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

(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

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.

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).

Originally Posted by cchen

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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.

Originally Posted by Aaron

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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).
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.

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&quot

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.

Originally Posted by Blackhood

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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.

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.

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.

Originally Posted by SkinnyGoomba

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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.

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.

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

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

Originally Posted by cchen

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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?

low/moderate pay + sweat equity

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.