The case against VC-backed employers
Silicon Valley has carved an entirely new definition of the word “aspirational”. Notwithstanding that the companies it built are drip-feeding curated images of perfection into our lives, it has also created a paradoxical working culture: a curtain of free artisan lunches and unlimited holiday often drawn across a dark room of tiring and intense R&D.
As a potential employee, the image presented is enticing. In the big bunfight that has become recruiting tech talent, people are presented with a manicured dream. They believe they have found a place where ideas take priority, giving them enough freedom to knock out a few lines of visionary code, before being able to focus on winter sports.
However, before you sign on the dotted line and buy your snowboard boots, do your research into your new employer’s funding status. This could have an impact on your day job.
Why?
You may be familiar with the idea of trickle-down economics; this is trickle-down corporate pressure. The simple theory is that the more influence VC funding has, the more the screw may be turned on the workforce. Investors come with a need to make a return, and can apply undue pressure on senior management, who in turn lean on staff. A company’s goals can quickly switch from altruism to meeting a pre-defined multiple. Whereas once products and services were dictated by market need, decisions become imbued with the need to make money.
This means what?
An additional stress on the business. A cultural change. For your day job this will mean more pressure, more deadlines and, arguably, less purity of vision and desire to focus on R&D. Not every external investment has this effect, but it is something that should be considered.
Prudent advice is to do your homework on who funds the company looking to employ you, see what the individual VCs investing in the company are like, and expect this to play a part in the culture of the place you’re joining and the job you will be doing day to day. There are multiple factors which can be researched externally – for example, the type of VC (big/small/specialist) and what culture and reputation they have as an investor is important.
Also important are factors such as how long it has been vested, what stage the company it is investing in is at, and obviously the stake it has put up. A lot of this information is available online. It is simply a case of joining the dots.
Alternatively, if you’re thinking of moving jobs, seek a self-funded company which is in control of its own destiny. This is not a panacea, and in itself has some pitfalls. For example, working at a bootstrapped startup with no money in the war chest is unlikely to offer a calm working environment.
Similarly, cash-strapped founders could be forced to make knee-jerk decisions and tangential pivots which can change or make your role redundant. By contrast, a company that is profitable with cash in the bank is less likely to be backed into a corner and to apply a more purist approach, and less impinged by financial goals.
All businesses need to make a financial return, but it’s important to consider the motivations of the people involved. Those that want organic growth are arguably more likely to be considerate to the long-term health of the company, and by relation its working culture. So if you’re thinking of a new challenge, spare a thought for who’s going to be pulling your strings.