Going to work for start-up means taking a chance
BY SHERRI ENG Mercury News Staff Writer
RANDALL MEALS enjoyed a comfortable work life. As a general manager at stalwart
Hewlett-Packard Co., Meals had a secretary, regular eight-hour workdays and
generous vacation and retirement benefits. But he craved more excitement, more
challenges -- the kind only a start-up venture can provide.
So in 1995, he left the comfort of HP and joined Omnipoint Corp., a start-up
personal communications services company in Colorado Springs, for two years.
``I wanted to have an impact,'' Meals said. ``At a start-up, you're exposed to
a high level of accountability. Your mistakes are not covered. In a large
company, there's a leveling effect (from your actions.)''
As chief operating officer at Omnipoint, Meals often worked 16-hour days,
including weekends. There were no mentors to consult, no human resources
departments to give him a day off and no secretaries to type his memos.
``At a start-up, you work awfully hard and you make a lot of sacrifices,'' said
Meals, who took a pay cut to work for Omnipoint. ``Until you're in a small
company, you don't realize what you miss from a large company.''
But the sacrifice was worth the effort when the company went public in 1996,
making Meals ``a nice sum'' of money from company stock and options.
Omnipoint's stock doubled in 10 months after its initial public offering.
``That's one of the reasons why I joined a start-up. You may give up some in
pay, but you more than get it back in stock,'' Meals said.
Meals' dreams and desires are typical of those in Silicon Valley, where
opportunities to grab the brass ring are plentiful. Running off to a fledgling
company is exciting, risky and hip. And who could resist the chance to make
millions and the potential to become the Next Big Thing?
Despite such enticements, going to a start-up isn't for everyone, career experts
``(People attracted to start-ups) have always fantasized that this place is like
a tree house -- it's lots of fun with just me and my pals,'' said John Webster,
an executive coach for Coaching for Success in Saratoga. ``But when they get
into a start-up, they find out that reality is different from fantasy.''
Executive recruiter Erik Cederblom compares going to a start-up to sitting at a
poker table. There are risks and there are rewards. Whether or not you have
the intestinal fortitude to keep playing your hand in hopes of the big return is
what makes some people start-up material and others more suited for established
``If you have the right hand, is the pot big enough to justify the risk?'' said
Cederblom of Potter, Fontaine and Cederblom, a search firm in San Rafael.
At stake are your family life, your finances and your emotional well-being
should your employer go belly-up.
So, before you decide to play in the valley's version of Vegas, here is what you
need to know about yourself and the start-up world:
KNOW YOUR PERSONALITY: Are you results-oriented? Do you like to make big
decisions? Do you handle pressure well? If so, you may be start-up material.
Young companies tend to be nimble, energetic and creative. It takes a
quick-thinking person to keep abreast of the rapid changes the company faces.
``It's a total adrenaline rush,'' said Jim Rubino, who left Seagate to become
president of APT Technologies, a Santa Cruz-based start-up specializing in the
mass data storage industry.
If you work at a small company, you're likely to see your decisions make a
significant impact on its well-being. Your actions will drive the business and,
in some cases, make or break the venture. The pressure to succeed can be great,
but so can the satisfaction.
In contrast, your contributions at a large employer may have less impact on the
overall performance of the company. Yet, some start-up refugees have returned
to big companies because they feel that such industry behemoths have the ability
to lead the industry and steer competitors and technology.
``That's what drove me back to a large company,'' said Meals, who left Omnipoint
to join 3Com in 1997. ``The projects and innovations that I work on now have an
impact on the entire networking industry. That's hard to do at a start-up.''
IDENTIFY YOUR VALUES: Start-ups are not for 9-to-5ers who expect work to end
once they leave the office.
That's what Mike Brozda learned when he left his job in corporate communications
at National Semiconductor in 1996 to join a wireless technology start-up in
Santa Clara. He found himself logging in 70-hour weeks. His wife often had to
snap him out of a daze as he pondered work issues on the weekend.
``It was all-consuming. There was always something I should be doing,'' Brozda
said. ``I was thinking about (the company) day and night and on the weekends.''
After a year at the start-up, Brozda charted his plan to return to a larger
company. He ended up returning to his old job at National Semi.
``My values are that you should work hard, but you should also have a life,''
Brozda said. ``But that sometimes conflicts with a start-up that's trying to
quickly get a product out.''
UNDERSTAND YOUR WORK STYLE: Do you wait for people to tell you what to do?
Or are you a self-starter? A worker waiting for his or her marching orders
won't last long in a start-up that is moving frantically to get products to
market. It can be a chaotic environment, said Webster, who has done consultant
work for 19 start-up ventures.
``Learning on the fly is the central competency that anyone in a start-up should
have,'' said Michele Bolton, an executive coach at ExecutivEdge in Los Gatos.
Because new companies generally start at a grass-roots level with little
infrastructure, employees are expected to be self-reliant. So don't expect to
have a support staff to answer your phone or write your memos. At a start-up,
you'll more than likely be asked to run the company as well as take out the
``When you're at a big company, you get exactly what you want, people kiss your
feet,'' Rubino said. ``It's different at a start-up. Everything that gets done
is done by people here. If I wanted a letter typed, I was the one who did it.''
CHOOSE WISELY: Bob Lisbonne did his homework before leaving his job at
Claris Corp. of Santa Clara to join start-up Collabra Software Inc. of
Mountain View. He grilled friends and associates about the company's
reputation, he interviewed current employees and he even test-drove a beta
version of some of Collabra's software products.
``I think people should do a lot of investigating to find out which is the best
fit for them,'' said Lisbonne, who joined Collabra in 1994, and now is senior
vice president of client products for Netscape Communications, which acquired
Collabra. ``I call it doing your due diligence.''
No two start-ups are alike. Some are bootstrap deals sprouting out of garages,
while others are well-funded ventures backed by deep-pocket venture capitalists.
With the odds of joining the next Microsoft against you -- only one out of 10
start-ups goes public -- it behooves you to do some research on whether your
next employer will boom or go bust.
Finding the answers to questions about the company's financing, funding levels,
product shipment dates, competitors, business plan and board members will help
you make a more informed choice. Talk to company employees, customers and
vendors to get a better picture about how the firm does business. You can
easily get the buzz about the company's technology, its market and its
reputation in the industry by talking to competitors and doing research on the
``Look at the technology to make sure it has enough legs to gain critical
mass,'' said Karen Richardson, who left Netscape this autumn to join Epiphany
Inc., a Palo Alto-based software start-up, as executive vice president of sales.
``At the end of the day, there has to be a technology that is viable and not
In Meals' case, it was ``the personality, drive and vision of the company
founder that outweighed everything else'' and lured him to Omnipoint.
But career counselor Richard Phillips cautions start-up seekers to keep their
enthusiasm in check. ``Most of the mistakes I've seen in choosing a start-up is
from being overly optimistic,'' said Phillips, a career counselor for Advantage
Career Solutions in Palo Alto. ``The founders of the company are, by nature,
going to be very optimistic and you can get caught up in that.''
SET SPECIFIC GOALS: Like seasoned Las Vegas gamblers know, you should be
able to walk away from the table when you've reached a predetermined level of
pain or reward. Do you want to stay long enough to ship the company's next
product? Or after it has received its first round of venture capital?
Meals stayed with Omnipoint long enough for the company to go public and shift
its attention from developing its technology to building a customer base. More
interested in the technical side of Omnipoint, Meals decided to leave the
venture once its infrastructure was established.
``I never had the idea that I would stay forever,'' he said.
HAVE A REALISTIC FINANCIAL PICTURE: ``The biggest motivation for going to a
start-up is greed,'' Webster said. ``People go into start-ups with the idea of
making a lot of money.''
But cash-strapped companies typically won't have enough money to pay competitive
salaries, instead opting to give equity positions in the company or stock
options. Certainly, that can make you a bundle of dough and send you into early
retirement should the company go public and become the next Cisco. But don't
forget that you may have to wait four years before you can exercise your options
and cash out.
And as with every gamble, a start-up can also turn south, leaving behind a mound
of worthless stock. ``Sometimes (the stock options) become good for papering
your bathroom walls,'' said David Hanson, a principal of San Francisco executive
search firm PHD Consulting, who had one client that used the certificates from
four failed start-ups as wall coverings. Another client saw his stock's value
evaporate after the firm's venture capitalists pulled funding two weeks after
EVEN A BOMB IS A BOON: Even if your start-up bursts into flames, do not
despair. Being associated with one or two failed start-ups won't leave a black
mark on your rsum, career experts say. More than that, ``and people might start
to question your judgment,'' Phillips said.
In general, employers appreciate the business acumen workers gain from being at
a start-up venture. 3Com was so impressed by Meals' start-up experience that
the networking company hired him to launch its new storage networking division.
Drawing on his new pool of knowledge, he has been able to manage the division in
the same entrepreneurial way that he ran Omnipoint.
``In the end, you're viewed as having a broader background and having a creative
view of solving problems,'' Webster said. ``Working at a start-up is good for
people's careers in that it rounds out their experience.''