Your career: Start-up fever

As high-tech start-ups explode with growth, so have the opportunities for people in those fields--from top management to junior programmers. But is everyone striking it rich?


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Your career: Start-up fever
As high-tech start-ups explode with growth, so have the opportunities for people in those fields--from top management to junior programmers. But is everyone striking it rich?
By Valle Dwight

October 1999

In this article:
Profile of a promising start-up employee
Lessons learned
Small business by the numbers

Last September, Doug McCollough, 32, was finishing his undergraduate degree at the University of Toledo in Ohio and needed tuition money. He quickly found a job as lead developer on a project to build an online auction site. Though the money wasn't fantastic, he was lured by the idea that as the first employee of this start-up, he'd share in the company's revenues when the site took off, and he'd soon lead a group of programmers following his vision. Seven months later, still the only employee, he came to work and was told that the Web site was history. "They pulled the plug," McCollough says. "Just like that, in a weekend."

We've all heard the mind-boggling success stories: America Online Inc. employees retire as multimillionaires after five years; Jeff Bezos, head of Amazon.com Inc., is worth $12 billion; Frank Batten Jr., the largest investor in Red Hat Software Inc., whose main product is a version of the Linux operating system, is worth more than $1 billion; and Microsoft Corp. employees, from programmers to secretaries, buy million dollar homes.

Profile of a promising start-up employee

Is this you? If not, you might want to think twice before leaving the security of an established corporation to join a start-up.

Young, single, no commitments
Or, young married couple, with the spouse at a steady job with benefits
Can do many tasks at once
Doesn't mind taking on many roles
Able to work long hours
Works well in a potentially chaotic office
Rolls with the punches
Creative, entrepreneurial spirit
Illustration by Daniel Guidera
High-tech start-ups promise to be the gold rush of the new millenium. Anyone with an idea and a Web site can make millions in a few years, or even months. With potential like that, few can resist the lure of the start-up, and many IT professionals are leaving comfortable jobs at established corporations for the promise of IPO stock options and untold riches.

That's the illusion--what about the reality? Unfortunately, for every newfound millionaire, hundreds of disillusioned IT professionals find themselves out of a job when a promising start-up collapses with huge debts or is bought by a bigger company. Others are finding the fast-paced world of the start-up too chaotic and grueling for their taste or lifestyle, and many end up missing the corporate structure that guided them in their more traditional jobs.

Check it out

According to "Business Starts and Stops," a study from the Wells Fargo Bank in San Francisco and The National Federation of Independent Business in Washington, D.C., 2,897,000 businesses started from scratch in 1997. Most of those companies are small (78% of the start-ups had only the owners as employees), and were launched with modest investments. Of those start-ups, only about half survive the first five years. Some are bought by larger companies; others go under from lack of capital.

Lack of leadership and business savvy are common stumbling blocks at start-ups, according to several high-tech recruiters who have watched new companies come and go. If the founder is a visionary with lots of ideas, but little business background or leadership experience, the start-up could be headed for trouble.

Small business by the numbers
* Small businesses constitute 98% of all businesses in America.
* Small business has created about two-thirds of the net new jobs in the American economy since the early 1970s.
* Small businesses employ almost 60% of the workforce.
* More than half of the businesses with employees employ fewer than five people, and nearly 90% employ fewer than 20 workers.
* 47% of small businesses have access to the Internet, while 35% maintain a Web site.
* Of the 35% of small businesses who maintain a Web site, one-third of them report conducting business transactions.

Source: The National Federation of Independent Business, Washington, D.C.

Prospective employees can avoid joining a doomed start-up by doing their homework. According to Peter Lehrman, president of Emerging Technology Search Inc., in Roswell, Ga., the first place to start is by carefully checking out the company and its management team. Lehrman recommends that candidates have three or four interviews with the company, going there at different times to see how things are run.

Bob Otis, vice president at IT industry executive search firm Atlantic Research Technologies in Stamford, Conn., agrees: "We also encourage candidates to do what we do when we determine the viability and risk level of a start-up: analyze the management team. We want to know if the executive team is capable of making the company a success and if there is evidence in their employment histories to suggest that they might work well in a start-up environment."

You need to go beyond checking the leadership. Chuck Barrett, director of consulting services at Stanley, Barber and Associates, in Cupertino, Calif., a recruiting firm for high-tech professionals, recommends that prospective employees carefully examine the company's business plan and ask for references of the key management people "This is two-way interviewing," he says. "Get rid of those rose-colored glasses. You need to be very critical."

Lehrman cautions that especially cautious people might want to avoid a company just starting out, advising they wait until the company has a track record and at least 20 to 40 employees.

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