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There’s no such thing as a “startup inside of a big company.”

This misnomer actively misleads both big company employees working in such teams as well as people toiling in actual startups.

Despite all best efforts to create megacorp “startups”, they can never exist. Here's why:
(And, by the way, I ran one of these “startups inside of a big company” myself and at the time thought it was basically a startup.

We had a cool name. We were small, lean, and agile and dreaming about the future and had a $50,000 3D printer. This was not a startup. I was wrong.)
1) The most fundamental, pervasive background thread of an early-stage startup is that when it fails, everyone has find a new job. The company is gone, kaput, relegated to the dustbin of Crunchbase.

The company literally lives & dies on the work every employee does every day.
On the other hand, early-stage work that any 20-person “startup” team does inside of a 50,000 person company can’t cause that entire company to fail.

The physics dictate that it is impossible. (It is also why some people prefer the stability of big company jobs, and that’s ok!)
2) In the startup community, early-stage failure is often tolerated and even celebrated.

People understand what an accomplishment it is to have built a startup and are eager to hire people for a next gig. Failure is a badge of honor and is seen as eventually leading to success.
In many big companies, on the other hand, taking a risk and failing often puts the stench of failure on the people who tried, leading to career stagnation at the hands of those who chose the “safer” path of sticking with the cash cows that are going to make money no matter what.
3) Big company “startups” start off with the existing infrastructure of a megacorp. The company provides snacks and drinks. Someone takes care of custodial, finding you office space, makes sure you have sweet conference rooms, benefits, hardware, access to software and services.
In fact, in a big company “startup” you often get the coolest space and the best perks.

Teams are set up in a “garage” or “innovation lab” decked out with modern amenities, cool showcase design elements, and state-of-the-art hardware and workspaces.
In a real early-stage startup, you are taking out the trash yourself. If you want a drink, you buy it. You build your own desk.

This can actually be a fun part of startup life; it teaches you to take less for granted and creates a tangible sense of ownership in the company.
True story: We once wrapped an ethernet cable around the outside of our high-rise office building like a clothesline from the 19th to 18th floor to get internet to our sales team.

I bought the cable bulk from Home Depot and tried to pick a subtle color so we wouldn’t get caught.
These all seem like small things, but creating a functioning, humane workplace for people to do great work can take a lot of time, thought, and resources.

Emulating the startup “garage” atmosphere inside of a big company is all of the glamour without all of the garbage.
4) A big company “startup” product is sold and promoted with the resources of the big company behind it.

Even if you are a “just” a 30-person team, when you do Fast Company to show the cool thing you incubated, it’s with the implicit megaphone of a Google or Facebook behind you.
You’ve got a field sales team ready to sell what you’ve created. A marketing/PR engine ready to promote it. The name, goodwill, and trust that your company has created with customers.

These are all incalculably valuable, and often forgotten or taken for granted.
As someone who made a transition from a big “center of the tech world” company to founding a company, I didn’t realize how much I assumed that when we created new stuff, the world would pay attention to it.

No such luck. In the startup world, you have to hustle for every story.
5) Hiring in a big company “startup” is often more like a draft, where you get to pick the “best & brightest” from other teams to rapidly fill your headcount.

Teams can quickly ramp to 30, 50, 100+ people, with plenty of money to pay them and loads of readily-available talent.
Startups, on the other hand, have to put much more effort into building their teams. Every hire is from outside the company. You have to sell people on your vision, the ambiguous role, that you will still be around to pay their salary and health care in six months.
Real startups naturally attract people willing to embrace the risk/ambiguity in return for bigger challenges, autonomy, faster learning, and more ownership/upside.

When I read megacorp resumes that say they work “in a startup,” I try not to judge. They don’t know how it sounds.
All of this is not to say that “innovation teams” inside of big companies shouldn’t exist, or that they are bad places to work.

These teams might well be fun, with smart people and great perks. They may produce interesting products.

But they are certainly not a startup.
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