Unpaid Internships at Startups vs. Big Companies

One of the most disappointing outcomes of the recession was the rapid growth of unpaid internships for college students. Disappointing not only because there was a lack of true value exchange in a democratic, capitalist society but more so because of the careless disregard, bordering on exploitation, demonstrated by some employers.

Today’s New York Times has an article all about this, mostly in reference to college graduates who couldn’t find a job.

Although many internships provide valuable experience, some unpaid interns complain that they do menial work and learn little, raising questions about whether these positions violate federal rules governing such programs. Yet interns say they often have no good alternatives.

Interestingly, in my experience running a university entrepreneurship center and as a professor, I rarely heard such stories in reference to unpaid internships at startups. Over the years, I’ve fielded hundreds of inquiries from entrepreneurs hiring interns, and I’ve known dozens of students and grads who took such positions. But rarely, if ever, did I hear about a bad experience.

Here’s a few reasons:

  1. There’s too much important work to be done and not enough menial work to be done. As a result, interns (paid or not) get a chance to do meaningful work that contributes to the value creation process. Even founders will admit that they often forego the menial work (cleaning the office, filing paperwork, etc.) because there’s always more important things to do.
  2. As a result, interns actually have an impact at a startup or small business. Virtually everything they do is to support and extend the race for survival: creating the product, finding and keeping customers, raising capital, etc. In my experience, nothing is more fulfilling in the workplace than seeing the result of your effort right away.
  3. No two days are the same. I really believe that most people like variety and change, especially early in their careers. It allows for greater intellectual stimulation, makes the day go by faster, and is good preparation for the ups and downs of life.
  4. Interns learn new skills and gain experiences that are unique and relevant. Because they will have to do different things on a daily basis, interns are forced to learn new things, just like the founders are. And the cool thing is, most of those are skills and experiences that could give them an edge over peers in larger organizations (ie: programming, high-profile presentations, working with founders/CEOs, etc.).
  5. Making mistakes, and even failing, is allowed. Startups, and their founders, screw up all the time…it’s a part of the entrepreneurial process (not to mention part of life). As long as those mistakes don’t happen repeatedly and the lessons learned are built upon, interns gain an unbelievable learning opportunity in such situations.
  6. The upside can be tremendous. I’ve heard of unpaid interns who were able to get full-time jobs within weeks because the startup successfully raised capital (note: this can be random and unpredictable). Or, when they did get a salary, it was supplemented with equity or stock options, either of which could make those formerly unpaid interns incredibly rich if the startup hits a home run and gets acquired.

So if you’re faced with the unfortunate position of having to consider unpaid internships, please do it at a startup. They need you more, you’ll learn a heck of a lot more, and you’ll have more fun. And who knows, maybe you’ll be in the dugout when they hit a homer.


  1. Stuart Baum

    Raman, a fabulous article! And the picture you chose is great as well.

    So… students have two choices when they can’t find paying work: #1) join a brand name company for the resume fodder, or #2) join a smaller firm or a start-up for the experience.

    Would be interesting to see how many of today’s business leaders & successful entrepreneurs chose #1 or #2 in their past. Most fell into paid work, I expect, but unpaid (or barely paid) internships did exist in the 80s, 90s and 00s, as well.

    For the record, almost a hundred years ago, I chose #2. It was at a small arts foundation in upstate NY. It was unpaid, not even transportation money, but I was given an amazing amount of free reign. They needed anything and everything, so I could help out where and how I wanted. I still apply some of what I learned there.

    • Raman Chadha

      I suppose a 3rd option is to stop looking ;-)

      Thanks for the historical perspective. I had never even heard of unpaid internships until the 2000s, although I imagine it was more common in non-profits or the arts sectors. Thanks for sharing your experience, Stuart.

  2. Pingback: Recap of Posts from May 2012 | ramanations

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