Leaving A Startup: It's Not Me, It's You

Written By: admin_onstartups.com admin_onstartups.com October 23, 2006

In my first startup I founded, I got really lucky.  Most of the individuals I recruited were both extremely competent and extremely loyal (mostly to me, as the company didn’t have a particularly motivating mission).  As such, our attrition rates were really, really low (particularly for the time, since we were living through the Internet boom years).

But, that was an anomaly.  Now, having been involved with several more startups, I recognize that replicating my first success in hiring is unlikely.  But, I don’t want to write from the perspective of the entrepreneur – but rather, the startup employee that is faced with the difficult decision of needing/wanting to leave.  Often, startup employees are very early in their careers and may not have had to face this issue yet.  Certainly, the relationship of a startup with it’s employees is often much deeper than what it would be in a traditional big company.

Leaving A Startup:  It’s Not Me, It’s You
The title of this article is what it is because I think over half the time, the issues between a startup and it’s employees in the early stages lie with the startup.  Sure, you can have employees that are non-performers, but more often than not, it’s about the startup, and it’s founders.  Let’s face it, there are a lot of dysfunctional startups and founding teams out there.  It’s often hard to detect this early on (and even when you do, you write it off as “eccentricity” and related to the fact that they’re doing some “crazy, innovative things”.  There’s a fine line between crazy and just crazy enough.  But I digress…

Here are some quick thoughts on leaving a startup, should that situation ever arise.
  • When you first start having concerns, the basic question you should ask yourself is:  “Is the problem with this startup – or am I just not suited for the startup adventure at this time?”

  • It is important to remember that just about every early stage startup will experience “near-death” events about once a year.  If it’s a very early stage startup, and bootstrapped, it will likely experience this about once a quarter.  It’s important to separate root problems in the startup vs. growing pains that are typical of any startup.

  • Founders can be an emotional, quirky lot.  When dealing with the loss of a key employee, it can be a particularly charged situation.  My advice would be to stay calm, rational and objective.  If one of the founders is truly way, way off and does not deal with the situation professionally, it will likely just validate your decision.

  • It is important to understand the terms of your contract.  If you didn’t read it when you signed it, you should definitely read it now.  First, get a handle on the equity arrangement.  Do you have options that have vested (or will vest)?  What are the terms for these options?  When do you have to exercise them?  What’s the strike price?  What’s the fair market value of the startup?  What are the tax implications?  A lot of this often applies only if you’ve been with the company for a little while, as many vesting schedules have a “cliff” so that if you leave within the first year, no equity is vested).  Read as much as you can on the this.  Seek competent advisors.

  • Do you have another opportunity in mind already?  If so, make sure it doesn’t violate the terms of any non-competition covenant you might have with your current startup.  Most startup employees (including the founders) sign some sort of non-compete agreement that prevents people from jumping ship and working for a competitor.  The reasons for this are obvious.  Note:  You are not obligated to reveal where you are going or what your plans are (though if you have a good relationship with the team, this will often be brought up).

  • Make absolutely sure you do not “reuse” any of the intellectual property you created during your employment in your next gig.  This will be hard, as you feel a personal attachment to any code you’ve written.  This may not seem like a big deal at the time, but it can become one later.  It’s just not worth it.  Start “fresh”.  Buy a new laptop and migrate only your personal files off the old one supplied by the company.

  • It goes without saying, but I’ll say it anyways.  It’s important to try and leave on the best terms possible (without compromising on the important terms of your deal).  Startup-land is a very small land and chances are the next startup you’ll be going to will somehow know the people at this startup.  Try not to burn any bridges. 

Summary of my points:  Make sure you understand the reasons why the opportunity is not working out.  If it’s a problem you have with startups in general, you’ll likely have the same problems at the next one.  Understand your rights – and obligations based on any legal contracts.  And, keep a level head.  Leaving a company is rarely easy – and leaving a startup can often be like breaking off a personal relationship.

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