Startup Lies Part II – “Work For Us, Because We Give Unlimited Vacation Time! Also, Have Some Free Pizza!”

Startups evoke images of a type of “freedom” you wouldn’t otherwise experience in a normal job.

There is of course a lot of truth to this. Startups allow you to tackle an overlooked or undervalued problem. It allows you to tackle the problem via unorthodox means. If you are an employee at a startup then it certainly does allow you to spread your wings. Instead of being a “code monkey” you could go into product management or work more in the backend or frontend and you could have a large say about the direction of the startup.

All of this stuff is definitely true.

What’s not true is that working for a startup is easy or fun.

Just to clarify, it can be fun to work in a startup – if by fun we mean working very long hours to solve a technically very difficult problem that will bring a lot of value to many peoples lives.

But people conflate this type of fun with frivolities that large tech companies advertise.

Everyone has heard of companies such as Facebook or Google giving their employees free food, onsite gym access, free pizza, time off to work on personal projects and unlimited vacation time (popularised by tech companies such as Netflix). All of this makes it sound like startups are like some kind of non-stop party.

They are not.

The question one must ask themselves is; why would a company provide you with so many perks?

And the reason becomes insanely obvious when you look at it from the perspective of an employer.

If you were Facebook you would want to lure people into your company because you wouldn’t want your competition (e.g. Google) to get that talent and you really wouldn’t want engineers to create their own competing startups either. Much better to try and lure them in with the promise of free pizza and vacations.

The thing is that these perks sound nice until you’re on the inside. Perks such as free food and “sleeping areas” are designed to keep employees working in the office for longer and longer hours. It’s not necessarily there for the well being of the employees and to make them happy. It’s there to squeeze as many hours and as much labour out of the employee as possible. Why go home if you can sleep and eat at the office? Why work on your own, possibly more interesting side projects if you have dedicated time to work on your own projects (the rights for which will be owned by the company you are working for)?

And what about the ultimate perk of unlimited holidays? It sounds wonderful doesn’t it? Imagine if a family member is unwell or you’re just not feeling that great or you feel like taking a month off to go travelling. Wouldn’t it be great if you could just take some time off?

But in actual fact, unlimited holidays have the opposite effect of what you might think. In reality people end up taking less time off when they have no allocated vacation time. The reason behind this is because if you are the one person on your team that takes time off when no one else does, then you are the lazy one. When it comes to evaluating performance and you’re the one who took off more time than the others, do you really think that you’ll get promoted?

Never underestimate the power of social pressure. People generally don’t want to be looked down upon by their peers. In reality having allocated time off is better for the employee because you are expected to take time off, you won’t have the feeling of guilt of taking time off and it won’t effect you getting promoted.

Another reason why unlimited holidays suck is that it gives companies the ability to fire you with less repercussions. In traditional companies if you wanted to leave and handed in your resignation letter or if you got fired / made redundant, then your employer would have to provide you with paid vacation time while you get back on your feet. But guess what! If your company provides unlimited holiday time with no specific time off allocated in your contract then they don’t need to give you any paid leave. You’re just left to fend for yourself with no income while you try to frantically find your next job and the company gets to save a ton of money!

As a founder, what also irritates me is that I see other founders fall into the trap of providing these “perks” without having a proper understanding of why larger companies / Silicon Valley companies / VC backed companies provide these perks, what the implications of these “perks” are and what a hugely negative impact they generally have on employees. Most founders start off honestly trying to do good in the world. However, by copying others without understanding why they are likely making things worse for themselves and their most valuable asset; their employees.

Another reason why these “perks” can be misleading, is that early stage startups often conflate having “perks” with being a successful startup. They see Google providing dinner to their employees and so they think “this must be why they are successful”. When in fact it has nothing to do with success.

Peter Thiel has spoken about this in the past. He was one of the founders of PayPal which got sold to eBay for $1.5 billion. Many of the original team members from PayPal went on to create other very successful companies. Elon Musk went on to create Tesla and SpaceX. Thiel went on to create Palantir and three former PayPal employees went on to create YouTube, for example.

When Thiel has been asked why so many former PayPal founders / employees went on to be so successful, he says that they learnt that it is possible to solve hard problems with hard work at PayPal. He then has gone on to say that employees from other large companies (e.g. Google) don’t have this track record, because they didn’t learn this same lesson. Instead they get fooled into thinking that “perks” are the reason why companies such as Google became successful in the first place.

Here’s a novel idea; Instead of giving silly “perks” to your employees, how about treating them with respect, giving them generous paid vacation time, giviving them reasonable hours to work every week and giving them a good salary so that they can afford their own food (or whatever else they want to spend that money on). Crazy isn’t it? But it might just be crazy enough to work!

Next week in “Startup Lies” we shall discuss why “publicity” when it comes to startups is actually BS.

This was part two of “Startup Lies”. Part I can be found here: Startup Lies Part I – “I Need Capital”