Ask HN: For employees, is picking a good early startup more luck than skill?

You are right that there is certainly a lot of luck involved, but there are many things you can do to improve your odds. Interestingly, the kind of factors that matter are often counter-intuitive to engineers, so engineers are probably disadvantaged when trying to pick a good early stage startup.

Some things to pay attention to: 1. funding and ability to attract substantial funding from top-tier firms... it's not a guarantee, but it improves your odds 2. CEO who values engineering quality and culture: again, it is possible to be successful without it, but it's far less likely 3. business-minded, focused founders 4. good market for venture-backed companies with potential for multiple paths to success

In my experience, simply finding early stage startups is hard. Oftentimes they don't even have a web page during the earliest stages, and if they do, you likely wouldn't be able to find it, and then it might not have any contact information, and if it does have contact information, you have no idea what they're doing, to know if it's worth contacting them or not.

I think it might be easier to find early stage startups if you try to aggressively network in that space, but not being much of a networker I couldn't say. I guess I should add that I'm in Seattle which seems to have a much smaller startup scene than the Bay Area.

I got my most recent job through AngelList but in that case I didn't use it to research companies, I just spammed every startup listed in Seattle that had an opening I was remotely qualified for, and then just talked to whoever responded. Before that I had basically scraped CrunchBase for startups in the Seattle area that had received funding at some point or another. I applied at a bunch of companies, but I don't think I got a single interview out of it.

This is a long winded way of saying that, yet, in my experience getting into a good startup is pretty much just luck.

I think I found the last early stage startup I worked at through Craigslist. This was usually my stomping grounds to find some occasional part time or contract job and we had a very informal process from first phone call to job offer.

This guy seemed to have his head on straight, and having both degrees in law and computer science, felt like a slam dunk combo to run a SaaS business without getting into hot water. However, sales tanked in my second year of worked there, and was eventually laid off. Three years later, they're still around doing buisiness, but I don't know if they're coming or going. You can sometimes never tell from the outside, when they're not making news headlines and feels like they could be spinning their wheels.

I live in Chicago, where a lot of startups are B2B more than B2C and don't really spam hunt most places anymore, because it's hard to find a lot of information about them.

You're probably not going to be as good at it as a VC or Angel investor and there's still a relatively low chance of picking a winner for them so I'd say yes, luck is probably going to be a significant factor.

You should be able to improve your odds in theory by taking into account some of the same factors that successful investors look at but since they still rely on a portfolio to make a decent return and you can't realistically 'invest' in as many companies as an employee as they aim to you're still going to be quite luck dependent.

There are so many moving parameters here. You can only improve the odds.

Like joining startups from founder / company which had a good previous exit

Due deligence is ofcourse a good method to choose, but that will also be based on your own understanding, perception and how convincing the business is to you. After accounting all, its agains a probablistic choice. By going with 2nd time startups / businesses, you are increasing your chanceBy going with mid-age founder you are increasing your chance further.

You can build your own logic this way, of pure increasing the chance type of parameters. But again, if only 1 percent startups succeed, the other question is what is success that you want - continual of good salary, getting hired at nother company, stock option or see the success of company listed and encashing it. There will be more secondary and tertiary questions to those questions.

The word "success" will have different meaning here.

By adding tertiary logic to the above explaination you will start finding answers and selection method to your target. But that too, may increase the chances for 1 percent to 2 percent.

You may not exactly come to know, what you should know. But you will know, what you must know - at the minimal level.

What are you trying to achieve by being an employee at startups?

Is there an alternative strategy for achieving this goal?

e.g. if the goal is "save a bunch of money and retire to do $whatever_youd_prefer_to_do"...

> At a big company, we have a career's worth of income in six years with high probability once you get your foot in the door. This isn't quite as good as the claim that you'll be able to do that in three or four years at a startup, but the risk at a big company is very low once you land the job. In startup land, we have a lottery ticket that appears to have something like a 0.5% chance of paying off for very early employees. Startups might have had a substantially better expected value when Paul wrote about this in 2004, but big company compensation has increased much faster than compensation at the median startup. We're currently in the best job market the world has ever seen for programmers. That's likely to change at some point. The relative returns on going the startup route will probably look a lot better once things change, but for now, saving up some cash while big companies hand it out like candy doesn't seem like a bad idea. [1]

[1] -- https://danluu.com/startup-tradeoffs/

Strategically, it's not great to end up in a position of having to pick winners, particularly when there's lots of idiosyncratic risk --- it'd be better to be able to invest in a diversified portfolio of reasonable looking bets. you can't do this as an employee of startups --- startups typically want you to work at least 5 days per week, and pay you for at most 5, so its a bit hard to diversify. you can diversify your capital as an investor, if not your time. also, investing in things that arent your day job reduces the correlation between your main source of revenue and your assets (less risk of both getting wiped out due to a single event like your employer going bust).

VCs are an entire industry dedicated to betting on early stage startups and get it wrong a majority of the time. Seasoned veterans in specific industries are often blindsided by startups they write off initially. So yes, its luck.

I think more important is to choose a company that has a team you get a long with, is working on things you find interesting and if possible is aiming to achieve something you are interested seeing done too. If a sudden layoff would be damaging for you, look at their runway or stage to mitigate risk.

I think the unfortunate reality is as a new grad entering the startup scene it can take a few failures before knowing what to look for. I think I’ve gotten moderately lucky on try 3, but no exits yet.

My only advice is ask as many people as possible what they think of the startup, listen to them and don’t be blinded by big promises.

Also, as previous he threads have pointed out, financially you will be much better if you just go work for a FAANG. If you really want you can use your accredited investor status to buy into other startups.