After successfully engaging with a “bubble” of startups, then comes the bewildering choice of picking which one to join. Below I’ve listed all the factors that I considered for choosing which one to join.
- The Idea
- Professional Development
- Personal Requirements
- Company Details
- Interview Bar
- Tiny: Are you a founder? First engineer?
- This is likely seed/pre-seed. You are in it for the long haul.
- You’d better like the team, think they are good, and have a few ideas about the product.
- Pre-A. Great options; then cash injection!
- Every founder will tell you they are just about to close that A round. I don’t know if it’s possible to demand to see the term sheet, but it certainly seems like a good idea now. This is a real sweet spot if you can achieve it.
- Post-X. Growth!
- This is an interesting time. The product is mostly ready or working, and has in someway been validated by customer(s). Joining now probably means your stock or RSUs are going to be pricey, but there’s some confidence that this company is going to be somewhat successful, though that doesn’t equate to a high valuation, or being able to liquidate.
I think tiny only makes sense if you are a co-founder, or are really tight with the team. Pre-A is mystical, it’s really “tiny” in disguise. That leaves post-X, which is hard to pick.
Are these people you know directly, or confidently indirectly? Do you trust them; technically or otherwise.
What is the background of the team? Any successful exits? Any successful products?
What are their motivations for the company?
- I heard one story where a CEO was already a millionaire, so wouldn’t exit his company until he could become a billionaire. That’s not going to help you much if you are living in some horrible 1950’s apartment in the valley.
Are they committed full time to the company? Is everyone full time. You don’t want to be the most leveraged person.
What customer problem are they solving?
Make sure that it’s a painful problem that needs to be solved with their solution, it’s not just technology looking for a problem. Why would people want to buy that product now.
- Who would you start selling to?
- What is size of market? (How is the product monetized?)
- Who are competitors ? (Did any exit?)
- Why is this better than any competitor?
- Why are the competitors better than this?
- Any barrier to entry for competitors ? (IPR etc).
Note that often “making things cheaper” doesn’t help, lots of companies have fixed “use it or loose it” budgets. They want to do more with the same.
How hard is it to make the product, given the funding and team?
This should mainly be about what new skills you want to pick up, but it can also be an opportunity to get into a new job role, e.g. more customer interaction.
Basic things, but working in a startup can be a slog, so make sure you can survive:
- Where is the office likely to be.
- Where does everyone else live.
- Is there health insurance.
This is hard to ask about. It’s always going to be a rose tinted view, with no possible problems in the future.
- What is 1 year plan? 2 year plan?
- What is the burn rate currently? How long can it run for?
- Who are the outside board members?
- How are the advisors ?
Note I really mean how are the advisors; are they engaged with the company, making house calls. Are they connected enough to get you in the right meetings?
Just go ahead and assume the company will never exit. That said, you should make sure you get an appropriate amount of equity for your role for the stage the company is in. Good luck googling that question.
Make sure to ask about early exercise, and the potential cost. You really, really, want to early exercise, and if you can’t afford to do so, that’s really going to hurt later.
If you are in an early startup, and you don’t early exercise, that is a sign you should quit, if the founders don’t want to talk about this, it’s also a sign you shouldn’t join.
If the startup is with people you really know well, there will probably not be an interview. If it is with people you haven’t directly worked with, then there is a common rule:
- If the interview wasn’t tough for you, then the bar is not going to be that high for others either. This is a red flag.