Sometimes entrepreneurs do what many consider unthinkable: they quit their business to become a full-time employee.
Being a hard worker may be anathema to those with the founder gene, who find the uncertainty of entrepreneurship liberating and exhilarating in equal measure. But sometimes the lack of stability can be overwhelming, both financially and emotionally. Life becomes a little easier if you have a stable salary and there is no constant fear that your startup will go bankrupt. But when former entrepreneurs want to return to work, they often face undue stigma. Recruiters hinder review their unusual resumes and do not know how to evaluate a candidate with unusual work experience. Not to mention the stereotype they face as impetuous and selfish.
“It’s really important for them to be able to explain the elephant in the room,” says Debi Chrisman, CEO of recruiting firm Raven Road Project. “Because the atmosphere is that someone who has been an entrepreneur for a long time is a bit of a maverick and doesn’t really want to fit into a box or be a small piece of the puzzle.”
According to research, former entrepreneurs are 35% less likely to be interviewed. research from London Business School. This trend is commonly referred to as the “entrepreneurship penalty.”
A separate study from Rutgers University’s School of Management and Labor Relations recently tried to understand whether former entrepreneurs are less likely to be hired because company founders are poor job candidates or because they face bias throughout their careers. the entire hiring process. The researchers asked recruiters to evaluate resume designs with comparable levels of education and experience from candidates who had worked at traditional companies, startups, or both. The study found that 60% of recruiters responded less favorably to a fake resume from a former entrepreneur.
Thus, although the stereotype of changeable, bordering on antisocial behavior founder While the Steve Jobs or Elon Musk model might exist (and perhaps this is partly true), the study points to the fact that companies tend to unfairly punish entrepreneurs. One reason may be that they are simply not designed to evaluate candidates with non-traditional backgrounds.
From a recruiter’s perspective, assessing an entrepreneur’s experience is difficult, said Rutgers University professor Jasmine Feng, one of the researchers.
“You rely mostly on information that is largely self-reported,” she adds. “So it’s really difficult for recruiters to understand whether their qualifications, experience or job responsibilities are comparable to those of a typical candidate.”
Nishta Dube, an aspiring content creator who left her entrepreneurial dreams behind for a more traditional career in education, says she regularly had to explain parts of her CV to skeptical recruiters. “I didn’t know which parts of my experience would matter and which parts wouldn’t,” she says. “I also had to explain why I was giving it all up to find a job.”
Even a successful startup cannot protect candidates from fines for business activities. Harvard Business Review Study found Software engineering candidates with founder experience whose startups were successful were 33% less likely to receive an interview invitation than those whose companies failed. This may largely be because recruiters are concerned that formerly successful founders may be set in their ways because their methods have already led them to great success once.
“If their mindset is arrogant, potentially inflexible, or just dogmatic in their approach, then it may not be as attractive to the recruiter overall,” says Chrisman.
More often than not, the most successful founders are best suited for executive-level roles, she adds. They can leverage that experience into the C-suite, as former Everfi co-founder and CEO John Chapman did. There’s “no doubt” that the success of Everfi, which he sold in 2022 for $750 million, played a role in him landing his current job as CEO of the esports company. PlayVS, according to Chapman. “If I hadn’t been so successful, it wouldn’t necessarily have ended this way for me,” he says.
Companies strive for an “entrepreneurial” culture
Meanwhile, entrepreneurs can still make valuable additions to traditional front-line jobs. In recent years, many companies have tried to change their culture to promote more innovation. To do this, companies actively seek employees who possess some of the qualities that founders typically bring: out-of-the-box thinking, innovation, and a willingness to embrace uncertainty. This is especially true in the current business environment where the situation is so volatile. Advances in artificial intelligence, uncertain interest rates and the upcoming presidential election are creating particularly turbulent times for companies – exactly the kind of situation that suits former entrepreneurs.
Companies are “really struggling to understand the concept of new and future,” says Chrisman. “So when you hire someone with entrepreneurial experience, they bring a sense of calm because they lived in chaos for a long time.”
Chapman recalls how his own experience launching Everfi was characterized by some moments where he took his time. “When you’re in the startup phase, you’re constantly having to figure things out on the fly,” he said. “And make decisions quickly, without knowing whether you will be right or wrong.”
To weed out entrepreneurs who might be good candidates from those who end up frustrated by being a cog in a larger machine, Chrisman suggests exposing candidates to different scenarios during interviews. She suggests giving them an example of the bureaucratic red tape they might encounter and asking how they would approach obtaining the appropriate permits.
Chrisman also advises recruiters to try to assess whether someone is with the company for the long haul. Research shows that former entrepreneurs actually have higher staff turnover compared to other employees. “Skill set is important, of course, but mindset sometimes trumps that,” she said.
The Rutgers study also found that certain types of recruiters are less likely to be biased against entrepreneurs. Perhaps unsurprisingly, recruiters with their own entrepreneurial experience are the most open to hiring former founders. The study also found that recruiters with short tenure and women were more favorable to candidates who were former entrepreneurs. According to Feng, recruiters who had just joined the company did not have the same institutional mindset, while women were less likely to stereotype founders in general and instead simply evaluate them using qualifications in resume layouts.
Facing the reality that entrepreneurs may have a harder time than others finding work is just another example of the adversity faced by those who choose this career path, Feng said. “Those who want to become an entrepreneur need to understand that it may not always be rosy,” she says. “It can be a very bumpy road. This could lead you back into the traditional workforce, and you need to be aware of some of the career risks associated with this reality.”
For Dubé, it was how bumpy the road was that ultimately led her to choose a more stable, albeit traditional, career option. “Every part of this experience felt like I was struggling to make ends meet.”