What is a Start-up?

Working at a startup is exciting, there’s no doubt about it. The potential to build the next big tech success like Facebook or uber can be like a magnet to many. If you imagine yourself thriving in an environment where you can really affect the finished product and have a ringside seat watching a business be built from the ground up then this could be for you. Before jumping onboard and dreaming of stock options there are some real differences between a start-up and any company you have ever worked for, let’s take a look.

So what exactly is a start-up anyway? The term has been used more and more in recent years in reference to new companies popping up in San Francisco and other tech capitals around the world. A great definition of a start-up comes from Warby Parker co-founder Neil Blumenthal. “A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed,”.

A startup is usually a company within the first 3 years of launch going through rapid development. Normally kicked off by a couple of cofounders with a revolutionary idea a startup has to go through rounds of pitching for investment with venture capitalists known as VC’s. 

Sometimes the co-founders will attend startup accelerators, which are short events including mentorship that help you present your idea at the end of the workshop in a demo day to attending VC’s.

This initial money will go towards building a team and rapidly trialing and testing an idea until a profitable business model is found. 

The end goal of a startup is known as the exit. The first way this is possible is through being purchased by larger companies looking to get into space such as google. These larger companies are always looking to stop young competition and buying the company and bringing talent inhouse is the best way to do this.

The other option is going public. This is the ultimate goal of many founders as the potential to reach sky-high valuations here is a realistic dream. Going public is where a portion of your company is floated on the stock market and you receive a huge cash influx for the stock you have put up. If you want to be a billionaire this the route to go down.

Let’s take a look now at the massive potential working for a start-up that could bring you. As a UX/UI designer, you will probably be brought into the company at a relatively early stage. The founders are usually visionaries and it will be up to you to own the design process for the company. At this early stage because startups have no income and limited budget they won’t pay the best salary. To beef this up they will offer you equity in the company and as bonus stock options. This equity usually is on the condition that you stay for 4 years and is called vesting. You will normally be entitled to 25% of your equity after year one and so on. If you leave before the full vesting period you will only get a percentage of your full equity.

If the company does well and is purchased or goes public then this equity is suddenly worth something. If your startup reaches the billion-dollar mark and you have equity of 1% suddenly you have 10 mils in your pocket if you decide to cash in. Things looking interesting now?  

A massive difference between a start-up and a large company is your day to day role. In an established organization you will have clearly defined responsibilities and knowledge in general how things are progressing. In a start-up, things run a little differently. You could start off as a UX designer one week and suddenly a month later run a small team of designers and developers. The pace of change is relentless and focus can shift dramatically from one week to the next. You better be ready for a change! 

A common term associated with startups is a pivot. This is where the entire focus of the company suddenly shifts through trial and error. One week you could be designing a fast-food delivery service, the next week a healthy snack box. Some startups go through numerous pivots before finding a successful business model. This is just something to keep an eye on when working inside one as constant pivots could be the company is struggling to find a sustainable business model.

According to an article in FastCompany, 75 percent of venture-backed startups fail. I’ve even seen this number as high as 90%. Failing today in business is seen as part of the process and many startups bite the dust. A Venture Capitalist will spread their money across many different young companies in the hopes that just a small number of them hit the big time.

The top reason for failure according to Fortune magazine is that “They make products no one wants.” As a designer, it is your job to make sure that the company follows the user-centered design process and puts the customer at the center of the business. If your company creates something amazing but at the end of the day no one needs it then it’s doomed to fail. 

If you’re ready for a gamble and prepare to take on possibly the most important job inside a new company then a start-up may be for you. For more information on startups check out Wired magazine, they have great information and are always looking at new companies.

Ok so now we have looked at the big 3 options you have when choosing where to work. In the next section, we are going to go a step further and find out how you will be employed. There are 2 options here, freelance or permanent and there are some massive differences. You’ll want to understand the pros and cons of both before choosing as this will affect your career and dramatically your income. See you there! 

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Ali Ariya
Ali Ariya

wanted to say that some of the videos that after you finish watching them, still says in progress and won’t get it ticked off

Magdalena Škardová
Magdalena Škardová

Antony , thank you so much for this free course. I am a total newbie in this industry but trying to learn as much as I can:)