lines are crossed. It is not always ideal, but comes with a lot less stress than at start-ups. One major advantage for large organizations here is availability of experts and mentors who can be relied on to provide expertise and guidance. Many projects carry a part that is difficult to solve and requires a special type of talent, and large corporations would typically already have hired them. In start-ups the solution search is left to the individuals who are willing to learn more or rely on expensive consultants.
Transparency / Decision Making
In larger organizations it is hard to know the future and direction of the company if you are not one of the executives. The important decision-making is opaque for most of the organization and once the decision is made, it is hard to provide the input to highlight issues with the new plans. Decisions are made at the top, usually on the annual basis and then declared as a master plan to follow for the rest of the organization. In start-ups on the other hand the decision-making is very transparent and impacts are very visible, given the small number of employees and access to the company-sensitive information.
One of the most important differences that I have slightly touched upon is the set of reliable processes that exist to execute business goals. Hiring, planning, budgeting, decision making processes would already have detailed step-by-step proven approaches at larger companies. In start-ups it is more fly-by-the-seat-of-our-pants approach, with lack of reusable templates. The structure and processes rely very much on the personal experience of the founders and their ability to instill the least structured environment in order to minimize the overhead and contribute to the maturation of product/market fit.
Hope that these high-level comparisons were useful to you to solidify your personal preference of company size. It is not an easy decision to make and sometimes it is useful to just take the plunge and try the different environments on yourself. You are the best judge of what is best for you!