The neo-startup

13 February 2015
Although it was to some extent by accident, one of my major circles of contacts is people from the IT start-up scene. While I don't regard myself as start-up material, previous companies I have worked for have given me a taste of what it is like to work in such an environment. The main one that springs to mind is my previous company, which although not actually a start-up, was also not that many steps away from being one. In discussion I have referred to them as neo-startup, and felt that a formal elaboration was needed.

My own experience

My previous company was not a start-up, since it had been going for quite a few years before I joined it, and hence it had an established customer base. However it still had a lot of the traits of a start-up. The two main ones are the cash-flow panics, and the relative lack of formal procedures internally:
The panics
Neo-startups may have a customer base, but keeping them is not any less effort. Even if this is not the case, revenue is erratic rather than regular, and this leads to the type of work crunches that make burnouts.
The informality
Because things like Brooke's law are still far from kicking in, business processes are still treated as an art. My article on living dangerously elaborates on all of this, and how it can go sour.
The overall result is a roller-coaster. On the one hand there is a lot of scope for keeping things interesting, but on the other when things get tough they are as hard as nails. Aside from possibly better fire-fighting experience, these are all things that young start-ups also go through.

Work-life balance

You work, or your life hangs in the balance. Anyone who joined a small company in 2009 or 2010 understands, because back then hanging on by the fingernails was a way of life. In fact looking up the publicly available portions of my then-company's accounts made me realise how much of a close shave at least one point of my time there was. There were times when I stayed at work until a feature was complete, because I knew that if I didn't get it done, I would likely be finished before long. It was not the Dilbert-esque threat of being sacked - it was knowledge of the whole company going the way of the Titanic. One of my then-bosses had put his house on the line because post-crunch rules about “risky” bank lending gave him no choice, so his stress levels were certainly no lower than mine.

There are a lot of people out there for whom their start-up is a second job, including one I met last week who said he had just got his first big customer, and another who plans to quit the day job as soon as his start-up breaks even. A lot of such start-ups begin as a project on the side, and as a result taking it full-time is a massive personal risk. The casualty rate is predictably very high - information relayed to me about business incubation funding is that around 90% of ventures fail within the first two years, and that is just those that somehow manage to get grants. The neo-startups are the ones that survived infant mortality, but that does not means they are out of the woods.