The Software Engineer's Path: The Good, the Bad, and the Ugly of Working in Startups, SMEs, and Corporations

by Pablo for Alto . A special thanks for the collaboration Bernarda Nieves , Maximiliano Raffetto , and Bruno Cascio

In the software industry, software engineers and experts regularly face a crucial career decision: where to work? This decision encompasses more than employment; it involves considerations like the length of projects—should they be short-term or long-term? Should they seek full-time or part-time positions? Another significant consideration is the type of industry: should they choose one in which they have experience and can immediately contribute, or should they explore a new field where they can acquire substantial knowledge and apply their past experiences?

Furthermore, this decision ultimately involves choosing among vastly different environments—startups, Small and Medium Enterprises (SMEs), and large corporations.

In March 2024, we conducted a survey at Alto among software engineers , highlighting their preferences: 50% favored startups, 18% chose SMEs, and 32% opted for large corporations. This reflects the varied inclinations and career choices within the field.

Drawing on the parallel of "The Good, the Bad, and the Ugly" (a Western film directed by Sergio Leone), we will analyze the good, the bad, and the ugly aspects of working in each type of company using statistics and testimonials from Bernarda Nieves (Lead PM), and Maximiliano Raffetto and Bruno Cascio (both full stack engineers with + 10 years of experience each). All three have worked in each type of company, providing a great perspective.

Startups??

The Good:

Accelerated Learning: Startups offer an intense and rapid learning environment. Given the small teams and less specialized structures, engineers must take on various responsibilities and learn on the fly.?

Maxi explains, "In startups, you're really trained for warfare. If you survive, you gain a broad range of skills. Plus, the agility in methodology allows for strong personal bonds and a dynamic work environment."

Impact: In a startup, each member has the opportunity to directly influence the direction and success of the company, which can be highly rewarding.

?"Working in a startup means close-knit teams and rapid pivoting which fosters varied skills and individual growth. Seeing a company grow from the ground up is incredibly rewarding," says Bernarda.

The Bad:

Financial Risk: Startups generally offer lower base salaries and fewer bonuses compared to larger companies. Although they often provide equity packages, the risk of the company failing is significant.

Stress: The pressure to deliver results quickly can create a stressful and demanding work environment, characterized by constant context shifts and time pressures.

"The constant changes and lack of clear processes bring a lot of uncertainty. The financial instability and heavy workload can be overwhelming," Bernarda notes.

The Sobering Realities: Startups often lack specialization, which can lead to more superficial knowledge among their teams. Additionally, documentation and processes are typically minimal, and there is a high degree of pivoting in requirements.?

The Ugly:

Failure and Instability: Startups have a high failure rate, which can lead to difficult situations such as sudden and emotional layoffs, significantly impacting employees who feel deeply connected to the company and its product. From 2023 to the present in April 2024, we have seen many companies run out of cash and have to make layoffs. However, this issue is not unique to startups; it also occurs in the other two types of companies: SMEs and big tech firms.

Documentation, Processes, and MVPs as Final Products: Like any company in its early stages, there's a lot to be done. The downside is that, while one can observe the company's growth, it is also evident that issues starting poorly do not necessarily improve. As Bruno points out, "There's a lack of proper documentation and processes. Requirements often pivot, and the Minimum Viable Product (MVP) sometimes ends up as the final product, which can be challenging to maintain."

SMEs: The Middle Ground

The Good:

Validated Business Models. Let′s grow!: SMEs, including those transitioning into scale-ups after validating their business model, generally provide a stable environment with better salaries and a focus on organizing existing operations rather than just adding features. "SMEs combine the dynamics of startups with better salaries and a focus on organizing what already exists rather than just adding features," Bruno states.

Balance of Flexibility and Structure: SMEs offer a balance between the agility of startups and the organized approach of larger firms. They typically provide better salaries and place more emphasis on sustainable growth.

Bruno, comments on this: "SMEs merge the dynamism of startups with improved salaries and a focus on organizing existing operations rather than merely adding new features."

The Bad:

Resource Constraints: SMEs often face heavy workloads and limited staffing, which can result in operational challenges and reliance on outdated systems.

Bruno adds, "Legacy issues start to emerge, and frequent onboarding can further strain resources."

The Ugly:

Neither Fish Nor Fowl: Sometimes being in a category that is neither extreme—lacking both the adrenaline rush of uncertainty and the comfort of hyper-specialization—can be a factor that ultimately demotivates software engineers.

Corporations: The Structured Giants

The Good:

Specialization and Stability: "Big corporations offer the opportunity to specialize deeply in your field. There's a role for everything, which is great for learning and correcting bad habits," Maxi explains. Detailed processes in these firms allow for effective task delegation and operational efficiency, as noted by Bruno: "Big tech firms have specialized areas for specific tasks, allowing for effective task delegation and solid processes."

Defined Processes: Structured roles and detailed processes allow for effective delegation and efficiency in project execution.

Bruno dixit: "Big tech firms have specialized areas for specific tasks, allowing for effective task delegation and solid processes."

The Bad:

Bureaucratic Slowdowns: The size of these corporations often leads to slower decision-making and innovation, creating frustrations among employees used to a faster pace.?

Bernarda adds: "Everything moves slower in big tech. It’s more ceremonial, and methodologies can become stale. Plus, it's common to find yourself with downtime, blocked, despite what the roadmap suggests."

Lack of Personal Impact: Engineers in large firms may feel disconnected from the direct impact of their work on the end-user, leading to a potential loss of purpose. Or at least is more difficult to see the direct impact.?

Bernarda dixit: "Big tech can be inflexible and slow due to the many people involved. Roles are very defined, which limits learning diversity and creativity. It's all more straightforward without much room for creative deviations and personal impact within the organization."

The Ugly:

Politicking and Misaligned Incentives: Performance reviews can foster a culture of internal competition and politicking, which may not always align with the company’s best interests. Additionally, the subjective nature of some processes can reflect unfair outcomes.

So… which is the best path?

Disclaimer: Here comes my personal opinion, as Pablo.

As we have observed, each path presents its unique set of advantages and challenges.

When deciding between a startup, an SME, or a corporation, software engineers consider a multitude of factors—from personal growth opportunities and workplace culture to financial stability and career trajectory. Choices may also be influenced by personal life stages, with some periods being more risk-averse and others more conducive to taking risks.

Undoubtedly, for me,? the path with the greatest potential returns involves exploring all three types of companies and retaining the best aspects of each experience. After thorough analysis, one can devote more time to the type of company where they believe they can add the most value, learn the most, and feel the most valued.

I believe the path that can offer the most returns starts with startups and then moves to Big Tech. Based on this experience, one can decide whether to try working at an SME or a scale-up, stay in Big Tech, or return to a startup.

Thoughts?