Degrees of Risk In Full-Time Tech Jobs
Full-time tech jobs come in different varieties, with different amounts of risk. Let’s arrange them on a spectrum from the highest to the least risk, so that you can figure out which level of risk is right for you at this point in your life:
Single Founder
A single founder means that I start a startup and employ others. This is the riskiest job option. In addition to quickly depleting my savings, every area — product, UX, engineering, marketing, sales, and so on — becomes my responsibility. And every problem, my problem, because there’s nobody else.
I wouldn’t do this again.
Solopreneur
A solopreneur means that I’ve decided to build a one-person business — no employees, no contractors 1. I do all the work myself.
This is safer than being a single founder, because I don’t pay others. Deciding not to hire eliminates a whole bunch of issues: thinking about what skills to hire for, writing JDs, interviewing, writing contracts, being answerable to people, worrying about people leaving, dealing with the consequences when they do, dealing with people issues… Deciding not to hire is a high-leverage decision: it eliminates a dozen more areas of work, fractally simplifying my life.
Solopreneurs can progress only slowly, since they have to do everything themselves. This stresses me out about not moving fast enough, because competitors will beat me. And about going too long without income. I wouldn’t do this again full-time.
Cofounder
In this option, I join forces with someone looking for a cofounder. Either they’ve already started and made some progress, and I join them to work on their idea and take it forward, or we brainstorm together before starting a startup, with me being flexible to work on their idea instead of mine. But I won’t be starting a startup and then hoping to get a cofounder on board 2.
I’d be clear with the other founders (and early employees) that I won’t be paying for any company expenses personally, be it employee salaries, contractors’ fees, laptops, traveling to meet customers, a coworking space, or any other company expense. I’ll use my laptop, but if it breaks down, I’ll expect the company to buy me one. The company may not be able to pay me initially, and that’s fine, but a single rupee won’t go out of my pocket towards the company.
This is safer than the above two options (single founder and solopreneur) because the chance of success is higher when I work with other senior people who have complementary skills. If I were a solopreneur, I wouldn’t have anyone else, which means limited skills and slow progress. If I were a single founder, I would have only junior people, since those are the ones I can afford. But to progress, we need leaders in multiple areas — a minimum viable team. Junior people can follow, but not do things independently. This makes the startup single-threaded, which is a recipe for failure. On the other hand, when I join forces with other leaders, we already have a multi-threaded team. It’s also critical to have someone to share the hard journey with. This is a softer aspect than skills, but no less important. For these reasons, joining as a cofounder is safer than the earlier options in this post.
But it’s still too risky for me, so I wouldn’t do it.
First Product Employee
In this option, I’d join a company that does not have an engineer, designer or product manager, since I can perform these roles myself. At this stage, the company might consist just of one or more founders but no employees, in which case I’d be the first employee. Or it might have employees in marketing, sales, finance, operations and other business roles. In either case, the company would not have an engineer, designer or PM, in which case I’d be the first product employee 3.
I’d be an employee, not a founder. Why? In the initial days of a startup, founders don’t take home any money. There might be no money remaining for founders after employees’ salaries. Even once there’s enough money for founders to take a salary, investors would permit only a meagre amount, not enough for my expenses. And if there’s a gap in funding, founders are the first to stop getting paid. If and when funding is secured, arrears to employees are cleared before founders earn anything. That’s why I’d want to call myself an employee, like CTO or Head of Product, not a founder.
Initially, I would not earn the salary that I can get in the market, but I would want to earn my living expenses. If a founder isn’t okay with that, it raises a number of red flags: I’ll be depleting my savings, which is not okay for me. If he doesn’t have any money, how is he going to set up a team? Other people won’t work for free, even if I do. Or does he have money but not willing to spend it, which is a red flag about his commitment? Or does he believe in people working for free to begin with to ensure skin in the game? This is good for him but not for me. Or he may not value what I bring to the table, and nobody will admit that; they’ll all say you’re very valuable, and I know the truth only by seeing if they put their money where their mouth is. For all these reasons, both signalling and otherwise, I would want to at least be paid my living expenses.
Beyond that, I would also agree on a schedule to be paid my market salary. For example, if I can get a job in the market with a salary of X, then I’d insist that the founder commit to giving me a salary of X in two years, or when $2m of funding is raised, whichever is earlier. I’d get that commitment in writing in my offer letter, with his signature. I’d reiterate that this is a hard commitment and that he will need to honor it for us to continue working together. I’m okay earning less than my market salary only temporarily, and that too only if there’s a hard, time-bound commitment. As a general principle, I would never work for someone who thinks I’m not worth a ton. Because he will then respect me less, give me less autonomy, second-guess me, be quick to dismiss my perspective, etc. He’ll think of me as replaceable.
Moving beyond money, being an employee also sets up a hierarchy that the founders are my bosses. This means that when there’s a disagreement, there’s a clear decision-maker. This is good! I wouldn’t want to be in a conflict where neither side can overrule the other, because we get stuck, unable to progress, or each person keeps doing things in an incompatible way, prolonging the conflict. I’d prefer to have clear roles to ensure fast and decisive decision-making, which is more important than me prevailing in a disagreement. Hierarchy is good.
I think of being the first product employee as just a safer version of being a cofounder, with almost the same learnings and benefits.
Consultant
Working as a consultant is safer than the above options, because I get paid at the end of the month 4. I know of employees in early-stage startups who didn’t get paid for months, in one case, 10 months. I wouldn’t want to be in their shoes.
Moving beyond the risk of non-payment to the amount of the payment, consultants are paid a higher hourly rate than anyone else!
As a consultant, I could have periods of less or no work, but that’s not a problem — I’ll turn the setback into an advantage, say by picking up skills that I like. Or that I feel are important for the future. This learning is an opportunity most people don’t have in their career, since they’re working full-time. I’m also using that time to advise startups for free to upskill myself and build a network of people whom I’ve helped and who’ll want to reciprocate.
Employee Earning Market Salary
In this option, I find out what my market salary is. This is a range rather than a single number. Say it’s $40-60,000. I wouldn’t insist on 60K, because that amounts to picking a job based on only the money, which is a bad idea. But I would insist on 40K. If a company can’t pay even 40K, I’d hang up the call, and pick from the remaining ones.
This might mean working at a bigger company than I’d have preferred. For example, if I want to work at a seed-funded company, but they can’t pay me 40K (in this example), I’ll settle for a series A- or B- funded company.
Employee Earning Market Salary In A Tech Giant
Google won’t be going bankrupt next year no matter what, so this job has the least risk, but I won’t learn or grow or be satisfied as much, so given two companies that pay me my market rate, I’d pick the smaller one.
The right job for you can vary depending on your situation in life. It can also change from time to time. So the point of this article is not to anoint some options as better than others. Instead, if you want to do something, place it on this spectrum, and think about whether you instead want to go one step to the left or right.
I could hire a contractor for a specialist role like logo design that does not make sense for me to learn, but I’ll do most things, like UX design, myself.
If you’re a not a techie, the more general principle is to join a company which doesn’t have the skills you have. If you’re experienced in sales and operations, for example, join a company that has eng, UX and product. Basically, everyone but sales and operations.
Assuming you’ve structured your consulting well, such as working only against an advance, trusting your instincts if a client comes across as unreliable or aggressive, etc.