A 20 Million Dollar Lesson - Reader Digest Edition

After “A 20 Million Dollar Lesson” is published, I got a good number of feedbacks from you all. Thanks for those who shared their thoughts with me, and I am taking the liberty to share some of the feedbacks here so that the rest of the readers would be able to benefit as well.

Meanwhile, in the interest of time, I have consolidated, organized and grouped all the relevant feedbacks under a few short paragraphs for easy reading. Enjoy!

Nowadays, working in big companies is not the same as that of 20 years ago where employers did take care of the employees for their retirement. What Mr. X experienced is more of the norm than exception. The only pros about working in a big company is to take advantage of its resources to polish our skills and prepare ourselves to venture into a fast pace startup so that we can leverage our time to create maximum value.

However, what is most commonly found is that the longer one stays and works in big companies, the less competitive one is to earn a job in the small to medium sized companies where most of the innovations are borned.

In regard to if Mr. X should go with the offer or not, it has not much to do with whether the company is a bubble or not, but more to do with taking calculated risk based upon opportunity cost analysis.

It is fairly straightforward to size up the cost of staying with a fortune 500 company. As long as the overall compensation from the startup in question is not too far off from what Mr. X was making, and the startup has some legitimate funding sources and business model, (that is, the company is not likely to shut down in the next 6 to 12 months due to cash flow issues), the calculated move is always to go for the one with the higher future payoff.

In fact, the risk for joining a startup can greatly be mitigated by researching the backer of the startup. If it receives funding from reputable venture capital firms, it pretty much speaks for itself.

Why?

High quality venture funds usually have a team of very high quality staff who have in-depth knowledge within their own specialty to scrutinize the deal. The startup that eventually made it to the term sheet and successfully got the sign off from the general partners not only has a very good chance of showing a profitable exit but also gets the venture capital aurora to attract great talents and storm through the bad weather in case it runs into any short to mid term cash flow issues.

Simply look at the track record of the backer and it should serve as a decent indicator of where the startup would land in a few years.

Last but not least, missing out on a great opportunity shouldn’t prevent Mr. X from trying again. While Mr. X was working in the big company, he should keep polishing himself and keep looking out for the next promising startup to join.

All in all, we should not only prepare ourselves for opportunity, but also actively go out and create opportunity for ourselves!

   

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  1. A 20 Million Dollar Lesson
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