Working in consulting or a startup?
By: Brecht Verhoeve
Tags: Careers, Career Paths, Startup, Consulting

The differences between consulting and startups

1: Strategy vs. Execution

Strategy is perhaps the single most-used word in consulting. In management consulting, you’ll focus on solving a companies’ problems from a strategic point of view. These are questions like “What’s our strategy to enter the foreign markets?” or “Which innovation projects should we focus on to increase our revenue tenfold over the next five years?”. Most of my past deliverables consist of PowerPoint presentations and Excel models containing analyses, recommendations, and long-term strategic roadmaps.

It’s great to focus on the strategy part of projects since that’s where most of the big decisions for a company are made. However, strategy is only the tip of the iceberg of a project and a good strategy doesn’t guarantee a successful project. This hyper-focus on strategy can be a blindside in my opinion. This is especially so when consultants hide behind the strategy curtain in case of a project’s failure (it’s not their fault that the execution wasn’t done according to the strategy!).

When I entered the startup world, I quickly learned that the proof is in the pudding. As Robert Jordan puts it “Execution is everything”, and this is especially the case for (early-stage) startups. It’s a lot harder to convince investors to pour cash and time into your startup idea with slides detailing a five-year strategic roadmap than it is to do with a working prototype. Users are even tougher to convince. If a product is crappy, no one will want to buy it.

Some argue that execution matters even more than the idea. There are numerous cases of companies with very similar ideas that won over entire markets based on execution. When Facebook was conceived, the idea of a social network was old news. But through good execution and extreme growth, they were able to knock competitors such as Myspace out of the market.

2. Variety of work

One of the major benefits of consulting is the variety of work. Projects are fast-paced. You’ll change clients and/or industries every 6 months or so. During my time at Deloitte, I worked for 8 different clients across 3 different industries, each time on quite different assignments. This is also a plus if you’re not enjoying a project, since you can switch projects relatively easily.

Variety of work is the defacto rule for early-stage startups. Since there are only about 10 people, everybody has to chip in to do everything. You’ll often see job advertisements searching for people to “wear multiple hats”. This is startup lingo for saying you’ll have to do things not necessarily in the job description, such as furnishing the office, interviewing candidates, working on PR material, or writing blog posts. Early-stage startups need generalists that can do a bit of everything, later-stage startups will hire more specialist profiles.

The difference in variety between consulting and a startup I experienced is the level of detail and the context in which you work. In consulting you usually won’t get to the nitty-gritty details of a project because you’ll often switch clients and industries. In startups, you’ll always work within the same context of your company, but you’ll have a lot of variety in the types of work you’ll do. Sometimes you’ll have to dive deep into a subject in order to execute well.

Wearing multiple hats in practice

3. Finance & Salary

It’s no secret that consulting pays quite well. Although you’ll sometimes start out with a lower monthly salary than your peers in the industry, consulting firms usually offer fixed career tracks that include annual increases of up to 10%, and an end-of-year bonus that can be up to 3 times your monthly salary. Add to that the expense policies, fancy client dinners, and company cars, and you can start to see why consulting is financially interesting.

Smaller startups often pay less, since they have limited resources to work with. Usually, this is compensated with equity options which give the employee the opportunity to buy company stock at a certain agreed price in the hope of selling it once it goes up in the future.

They can be quite a generous financial incentive, especially if the company does well, but it’s good to remember that these options are only worth something if the company gets sold or does an IPO. Equity serves a double purpose; it’s also an incentive and a sign of trust to motivate the employee to build together on the future of the company now that she has a right to a part of it.

Contrary to popular belief, larger startups offer higher wages than established firms of the same size. According to a Yale study, younger firms might often pay higher wages to compensate for it being a riskier venture, even when the startup is of significant size.

4. Impact

“Making an impact that matters” is the company slogan of Deloitte. The idea of impact is an unchallenged belief in the consulting world; it’s an abstracted view of doing good, measured by the number of people impacted, profit generated, or an increase in shareholder revenue.

This impact however is deeply rooted in the faith that top-down action, orchestrated through well-designed strategies (Powerpoint slides) is the best way to do good in the world. From what we’ve learned in section 1, execution is everything, and you can quickly see that this belief can be flawed, as the actual impact is only realized through the concrete actions taken. I recommend reading this article which explores the topic further.

When I worked as a consultant I felt that there were projects where I definitely made an impact and others not so much. At one client I worked on the setup of a new big data platform for which they required outside knowledge. Since this is a quite direct experience — you’re designing and building something for your client — you can see this impact quite fast. On other projects, we were working on strategies that would only have significance in five years, if they were implemented at all.

The lesson I learned from this is that, as a consultant, you can make an impact, but it isn’t always the one advertised. Sometimes it’s only visible a couple of years after you delivered the work, sometimes your recommendations are ignored. But it’s definitely very rewarding to have a client following your recommendations and see the company evolve in a positive way due to your contribution.

Photo by Daniel Goosen from Pexels

In the startup world, impact has a very different way of expressing itself in my opinion. In most small teams, anything you do or change will have an immediate, visible impact on the company. Order a new fridge for the office — everyone uses it the next day, implemented a new feature — it’s used in demos or shipped within a week.

This can be a double-edged sword as well.

On the one hand, it can be tremendously fulfilling, since you immediately see the results of your actions. But this immediate outcome also implies immediate and direct feedback when things go wrong; which can be quite challenging and confrontational.

The same reasoning behind some impacts never being realized in consulting, can also be applied for startups. After all, how can you claim you made an impact on the world or the market if your company fails after a few years?

5. Team and culture

Team and culture can be a hit or miss in all work environments. Although companies try very hard to artificially craft a culture by coming up with a mission, vision, principles, a company’s culture is ultimately defined by the people that work there.

Consulting has a notorious reputation for having a very competitive, up-or-out culture, especially in the larger and more prestigious firms. Hours are long, commutes are terrible and you’re a cog in the big machine that is the firm.

As with all stereotypes, there’s some ground truth. Nowadays, most firms work hard to provide a work-life balance for their employees. The key lies in the word “balance”. From my experience, this implies that sometimes you have to chip in and work overtime to meet a deadline or finish a proposal. But it also means that sometimes you’ll get to leave early when there’s not as much work (like when you’re waiting for client data). And did I mention that consultants also play hard? With a lot of young people in consulting there’s a lot of partying, often expensed by the firm.

I also never felt like a number or a cog. As I mentioned before, most client assignments tend to be short, and likewise, the teams tend to be small(-ish) (5–20 people on average). If you’re good, the same people will want to work with you most of the time as well, giving you the opportunity to build lasting connections with your colleagues.

The high employee churn rate is a thing in consulting, albeit with a few caveats. First, many people choose to get out after a couple of promotions because of the exit opportunities that come their way, not really through being fired. Second, there are a few so-called “landing zones” which are levels where you can stay without promoting relatively long, such as senior consultant or senior manager. Finally, I didn’t experience that this up-or-out culture resulted in competition. Sure, there are going to be people that see it like that, but they usually don’t make it. Getting ahead in consulting is all about collaboration with your colleagues and growing your network, not by fiercely competing for a title.

Consultants do have a knack for joking about their work-life balance

I’d argue that in a startup the team you’re working with can matter more than the idea or product you’re working on. In the end, you’re only a couple of people, so you need to be able to collaborate and everyone needs to do their part. Otherwise, your startup is toast. When you’re looking to join a startup, pay special attention to the current team. What are they like? Do you recognize yourself in their passion for the product and the way that they work? Do you see yourself going above and beyond with this team? Likewise, when a startup is hiring they’ll make sure that a candidate is a great fit for the team. A bad hire is a huge cost for a company, but for a startup, it’s suicide.

The culture in most startups will be a lot more informal than in larger firms. Most of the time, nobody will bat an eye at people coming to work in a t-shirt or sneakers and those Pokémon socks you have lying around can be the next big fashion trend at work. But don’t let this catch you off guard, startup employees will work hard to outpace the competition. After all, you don’t disrupt industries on a 9 to 5 schedule.

6. Structured vs. Unstructured environments

I never really appreciated how structured Deloitte is until I left. There are defined team roles & responsibilities, clear escalation paths, a formal mentorship and career coaching program, regular performance reviews, available expense policies and budgets, and a clear career path. Any time you’re stuck on something there’s always an expert on the topic you’re working on somewhere in the company you can reach out to. Projects also follow a clear structure, from how the proposal is formed, which frameworks you’ll use to solve a problem, the format of your deliverables, to the way that you bill the client.

In contrast, startups, depending on the stage they’re in, might not have any of the above in place. When I first joined Qargo, I was the fourth person joining the team. We didn’t have an office to work from, we weren’t totally sure on which equipment we’d use to work with, and nowhere near the hierarchy of my previous company. This ambiguity on how you position yourself in the company and heck, even how the company positions itself, is a different kind of challenge altogether. I personally love this, but not everyone thrives in the chaos of early-stage startups.

7. Advising, selling, and reputation vs. delivery

As a consultant, your fundamental role is to advise companies on how to solve though problems. It’s important to be thoughtful and data-driven in order to deliver good recommendations. People say there’s usually barely any selling work involved until you move up the food chain.

I disagree with this. In consulting, you are the product the firm is selling. Therefore, it’s instrumental that you excel at selling yourself. You don’t only do this towards the client, but also towards other people inside the firm. The better your reputation, the more people want to work with you, the better projects you’ll get, and the faster you can climb the ladder. Of course, you’ll have to deliver results as well. But without a personal brand to accompany it, you’ll get nowhere.

Photo by Vladislav Vasnetsov from Pexels

This all goes out of the window when you join a startup. Yes, your personal brand and reputation are important for selling your product. But you actually have to be able to build and deliver it this time around. Not a single customer will give a crap about fancy slides or where you went to college if your product is broken half of the time.

You need to be able to get your hands dirty and execute well in order for the company to survive. You also don’t need to actively work on your personal brand inside the company as much, because you're not working to get promoted, you’re working to build a company. This can be quite an awakening for people coming from larger companies. It’s sometimes even the reason why some startup employees don’t thrive after acquisition by a large company.

8. Learning and growth opportunities

A well-known selling point of a career in consulting is the steep learning curve. You often need to learn a lot about an unknown technological domain or industry in a short amount of time in order to be useful on projects. The experience of working across all these different industries will increase your knowledge dramatically and at a much higher pace than employees working in a single industry.

Consulting firms usually back you with the budget and training programs, giving you the best fighting chance to be successful. This includes internal training programs, access to online learning material such as LinkedIn Learning or Coursera, access to books or newspapers, and even certifications.

These certifications are a big thing for consulting companies. For the firm, a certified consultant is a sign that they have the required expertise and this helps to sell projects to clients. For the consultant, a certification presents an opportunity to formally declare your expertise and these can help you out quite a bit later in your career. All this learning can be quite intensive, as you’ll be expected to learn a lot in short time periods.

It’s tough, but if you can keep up with the pace, it pays off massively.

Clients go mad for certifications so consulting firms will make sure you get them.

In a startup, you learn how to swim by getting dropped in the deep end of the pool. There usually won’t be a formal training program or budget in place to learn. You’ll need to work hard to get the knowledge you need to keep up with the problem you’re solving. You’ll often need to do this on your own time.

Startups are chaotic but above all they’re practical. Need to demo your product to potential customers but the product isn’t quite there yet? Create a mockup yourself in Figma or some other tool. If you don’t know how to use such a tool, figure it out. And you need to figure it out, or your product won’t get sold, which results in a loss of profits and ultimately in a dead company.

You can learn a ton in an environment like that. Often you don’t even realize it until much later because of how fast you’re moving. The analogy of the deep end of the pool also holds a warning; if you don’t learn how to swim, you’ll drown.

9. Network

When I started out in consulting, there was one thing that kept coming up throughout all of the pieces of training: “Make sure to build your network, because you’ll need it to succeed in this job”. And they weren’t lying; your personal network in consulting can make or break your career.

You need the network because of the nature of the job: you quickly need to gather expert knowledge in a domain or industry that might be unknown to you and provide sane recommendations that can help the client. I quickly learned that it’s impossible to do this on your own, there’s just too much stuff you need to learn. A solid network inside the firm gives you access to the knowledge you need. There’s always some subject matter expert available that is able to help you with your current engagement, especially in the larger, international firms. When you reach more senior levels, you’ll need both an inside and outside network to be able to sell new projects to clients.

Consulting companies play into this quite well, providing numerous team-building activities, seminars, and knowledge-sharing sessions to build your network. This might seem forced at first, but it’s the best way to broaden your horizon and to get to know many different people in a short amount of time.

Pexels

When building a startup company, your network will matter even more. Your own personal network and that of your employees is one of the most important factors that determine the early growth of a startup. It constitutes those first people you’ll hire (often friends or ex-colleagues from other companies), the first clients that will sign deals, and investors that will provide you with capital. Lack of financing, legal struggles, technological or industry knowledge gaps; all pains that are eased by the presence of a good network.

In contrast to the ‘forced network growth’ events in consulting, employees working for a startup will have to put more effort to grow their network on their own. In early-stage startups, this can be hard, because of the small number of people working for the company. You’ll need to network outside of your company by attending or hosting events. Especially when you’re focused on building out your first product, it’s easy to lose sight of these activities. I’m writing this during another COVID lockdown, so it’s especially hard nowadays to work on your network.

10. Long term careers

“Amazing exit opportunities” are often the number one reason on listicles why you should consider a career in consulting. And it’s true, consulting can be a tremendous springboard to launch your career in the fast lane. I’m quite sure I wouldn’t have gotten where I am today without my experience at Deloitte. Working in consulting shows future employers that you went through all of the challenges I wrote about in previous sections and that you’re worth hiring. So by all means a great prospect.

There are some buts though. The first one is which exit opportunities are available.

Depending on what you want to do with your career the exit opportunities can be either exhilarating or downright disappointing. The most straightforward and common exit option I’ve seen my ex-colleagues take is corporate management. As I mentioned previously as a consultant you’ll build a strong network which you can use to enter corporate management and skip the long ladder you’d need to climb through other routes. The public sector is another domain where many ex-consultants end up. Public institutions rely a lot on contractors and consultants and often hire them from projects. Banking and finance is another popular industry to end up in, because of a consultant’s affinity with financial frameworks and tools. Lastly, many consultants turn to freelancing to free themselves from the corporate side of things and earn for themselves.

The second but is the timing of your exit. As Peter Thiel puts it:

“Private equity investors and management consultants don’t start new businesses; they squeeze extra efficiency from ones with incessant procedural optimizations. It’s no surprise that these fields all attract disproportionate numbers of high-achieving Ivy League optionality chasers; what could be a more appropriate reward for two decades of resume building than a seemingly elite, process-oriented career that promised to ’keep options open’?”

A lot of consultants start out in this type of career to keep their options open because they haven’t decided yet what they want to do with their career. And this represents a very real opportunity cost.

At some point, you need to find a niche to specialize yourself in, especially when you get more senior. And this is something consulting usually can’t offer because of the short-term projects and varying industries. There’s also the golden handcuffs phenomenon in which people don’t leave even when they want to because of the good pay.

So the very thing that makes consulting attractive, comes back to bite you if you don’t time your exit correctly.

Knowing when to get off the train is important — Photo by mentatdgt from Pexels

When I was interviewing for Qargo, the CEO asked me the following question: “What do you see yourself doing in five years at our company?” In a sector where a mere 50% of the companies make it to their fourth year, this can be a surprising question.

Most people that join a startup early probably do this because of the same belief I have, that somehow your team can beat the staggering odds and build out something great that will survive the test of time. I do think that you need this sense of optimism in order to survive the emotional rollercoaster of a startup.

If your company fails, most of the time you’ll usually have nothing to show for. It’s not really that glamorous to have a company on your resume that nobody has heard of and which no longer exists. Although, more and more companies nowadays do recognize the startup experience as very valuable, even when the company has failed.

But if your company makes it, the long-term benefits to your career can be substantial; especially if you joined early. You might have stock options that can net you a good amount and you’ll have shown the world that you beat the odds. If the company gets acquired, many startup employees will stay with the new, bigger company for quite some time. Some founders will start anew and create another business.