Grow or make money, how do you think when you start a business?

Mark Suster, the author of this article, once ran two companies, selling his company to Salesforce.com in 2007 and joining Upfront Ventures as his partner. In this article he analyzes whether to join a start-up, and the key to solving the problem is what you want to do at work, and realistically consider your own conditions.

Whether it's a new job or a veteran who has been in it for years, he's always asked me about the same career development question-should I ever join a start-up? "I usually answer with a rhetorical question," Do you want to make a lot of money or accumulate experience now? 」

Let's face it, if you want to be a senior management position such as marketing Director, Product director, Senior architect, International business executive, then it's almost impossible to get a pension in a start-up that only finances 5 million dollars. But it's OK, not every job will be your lifelong career, and it's good to be able to learn something in a job.

A simple arithmetic problem

When people are faced with a chance to join a start-up, they often ask me if I want the company to have a big future. It is often the same reason that these people are confused, and that is to confuse money with self-improvement. When I answer questions for them, I usually do a simple calculation. You got a 0.25% stake in a start-up, and the company got 5 million dollars in the B-round financing. In a normal venture capital valuation, this means that the company has abandoned about 33% of its shares in exchange for 5 million of dollars in financing, so the start-up company's market valuation should be 15 million dollars. If the company is not going to raise money later (or if there is no bigger round of financing), or if it is sold at the current price (about $50 million average), what about the stock in your hand? The answer is that they're worth 125000 dollars. Such a simple mathematical calculation can solve the confusion in people's minds, but few people to calculate or according to this thought.

If you've worked in the company for four years, that means you've got 31250 dollars a year. Because you are holding stock options and restricted stock, your income may be taxed on short-term capital gains. My California state has a short-term capital income tax of up to 42.5%, so your income is only 18000 dollars a year after taxes, which is a more optimistic analysis. By the way, the above analysis also ignores priority liquidation, which may give you less real income.

Let's assume it's a little bit more crazy, you get a 1% stake, and in the third year of work the company sells for 150 million dollars (you're in the middle of a big picture). That's equal to 287500 dollars after you've worked for two years. Wait, don't be so happy, you get a four-year restricted stock, or you choose to get 143750 dollars, or you have to do two more years for the big company that bought your company.

Don't get me wrong, that's not to say it's not worth earning, but given that the property in Palo Alto or Santa Monica is already up to 2 million dollars, it's hard to make a home for that money.

I don't mean to blow you, I just want you to see reality. If you are single-minded in your desire to "get What You Want" (this is a chance to make a lot of money to buy a big place), you must start your own business or join a start-up as an executive. Or you can win by buying lottery tickets, or become a middle-class manager that companies like Google, Facebook and Twitter joined in the early stages of their creation. To tell you the truth, how many startups like this are going to stand out in America every year? 1? Or a maximum of 2. I recently talked to an investor who said that around 1500 startups in the U.S. could get financing every year, 80 of them (5.3% of the total) could sell for 50 million dollars, and only 8 (0.5%) could sell $150 million or higher.

So when a Stanford MBA, a former senior technical developer of a company, or a former CFO from a company asks me if I want to join a start-up, I ask them: "Are you ready to make money or to improve yourself?" 」

Two words of advice from one's own experience

For most people, getting into a startup is a process of self-improvement. The reason why I repeat this is because if you have a realistic expectation of what you are getting, it will be of great benefit to you. When people want to join startups, my advice is usually: "Make sure you can get something out of this company, go into a higher level of executive and investor circles, take more responsibility than your last job and get special industry or technical experience that will help you in the future, Or become a partner in the company and improve your industry connections. When you choose to join a start-up, you have to learn to grow before you get it. 」

When I was CEO of my first company, we began by calculating how much money would be worth in the future. It was still 1999, and in the internet it was full of the story of a rich night's wealth, and it was easy for you to make a big buck. Looking back on that time, I knew that the way to get rich quickly was to leave a bad corporate culture.

As time went on, I started telling employees in the company: "You're supposed to be in the business of wanting to get a different experience and what you like to do." If you can do a good job, we will give you a promotion and hold a higher position. If you think that your self-worth has not improved in the years of your career, and that you are not having fun at work, it is time to leave. We will offer you a good salary, but the number may not be very surprising to you. Equity is just a layer of icing on a cake that won't make you rich. Don't join a start-up company for equity. 」

There is no doubt that you should choose a job that you enjoy, which will put you in a very energetic position every day. Don't blindly join a company that you don't understand why you choose it.

Two distinct examples

A talented young man talked to me recently, and he got several offer at the same time and started his own company 6 months ago, even under 21. He wanted to listen to my advice, and I told him how to choose whether he wanted to accumulate experience or start making money. He is so young, it is not surprising to make any choice, for there is plenty of time to try and make mistakes, but before making a decision, it should be clear what the reason for the choice is. I advise him not to choose a big company that is very mature, because his role is to sit at his desk and process some papers. If you're in the business of learning experience, you should choose an exciting start-up that can really be an officer. If the company has a development, you can stay inside for a good few years to improve yourself. If the company doesn't have a future, you're at least a couple of startups before you're 26 years old. By that time, you are ready to make money for yourself.

On the other hand, when you are less than 21 years old, you will be able to get rid of worldly limitations and try to do a lot of work to improve your skills and exercise your mind. When you're 40 years old, with three kids and a house that needs a loan, it becomes more difficult to do whatever you want.

Now, let's talk about the "Making Money" section, and I have a friend who has been a senior at the company, and he's been a 40-year-old after graduating from Harvard Business School with three outstanding startups and two well-known big businesses. When he called to ask if I wanted to change my job again, I said to him, "Man, you should think about making money now." Don't go to another company when the second master, now is the time to be your own boss. You can either set up a company or go to a business that is hiring a CEO. 」

If you really want to make money, you should be the top 4th of a company, and of course it's best to be the founder. Few people can come this far and becoming an executive is an uncommon ability.

Of course, I don't want this article to be too harsh, and I'm not just talking about money. Working in a start-up is a very rewarding experience, and I've never let people work in startups. But when you make a career choice, you should combine your talent, age, skills, professionalism, and current economic situation to consider the problem and look more realistically. Before making a choice, be sure to ask yourself this question, "Do I work there to make money or to learn to grow?" 」

Original author Mark suster