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Working for a startup (or how I am about to turn my life upside down)

Discussion in 'Business, Careers & Education' started by feynmix, May 13, 2010.

  1. feynmix

    feynmix Senior member

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    (Warning: A bit lengthy)

    Would like some advice or comments from any fellow SF'ers that have started their own company, currently work for a start up, or have worked for one before.

    My current situation: 24 years old with little debt (15k fed loan at 2.5%) living in NYC. I have a BS in Physics from a top 5 school, and an MS in Financial Math from a very mediocre school (long story on how that happened). I currently work for a small risk consulting firm making OK money, but nothing great. I am not really getting anywhere with this firm, hence looking for other opportunities in finance, consulting, or something completely different.

    Keeping in mind that I am still kinda young and have little debt/responsibility, I am thinking of a major career change right now by joining my buddy's start up company in China/India. He and two partners have created a company that manufactures (in China) and sells solar powered LED lamps (in parts of India and Africa). These lamps are meant to replace kerosene lanterns currently used all over the world (especially in India), and there is tremendous demand for the product worldwide.

    They got their first round of funding from an angel investor a year ago, and now need some serious help marketing and selling the product at the grass roots level in India. This is where I come into the picture: My buddy and I first did a large portion of the leg work when the company was just a project, so I know the product and I have been "in" on it since the beginning. I am Indian, grew up in India and know the language and people pretty well. I can add immediate value to them and get the ball rolling for their sales in India. The downside is that I won't be living on much money initially, and there is not much room to obtain equity into the company since there are already 3 guys at the top. I would fall in at a solid second tier, with one other sales girl who is helping with bulk sales in Africa.

    So, if I can crack the market or help them drive their sales, I am looking at being a big part of a growing company that has potential to be successful. There is more to what I can do with sales (introduce micro financing programs, establish partnerships with other organizations or corporations, etc) but the idea is that I will have to come up with creative ways to sell the lamps.

    The downside, of course, is what I would be giving up a fairly easy and good life in NYC, getting out of finance for a little bit, money and SF approved clothes of course. I'd love to grow the company into something very successful, but that doesn't happen than to use the whole experience as a step to get into VC or very good MBA program (knowing full well that my mediocre MS degree and work experience so far ain't gonna cut it for H/S/W). I am just thinking (hoping) that doing this will get me out of my comfort zone, learn and experience something new, and give me an opportunity to do something that I might never get a chance again.

    So...what do you guys think? Am I being silly hoping that if the company doesn't make it down the road, that I can use the experience to get into VC or a good MBA school? I already have support from a good friend and a fellow sf member joelf, but I would love to hear what the rest of the peanut gallery has to say.

    Thanks,
    - feynmix
     
  2. cchen

    cchen Senior member

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    I say go for it. Will you make enough money to at least cover your living expenses and continue to pay your loans? It really looks like you have nothing much to lose here. Company doesn't do well, well you can still apply to b-school and have a great story to tell.
     
  3. Aaron

    Aaron Senior member

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    Don't do it if you're not going to be given some equity. You're assuming a lot of risk for not a lot of potential payoff (i.e. you might earn $100k plus in your 3rd year with commissions but that's nothing to having a few hundred in equity).
     
  4. feynmix

    feynmix Senior member

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    I say go for it. Will you make enough money to at least cover your living expenses and continue to pay your loans? It really looks like you have nothing much to lose here. Company doesn't do well, well you can still apply to b-school and have a great story to tell.
    We are still negotiating how much they will pay me. If I were to do it, I would live in Mumbai and its an expensive city to live in (comparable to NYC in some ways). I will probably able to negotiate so that I can at least cover my living expenses, but I am also trying to find some ways to make expenses cheaper (i can potentially get a place to live for free, or very cheap at least). I am on a 10 yr monthly installment plan and have some money saved up here, so I will probably just continue doing that without too much trouble. Do you think the experience will be a major force when I apply to b-school? As mentioned earlier, I went to a middle of the road program for my Masters and the company that I currently work for isn't really a big name consulting (can probably consider it another start up). So, in order for me to have a legitimate chance at getting into a good b-school, I need to have something that sets me slightly apart from the other finance, consulting crowd.
    Don't do it if you're not going to be given some equity. You're assuming a lot of risk for not a lot of potential payoff (i.e. you might earn $100k plus in your 3rd year with commissions but that's nothing to having a few hundred in equity).
    As of now, getting any sort of equity is out of question unfortunately. We have agreed that once I work for 6-8 months, we will again sit down and reassess my performance and how much value I brought, and talk about maybe some sort of options or maybe equity then. Again, it all depends on how I perform but there is no outright equity.
     
  5. Blackhood

    Blackhood Senior member

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    For the amount of work you'd be putting in I would expect some equity at least. Could you persuade them to give you a 12 month probationary period, with an equity share once some specific targets have been reached? (I would want this to be contracted rather than just a word that "We'll have discussions in 6 months")

    If you've been in on the project with your buddy and could really provide value to the company then there should be some kind of option. Would they let you buy into it? A $10k investment now might be mutually agreeable.

    I've always wanted to be part of a start up, simply because when you get in on the ground floor there is such opportunity for growth and financial reward, but I wouldn't really want the risk as a basic employee. If it goes to the wall you will get sacked, but if you own a portion then you work 20 hours a day to make it work.
     
  6. Pundit

    Pundit Senior member

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    For the amount of work you'd be putting in I would expect some equity at least. Could you persuade them to give you a 12 month probationary period, with an equity share once some specific targets have been reached? (I would want this to be contracted rather than just a word that "We'll have discussions in 6 months")

    If you've been in on the project with your buddy and could really provide value to the company then there should be some kind of option. Would they let you buy into it? A $10k investment now might be mutually agreeable.

    I've always wanted to be part of a start up, simply because when you get in on the ground floor there is such opportunity for growth and financial reward, but I wouldn't really want the risk as a basic employee. If it goes to the wall you will get sacked, but if you own a portion then you work 20 hours a day to make it work.


    +1

    If you are a critical component to this initiative they should want to give you a stake in a very short period -- if not immediately. Do not count on your friendships to prevent bad things from happening should outcomes in your area not meet expectations.

    Without equity I would expect a market based salary and only reduce salary demands as equity increased.
     
  7. Valor

    Valor Senior member

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    I'm not too qualified to speak on this, but I don't think the start up experience will help you get into H/S/W unless it is sucessful.
     
  8. SkinnyGoomba

    SkinnyGoomba Senior member

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    I dont recommend it. I'm not convinced that this company is doing anything that a larger corporation couldnt rip-off quickly. They'll also have supply chains already in place capable of supplying to this audience in short-order. If not already, then they'll have the cash to make it possible quickly.

    I think you're better off continuing with your career in finance and possibly finding a position that better suits where you would like to find yourself.

    Just my opinion.
     
  9. NARC

    NARC New Member

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    I dont recommend it. I'm not convinced that this company is doing anything that a larger corporation couldnt rip-off quickly. They'll also have supply chains already in place capable of supplying to this audience in short-order. If not already, then they'll have the cash to make it possible quickly.

    This. From a cursory standpoint, it sounds like a decent idea. But, the odds are seemingly against your being able to outmaneuver a larger organization if the market really is favorable. Maybe if you ran the operation very lean, and harvested with a small buyout/go-away fee (assuming you're lucky).

    If you're wanting monetary success, skip it. If you're wanting an interesting experience, you might as well go. If the concept falls on its face, it would probably happen within a year or so (or would be obviously headed toward that point). You're twenty four with almost no debt. There won't be a better time.
     
  10. bant

    bant Senior member

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    agree with most of the posters above - this will be an invaluable learning experience with great upside; if the start up fails you can easily spin this into a good story for your next gig. but i must echo the posters above - you NEED equity to make this happen - no "let's revisit in 9 months" bullshit - they are trying to recruit you to move across the world for a risky opportunity and a little bit of equity incentives should accompany their offer. be upfront with them as its not like you don't have other opps in the states.
     
  11. Dakota rube

    Dakota rube Senior member

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    Get globetrotter's take on working for start-ups. He has valuable experience.
    And, you shouldn't do this without an immediate equity position.
     
  12. cchen

    cchen Senior member

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    It seems unlikely that they'd give an upfront equity position. Any startup would be stupid to do that. Try to structure a sweat equity deal where you'd receive equity based on hitting certain targets/time
     
  13. Valor

    Valor Senior member

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    It seems unlikely that they'd give an upfront equity position. Any startup would be stupid to do that. Try to structure a sweat equity deal where you'd receive equity based on hitting certain targets/time

    If they can't offer pay, what do they have to offer but equity?
     
  14. cchen

    cchen Senior member

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    low/moderate pay + sweat equity
     
  15. DNW

    DNW Senior member

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    Without passing judgment on the business model of the startup, I would never do this without getting equity somehow. They don't have to give you an X% of the company right away, but you should at least get options that will vest based on certain predefined targets. Working for a startup is hard, and it's even harder doing it in a foreign country. I've been with 3 startups in my career thus far, and they've all FAILED. I know someone who's started 9 different startups before he found success. Given that the vast majority of startups do not make it, it's just not worth it doing it for a salary (and especially so if you've materially contributed to the company and were one of its first 10 employees).

    That said, if you don't do it, you'll always ask yourself "what if?" in the future. Working for a startup is way more rewarding than 99% of the typical corporate career crap.
     
  16. Blackhood

    Blackhood Senior member

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    That said, if you don't do it, you'll always ask yourself "what if?" in the future. Working for a startup is way more rewarding than 99% of the typical corporate career crap.
    This would be a big thing for me. Example: Big Company Boss gives you $1m to increase sales by 5% in an advertising campaign. You achieve 4% and get yelled at. Start Up Boss gives you $20,000 to increase sales by 50%. You acheive 200% (because they only made 15 sales per month) and you feel very smug.
     
  17. globetrotter

    globetrotter Senior member

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    wow, this isn't a simple thing.

    first off - my gut says "take it". 24 with no family and no debt, being in india working for a start up that works in india and china will be good on your CV. you will learn a shitload.


    ok, here is the meat, though

    cons

    they will try to cheat you. start up plus indian, boy, they are already thinking about how to cheat you. you need to protect yourself.

    mumbai is expensive, and you are a young indian. without money, you are shit. you don't want to be living like a 24 year old indian from the indian corporate world, they live like shit, they live like a cropholder in 1950's georgia.

    while being indian is an advantage in some ways, being a 24 yo indian, you fit into the sytem, and you fit into the bottom of the system. if you were white, or even a black american, or an asian, you are sort of able to push your way to the top of the system. this will be a fight for you. you have to think of how you plan to address it. you will be treated as being very low in status unless you think of a good strategy.

    start ups are tough, hard work, low money, and what people forget is that managers in start ups are usually not very good - a guy who invents something doesn't nessasarily know how to manage a company, sell, or handle finance. but he wants to run the company. so you will probrably have bosses who don't know what they are doing, this is not easy to live with, and it means that the company could be sunk any day because of a catostrophic mistake completly outside your control.

    if you are in india and the company sinks, who gets you home? how are your expenses, back salary etc, covered?



    pros

    a lot of responsibility, you learn as you go, you learn a lot of stuff outside your range of knowledge

    india is the best business school in the world, if you can sell to indians, you can be successful anywhere

    less formal heirarchy in a start up

    being the guy on the ground in a country is fun and very good for career development

    india is the place to be now - it is a growing economy and an important one. you can leverage that to work elsewhere, or you can make your career being an "india expert" for corporations.




    I have experience both in india and in working for start ups. if you have specific questions pm me
     
  18. Mblova

    Mblova Senior member

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    wow, this isn't a simple thing.

    first off - my gut says "take it". 24 with no family and no debt, being in india working for a start up that works in india and china will be good on your CV. you will learn a shitload.


    ok, here is the meat, though

    cons

    they will try to cheat you. start up plus indian, boy, they are already thinking about how to cheat you. you need to protect yourself.

    mumbai is expensive, and you are a young indian. without money, you are shit. you don't want to be living like a 24 year old indian from the indian corporate world, they live like shit, they live like a cropholder in 1950's georgia.

    while being indian is an advantage in some ways, being a 24 yo indian, you fit into the sytem, and you fit into the bottom of the system. if you were white, or even a black american, or an asian, you are sort of able to push your way to the top of the system. this will be a fight for you. you have to think of how you plan to address it. you will be treated as being very low in status unless you think of a good strategy.

    start ups are tough, hard work, low money, and what people forget is that managers in start ups are usually not very good - a guy who invents something doesn't nessasarily know how to manage a company, sell, or handle finance. but he wants to run the company. so you will probrably have bosses who don't know what they are doing, this is not easy to live with, and it means that the company could be sunk any day because of a catostrophic mistake completly outside your control.

    if you are in india and the company sinks, who gets you home? how are your expenses, back salary etc, covered?



    pros

    a lot of responsibility, you learn as you go, you learn a lot of stuff outside your range of knowledge

    india is the best business school in the world, if you can sell to indians, you can be successful anywhere

    less formal heirarchy in a start up

    being the guy on the ground in a country is fun and very good for career development

    india is the place to be now - it is a growing economy and an important one. you can leverage that to work elsewhere, or you can make your career being an "india expert" for corporations.




    I have experience both in india and in working for start ups. if you have specific questions pm me


    Being that I am Indian and 23 and have also lived in India, I agree with this ^^^^.
     
  19. SkinnyGoomba

    SkinnyGoomba Senior member

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    Fast forward to your job interview process if this doesnt work, Does anyone form the corporate world care? Do they give you extra credit points for having seen and done everything? Do they see you as a liability because they think you'll up and leave for the next start-up that piques your interest?

    Just some thoughts, I'm not one to rain on your parade, but its certainly worth considering the negatives.
     
  20. cchen

    cchen Senior member

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    Fast forward to your job interview process if this doesnt work, Does anyone form the corporate world care? Do they give you extra credit points for having seen and done everything? Do they see you as a liability because they think you'll up and leave for the next start-up that piques your interest? Just some thoughts, I'm not one to rain on your parade, but its certainly worth considering the negatives.
    From my experience, the corporate world seems to dislike those who have been entrepreneurial - and if you're entrepreneurial in the first place, you're going to dislike the corporate world
     

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