Job Security, Career Stability, and Employability For Startups

I was recently asked to answer a question on Quora about startups and stability, and as I read some of the other replies I noticed a trend. The question was basically “Would joining a startup be a mistake for someone with the goals of stability and career progression?”. The questioner then defined stability as being able to support a family and have nice things (financial stability).

The answers ranged from a flat-out “Yes” (i.e. “it’s a mistake“) to “startups provide no stability/career progression“, while another pointed out that most startups fail. The responses were familiar, and similar to objections I’ve received when pitching startups to software engineers over the past fifteen plus years.

Before answering, I considered the many I know who spent most of their careers at startups and small companies in comparison to the people who worked for larger shops. Have the ones that stuck with startups achieved less (or more) stability and/or career progression?

Stability vs Employability

Let’s consider Candidate A who has worked for ten years at one large company, most would say that shows job and career stability. After that length of time, we might assume (or hope for) some level of financial stability and at least a small increase in responsibility that could classify as career progression.

When presented Candidate B with experience at five startups over a ten year span, most conclude this demonstrates career instability or even “job hopping”. Without seeing job titles or any duties and accomplishments, it would be difficult to make any guesses about career progression, but many would assume that a series of relatively short stints might not allow for much forward movement.

Candidate A clearly has more career stability using traditional measures. However, Candidate B’s experience, at least in the tech world, is the somewhat new normal. Job security and career stability (marked by few job changes) is what professionals may have strived for historically, but now one could argue that employability is a much more important concept and goal to focus on.

Today, Candidate A’s company announced layoffs and Candidate B’s startup ran out of money. Who lands a job first? Who is more employable?

Startups Fail… But They’re (almost) Always Around

When job seekers voice concern about the stability of some software startup I’m pitching, I may cede that most startups will fail and the conversation may end there. I might even throw in a “Startups are risky“. These candidates are more concerned about job stability (the keeping of one job) than career stability (the ability to consistently have a job).

The fear is that a company will fail, and the candidate would then be a job seeker all over again with some frictional unemployment and the possibility of worse. Given the failure rate of startups, the fear of a company closing is rational. The fear of any sustained unemployment, at least for many startup veterans, probably is not.

Anecdotally, most of the people I know who gravitated towards small/new firms had little or no unemployment, and most appear to have at least the same levels of financial stability and career progression to those at larger firms. The only visible difference is usually that startup veterans had more companies listed on résumés, may have worked for and with some of the same people at different jobs, and some have a wider palette of technical skills. It’s reminiscent of a successful independent contractor’s background.

chart

Once You’re In, You’re In

After the first startup boom/bust some in the industry tied company stability to career stability or employability, as if being associated with a failed startup might negatively impact future employment options. Many discovered the opposite was true, as those who failed were tagged startup veterans unlikely to repeat the same mistakes twice.

I would expect that those who have worked for multiple startups would likely tell outsiders this: “Once you’re in, you’re in“. Let me explain.

While any individual startup may not provide job stability, an ecosystem of startups will provide candidates with career stability and usually increased employability.

When startups hire, most seek those with previous startup experience. It’s usually right there in the job descriptions. Remember Candidates A and B from earlier? Candidate A hopefully has a shot at a startup job, but B already has an interview.

Due to the transient nature of startup employment and the trend of startup employees to stay within the startup ecosystem, the ability for those in the startup community to get introduced to new jobs via one’s network increases dramatically. When Startup X fails, the 50 employees migrate to perhaps 3o other startups. That gives Startup X alumni a host of employment possibilities, which should grow exponentially as additional startups rise and fall over time. In smaller cities one can become a known entity within the startup community, virtually guaranteeing employment for as long as startups exist and their reputation remains positive.

Conclusion

The concept of career stability has changed significantly as increased job movement has become an accepted industry characteristic. When one expects a higher number of job searches over the course of a career, proactive professionals will consider employability and marketability more carefully. Job security ≠ career security. If your main concern is being continuously employed at rising compensation levels, employability will often trump job security.

 

9 comments

  1. Glen

    Great Post Dave! I’m curious what your opinion is if candidate A and B were applying for a large corporation instead of a startup?

    • fecak

      Thanks, and that’s an interesting question that even the man on Quora asked me. I definitely see some bias against large company employees by startups (or at least a bias for other startup employees), but I’m not sure I see it the other way. I don’t work with many large companies as clients anymore, but when I did that never was a major issue.

      The only time I could see that happening in software might be if the stereotypical big company (at least some bureaucracy) was afraid that someone from a stereotypical small company (lower bureaucracy) would be able to navigate the system and function with rules. This may be most evident in regulated environments (banking, pharma) where someone from a cowboy dev shop might not be able to handle the oversight.

      Great question though, and I’d certainly be curious to hear from large company hiring managers if they discriminate at all against startup alumni.

      Thanks for the comment.

  2. fredstluka

    Dave,

    This is absolutely true. I saw a shining example of it a couple years ago. I recruited a friend to leave his employer of 27 years to join a startup. We worked together for about a year and half, accomplished great things, and learn a LOT of new technology. When the owner and the VC guys disagreed on the product direction, the money ran out, and the company folded. My friend was immediately recruited back to his old employer with a choice of 2 different jobs that he would not have been considered for just 18 months earlier. He took one and has lived happily ever after. After getting a taste of startup life, he got bored with the large corporate inertia, left again for another startup, and I heard rumors recently that it may be bought, so his equity may really pay off.

    –Fred

  3. fredstluka

    Dave,

    BTW, as you said, the same is true of consulting versus being an FTE.

    I’ve been independent since 1996 and have a steady stream of employers and clients trying to recruit me to join their teams. I discard 5-10 job leads per day,
    not counting those that were mass-mailed, or sent to mailing lists or user groups I subscribe to. From big names like Google, Amazon, Facebook, Dropbox, IBM, etc. And from interesting local companies. I mostly just ignore the email from the recruiter. Sometimes I reply with specific questions but I’m rarely tempted to leave my current client, since I tend to stay for a few years at least. Often, I’ll offer to help the recruiter find someone else.

    Consulting is like working in a big company with hundreds of departments, but no corporate policy that keeps them from all competing to see who can hire you. Why would anyone voluntarily limit themselves to a smaller pool of opportunities?

    –Fred

  4. Mike Brocious

    I’ve been on both sides (I’m the guy Fred mentions in his earlier post). Worked in a big corporation for too long, and now I’m on my second startup. I’ve been involved in interviewing/hiring in all my positions. In the corporation, a long resume with a lot of past employers was a red flag. We wanted someone who we could count on being there for many years…we don’t want to invest in training someone only to have them walk out the door. Now on the startup side, the number of past employers doesn’t matter, unless it’s a small number. I worry about someone being comfortable, not challenging themselves, not learning new things/technologies. Of course, intelligence, work ethic, technical skills, personality, etc. trump the employment history in both cases. But the same resume may be perceived very differently.

    I’m the only income for my family of four. So going from a solid, comfy big company position to a startup seemed risky (esp. at age 45+), and it took me a while to make the choice. I finally convinced myself that I’d be able to find employment if the startup went south. Turns out the startup experience has (I believe) increased my employability. I’ve gained so much more in technical skills, leadership, business savvy, industry knowledge, etc. than I could’ve at the big company.

    I no longer fear losing my job.

    – Mike

  5. katharinerebecca

    Such an interesting post! While I am what everyone calls a millennial, I’ve always been taught that company loyalty means something (though it is a one-way street at times). As such, I’ve been hesitant to leave jobs and/or go to a startup because of what it might look like on my resume. However, reading this has laid it out clearer, and it’s making me more comfortable with the idea of going to a startup if moving up with my current company doesn’t pan out. While I recognize that this post is geared more towards those with a tech background, do you think this advice could be used equally for those of us with soft skills? I know that coding and design are learnable skills, and those are in my plans, but it’s slightly disheartening to think that soft skills aren’t as valued (in terms of the number of open positions/kinds of open positions).

    • fecak

      Thanks for reading and commenting. While the concept of company loyalty is obviously still alive, it’s changed over time. Those in highly competitive markets (like my audience of technology professionals) tend to think about loyalty a little differently.

      The advice I give here can often be applied to other industries and markets, as long as you use some caution. This article talked about the stability of the startup ecosystem for those within that ecosystem, meaning that once you get some startup experience you are likely to be valued by other startups. This holds true for non-technical professionals as well in my experience. I know of many non-coders who have made a living in startups, and have moved between them rather freely. This could include sales & marketing, accounting, customer service, creative, etc.

      Good luck to you!

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