When you consider employer’s growth goals & vision, Tech companies’ IPOs have been fraught with turmoil in recent years. Consider Uber’s drastic valuation drop, Peloton’s disastrous debut and WeWork’s financial debacles, to name a few. These three companies have something significant in common: despite going public, they still aren’t profitable. And the workers they and other tech companies employ, from engineers to senior leaders, often haven’t considered the impact a company’s failure to turn a profit can have on them.
As the global economy has grown over the past several years, so too has the availability of investment dollars. In 2018, venture capital financing reached $254 billion (€230 billion) globally, up from $174 billion (€158 billion) in 2017. Investors are rushing to put their money into start-ups. And that’s led to many tech company leaders burning though cash without an eye for their long-term vision. They didn’t hold up the implied moral contract of employment — that a company should provide protection and stability to its employees.
The phenomenon of unprofitability isn’t unique to Silicon Valley giants like WeWork and Uber — take Northern Ireland and Mexico, for example. In today’s tech environment, companies are founded with the goal of quickly developing a product that can rapidly anchor value and be sold to the first interested party, even if the company is losing money. They’re focused on short-term gains rather than long-term success, sustainability and market domination, and tech workers often pay the price.
Many of these high-flying start-ups sound like exciting opportunities. Who wouldn’t want to work on the next big thing? But the reality is that a failure to focus on long-term stability and profitability can have devastating impacts on employees’ careers and financial well-being. Over time, they typically pay the price of poor planning.
Employees who are laid off need to not only find a new employer, but also re-establish themselves in a new organisation with new career paths. They’ll need to do so quickly. With cash-burning companies sometimes paying higher-than-market rates due to the desire to recruit top talent, employees often take on mortgages and other financial commitments that can be hard to sustain without an over-inflated income.
Given the increasing fear of a recession, which is likely to dampen the outlook for job seekers, employees must demand sustainable, linear growth from their employers. Here’s how:
- Look for a company with purpose and vision. When you’re researching a potential employer, try to uncover its purpose and vision. These pillars of long-term success are the first sign that a company isn’t short-sighted. If it’s unclear from the company’s website, ask in your interviews. Organisations that are passionately dedicated to achieving a faraway goal are likely to be invested in empowering employees’ success, since employees are critical to reaching business goals. Organisations focused on purpose and vision are also more likely to be doing the financial due diligence needed to achieve long-term goals.
- Research potential employers’ spending habits. Read recent headlines, and look up prospective employers on Crunchbase to get a sense of how a company invests its money. Does it seem like it values the investment it receives and puts it to good use? If not, you might be better off looking elsewhere. Remember: Unprofitable companies might not be around long-term, but your expenses and career will be.
- Identify companies that bootstrap instead of taking on outside investment. Organisations that expand without taking on debt or capital investment are less likely to fall victim to unnecessary spending. Bootstrapping can also be a sign that leaders are highly invested in the business concept and model. Because bootstrapping requires a personal interest and investment from day one, leaders of bootstrapped organisations are more likely to stick around for the long term.
When it comes to the long-lasting viability of companies, if it seems too good to be true, it probably is. By digging into potential employers’ growth goals and organisational values, employees can better set their own careers up for success.
Source & Copyright: Forbes / Giancarlo Di Vece – Image: Pexels