My experience with startups has been either as an advisor or consultant to the founding team members. In those roles I have generally been on the hiring and recruiting side of the equation. I am amazed how often candidates fail to ask some what I consider the basics before joining a startup. They get the usual questions out of the way (compensation, benefits, vesting, role responsibilities, options, etc.) but they very often fail to touch on some of the important topics associated with startups.
To broadly categorize the reasons that most people don’t ask the critical questions: “I didn’t even think to ask that during the interview process” or ” I wanted to ask something but I did not think it was appropriate”
I am going to detail out a few things that I believe all individuals looking to join a startup should know about the startup before joining. Unfortunately, in most cases, these questions are not being asked. Note: These are just suggestions and not intended to be asked in a “point blank” type of way. This is intended to touch on the areas that should be covered within your discussion.
When things get tough, will the founders get along?
It is critical to understand the background and history of the founders. How did they meet? Have they worked together in the past? How did this opportunity present itself and bring them all together? I have seen too many startups fail simply because the founders could not align and agree on important issues. Ask questions to get a good sense that the owners are likely to get along even when tough times arise.
Will you get along with the team?
It will be likely that you encounter a startup team that is a close-knit group. It will be important that you get along with just about everyone that is there. If you don’t there really is nowhere to hide and life will be miserable. Analyzing things like experience, accomplishments, intelligence you are likely to determine if you respect the founders and other team members. It is equally important to decide and ask questions to decide if you can work along side them for 50-60+ hour work weeks.
What is the history behind the basic idea or product? Did you have other ideas or products that you have scrapped?
It will generally take a bit of refinement for most founders/teams to really settle on an idea that they are going to seriously pursue. I am always leery of startups that come up with an idea in week 1 and start recruiting staff in week 2 because they are so enamored with their idea and just can’t wait to get going. In most cases this is a sign of bad news. If I were joining a startup, I would like to understand how the founding team arrived upon the idea that they are pursuing now (chances are, they went through several others before getting to this one). Now, don’t get me wrong here, there is absolutely nothing wrong with getting involved with a startup when it is very young and green. This is simply to caution you that you need to know the status and go into it prepared that the overall idea or product may shift of you dramatically in the first few months of your employment. On a related note – It is helpful if all founding members are pursuing the same idea – shockingly that is not always the case.
How much cash is in the business, what is the source, and how long is the runway?
If the startup is venture backed, it should be fairly simple to find out who the investors are and how much capital was raised. Look for a press release and if you can’t locate something, it is not inappropriate to ask. For self-funded or bootstrapped startups, the questioning can be a bit uncomfortable so ask questions such as: “What are the capital raise plans for the company?” “Are you expecting to bring outside investors in, if so, when?” This will give you a sense for where the company stands financially. The key here is how much cash is in the bank! If they express that the runway is short but that several investors are interested, that is great but keep in mind that will not pay the bills or your payroll.
What are you as a founder looking to get from this business effort?
Try to press beyond the cliches. Drill into what they really want to get out of this. Do they want to just make a ton of money and retire on a beach somewhere? Do they want to build a world famous product? Do they just want the opportunity to work with friends and family? Are they looking to raise money from top-tier VC groups? To be honest, there really is no “right” answer here. They key is to look for alignment with the founders and at some level they should have similar goals or that can be an area of conflict.
What will the startup do for you?
We are all acutely aware that joining a startup is usually a big risk and a lot of work. In order for it to be meaningful for you, in addition to bringing value to the startup – it needs to bring value to you. Do you want to wear multiple hats? Do you want to have a large amount of discretion and control? Are you looking to work with a specific founder? Regardless of what you attribute value to, make sure that you have a real chance of receiving this value. Relationships that are just one way, rarely ever work out. I am a huge fan of growth opportunities within startups, particularly for younger team members who are early in their careers. Nowhere else can you get the diverse set of experiences and visibility that you can get from an early stage startup. If you are not going to benefit from this and if you are not passionate about it, you are missing out on one of the largest components of value.
Overall, I can see the level of startup activity to continue at a good pace. The Covid-19 pandemic has created some opportunities for entrepreneurs to explore opportunities. I think it is a great time to look at startup opportunities but it is equally important to walk in with your eyes open. This is particularly true if you have never experienced working for a startup. I hope that the above helps you out in framing some questions during your interview process.