The question has plagued many, especially the millennial generation. When we think of startups, we may conjure up images of successful tech startups like Facebook or Apple that propelled their way to mega company status. In reality, the road to a successful exit is often bumpy and not for the faint of heart.
To know whether a large corporation or a start up is the better fit for you, I like to use the analogy of steering a big ship as opposed to a small canoe. Big ships are more complex and require more expertise to steer but when the waters are choppy, they can weather the storm. Small boats on the other hand are easier to maneuver but during a storm they are more likely to go down under.
Large corporations are like big ships. Change is harder, takes time and requires many approvals and people to steer the ship. Startups on the other hand are like small canoes. Making change within the startup is easier, takes less time and less people to execute. Big ships can travel long distances without need for supplies; startups have a limited runway to execute and need constant cash injection at every point.
Then comes the question of which water do you want to ride on. Some waters are choppy to begin with and the risks of going under are higher. The choppy waters are analogous to the support and ecosystem for building a company in a particular context or country. Large corporations (big ships) can most of the time weather the choppy waters as they are not dependent on external funding. Not so much for startups.
To illustrate this point, the graph below shows the number of startups which have received funding at different levels since 2001. (Note: the data does not cover micro-businesses, information for which is not publicly available, which make up a large percentage of businesses, especially in emerging markets; however, the data represented here is for scalable businesses.) The USA is by far the most entrepreneurial friendly country. The chances of getting funded and having a successful exit is way higher in America than other countries. The water there is relatively calm. That’s not to say that you should not open up startups in other countries, just know that the water is choppy, as the risks are higher there.
Adding to the analogy further, the Angel Investors, VC funds, private equity, large corporations and governments are like the kings and emperors of the olden times that funded explorers like Vasco da Gama and Christopher Columbus to set sail on the sea; whereas the explorers are the startup founders in today’s time. They are high risk takers. They will challenge the status quo to invent new business models and start entire new industries.
Explorers relish the challenge of creating something new, while their counterparts, prefer the safety of big corporations. To be clear, change also happens in big corporations, but it takes a long time for it to be put to practice.
So what kind of organization do you want to work in? Do you get seasick in choppy waters? Do you prefer the safety of big ships? Or are you ready to explore what awaits you in your nimble canoe?
It all depends on what kind of mentality and risk taker you are. Happy sailing!
