Saturday, December 03, 2005

Comparing companies

I've recently been studying companies in an attempt to determine the best company to work for. One of the most interesting things that I discovered was that it varies depending on your risk/reward tolerance. To better represent these differences, I broke down companies into a number of different categories, or tiers. Companies across tiers cannot be compared because they have a different risk/reward structure that appeals to different people. Instead, only companies intra-tier can be compared to find a "best".

Tier A - These are start-ups. They are usually in someone's basement or spare room. They have a HUGE risk and can go boom or bust. Most often, they don't even last a year. They require long hours and the ability to live a few weeks without a paycheck.

Tier B - These are larger private companies. They either have not or do not want to go public. However, they are also more established so that the risk is not as large, but the reward is not as large either. They still require long hours, but can be very rewarding financially and socially.

Tier C - These are fairly new public companies; those that have gone public in the last 3 years or so. They still have the chance of doing great things, but much of the initial gain is gone. In addition, their beurocracy is starting to take shape and the system will disolve into process over the next few years. The risk is still there, as public companies can disolve or be bought out in their early, formative years. However, the risk is less than a Tier A and many Tier B companies.

Tier D - These are stable public companies. Usually these companies have a global name and produce hundreds of millions, if not billions, of dollars of revenue. The company is process laden and hierarchical. The ability to make money is diminished to a much smaller chance and the risk is very small as well compared to the other tiers.

Tier E - Government jobs. The reward is your salary and pension. The risk varies, but is often low. Typically, it is a process laden (burdensome) job and nothing more.

Each tier is attractive to different people. There is no point in comparing across tiers except to find the tier you want to work in. Once that is done, you should seek out companies in that tier and compare them. Are they market saturated? How is their health insurance? Is their stock going up or down? What is their pay rate? How many different things can you work on? What are the chances of movement, both with technology or people? Do they value the same things you value? Do you respect their leader?

All of these questions need to be answered in order to lead you to the right company for you, but don't get caught up in comparing cross tiers, for that way lies madness!


Mark Staggs said...

Good theory, but it needs a bit of modification. I would say that many companies don't fall exactly into a specific tier. What if the company is several years old (not a start-up) but isn't quite into the large private company tier? What's the distinction between a large private company and one that's just gone public? What about small public companies? I think things get more complicated than what you put forth here. This is what makes comparing companies difficult--no company is clear cut. I think it's more of a gradient, and figuring out where on that scale a company is, is the key.

Tanton said...

Yeah, there is a definite gradient. However, I think the gradients are within the tiers themselves. For instance, if a company is several years old, but isn't quite a large private company, then it could be at the top of Tier A or the bottom of Tier B. It is up to the person doing the comparison to pick which tier to place it in. The tiers are just meant to be guideposts, not absolutes.