In my experience of working for a large global software manufacturer and now having my own software startup Paul Graham* is spot on. Paul said “Running a start-up is like being punched in the face repeatedly… but working for a large company is like being waterboarded.” (Waterboarding is a form of torture involving simulated drowning.)
I’ve found the bigger the company the more market power you have but the less freedom you have as an individual. However having startup’s freedom means getting rejected (‘punched’) continually as you have virtually no market power. Get used to it and come out fighting because startup and small companies are more fun.
The ultimate punch in Matrix Revolutions, 2003
During my career I’ve worked for several small and medium companies and one of the world greatest ever tech corporations, Novell Inc. People generally open doors warmly when you’re from a large corporate enterprise but in the startup they often don’t even give you the time of day.
The Big Corporate Enterprise
When I joined Novell they were enjoying a temporary revival with Eric Smidt at the helm. Interestingly Eric is now the CEO of Google. Even during Novell’s decline I always remember the feeling of power when I meet customers and partners. They all took you seriously. Even prospective customers, partners and ex-customers would welcome you in. Novell and other corporate enterprise’s have huge amounts of market power.
Market Power
By market power I’m referring to a company’s credibility. Being creditable reduces the customers perceived risks and often increases trust. From my experience market power is derived from having several of the following:
- Customers - Referable large company and well known household name customers.
- Partnerships - creditable partnerships with creditable leading companies.
- International service/product – Effective provision of services across the globe.
- Scalable service/product – The capacity to take on new large scale orders and customers without over-stretching.
- significant assets – Whether is be customer base, IP, financial or contractual assets.
As an employee working for a large enterprise you are riding on this power. Unfortunately decisions and change happens very, very slowly and painfully within the corporate enterprise. The large companies often rely on the status quo. There is certainty in the corporate world for the company and the employee.
To get on in the large company you have to be a good corporate citizen . This means towing the line, keeping you head down and doing as your told even if you don’t believe in it. It can become torture for many. What makes all of this worthwhile is the pay and the perks. However there is more to life than money…
The Small to Medium Size Company
This size of company sits somewhere between the giant corporate company and the startup. They’re often in partnership with the big companies, reselling or distributing their goods or services. The effect of having referable customers and being involved with a large stable enterprise company brings credibility. This increases the smaller companies market power. However they often still lack market power because they’re not making an embedded product or service product.
The good thing about working as an employee for smaller companies is that you get paid and the decision making progress is shorter and therefore quicker. This means as an individual you have more freedom than within the corporate environment. However as a small company you have to fight alot harder to survive. Interestingly some larger companies like Virgin Group, Ltd and WL Gore & Associates, Inc have successfully divided into small units to act and feel more like smaller companies.
The Startup
You love your startup like nobody else. You believe your product is a world beater but unfortunately very few will agree. As a startup you have no market power unless you have a track record of previous startups. Again and again you will get “punched in the face” by people all around: customer’s, partners and investors. Graham says “everyone has a problem with your product” .
As a founder you have to draw strength from somewhere. Graham says “uncertainty” abounds, “as well as a persistent fear that a single bad decision could doom the whole enterprise” and “the gut-wrenching period when you realize that success isn’t going to come quickly or easily”.
Your strength may be your family/partner, friends or an inner driver of your vision of the future. Something has to drive you. And it has to drive you hard to gain market power. However a startup is something very special. Many only dream of having one. A startup brings the idea of freedom. The freedom to create and grow something of your own.
It’s very interesting to see people from all three types of companies sharing public discussions. Now I look back on my career the differences are amazing. The corporate citizens often lack passion, individuality and an inner drive. From all my years of experience I enjoy working for startup and small companies the most. They give you a sence of purpose, belonging and fun. Unfortunately the pay sucks in a startup but then money is not everything 
