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There’s no such thing as “a startup within a big company”

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Re: There’s no such thing as “a startup within a big company”

#141

Post by aerosmile »

nonplussed wrote: post #138
aerosmile wrote: post #126

The predominant sentiment in the comments is that equity is worthless, which very well may be a fair statement. It would also explain why relatively few people decide to start companies, let alone do it back to back several times after getting burned over and over again. But those same people will then argue that founders should not get 10x more equity than employees [0] (which, for the record, may or may not be just…

I can't stress the the "ideally successful" part enough. I've worked at a couple startups where the entrepreneur was serial but this was their first "success". I felt I learned very little. Both companies reached a comfortable point and then the founder didn't know what to do beyond that. I came to understand why there's a lot of stories of VCs forcing out the founder and bringing in a new CEO who had experience in g…

I agree. I didn't want to make too much of a point of that, because if you filtered just for founders with prior exits, you might have a hard time scoring early opportunities with them (they usually have plenty of people to fill the first 20-50 jobs). But yes - joining Square the day it was announced that Jack Dorsey started another startup would have been a no-brainer for that career path (same with Max Levchin's Affirm and many other examples).

Re: There’s no such thing as “a startup within a big company”

#142

Post by data_spy »

This is correct. When I was at Allstate they had a 'labs' team to come up with innovative new technology. They were the only ones with standing desks, treadmill desks, bicycle desks, and over two years the only thing they accomplished was design a phone holder for a bicycle.

They had much greater success using Kaggle for data science competitions in terms of innovation.

Re: There’s no such thing as “a startup within a big company”

#144

Post by ska »

fallingknife wrote: post #127
ashtonkem wrote: post #99

Earlier quoted context omitted.

Even when they’re not worthless, most startup options end up being worth less than the salary that one could’ve gotten at a non-startup. Last time I looked into it, and it was a while ago, the median startup option package was exercised for a profit of $30k, not nothing but far less than what one could’ve gotten at a large company like ... Microsoft. Arguably the existence of several different types of stock options…

Are you sure that's the median? I would think that they are worth 0 >50% of the time.

It might only be counting equity that returned something, in which case 30k seems plausible.

Re: There’s no such thing as “a startup within a big company”

#145

Post by onion2k »

BurningFrog wrote: post #120
ashtonkem wrote: post #99

Earlier quoted context omitted.

Even when they’re not worthless, most startup options end up being worth less than the salary that one could’ve gotten at a non-startup. Last time I looked into it, and it was a while ago, the median startup option package was exercised for a profit of $30k, not nothing but far less than what one could’ve gotten at a large company like ... Microsoft. Arguably the existence of several different types of stock options…

> the median startup option package was exercised for a profit of $30k That must be one of those cases where "median" and "average" are very different.

Which is exactly why you should look at the median.

Re: There’s no such thing as “a startup within a big company”

#146

Post by lotsofpulp »

BurningFrog wrote: post #120
ashtonkem wrote: post #99

Earlier quoted context omitted.

Even when they’re not worthless, most startup options end up being worth less than the salary that one could’ve gotten at a non-startup. Last time I looked into it, and it was a while ago, the median startup option package was exercised for a profit of $30k, not nothing but far less than what one could’ve gotten at a large company like ... Microsoft. Arguably the existence of several different types of stock options…

> the median startup option package was exercised for a profit of $30k That must be one of those cases where "median" and "average" are very different.

There are many different kinds of averages. Median average, arithmetic mean average, geometric mean average, mode average.

People frequently, and intentionally when it comes to politics, use the word average to muddy the information and evoke whatever emotion they want rather than specify the type of average.

Re: There’s no such thing as “a startup within a big company”

#147

Post by ashtonkem »

scruple wrote: post #133
ashtonkem wrote: post #99

Earlier quoted context omitted.

Even when they’re not worthless, most startup options end up being worth less than the salary that one could’ve gotten at a non-startup. Last time I looked into it, and it was a while ago, the median startup option package was exercised for a profit of $30k, not nothing but far less than what one could’ve gotten at a large company like ... Microsoft. Arguably the existence of several different types of stock options…

> most startup options end up being worth less than the salary that one could’ve gotten at a non-startup I took a lower salary to work at a startup I "believed" in. We were eventually acquired and my options were in the low six-figures when exercised. I worked there for 6 years. If I average the options profit and add it to my base salary, I'd have still been underpaid in the local area for my skills and experience l…

> I never worked like a dog for the place in my story, at least. It had a very sane work/life balance.

For sure not every single startup overworks it’s employees, and not every overworked employee works at a startup. But there is a very common (but not universal!) trend for startup employees to be encouraged to overwork themselves so that their options will be worth more in the long run.

Your mileage may vary, as yours did.

Re: There’s no such thing as “a startup within a big company”

#149

Post by mrcwinn »

Former CEO at Creative Market here (though at the time, I was VP Eng). Call me an optimist, but I believe this can work, though I accept the premise of the headline generally.

We were acquired by Autodesk in 2013. We may make for an odd case study: we had a very unique opportunity to spin out and return to be an independent startup in 2017, thanks to Autodesk's support - not to mention the leadership of our co-founding CEO at the time. (Parenthetically, I could write a book about acquisitions and spinouts, but that's for another day.)

During my time at Autodesk, we were very much a "startup within a big company." They wanted us to continue doing what we do, because it was clearly working. We continued to grow. We continued to have more resources and support thanks to Autodesk. We found ways to preserve our culture, but also adopt some of Autodesk's. We built relationships and got to know people in other business units. We never felt like there was some ulterior motive or felt our hand forced.

There are disadvantages, sure, but I think it would lack nuance to pin all that blame on the acquiring company. Relationships are a two-way street. If you're going to sell, I think it's incumbent on the founders to normalize being proud of being a part of that bigger company. I think it's okay to say, we're going to change and we're going to reach out and connect with the larger organization. It may not be helpful to try to be the "pirates" within the organization, like the Mac team during Jobs' first stint. It's isolating and corrosive to be the smaller piece of the puzzle, yet view yourself as the greater cause.

People can criticize big companies. In many cases, that criticism is warranted, fair, and important if we're going to increase competition and innovation. For my own part, looking back on my time there, I always felt valued and respected as an Autodesk employee. I was always proud to hold my employee badge.

Re: There’s no such thing as “a startup within a big company”

#150

Post by zeroonetwothree »

aerosmile wrote: post #141
nonplussed wrote: post #138

Earlier quoted context omitted.

I can't stress the the "ideally successful" part enough. I've worked at a couple startups where the entrepreneur was serial but this was their first "success". I felt I learned very little. Both companies reached a comfortable point and then the founder didn't know what to do beyond that. I came to understand why there's a lot of stories of VCs forcing out the founder and bringing in a new CEO who had experience in g…

I agree. I didn't want to make too much of a point of that, because if you filtered just for founders with prior exits, you might have a hard time scoring early opportunities with them (they usually have plenty of people to fill the first 20-50 jobs). But yes - joining Square the day it was announced that Jack Dorsey started another startup would have been a no-brainer for that career path (same with Max Levchin's Af…

This is very cherry-picked. Actually research has found that prior business success does not predict future success at all. Though failure does predict failure, so at least avoid that.
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