November 28, 2006
@ 03:09 AM

Auren Hoffman of RapLeaf has a blog post entitled Why big high tech companies are losing the talent war where he writes

In today's hot startup market, it is essentially irrational to join a big company. That means that big companies are only attracting “B” and “C” players or they are attracting irrational A players. And they are losing all those great “A” players they hired in the dog days of 2002 (most of which now have fully vested stock-options).

Essentially, when the economy is good and massive amount of startup activity is happening, the big companies suffer. Just think about it…when you see the Google $1.65 billion acquisition of YouTube, does that make you want to work more for a Google or for a potential YouTube? I venture to guess that you’ll want to go out there and work for startups like POSTroller and [Disclosure: Auren is an investor in POSTroller and is on the advisory board of and both companies are looking to recruit “A” players right now]

Now there are some rational “A” players that are still going to large companies. In order to recruit rockstar engineers, companies like Google significantly increase the pay and offer too many perks to list. And some people have their own reasons to join these tech companies. Niall Kennedy, a true “A” player, joined Microsoft last April because he wanted to be at the epicenter of the PC user experience. Like a scientist attracted to a university with great resources, Niall was attracted to Microsoft not to make a personal profit but to build true, long-lasting innovations. Unfortunately Niall left four months later when he realized corporate bureaucracy can stifle innovation.

I disagree with the core premise of this post but it did get me thinking about how to differentiate the typical employee at a big company like Microsoft or IBM from the typical person who joins a startup. After watching a couple of people leave Microsoft for startups, I think I've put my finger on the core difference between the kind of people you see toiling at a startup versus the ones you see as faceless cogs in a giant corporation. There are basically two kinds of people that you'll find a lot of at large software companies like Microsoft and IBM but rarely at startups

  1. The Indentured: For example, all those foreign workers on H-1B visas
  2. The Risk Averse: For example, the kind of folks with a spouse, kids and/or a mortgage.

After a few years of watching people, these are the actual differences I've seen between startup folks and corporate ladder climbing types. It's not some silly distinction as to whether the person is an "A" player or not.

An interesting consequence of this difference is the culture of the work environment. A place full of people who don't want to rock the boat because they are risk averse or indentured isn't the kind of place that will produce a project as fundamentally risky as YouTube. Even though all the big Web companies had online video offerings from MSN Video to Google Video, it was YouTube that won. How? By doing things that the typically cautious, risk averse folks in big companies like Google and Microsoft didn't consider like allowing user uploaded content and not bothering to have an "approval" process to ensure only appropriate videos showed up. YouTube was clearly a lawsuit magnet of the sort that would never fly at a big company.

That is the difference between startups and big technology companies