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Work has pulled me away from my passions, but the way that I've lived my summer suggests to me that I am not controlling my job the way that I should be. I did not devote enough time to myself, and in a departure from the usual, I just didn't take any risks over the summer. I wasn't renting and flying planes, I wasn't traveling, and I wasn't writing. And once I start down the path of overcommitment in the office, it is tougher and tougher to claw my way back out into the world.
That missing ingredient— taking risks— is something that I discovered to be a defining part of my character over the past ten years. It should come as no surprise that what befits me perfectly is the West Coast's dizzying scene of high tech startups. They are fast, crazy, and risky, and though relatively few of them have a happy ending, it's the prospect of ultra success that drives us. I had to traverse four startup companies before I found a little of my own success. Having seen the many faces of startup survival, the time is ripening for me to join my fifth one. Yes, there is substantial risk involved in me leaving a great job with a great company to chase another rainbow. But just like all the other paradigms that we must journey through in life, each of my tenures is more fruitful than the last, and I enter each one more wiseness and emboldened than before.
I am often asked, how is it that technology has become so lucrative and alluring, and why do so many Californians want to get rich off of technology anyway? There are plenty of honorable reasons why people are exhilarated by this industry. Chiefly, technology gives rise to endless possibilities that did not exist previously (such as nanotechnology), and in technology, there is no limit to what we can accomplish. We software engineers know this more than anyone, and we constantly make discoveries that amaze even ourselves. Secondly, high tech startups are SEXY. Sometimes, college grads will look for work in startups, just to be part of a new company full of young co-workers that's already a household name.
To be perfectly honest about the darker side of business, I think that many reasons why being part of these companies is so desirable lie in greed and envy. Investors who inject money into a little tech company to keep it alive, with a short and quick exit strategy in mind, often do not have much respect for the technology itself. It is greed, or the prospect of taking millions and turning it into tens of millions, that attracts the wealthy to this business. What often attracts aspiring workers to fast startups is the prospect of striking it rich, much like the allure of the California Gold Rush over 150 years ago. This can be aggravated by viewing with envy those who already succeeded in this game and now live in a $2,000,000 home in the most affluent part of town. The thought of just standing in the right place at the right time and becoming an instant millionaire, just enthralls people, especially the young women and men of Generation Y.
How People Get Rich within Startups
Believe it or not, most citizens of the world don't quite understand just how the lucky few manage to strike it rich. Here's a quick hack job of an explanation: Joe Blow has a very innovative idea, whips up a little money, finds a business partner, and co-founds a new startup. They sell part of the company to investors, usually called venture capitalists, in return for some quick cash, so they can hire a team of thinkers and leaders to manage them. One of these crazy techie guys is John Doe. They all get a small piece of the company too, usually through stock options. As the idea grows, so does the team, and Joe Blow and his company needs even more cash. Once a second or third round of funding happens, much of the company has already been sold to its lenders.
Realizing that the company cannot continue in this state, its board always aims for a quick exit, usually in the form of an acquisition. They drum up interest from a larger corporation, and seizing the opportunity, the big corporation buys the startup. If the big company is publicly-traded, presto, the old startup options are now converted to the new options. Suddenly, Joe Blow is a millionaire, and all those other techies, including that crazy John Doe, make a little money too.
Tragically, in this kind of scenario, the general workforce doesn't make a whole lot of money. It's only a mild base hit. But what if the company found a way to make itself profitable quickly, only requiring two rounds of funding? That would mean that more of the company belongs to the executives and employees, and less to the venture capitalists. That also means that the company now has the chance to grow and go public. Let's say that it does. All those options that everyone owned have much more value now, and many people like John Doe, not just the founders, become millionaires.
Such was the case with Google, and on a smaller scale, companies like Salesforce.com, VMWare, and Genentech. As you might guess, there are darker shades to this seemingly sweet deal. This scenario creates a major workplace disparity, between the rich veterans and their newly-hired co-workers who have to work for an average salary, sitting next these millionaires doing roughly the same type of job. Yes, it spawns workplace contention, and human resource staffers are now having to deal with the symptoms that this disparity creates, particularly at Google.
This little tour through high tech only scratches the surface of what our industry is really like, and in the coming months, you'll read much more about the inner workings of a startup company. For within any company you will find stretches of triumph and joy, as well as some cases of shame and disappointment. This is especially the case in my industry. But the stories of these startups are very human, and with all of their risky business, high tech companies are the sign of our times.
Johannes Brahms: Clarinet Sonata in F Minor, Op. 120
1: Allegro appasionato
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(By Daniel Culveyhouse | No comments yet | comment here)
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