It's been done: Kelly Johnson's "Skunkworks" as a part of Lockheed.
There’s no such thing as “a startup within a big company”
321–326 of 326 posts
Re: There’s no such thing as “a startup within a big company”
#322When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…
This is also an issue I’ve seen with companies that began as startups, but then transitioned into the “big company” phase: Founders and early employees complain that “when we were getting started, we could’ve gotten this feature done in a week! What’s taking so long?” There tends to be frustration that employees won’t work nights and weekends, even though their work could “turn this company into the next Amazon!” Whe…
I said this thing in response to Game Development crunch, which also applies to startups. The original creators of the company, now people in charge, have equity and that is a big reason they worked so hard to grow the company from nothing into what it is today. Therefore when they ask (or subconciously demand through company culture) to crunch or work overtime they should give out equity as an extra part of the compensation for working extra hours.
Part of this is to align the founders' and employees motivations so they're more in sync, as both parties now have some form of upside to work hard and see the company grow.
Another part of this is to make the shareholders and founders really think about the culture and how they expect other people to work. So if they want a culture that is about putting in many hours and effort then they should be prepared to lose a little bit of ownership to make that happen. If they're not comfortable with that then they this will act as a disincentive for them, so they fix the culture and their expectations and people can have a normal work schedule.
One final note is that with whatever system there will be people that end up exploiting it, and as ever that's a people management problem. Hopefully with a trustworthy culture this will not happen.
Re: There’s no such thing as “a startup within a big company”
#323Earlier quoted context omitted.
I have never had a stock option that was worth as much as a penny in the course of my career. In one case, a “can't lose” employee stock purchase program (where you put aside money for purchase and at the end of the year you would get stock bought at the lower of the price at the beginning and end of the purchase period with a 10% discount on top of that) ended up being a loss because the stock dropped 50% between th…
A company sold for 3 million is... I mean, in average, I see that the worth is about 1m$ per employee. If you sold for less, your stock performed poorly compared to others. Maybe the product or the engineering was great, but on the wrong market or never met its window. Business is difficult. The question is, would you have had excellent returns if the company had been worth $1m per employee?
In addition to the $3m/3M confusion, don't forget preferential liquidation.
If you own 10% of a company and it sells for 2x the invested value, you might get < 5% of the sale price yourself once the investors are taken care of.
Re: There’s no such thing as “a startup within a big company”
#324I mean, sure, but it also misses the point a bit. "Startup in a big company" doesn't mean "yo take some cashdollar and try build and release something to the public", but it does mean "hey, take a small team and do your own thing with less oversight and process overhead from higher-ups". The team I worked in at AWS was like this and it felt a lot like startup teams I've worked with. That didn't mean we could take 'br…
The word for this is "skunkworks". Even the most independent skunkworks still serves big-company goals, often taking advantage of big-company resources and generating IP for the big company. In some ways, a skunkworks is startup-like but in many critical ways it's way different.
Honestly just working on something without an existing user base makes a huge difference.
There's a certain amount of institutional crud that's just crud, but most of it exists because once you are successful, you can lose what you have more easily than gaining something new.
Millions or billions of people use the major products FAANGs provide. They might get more users if they make these products better, and boy howdy are there a thousand ambitious devs, PMs, and managers trying, but they'll also lose millions of users if they make them worse. Hell, they'll lose millions of users if they make them different, regardless of whether it is better or worse.
90% of institutional crud is "how can we not piss off the billion people who are happily using our products and giving us money, either directly or indirectly?". Users hate it when our product breaks, so we're going to have excruciating review and approval processes to submit code changes, style guides and minimum test coverage and an entire campus devoted to monitoring for problems. Users hate it when their personal data gets leaked or abused, so we're going to set up razor wire and require devs to go on a quest for mystical artifacts before they can do anything with it. Users hate it when the site changes so we're going to require a dissertation in the form of a sonnet explaining why the color of the buttons should change, and then six months of live experiments to be sure.
90% of what you hate as a user about big companies is the result of them "acting like a startup" and radically redesigning UIs or changing the core functionality of a product or breaking existing functionality to add new or just developing a new product out of nowhere and presenting it to you like you should care.
Re: There’s no such thing as “a startup within a big company”
#325Earlier quoted context omitted.
The thing most people forget about options & RSU is that one is taking away a big chunk of the TC and delay it to a future year. Even when you hate your job, you will be hesitant to leave the company because of FOMO and sunk cost fallacy That said, anecdotally, every one of my close circle of friends made decent amount money from equity (one of the many companies they worked at did very well) - far higher than the 10…
I don't think that tracks with reality. If my company suddenly decided to do away with equity comp, they would not replace all the potential earnings with base salary. Base salary would be higher, sure, but still much lower than the salary+equity package. I think more companies now have a policy where your RSUs vest every quarter, and there's no cliff (except for possibly the first new-hire grant[0]). So yes, it's de…
> This is unfortunately true. I do know people who aren't happy in their job (maybe not to the point of actively hating it), but stick around because of their golden handcuffs.
For anyone "stuck" in this situation, recruiters from the other FAANGs you don't currently work at will try to match unvested shares in their offer. It always pays to interview once a year or so to see what the current offers are like, and it's fun to try out the other microkitchens. Well, until 2020 I guess.
Re: There’s no such thing as “a startup within a big company”
#326When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…
Hmm, you are at least talking about a tech startup on a big tech company.
I've seen many attempts of hosting (incubating?) a startup in a traditional company like a financial institution. That's what really isn't possible.