Angel funding. Venture capital. Series A. Unicorn. Valuation. Exit. Stock options. Freebies. Awesome workplace. Office parties.
All those terms sound cool to youngsters with dreamy eyes seeking hot jobs in startups.
But few seem to realise in the euphoria that there is another side to the heady boom in entrepreneurship.
One week after it rescued an abducted woman employee with a spirited rescue campaign on social media, e-commerce firm Snapdeal is in the news for the wrong reasons. It is “letting go” of an estimated 200 employees in a performance-linked purge.
What’s more, something that is not seen in the Silicon Valley is happening in India: a union-like effort by the staff to move the government and invoke pro-labour laws.
Snadeal’s staff protested in a letter to the government that they their jobs had been “illegally terminated” and wanted them back. Forget about stock options maturing, they have not been given their demand for three-month severance pay. Employees have also been demonstrating in Delhi.
Not just that, TinyOwl, Localbanya, Zomato and Housing.com have between them laid off 1,500 employees in recent months. Foodpanda is busy reinventing itself with some pains.
It pays to acknowledge the darker side of the startup game. So here some tips to get real and friendly words of advice for startup employees – existing and aspiring.
1. Remember the risk: Startups are hot because they dream big but a lot of the rewards are linked to risks taken by everyone: venture capitalists, angel investors, entrepreneurs and employees. This could mean dealing with ups and downs that you don’t quite know about.
2. What’s good for the company may not be good for you: In the end, profitability is important for a startup. This means higher revenues and/or lower costs. This could translate as extra pressures on sales and customer service staff or a demand for fewer heads and hands to do more work.
3. Funding may dry up, suddenly: Venture capitalists woo in style, and then shoo in style. When they don’t see the milestones coming, they turn off the tap, and your CEO may be left holding the baby – if at all he/she is around to do so.
4. Goodies come with the slog: Long hours, nightly phone calls and drudgery are expected when they give you good café food and parties. Consider if you can juggle these with a healthy personal life.
5. Valuations may go down: It is a two-way street for your stock options. Bubbles may burst, or at least, company valuations may go down if sales and/or growth targets don’t come on as expected. They are trying to create mechanisms to sell illiquid shares of unlisted companies (which is what startups are). But hey, you may get stuck with dud shares.
6.The Silicon Valley is far away: It is a different country, stupid. India has labour laws to protect employees but the flip side is that this also means hassles for employers. Easy hire-and-fire makes your job less secure but higher government interventions mean company growth may not be cruising.
7. Mergers/acquisitions can hurt: Your company may be acquired –or may acquire. Either way, for some employees, this may imply a redundancy. You may be the best vice-president (fill in your specialisation here), but your head may roll if the merger plan has someone in your league who is faster/better/cheaper/smarter/luckier.
8. No tantrums, please: Try a tantrum, and you may find yourself fired. A decidedly underpaid US employee of Yelp got fired after she complained to the CEO. She yelped. It did not help. Never mind that Yelp is already listed with a valuation close to $1.5 billion. “Your employee for your food delivery app that you spent $300 million to buy can’t afford to buy food,” she wrote. “That’s gotta be a little ironic, right?”
(You know the HR hears a lot, but don’t be sure it is listening).
9. Slow bleeds are painful: They call him the “father of e-commerce in India”. K. Vaitheeswaran was a rockstar circa 2000 when he founded Fabmall, which got folded into IndiaPlaza. But his company bled away slowly and closed after more than a decade. The Flipkarts and Snapdeals of the world have stolen his thunder. You know, some startups remain startups for too long, and it can be pretty purposeless and painful.
10.Your skills stay; stay abreast: Companies come and go and startups can go bust for reasons no one can guess. But what you are good at may be more permanent. Keeping that skill in good shape is an investment that may matter more than a big dollop of venture funding that comes into a startup.