Article written for Sapo Tek by Sofia Fernandes, Business Development Director at BGI.
Do the options for starting a career have to go through the big multinationals or is it worth betting on a startup? Sofia Fernandes points out 7 reasons for charting the path of small businesses.
Typically, when you think about success, you think about going to college and working for a large company. I come from Management, so in my case, normally, the best students go to the “Big Four” - the four big audit/consulting companies in the world: EY, PWC, KPMG and Deloitte. It's interesting to see how lately - I don't know if influenced by my passion - my colleagues have started to come to the startup world. Either they go for groups of investors (Venture Capital) or for the well-known startups. In a conversation I had with one of my friends who started her career with me in a multinational company, we were discussing precisely how our careers diverged. The question arises: Why the startup world? I went home and kept thinking about it… Here are some of the reasons I consider relevant:
#1. The success. If we look at the TOP 12 of the richest men in the world, 8 of them founded their own technology-based companies: startups. The rest came from a family that had already built an empire or at least a successful track record in the area. In all cases, success comes from leading “family” businesses, whether the entrepreneurs have started or continued the process. As these are models for the new generations, there is usually a growing adherence to the startup business, with the goal of looking for the next big success story.
#2. Start the path to success. There may be the initial ambition to create a company but the business idea is not yet clear. There is a will but it’s not clear how. Perhaps because of cultural and social pressures, the fear of failure turns out to be so great that we often decide to think smaller. Maybe decide that we don't want to change what we do and that we are “just fine”. Between that and continuing “business as usual”, the leap to work at a startup seems to be part of the process. Many young people enter startups in order to learn and later have their own startup. They learn by doing. And that's why joining a startup can be the necessary push.
#3. Share Capital by installment. Nowadays, it’s becoming more and more frequent for the founder to provide social capital to key employees. People who typically enter the early stages of startups and bring great capacity for product development or business development. That's why it's also interesting from the point of view of profitability, since startups typically end up in “exits” – selling the startup to a large company. If the employee has share capital in the company, when it’s sold, he receives the money for his share. That's how Elon Musk started his fortune, making an exit from Zip2 - later PayPal - and using the proceeds from the sale to invest in other companies like SpaceX, or Tesla.
#4. Startup VS corporate environment and evolution. In a startup, the environment is dynamic, and a single employee may have to think about the strategic vision, selling to customers, recruiting, acquiring investors, etc. Therefore, the skills and learning that a startup employee develops are exponential, while in a large company there is learning for specialization, but over time the work is similar and constant. That’s why it’s so frequent for new generations to change jobs, seeking to develop more skills, the so-called “soft skills”. In startups there is still a big advantage: deciding the future of the company and investing in creativity. As everything is still being created, each employee is really a crucial element. While in a large company typically any employee is easily replaced, in a startup the loss of a member can be decisive for the company's success. Finally, in the social aspect, the environment that you live in a startup is one of family, of total mutual help. When a colleague is in “trouble”, others stop what they are doing to help. This would be unthinkable in a large company where departments are well defined, and there is much more “individual” work, with each employee having very independent goals.
#5. Overtime hours. If before having a business, or being an entrepreneur could have the disadvantage of working overtime, or even weekends, today it’s the industry standard. It’s no longer common, in the private business world, to have a job from 9 to 5. So this disadvantage has been disappearing, being replaced by an important question: do I work overtime for my own gain, or for someone else's? And the response is increasingly positive in startups, as at the end of the year this extra work can result in substantial revenue.
#6. A path already trodden. A few years ago, the idea of a startup was associated with dropouts who got together and “lost” years developing a project that later had no success. But that has changed. Films, documentaries, books, news, testimonies, TEDTalks, training, even the Web Summit in Portugal, came to educate the population. To be successful, there are necessarily bad moments, considered “failures”, but ambition and perseverance lead to the realization of dreams. We talk about the importance of doing something you like rather than doing something to pay the bills. All this came to change the paradigm of startups being failed, and the importance of having “Glovos” and “Ubers” around the world. Therefore, saying “Mom, I joined a startup” is a reason for curiosity, happiness and excitement and not disappointment or frustration. Right now, I even dare to say it's “cool”.
#7. A cause, a passion. Opening a startup is creating an unprecedented path. It’s designing a non-existent structure and culture and above all striving for an ideal. History has a curious way of showing us that our true heroes always fight for their ideals. For hopeless romantics and idealists, a startup can be the way out they need to find true happiness. That's why I leave this reason to number 7 - the number of perfection. Because more than ambition, profits or personal satisfaction, these ideals and this culture can be mirrored in all the people who play or work in these startups, and that is definitely passionate.
It’s important to mention that about 90% of startups fail, so it’s still necessary to have a profile of those who like to take risks to kick off a small technology company that brings something really different to the market. Hence the “10x” rule: if you try 10 times one of them succeeds. However, if a startup succeeds, it will inevitably become a “corporate”, a multinational. Most of the time, the group that creates the startup is not the one that stays for when it becomes a big company - then people specialized in different areas are hired. But it’s interesting to see that large companies that come from startups have a profile, an environment and innovation that are really different from the industry, and that is why companies like Apple, Google, or Tesla still remind us of what a startup is made of.
Read the original article in Portuguese here.