A good startup, from a venture capitalists’ point of view, is typified by the company’s ability to hire quality people who have passion and commitment, at lower-than-market salaries.
However this puts startups at odds with the managements of engineering and business schools: desperate for a high ranking on surveys, they want their pass-outs to get high salaries, and in fact ban companies who want to recruit from them unless they promise a minimum salary level.
This causes a catch-22 as the best and the hottest startups rarely recruit via campus placements.
Inevitably what happens is that over-funded startups which have a lower chance of long-term survival because of fundamentally unsustainable businesses - are the ones that pony up the high salaries that college administrators demand for their students.
Students who seek the thrill of working at a startup should choose - excitement or high salary? This depends on their ambitions. Are they entrepreneurial? Or are they mercenary salary-earners?
If they are entrepreneurial, and want to be in an environment where they want to learn how to one day start up their own businesses, they should approach interesting ‘hot’ startups directly, outside their college placement process, and side-step the Day Zero, Day One rigmarole.
On the other hand, if they’re more concerned about salary and take home pay, they should perhaps skip startups altogether and go for more established, profitable businesses like Google, Facebook, Morgan Stanley and the like - because those can sustainably offer high salaries with reasonable job security.
You can’t have your cake and eat it too. Unless you’re ready to be thrown back on the street without warning.
Be aware that seeking places that can offer high salaries could be a sign that the employer doesn’t have a sustainable business- and applicants should be prepared to lose their jobs. While this in itself is not something that has a stigma, one should be prepared that their next employer, after an over-paying startup has imploded, may only be able to offer them a fraction of what they were earlier earning. A lifestyle adjustment might be necessary.
One must keep in mind that funding of a startup in itself is no indicator of long-term success.
While the startups forget that only mercenary or a hireling will join them at high package, graduates also fail to evaluate the sustainability of the company they are joining. It is a self-fulfilling disaster because more often than not the startups might recruit people at high packages from these institutes and might collapse few years down the line.
So, if you want a high salary and are planning to join a startup, you’re doing it wrong. You might as well go to some of the more established firms around.
If you go for a startup paying a huge package, always be aware you might end up joining a unsustainable company. If you want a high salaried job, go to a highly profitable place, in other words, don’t go to a startup. If you want a career in a startup, don’t look for high salary, a high salary at a startup comes with a huge risk of failure.
(Murthy, who is the managing partner, Seedfund, spoke to Rozelle Laha)