When you first learned to code you probably dreamed of working for the best companies in the world, utilizing bleeding-edge technology, solving complex problems, and creating products that would change the world. You can do all this and more working for FAANG or with startups. But which is the best route to take?
Today we’re taking a look at the pros and cons of both FAANG and startups; we’ll compare compensation, company culture, and personality types that thrive in these environments, and much more to help you make the best decision for your career.
As a software engineer, there are many career paths you could take to be successful. Chances are, when you decided to major in computer science you were studying with the dream of working in one of those cool companies with bean bag chairs, a ping pong table, and an opportunity to develop the next big thing. But does that really bring happiness?
According to a study done by Angel List in conjunction with Blind, startups and FAANG companies both have happy and unhappy employees. But startups have 30% more happy employees than their larger competitors. We’ll share more about that later.
Let’s first break this topic down into its basic pros and cons before we jump into the real meat and potatoes.
PROS of working for FAANG:
Let’s be honest, it’s really cool to say, “I work for Netflix”. One of the top reasons engineers want to work for FAANG companies is the prestige of having a large brand name on their resume. FAANG technical interviews are notoriously difficult, so you’ve earned your bragging rights if you’ve gotten in and managed to stay there a few years. That’s definitely a gold star on your resume.
This may seem obvious but FAANG companies aren’t going anywhere anytime soon. Google’s been around for over 20 years and looks like it’s here to stay for good. There’s no fear that the company is suddenly going to collapse or lose a major contract and go under.
Money, Money, Money
FAANG companies have deep pockets. The money to pay you the big bucks and the money to invest into great tools and tech for you to do your job in the best possible manner. It makes a difference knowing you’ve got access to the best tools available and you’re working with one of the top players in the industry. What could be better than that?
CONS of Working for FAANG:
A COG IN THE MACHINE
You may have all the prestige of saying you work for a FAANG company, but what is it you really do? Due the large number of engineers that work for big tech companies, the scope of your work will be much more limited compared to what you would work on at a startup. You’ll rarely get to work on a project from start to finish and see your ideas implemented at the scale you would at a startup.
You have 1 job… literally.
YEARS OF EXPERIENCE? OR THE SAME EXPERIENCE, FOR YEARS?
Similar to our earlier point, but a little different. Many engineers feel like working at a FAANG company will open doors for future career opportunities. While the name brand may help, consider this… Are you really learning and expanding your skillset? If you aren’t being challenged and wearing multiple hats, how will you know where you really shine?
When you show off that resume with 3 years of experience at FAANG, how many accomplishments are under your job title? What was your impact?
GOT A CASE OF THE MONDAYS?
It truly is a feather in the hat of an engineer to work at a FAANG company but after the initial excitement of getting to update your ID badge and LinkedIn page wears off, are you still excited to go to work on Monday?
A study was recently conducted to assess happiness and motivation among employees at FAANG companies and startups. The findings may surprise you!
Google had over 45% unhappy employees, Facebook had 48%, Apple 50%, and Amazon had 58%! The outlier was Netflix with 11% of employees unhappy and a whopping 89% happy.
Overall, employees at startups reported being 30% happier than employees at FAANG companies.
Aside from Netflix, you may be genuinely happier working at a startup.
When working at a startup you get to be hands-on in many different areas. We’ll quickly discuss 3 of them.
#1 Startups often allow software engineers to pick the project or aspects of a project they want to tackle instead of assigning tasks without buy-in.
#2 You have the opportunity to see a project develop from concept to completion. You’re not a small fish in a big pond when working in a startup but a big fish in a small pond where your contribution matters.
#3 As the team grows around you and other core engineers, your input may be needed for future hiring decisions. You may be able to significantly influence the development of the engineering team.
Overall, at a startup you have the opportunity to take ownership of your work from start to finish, see how a product goes from ideation to production, and the ability to shape the work environment and culture.
That’s incredibly valuable experience for a software engineer!
Part of the Vision
Most engineers that choose to work for a startup pick a company that seems to be stable, has a good plan in place, and most importantly has a strong vision. This is your opportunity to align yourself with a company that’s motivating for you on a personal level. You can contribute your skills to a cause that means something to you or solves a problem you actually care about.
While FAANG may have cool game rooms and free lunch onsite, it isn’t very cool to be restricted to refactoring someone else’s code or fixing small bugs all day. In a startup environment you have the opportunity to work on different parts of a project and experimentation is encouraged.
Want to create the next internal service in a new language? Why not? Want to create your own hybrid framework based on standards you’ve implemented on your engineering team? You can make these kinds of changes and tackle different problems all the time in the fast paced culture of a startup.
Significant Opportunities for Career Advancement
Because startups aim to scale rapidly, there’s plenty of room for advancement. Since the teams are usually small there is a much higher probability that your talents will be noticed as compared to being an engineer at FAANG. You’ll also have ample opportunities to improve and develop your skills as you tackle different challenges, wear multiple hats, and take on different roles.
A startup will need tech leads, engineering managers, or a CTO as it grows and adds more structure. Why not you?
HIGHER REWARDS COME WITH HIGHER RISKS
All of our earlier points may sound great but keep in mind that startups have a high failure rate and are not for the faint of heart. Best case scenario: You join a startup, you get to work on amazing passion projects, your talents are recognized you have a great base salary plus equity, the company grows and grows until it gets acquired or goes public and you end up with amazing stock in the next unicorn and get to tell the story of how you were there in the beginning!
Worst case scenario, you join a startup, you get the same great base salary and equity, you work on the same passion projects and picked up some valuable skills, but this time the company fails due to a lack of product market fit or other oversight – so that equity doesn’t amount to anything and you need to look for another job.
How unfortunate for you, it’s not like you work in one of the most in-demand careers in the world and have recruiters calling you every day, practically begging you to entertain new opportunities. Finding another job will surely be impossible…
Startups have investors expecting results and it’s absolutely critical that the company performs and meets its short and long term targets if it wants to survive. This may mean pulling some all-nighters, occasionally working through a weekend, doing tasks that aren’t really in your wheelhouse, and anything else it takes to get the job done.
Since you aren’t just a cog in the machine, you are depended upon to get the job done. It may not be all the time or every week, but you can expect a few stressful periods as deadlines approach.
“Startup” is a broad term these days covering everything from a fledgling company with no backing and no product, to companies with billion-dollar valuations, backed by over $100 million in VC funding, otherwise known as unicorns. Contrary to popular belief, many startups can often match or beat the salaries of FAANG companies and are willing to do so in order to compete for talent.
The vast majority of startups offer equity in the company in addition to the base salary. The equity in the company could turn out to be a major win if the company sells or goes public.
For example, Coinbase, the popular cryptocurrency trading platform, recently went public. They gave all of their 1,700 employees 100 shares before its public listing. On opening day the stock was priced at $250 a share and each employee immediately had $25,000 worth of shares.
Another example is Zoom Video. Once upon a time they were a small startup with less than fifty employees – today, they’re a household name and the number one platform for video meetings.
Equity grants for engineers at startups typically varies between 0.1% and 0.5%. At the time it went public, Zoom Video was valued at $9.2 Billion. At 0.1%, your equity would have been worth $920,000. At 0.5%, your equity would have been worth $4.6 million.
What are your chances of getting a payout like that at FAANG?
WHERE DO YOU FIT IN?
So is it better for you to work at a FAANG company or a startup? Well, that largely depends on…YOU.
When interviewing, it’s quite common for both engineers and hiring managers to talk about “culture fit”. But what does that really mean? Culture fit is when a person’s beliefs, values, and behaviors align with that of the company.
However, it seems like many companies today have very similar mission statements and company values. How do you make a decision?
Know Thy Self
Different personality types thrive in different environments. In general, people who do well at FAANG or large tech companies prefer a structured environment with clearly defined tasks, roles, and procedures. These individuals are risk averse and greatly value predictability.
Predict the Future
Think about what you want 2 years from now, 5 years from now, and 10 years from now. Is it your personal goal to become a CTO or would you prefer to be a team lead at a large and well-known company?
Know your career goals but also consider how they’ll affect your life and family. Being a CTO may be very rewarding in your late 20s or 30s but in your 40s with a family you may find it’s more stress than you really want. Consider the best overall path for yourself and then pick the best vehicle to get you there.
What Drives You?
Another major difference between individuals who work for FAANG and those who work for startups is their motivation. To work at a startup you need to be bought into the company’s mission, enjoy solving novel problems and working on projects that are often unprecedented.
While you may have a founding engineer or team lead to answer to, you’ll act fairly independently as there is less time for hand holding and training. When you join the team, you get to play! There are no bench-warmers on this side of the industry.
Engineers at FAANG companies are typically less motivated by the company mission statement and more by notoriety, a high salary, a structured work environment (having detailed process and procedures in place), and stability
Many engineers seeking mentorship and guidance enjoy working with FAANG companies as they will often have a mentor, manager, or team lead who is guiding their work and assisting them with their career path.
If work life balance is important to you then make sure to clearly define what that looks like before choosing to work for FAANG or a startup.
Contrary to popular belief startups don’t require you to work 80 hours a week and come in every weekend. Their relaxed vacation policies, remote work opportunities, and other benefits support a healthy work life balance, even when the pressure is on before a deadline.
You may think working for FAANG means punching in at 8am and punching out at 5 or 6pm but they too often have to pull a few long nights before deadlines. Due to the high demand for their products and services they often require engineers to be on-call to resolve issues that can arise at any time of the day…or night. Amazon cannot afford for prime shipping to be delayed or user interface issues on the app. Minutes of an issue for a company of that size could cost hundreds of thousands or millions of dollars in lost revenue.
How to Decide?
Consider the pros and cons carefully, consider your personality traits, and your career goals, then make the best decision for you.
Remember, if a move doesn’t work out, there are literally hundreds of thousands of positions open for software engineers at any given moment around the world. Perceived risk, in this case, is often higher than reality.
Of course compensation is another factor to consider. RSUs and Equity plus salary are difficult waters to navigate but we will give a quick explanation of what to expect.
Compensation for Senior Software Engineers at Facebook, Amazon, Apple, Netflix, and Google typically consist of a base salary of around $150,000/year plus RSUs (Restricted Stock Units). Usually the company will require you to work there for 4-5 years before you are fully vested and able to then either sell or keep the stocks.
At startups, compensation for Senior Software Engineers consists of a base salary that can range from $150-250,000/year, along with equity in the company. Startups, by definition, cannot offer public stock options, but they offer equity which can be worth anything from nothing to millions of dollars, depending on the success of the startup. It’s important to mention that startup equity also comes with a vesting schedule, so you’ll have to stick around to reap the full benefits.
Hopefully knowing this can help you to make a decision that best suits you.
We hope this article helped you learn more about the world of FAANG and startups!
If you enjoyed this article you may also enjoy How to Handle Salary Negotiation in Your Tech Career or Software Engineers: Here’s How to Make Your Resume Irresistible.
Kofi Group offers a multitude of resources to help you learn more, improve your career, and help startups hire the best talent. If you are interested in learning more get in touch today!