Start-ups Aren’t Necessarily What They’re Cracked Up To Be

Startup companies seem to be a way of life right now in this down economy. Start-ups can be great, but there’s a time and a place for them.

According to Steve Tobak, here are a few reasons why being a start-up might not be all that it’s cracked up to be:

1. Long hours and low pay. In general, startups expect longer hours and offer lower pay.
2. IPOs are few and far between. Liquidity events, i.e. big payoffs, are rare, especially these days.
3. Employees lose out in an acquisition. In the majority of startup acquisitions, VCs and founders make out; employees get to keep their jobs.
4. Poor benefits. In general, the benefits aren’t comparable to bigger companies, especially for senior management or executives.
5. Little or no job security. Obviously, not that you get much in any company these days.

Steve also gives us a few alternatives to the traditional start-ups:

• Late stage startup. If you can find a “late stage” startup with decent odds of “making it,” that’s a great score. The rub, of course, is determining the odds.
• Small-to-mid-sized public company. Especially if you’re management or executive level, you can still get a lot of equity (that actually has value) and a big title.
• Turnaround or struggling public company. The equity has value and a big potential payoff if the turnaround works – considerably better odds than a startup liquidity event.

However, if you’re young, hard working, willing to take risks, and looking for an opportunity to change the world, being part of a little team is great!