Key Moments
Why You Should or Should Not Work at a Startup by Justin Kan
Y CombinatorKey Moments
Startup management generally sucks and you're unlikely to get rich, but it offers unparalleled learning opportunities and chances to lead projects you're unqualified for.
Key Insights
Management at early-stage startups "generally really sucks," offering little mentorship unless actively pursued.
Statistically, it's improbable that joining a startup will make you rich or set you up for life.
Startups offer access to jobs you're completely unqualified for, leading to rapid skill development, as seen with an early Justin.tv programmer who scaled to run back-end operations.
Working at a startup can be a gateway to starting your own, as exemplified by an engineer who met a co-founder and launched their own YC-backed company.
Maximizing your speed of learning is a primary benefit, whether the startup is growing (like Twitch's infrastructure) or failing (like closing a bad deal for Exec).
Y Combinator partner Paul Graham's philosophy emphasizes one's "slope" (rate of growth) over their "y-intercept" (initial position/success).
Why you might want to avoid startups: flawed management and low odds of wealth
Justin Kan argues that a significant drawback of startups, especially early-stage ones, is the generally poor quality of management. He humorously notes that effective management seems to be a rarity, often overshadowed by the company's overall trajectory. Consequently, employees are unlikely to receive ample mentorship or direction unless they proactively seek it out. Another key deterrent is the low probability of financial windfall; the idea of becoming rich or financially set for life by joining an early company is statistically improbable. Kan explicitly advises against joining a startup for this reason alone. Furthermore, he observes that Silicon Valley has matured, attracting individuals seeking career stability and clear paths, which startups, by their nature, cannot offer. Anyone prioritizing stability should likely look elsewhere, perhaps at more established tech giants.
Unqualified for the job? You'll likely get it and learn fast
One of the most compelling reasons to join a startup, according to Kan, is the opportunity to take on roles and responsibilities for which you are completely unqualified. He shares the story of "Jim," a programmer recruited for Justin.tv. Jim was offered a salary boost by Kan to join Justin.tv over Scribd. Within a year, Jim was leading the entire Rails back-end for a top-tier website. This role was far beyond his initial qualifications, but the startup environment demanded it, providing him with an unparalleled learning curve. This growth trajectory continued as Jim later co-founded Socialcam, which scaled to 128 million users in two months, and eventually co-founded Triplebyte, a recruiting company for startups. This illustrates how startups can thrust individuals into high-stakes situations, forcing rapid development and skill acquisition that might be impossible in more structured environments. This rapid ascent and acquisition of skills is a game-changer for personal growth.
A launching pad for your own entrepreneurial ambitions
For those who dream of founding their own company, working at a startup serves as an excellent preparatory ground. Kan recounts recruiting Finbar, an engineer from Groupon, for his startup Exec. Finbar's goal was to eventually start his own company. Kan emphasizes the importance of surrounding yourself with ambitious individuals through his co-founder Emmett's adage: "you are the average of your five closest friends." While Exec didn't pan out, Finbar met a co-founder there, leading him to embark on his own entrepreneurial journey. He went through Y Combinator and then launched another startup that also went through YC. This narrative highlights how startup experiences, even those that don't achieve massive success, foster invaluable connections and provide exposure to the entrepreneurial process, significantly increasing the likelihood of future success in launching one's own venture.
Maximizing your learning speed: up or down, the growth is immense
Kan identifies maximizing one's speed of learning as the most crucial reason to join a startup. He uses the two co-founders of Cruise as prime examples. Kyle, recruited from MIT, became VP of Engineering and a co-founder at Justin.tv. Initially a hardware hacker, he had no experience scaling systems. He was tasked with engineering a live video system, which was initially unreliable, famously crashing every 36-48 hours, leading to comical situations like needing a pizza delivery driver to relay messages. Despite the challenges, Kyle's role forced him to invent and architect a scalable system. By the time Twitch sold to Amazon, this system was a massive infrastructure, consuming the fourth-largest bandwidth in North America. This demonstrates learning on the way up. Conversely, Daniel, Kan's brother and also a Cruise co-founder, learned immensely from a failing startup, Exec. While Kan was on vacation, Daniel single-handedly navigated the complex, drawn-out negotiation to sell Exec to Handy, learning critical skills in deal-making and negotiation. He later applied these hard-won lessons to Cruise, which sold to GM for $1 billion, showcasing how learning can occur and be applied even when a venture is failing.
The importance of one's growth trajectory
Kan references a common quote from Y Combinator partner Paul Graham: "it's not your y-intercept, but it's your slope that's important." This philosophy underscores the value of personal growth and a steep learning curve, which startups are uniquely positioned to provide. The focus should be on how to position oneself to maximize personal rate of growth and learning, regardless of the specific company or outcome.
Mentioned in This Episode
●Companies
●Organizations
●People Referenced
Startup Employment: Do's and Don'ts
Practical takeaways from this episode
Do This
Avoid This
Common Questions
Startups often have poor management and may not provide sufficient mentorship or direction. It's also statistically unlikely to get rich, and they lack the stability and defined career paths found in larger companies.
Topics
Mentioned in this video
A company from the East Coast involved in a deal negotiation with Justin Kan's startup, Exec.
A company where Finbar worked as an engineer before joining Justin Kan's startup, Exec.
A company co-founded by Emmett, mentioned as an example of the 'average of your five closest friends' concept. Justin.tv later became Twitch.
An earlier company founded by Justin Kan, presented on stage eight years prior to this talk.
A startup founded by Finbar after his experience at Exec, which went through YC.
An autonomous vehicle company co-founded by Kyle Vote and Daniel Kan, which sold to GM for $1 billion.
A company founded by Justin Kan in 2012, which focused on the home cleaning business and eventually tried to sell.
The company that acquired Twitch in 2014.
Justin Kan's current company, which went through YC in Winter 2018.
A company co-founded by Jim (mentioned in the transcript) that does recruiting for YC companies.
General Motors, the company that acquired Cruise for $1 billion.
Justin Kan's brother and co-founder of Cruise. He gained negotiation experience from a failed startup called Exec.
An unknown band recruited by Daniel Kan for Justin.tv, who later became very popular.
The speaker, founder of three YC companies including Justin.tv and Atrium. He shares insights on the pros and cons of working at startups.
A YC partner often quoted for his advice on startups, including the importance of one's 'slope' rather than 'y-intercept'. (Note: The transcript says 'Paul Boo Hight', which is likely a mishearing of Paul Graham's common quote).
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