Entrepreneurial success stories like Google, Facebook and Twitter are a huge inspiration for those just starting out on their journeys. And it may seem as though the best way to learn from their example would be to join their ranks. But how useful is spending time at a large corporate for those with an eye to starting their own business?
Having previously worked for both corporates like Sony and JP Morgan and larger startups including Qype and Songkick, Dan Rogers, now co-founder of Peakon, the real-time people analytics platform, is in a perfect position to comment on how each environment sets entrepreneurs up to run their own startups. He recalls a useful metaphor once given to him by a VC: entrepreneurs launching a new startup are effectively explorers hacking their way through a jungle without having a clear path to follow, whilst scaling a startup is like navigating along dirt tracks and optimising to find the best route. Finally, running a large-scale company is like hitting the motorway: the roadmap is well-established and the most important thing is keeping one’s foot on the accelerator. “They’re three very different phases and they require very different skill sets,” he says.
Inevitably, the fact that startups are having to blaze their own trail means that they need a suite of survival skills that their corporate cousins no longer have a use for. “In a big company, you strive towards becoming a specialist,” says Henrik Torstensson, CEO of Lifesum, the Swedish health and fitness app, and former head of premium sales at music-streaming giant Spotify. “In a startup, especially in the first few years, you need to be much more of a generalist.”
Whilst entrepreneurs working in highly technical verticals like tech will undoubtedly need specialist expertise, it’s important that the founding talent in a startup has T-shaped skills that enable them to take on many different disciplines as required. “You want people that can go deep in one area but still play the field across multiple specialties,” Torstensson says. “If you’re making the journey from a big company to a small startup, that can be one of the biggest challenges.”
Building up this breadth of experience requires entrepreneurs to be prepared to constantly experiment and step out of their comfort zones. “In my opinion, the way you build a successful startup is you fail fast,” says Rogers. “You’ve just got to try a lot of things and kill them quickly if they’re not working.” With failure rates for startups at around 85%, being willing to take risks and quickly pivot when things don’t work out is essential for entrepreneurial success. “That’s the standard mode of operation for a small, agile startup,” he says.
Working in a corporate environment can actually inculcate potential entrepreneurs with the opposite mindset. “At larger companies, you don’t generally stand to gain much if you stick your neck out,” says Rogers. When somebody is working in a company with tens or even hundreds of thousands of employees, innovation cycles are typically glacial and it can take up to five years to properly implement a new idea. This means that the onus is on getting it right first time and avoiding mistakes at all costs. “When you take someone from a medium-sized or a large company and put them in a startup, that’s quite hard for them to deal with,” Rogers says. “They don’t expect to fail that often so they’re like, ‘Oh my god: everything’s falling apart’.”
However, that’s not to say working at a larger, more established businesses before building a startup doesn’t come with some benefits. Whilst working for Goldman Sachs might not teach you much about putting together a pitch deck or building a customer acquisition strategy, it’s a fantastic environment to learn processes that will serve a startup well much further down the line. “Larger companies tend to be well-managed, so you learn a lot about how to manage a team, manage yourself and be more efficient,” Rogers says. As a startup grows, its concerns will gradually turn to internal structuring, auditing and reporting. So having some first-hand experience of how these things are best implemented can pay real dividends. “It’s very valuable experience to see a company that has transitioned through those phases,” he adds.
Another potential plus of working for one of the sector’s biggest names is that it can help future entrepreneurs recognise truly gifted individuals when they are recruiting for their startup. “If you’re working in the right company, you get to see what greatness looks like,” says Torstensson. Working at Spotify, Google or Facebook means entrepreneurs will at times be rubbing shoulders with some of the best and brightest talent the tech industry has to offer. This makes it easier to assess incoming staff and recognise the best hires. “Your benchmarking of key talent becomes a lot better,” he says. “Suddenly you realise what it looks like when someone’s truly great, instead of just good.”
Contradictory though this may sound, another benefit of getting to work behind the scenes of some of these corporate giants is that it can actually help humanise their achievements. “We tend to put people in companies like JP Morgan and Google on a pedestal,” Rogers says. “But when you go and work for those companies you realise that everyone’s mortal.” Being able to see that these businesses have been built by ordinary people can help entrepreneurs appreciate that even a sector’s brightest businesses were startups once. “It’s really empowering because you realise it’s actually achievable for you to build a similar business,” he says.
However, regardless of the benefits of working for larger firms, it’s worth bearing in mind that returning from the comparatively comfortable travel of the motorway and heading out into the unknown will require some serious sacrifices. In light of this, it’s easy for a wannabe entrepreneur to stick with the relative security of the corporate environment. “Once you’ve had the benefits of the large company, you might actually find going out into the wilderness doesn’t seem as appealing,” says Torstensson. Going from having a hefty salary, stock options and employee benefits to bootstrapping a business can be a serious shock to the system and not everyone may be willing to take the gamble. “True entrepreneurs will seek out adventure regardless but obviously this might dissuade some people from leaving,” he says.
And, ultimately, this may all just come down to a question of personality. “In my experience, what tends to happen is that the people who enjoy the jungle phase don’t enjoy the later phases,” says Rogers. Effectively, if someone is more interested in being a serial entrepreneur than the next Larry Page, it probably isn’t essential to dedicate years of their lives to working in a corporate environment. “You might not still want to be the CEO by the time your startup reaches 5,000 employees,” he says. “So is the knowledge you might gain somewhere like JP Morgan vital? Probably not.”