Monday Musings, 19: "Early Stage vs. Growth Stage Startups: 3 Things I've Learned Working for Both Types"

Ah, startups.

If you've worked for or are interested in startups, you probably know that startup companies can fit into many buckets. In addition to industry-specific and functional buckets (e.g. on-demand, ecommerce, social, B2B, fintech, martech), startups can also be categorized by stages and funding rounds. A popular example is Uber, which has been branded with the word "unicorn" and has raised $15 billion to date (we might need another alphabet).

In my career, I've worked for two types of startups: an early stage startup that raised a seed round and a growth stage startup that has raised Series C. Here are three things I've learned working for both types of startups as an employee and as someone who has been exposed to the inner-workings of running a startup.

Work Becomes More Complex as You Grow

From an employee's perspective, work drastically changes when you move from an early stage startup to a growth stage startup. At an early stage startup, it's true that you have more tasks on your plate. You'll most likely be forced to become a jack of all trades, which makes getting things done ironically simpler. Why? Because you can dictate how and when things get done with little input from other teams (because they don't exist). You can learn, screw up many times, and not kick yourself for it because you know that it's okay to fail. All that matters is finding that one thing that works.

At a growth stage startup, work is more specialized but more complex. At this stage, teams and departments have to work together to drive growth. Growth stage startups tend to hit an inflection point where growth rapidly increases and more people are hired every week. Teams grow, ambitions grow, the stakes are higher, forecasts are more aggressive, investor expectations are higher, and the pressure gets heavier. Because of the rapid growth at a growth stage startup, processes have to be put in place to make sure the startup isn't running rogue and every individual employee can contribute in an efficient, impactful, and quality manner.

Teams grow, ambitions grow, the stakes are higher, forecasts are more aggressive, investor expectations are higher, and the pressure gets heavier.

When this happens, the work you do as an individual employee has to go through many hurdles to launch. There will be more stakeholders in your work to ensure quality and consistency. If this sounds corporate-like to you, that's because it kind of is but it happens in a different environment. Even though there are more moving parts, things happen faster and quick wins are welcomed. Rapid testing and iterations to find the next 10-100X idea are even more important at the growth stage. It becomes a part of everything you do.

Neither of these experiences are good or bad. They're just . . . different.

The startup financing cycle via Startup Explore.

The startup financing cycle via Startup Explore.

Maintaining a Great Culture Becomes Harder as You Grow

At any startup, regardless of stage and financing, maintaining the company culture is the responsibility of every employee from top to bottom. For early stage startups, the task of maintaining the culture is pretty easy. There are very few people to deal with, and in many cases, everyone at a small early stage startup are like-minded. Bad apples are easy to spot and easy to get rid of. The introduction of new employees isn't frequent, which means the small core group of individuals working on the startup will remain in tact for quite some time.

At any startup, regardless of stage and financing, maintaining the company culture is the responsibility of every employee from top to bottom.

On the other hand, company culture becomes more vulnerable as a company hits the growth stage. When hiring picks up and the company expands, new people are walking in the front door almost every week. The amount of work recruiters and managers put into hiring the right personalities with the right skillset and experience is underestimated and admirable, but even they can make mistakes. All it takes is to make a bad hiring decision to put your company's culture on ice. There's also a chance that new employees may not understand or believe in the full mission and vision of the company. As with any company, some people may just be in it for a paycheck and have no interest in working as a team player or playing nicely with others.

This makes company culture the most precious and vulnerable thing that a company can have, and unfortunately, there's no easy way to maintain and protect it.

Product Is Always Important

At an early stage startup, building an MVP (minimum viable product), growing a customer base, and finding product-market fit is the core focus. As an employee, this means that a lot of your efforts will touch the product directly. For example, if you were hired as a marketing person, there's a good chance you'll still be doing customer service (I know from experience). The product is the most important thing and all efforts should be focused on the product and anything that impacts it directly.

When a startup hits the growth stage, things change a bit. The product is still critical. However, there are increasingly more aspects of the business that impact the bottom line. For example, marketing becomes increasingly important for customer acquisition and having solid operations and finance teams is important for budgeting, cutting back on wasted expenses, and the overall health of the company.

From an employee's perspective, what you do on a daily basis may or may not impact the product directly (e.g. you may be the one planning events for prospects). However, the product is the lifeline of the company. Nothing else matters if the product isn't right, and if you can't confidently vouch for the product inside and outside company doors, then you'll struggle to find the motivation necessary to impact the company in a positive way. In other words, not only can a company's product impact whether or not customers use it, it can also impact whether an employee stays or leaves.

Although startups differ in many aspects as you move from one stage to the next, almost all startups possess a hunger to succeed. That's the beauty of this whole startup thing. Nobody wants to fail. Everyone thinks they have a good idea. Everyone thinks they can make an impact. But only a few will actually live to see that impact.