Everyone knows startups are hot. Fueled by a strong seed funding climate and several well-publicized successes there is seemingly a rush to start your own company. I’m a big proponent of young folks (i.e. early 20s) joining an early-stage startups for a slew of reasons. Joining an existing startup is a great way to learn whole business works, have much more responsibility with influence on how a product evolves and often at little financial risk. But when I talk to smart, hungry young people who are gung-ho on founding a startup I want to offer a few words of caution as they contemplate their options.

This is by no means trying to say not to start a company but to have clear eyes about the risks and tradeoffs. For those lucky few who create a successful startup or are on the early team of a huge thunder lizard, congratulations! You’re living the dream, your ticket has been punched and you’re among the fortunate 1%.

  1. Learning Lessons the Hard(est) Way - My concern for intrepid startuppers is that they will pound their head against the wall learning what doesn't work but not necessarily what does. And while failure can be an excellent teacher, it isn't always. Failing to successfully sell a product doesn't automatically teach how to become a great salesman. If one's goal is to maximize learning then it might have been better served by working with a master of the discipline. At a minimum, make sure you have mentors and advisors that you deeply engage to avoid the first-time pitfalls.
  2. Beware the Burnout - If you're in the "Uninformed Optimism" phase of entrepreneurism it's hard to imagine why others would ever make the choice to work at a boring, staid companies when they could be their own boss on a mission to change the world. The halls of bigger companies have plenty of people who worked at one or two startups where they got burned and they got off the roller-coaster. The true serial entrepreneur is a rare-breed for a reason. Burnout is real even for the caffeine-fueled twenty something. Time is on your side but you'll likely only get to make a few bets, so make them count.
  3. Ending with Capabilities Better than Resume - This applies primarily to "business" people at startups who are founding a company in lieu of a more traditional MBA. When looking for the next gig all the hard work you've done won't necessarily be valued in the way you might hope. What a later-stage company needs is someone who is a kick-ass product person, or killer marketer, and so they discount the less relevant experiences you bring. Protect yourself by developing at least one core strength where you have demonstrated excellence.
  4. Digging a Financial Hole - The most obvious concern before founding a company is how you'll pay your bills. The risk is that many startups take years to break-even and fund-raising is much harder than the headlines on TechCrunch would have you believe. In the mean-time racking up credit card debt and missing out on income can shackle you down the line. Of course keeping your expenses low is crucial, but also know your financial limit so that you can pursue future goals (another company, travel, buying a house, etc).