Ask HN: What should I look for when recruited to join a startup? | Hacker News Reader

Ask HN: What should I look for when recruited to join a startup?

8 pointsuptownfunk6 comments

I’m sure many of you here get offers to join startups. How do you evaluate the opportunity? What questions do you ask regarding the financials of the startup?

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First, and IMO most importantly, questions you should ask yourself: - Do you believe in the business and its potential to succeed. - Do you trust and believe in the current team and their capability to execute on a plan to succeed. - Do they have at least another full year of runway given their growth, costs, and hiring plan? If not, how likely/soon is their next fundraise/sale/capital-infusion to keep them going? - Do you fully understand the expectations and role you'll be taking on? Try to identify how you'll learn and grow from the experience. Perhaps they have senior talent that can mentor you or maybe you'll be given the opportunity to build and grow a team within the company. Maybe you'll be responsible for bringing an entirely new department/platform/etc to life from scratch. Also, the earlier the stage of the company, the more you'll likely be exposed to other aspects of the business which, in itself, offers a great experience.

Most of the rest depends on the size/stage of the startup. Equity grants are determined by a combination of your role, their stage, and your negotiating ability. Salaries tend to be lower for earlier stage companies since cash is limited and valuable - discuss a plan ahead of time for a bump upon next milestone/fundraise. Recognize that at a startup, you're anchoring yourself at the salary/equity to agree to when you join - so be comfortable with the agreed upon terms. Ask friends, look on Angel List, etc. to make sure you're getting a fair deal.

Good luck! Startups are exhilarating and, more often than not, they help you level-up your skills faster than most other opportunities.

>> Do you believe in the business and its potential to succeed

This is going to be a tough if one does not understand the space or assess the market.

With all due respect to “start ups”, most don’t go anywhere and most employees don’t make it rich even if the company does have some moderate success. So treat it like any other job offer. Do you like the work, people, compensation, etc? Are you comfortable with the risk?

When trying to evaluate the above items, make sure you understand how much your compensation actually is. Are you getting stock or options? How much is the strike price vs current shares selling price? How many outstanding share? How many outstanding options? Do they have any dilution protection? Are they the same series/rights as investors? Are additional options currently authorized but not issued? Is there ability to sell shares currently? If not then when?

FYI working for an established company does not mean your job is any more secure.

FWIW, I started a company that is 17 years old now so I think I have, at least, a little knowledge behind my opinion.

Lastly, this is random internet advice so ymmv.

Like most decisions, joining a start-up is a risk vs reward decision. So think about the level of risk you’re comfortable with and/or can mitigate (e.g. less job security but it may not matter if you’re confident you can get another job easily). Then look at the potential rewards and figure out if you’re game for it. Rewards usually include working on something that matters to you; being able to have a real impact on the company’s future; a more fulfilling work environment; learning new stuff/leveling up; being exposed to business/strategy/management/non-technical topics; etc. Notice that financial gain is absent from this list: don’t bank on equity as a golden ticket to millionairedom, I don’t know the numbers but they’re regularly hashed out in HN and you should look at it as a lottery ticket more than anything else. Which brings us to the financials: almost by definition, a start-up’s business plan is incorrect; take it with a huge grain of salt. Burn rate (assuming you can get the number) will give you a sense of the company’ short-term perspective.

How fast are they growing? The best thing, if you can get it, is a graph of revenue per month for the past year or two. Then you can see whether the trend is hyperlinear.

If they balk at telling you their numbers, tell them you'll take a graph with the y-axis cropped off. The shape of the graph matters more than the numbers.

Housing.

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