Should You Join a Big Company or Startup?

I teach courses on leadership and entrepreneurship to second-year Stanford MBA students. Many of them end up going into investment banking, private equity or consulting, or they join a larger firm in a functional area like finance, marketing or IT. Others are drawn to the idea of starting or buying a business, or of joining a small, growing enterprise. All are great choices.

So, how do you know which path is right for you?

Larger companies have resources, longer time frames for decision-making, codified processes and procedures – and a certain level of office politics. Big firms provide clarity around career path and years of “best practice” experience embedded in policy manuals, as well as access to specialized outside service providers. They’re generally led by experienced senior management and governed by long-time investors. Many provide great on-the-job training, allowing young leaders and executives to make career treks with seasoned guides at their sides. And the pay and benefits are generally higher. But large firms can be protective of traditions, slow to move and can feel stifling to some.

This is where small companies come in. They don’t have a vested interest in how things have always been done, so their raison d’etre is generally to disrupt the status quo. They often have younger, greener leaders who simply don’t know what can’t be done. This can be exhilarating; but if you join, buy or start one of these enterprises, you’ll have to get good at lots of things – and quickly. You might not receive much training, and you’re likely to experience resource constraints.

The odds are also good that you’ll have to find capital, do your own reference checks for every hire, and get good at hiring (and firing). You’ll have to set priorities, allocate scarce resources, and cut out lots of things you’d do in a large company. For example, you’ll personally orient new employees, manage third-party providers of goods and services, give real-time feedback, manage a board, become a hands-on salesman, and negotiate leases or financings. This list is not exhaustive; only exhausting.

For my first real job after receiving an MBA from Harvard Business School, I moved to Paris, France. I figured I’d be doing high finance, meeting with important people and making deals on my way to building and leasing office buildings in the City of Lights. I couldn’t have been more wrong.

I’d landed at a small firm where I trained myself to send and receive telexes, picked visitors up at Charles de Gaulle Airport, typed up notes on construction meetings, hired administrative staff and found office space. This was all in addition to reading loan documents and doing the precursor to today’s spreadsheet. My “To Do” list seemed endless – and there was no one to whom I could delegate tasks.

It was a stressful time, but I’ve since come to appreciate it as a valuable rite of passage. Many entrepreneurs and small company executives tell of similar moments in the development of their firms and their mindsets for dealing with setbacks and uncertainty.

All of these tasks matter, of course, in larger organizations. The difference? In a larger organization, you may never be involved in some of them, and you can draft behind outside specialists. But in a smaller enterprise, you may personally touch all of them in the course of a month.

To many, the distinguishing characteristic of small and entrepreneurial businesses is that they’re led by generalists dealing with shorter time frames, fewer resources and more uncertainty. Beware, however, of being tempted by the generalist-only approach. For those good at juggling, it can be easy to think that it’s the primary job of the entrepreneur or small company executive. But really, it’s only a part of the job. You also need a clear “domain expertise,” a real passion around the product or service you’re providing, and an ability to bounce back from almost certain setbacks on the way to the summit.

In the end, it’s less about large or small than it is about meaning, respect, learning and people. If you are a respected member of a winning team doing something meaningful, you’re likely to thrive – in a large or a small company. If not – whether you’re with a huge organization with terrific executive development opportunities or a small one living hand-to-mouth as it figures out the way to disrupt the former – you’ll thrive as long as you’re growing, profitable and doing something you care about with people you like and respect.

By Joel Peterson