The Startup Double Standard

Part of my disenchantment with startups has come from the ways that startup employees are discouraged from making responsible investment choices, while the VCs that fund them are allowed and encouraged to use sound investment principals in their own companies. There are two interrelated principals that I found at odds in the startup world, which ultimately caused me to leave it.

Investing in more than one startup

In the investment world, investing your money in only one stock is a huge no-no. Diversify, diversify, diversify. If the company fails for reasons you weren’t able to foresee, you’re out of luck if that was your only investment. VCs understand responsible investing and invest in many startups at once to diversify and both increase their chances of picking a winner and decrease their exposure to a particular failure.

Yet, as an employee, investing your time in a handful of startups at once is frowned upon; you are expected to work full-time at a single company at irresponsible investment risk. VCs use the knowledge that most startups fail and diversify. As an employee I’ve twice seen attempts (at one company, led by me) to use this knowledge to at least encourage personal investment and get the company to offer a decent retirement savings (IRA / 401K); both times it failed.

Oh, and don’t pull out early just because the forecast isn’t good like a smart investor would, or you might be labelled a job hopper.

Working part-time

When I asked if I could do work on the side for another company, it was rejected. I then asked if I could work part-time so that I could diversify my time between work and personal growth in other ways. The response was that that would be tantamount to quitting, so I had to choose.

And yet VCs only spend a fraction of their time each week or month on one particular startup, so that they each get attention, because that’s healthy. Why is it considered unhealthy for an employee to do the same? Isn’t in unhealthy to spend the majority of one’s waking hours during the week on one particular thing? How often have you seen a bug tracker response / project status analogous to “Sorry, I don’t have time to work on this anymore, I have a real job now.”?

Some might argue that VCs are paying, while employees are getting paid, so VCs are both at more risk and deserve more control. What I’m trying to point out though, is that we’re both investing; VCs invest with money, employees invest with time. However, lost money can be re-gained, while lost time cannot. Which is the riskier and more meaningful investment?

(Update) Finally, I want to mention that the general problem seems to be the startup work culture (and perhaps Western work culture in general), not the individual people involved. Everyone I’ve worked with and met, including managers, CEOs, and VCs, are all good-hearted people, and I’m quite grateful for the experiences I’ve had with them. This just serves to make the double standard a little more fascinating.