Ask HN: How should I evaluate a startup as I job hunt? | Hacker News Reader

Ask HN: How should I evaluate a startup as I job hunt?

102 pointsvowelless56 comments

I've been a lurker at HN for a while and it has greatly motivated me to seriously consider joining a startup. I have been at one of the large software companies for almost a year now (first job after college, good CS school) and I've decided to change jobs before I get too comfortable here.

Given the large number of interesting startups, what kind of questions should I be asking, not only the engineers / founders of the startup, but also myself? What are the signs of a healthy startup (funding, background of the founders)? How do I gauge the core principles and culture of a startup?

I apologize in advance if some of these questions don't make sense or may even be irrelevant in the pursuit of finding a job at a startup. I also realize different people will have differing opinions about how to evaluate a startup. That would be particularly helpful.

Most of the links I came across while searching on google were about investors evaluating startups. I didn't find many opinions on how to evaluate a startup from a job-seeker's perspective.

Thanks in advance

View on HN

Financially, as if you were an investor. They're the people whose job it is to evaluate startups' prospects, and they care above all about two things: the founders and the market. The founders should be relentlessly effective, and the market should ideally be of a size that can only be obtained by riding on trends beyond the startup's control (but visible to few besides the founders, or the market would already be full). Joining the young Microsoft, for example was a bet on Bill Gates and microcomputers, both of which turned out to be very good bets.

As a hacker you may be able to judge market bets as well as or better than many investors. E.g. I think HN readers knew Dropbox was onto something before most investors did. So if you go wrong it will be in judging founders. For many hackers, especially the unwordly sort, it's hard to distinguish true Bill Gateses from mere good talkers.

I wish I could offer some advice about distinguishing, but that would take a whole essay. The best simple hack I can think of is completely self-serving, but I'll offer it anyway: piggyback on our filter. YC specializes in distinguishing between genuine Gateses and good talkers. We're occasionally fooled, but far less often than a typical hacker looking for a job would be.

I respectfully disagree.

If you receive equity, then sure, take this into consideration.

But OP isn't a professional investor. He isn't risking other people's money. He is betting his own financial stakes on the venture.

The outer scope is as you say -- will this company go on to greater heights?

But the inner scope is -- given my personal appetite for risk, can they make pay day?

This person is, I presume, young and without obligations like children or a mortgage. So his or her appetite for risk has much more latitude. But that doesn't mean it isn't there.

I opined on this a while back and was downvoted heavily for suggesting that interviewees ask to see some sort of financials -- the consensus in the ensuing discussion was that it was ok to ask what kind of runway the employer had as a proxy for the underlying financial realities.

In a tough job market, I agree that would be an important factor to consider. But it's not a tough job market for hackers now, to put it mildly. I've never seen such demand for hackers. A good hacker who wanted to ditch a dying startup today could find a new job more or less instantly.

This is not universally true.

I for example cannot leave Perth, Australia. I'm doing the startup boogie from here. And there aren't many dance partners.

So the dynamics of hiring in Silicon Valley, Seattle and New York hold about as much validity for me as the far side of the moon.

(Wherein I partially sink my own argument).

A million times this. I'm in Auckland, New Zealand and it's quite scary sometimes when you run in to people trying to pretend they're in the valley the way they run their startup. It just is not the same out here: less money, less funded startups, less startups in general, very few supporting anything more than the founders, if they even do that. SV and NYC are outliers globally.

I'm in Brisbane and I'm doing some freelance for a US start-up right now. I kind of stumbled into this work, but would like to take more of it on in future.

I think it would be great if there were some better tools for tracking and working with remote hackers. I think the virtual office is so close to becoming a reality.

> I think it would be great if there were some better tools for tracking and working with remote hackers.

I've been freelancing lately.

There are probably thousands of such tools. Pretty much every freelancer ever has cobbled one together and some substantial fraction have gone on to release it.

Pivotal Tracker not your style? Try WorkflowMax. Or briefcase. Or IMS Service Track. Or SmartBiller. Or Jobsheet. Or ProWorkflow. Or TriggerApp. Or ...

I would agree, to an extent. (Even) in tech work right now there's a huge bias against remote workers.

The market is hot.... Assuming you live in SF or NYC. It's pretty dry - even for tech - if you live somewhere else. (just look on github jobs and count the number of jobs accepting remote workers)

I'm not sure better tools would solve the problem. Between web based trackers/document collaborators/Skype/Google Hangouts, it feels like we have most of the tools we need (except maybe a good whiteboard tool).

There are biases against remote work (in most cases). In some cases it might be, "oh, we neeeeeed high Bandwidth of seeing people in same room" (maybe, maybe not). In some cases it might boil down to someone equating "seeing butts in chairs" with "working". Or, "we've always been in one room, why change?"

The tools are there: Web based bug trackers, email, Skype/Hangouts, pairing via screen/tmux (granted pairing is an market ripe for even better tools), GitHub... And yes it's some effort to use these tools, but it's a pretty low barrier.

I think the virtual office will become a reality once people overcome their bias... Which is a human problem, not a problem we can solve with Mr Turing's Machine.

Having moved from Perth to Silicon Valley I've got to second this. In Australia I'd get approached about jobs maybe every couple of months while in Silicon Valley I get approached every couple of days.

While I primarily do security rather that software, in Australia the approach would be "Are you interested in contract work for Reputable Government Agency / Mining Company / Bank?" while in Silicon Valley is "Hot new VC funded startup looking for a rockstar to secure the social local cloud!".

I'm really enjoying the difference.

It's funny how we hand-wring about why there's only an anemic startup culture in Australia. Leaving aside the storied legal barriers, there's the fact that the E-3 visa makes it much easier for bright Australian technologists to decamp to the USA.

Until certain developments in my life made it an impossibility, I was thinking of moving to New York. Because it's the most unalike[1] English-speaking place with a vibrant startup scene I could think of to live in.

[1] unalike from Darwin. Even Perth is a megapolis compared to that beautiful flyspeck.

Ok, yes, that's true; lack of job "liquidity" can negate the effects of a hot market. If there are only two places to work in your town, you have to think twice before leaving the safer once.

I never considered it before, but this is another benefit of startup hubs for the best startups: it's easier for people to leave their employers to come work for you. Of course you die by that same sword when you get sufficiently big, but that's a good problem to have.

This is one thing I don't understand about people working in startups. You are in the business of you. The startup is in the business of the startup. Don't conflate the two.

Unless the OP will be getting a significant portion of preferred stock (viz. it won't be clawed back and it will receive money in the exit), I doubt that evaluating the company as an investor would is a good idea. Piggybacking on the YC filter would mean joining a company that already has VC money, so potential employees should be doubly careful about their percentage of stock and their stock options.

It would be much more self-serving for an employee to read and consider information aimed at employees. A good article on this is http://michaelochurch.wordpress.com/2012/07/08/dont-waste-yo...

I think what you mean is preferred stock. And (a) the distinction only matters if the startup does badly, in which case it doesn't matter much, and (b) the founders don't have preferred stock either, so an employee is in the same boat as them. (It is vanishingly rare for individual employees to get their stock/options taken back. Zynga is the only recent case I know of.)

It is certainly not true that joining a YC company means joining one post VC funding. Even if it did, it doesn't matter, because (as investors know) the startup you pick affects returns way more than the stage at which you pick it. That's why VCs are willing to invest in B and C rounds at high valuations when they could invest in other (less promising) companies' A rounds at much lower valuations.

As you say, I did mean preferred stock. You caught me before my edit :)

I still stand by the assertion that investors are looking for something different than the typical employee. It seems to be a large risk for a large reward; I don't want to presume to speak for you, but usually investors are both looking for a large exit that an employee will not really benefit from, and can be involved with many companies at once to minimize their risk.

I definitely agree for investors that the startup you pick is more important than the stage its in when you pick it. But that's still involving a significant chunk of the stock even in later rounds. Ultimately, unless the employee is getting a large chunk of the company (in which case he should think as an investor and would be wise to go for YC companies) the decision process should be different.

That article has some dangerous inaccuracies. For example:

If the first technical hire gets 1% while the CEO gets 5% and the other 94% has been set aside for employees and investors, and the CEO has been going without salary for a year already, well, that’s much more fair.

Any startup that's keeping 94% of the stock for future employees plus investors has a serious problem. The CEO has very little incentive to continue working on the company, as opposed to either selling out early for a deal that gives special treatment to the CEO, or just directing resources from the company to himself. You don't want to work somewhere that the founder gave himself 5% of the company.

Surely I can't be the only person who would be fascinated to read an essay about distinguishing between the talkers and those with real substance. I sometimes wonder myself which one I qualify as: sometimes I feel like a genius sometimes like a fool. Part of the startup mood swings, I suppose, but I see talkers sometimes and think to myself, "Please let there be more substance to me than that."

Here are a handful off the top of my head:

  - Are you profitable? If so, for how long?
  - How long until you need another round of funding?
  - Are you planning on hiring more staff? If so, for what positions?
  - How do you gauge promotions/raises?
  - Who will my coworkers be?
  - What is the office setup like?
  - What hours will I be working?
  - How much time is spent on maintenance vs. new development?
  - Is your code unit tested, and do you have version control?
  - Who do I report to?
  - Is there a vision for where the company will be in # years?
  - Ignoring equity, is my compensation fair?
  - How fast is the company growing? What are some recent milestones?
  - Is the office located in a place that's easily accessible?
  - What will I be working on after my first month here?
  - How often do you have meetings?
  - How do you manage deadlines?
  - How long have you (the interviewer) been at the company?
  - What attracted you (the interviewer) to the company?
  - Why did you choose the current technology stack you're using?
  - Are you having any issues with stack?
  - How much of the code is understood by >1 person?

Is this the sort of list you're looking for?

This is a great list! Thank you.The last point is something I had not thought about.

> - Are you profitable? If so, for how long?

For some reason, a few companies seem to think that including investor infusions while computing profitability is somehow a good thing. It is wise to (gently) probe and figure whether this is what they are doing.

I think

   - How long is your runway?

might be toward the top of my list. It gets right to the point regarding stability and opens the door to further explanation regarding short term and medium term plans for company growth.

Don't forget to ask what will you learn or how will you grow in doing the work.

I'll often take work because I'm looking for an opportunity to learn a new tech or move strategically.

I wanted to get out of Flash and into HTML5 so I went and found a bunch of HTML work.

Where do you want to be in 2 years. Mobile, Web, Social?

Nice list.

I just joined the first startup of my life, and, in a way or another, all of these questions were answered satisfactorily for me.

A couple of additional questions:

1- "What is the flow for making a change?" 2- "Will I be able to improve how things work here?"

A startup should be fairly open to changes. For example, if they develop without a debugger, can you use one? Will servers be updated for supporting remote debugging?

I highly recommend looking for any dissonance between the ground-floor workers and management/leadership.

The best scenario you can find (a truly rare gem of an employer), whether startup or established company, is where everyone is on the same page. Vision should be clear, strengths should be accurately gauged, and problems should be acknowledged and well-understood. You should be able to share what you've learned from the workers with management (and vice versa) without any looks of shock, fear, or panic. Overall visible stress should be almost non-existant.

The worst scenario is where the company's leadership lives in its own reality and blames any issues on workers or outsiders. Run from these employers; no amount of money is worth working for such people. The easiest way to test for this case is to just talk openly about what you've learned about the company and how the future looks given their strengths and weaknesses. Watch out, in particular, for the hushed phrase "I shouldn't tell you this, but..."

Realistically, though, you'll find a lot of employers somewhere in between. Just know that the distance between the reality of leadership and worker is going to be proportional to the pain you'll feel working at that employer and that such distance tends to increase over time.

There's plenty of great advice here. I'd add one more signal to evaluate:

How tight is their hiring process?

Hiring is one of the most important tasks of a startup. As the business grows, it identifies new things it wants to get done and eventually that means adding people.

Watch your interactions with a prospective employer carefully. Are they swift in communications to schedule your interviews? Do they seem prepared when you show up to talk? Is their follow up clear and prompt after your first meeting? A startup with their shit together should be able to go from phone screen to signed offer letter inside of 7 - 10 days.

Any longer than that suggests sloppy management, poor communications skills or lack of focus. Or worst of all: lack of clarity/urgency around the initiative they're hiring you for.

If their hiring process is sloppy, it's a safe bet you're in for a bad time.

Ask: "Will I have fun working here? Will I wake up in the morning excited to come in to work? Will I learn something new every day?"

Working for a short period doing something you love in a company that ultimately fails is better than doing something you don't love for 30 years. You can always get another job.

You first have to decide what kind of startup you're looking for. Do you want to be hire 1-10, 10-50,50-100, or 100+? Each of those company sizes is a substantially different beast and depending on which one is more suitable to you the other questions change dramatically.

If you're looking at the 50-100 range then the startup is obviously more mature and the nature of the company isn't as important so much as the work you'll be doing. If you're looking to be hire 1-10 then the company itself is a lot more important, especially the founders.

Let's assume you're looking to join a smaller team. If that's the case then I'd concentrate almost everything on the founders. Ultimately it comes down to trust. Do you trust these people to focus on important matters? Do you trust them to be fair and mature about tough decisions? Do you trust them to treat you and your coworkers right?

For many people this can be a difficult thing to gauge and it's made especially more difficult since the founders will be actively trying to sell you and therefore make themselves look better.

Ultimately there are some high level filters that can help carve out a lot of options and save you a lot of time. And these are actually the same kind of filters that investors apply:

Are they a YC company?

What is the experience of the founders? Have they done a startup before? Do they have an "in" for the space?

Does the company have traction?

The reason why I put YC company first is that pg and co are going to be better than most people at picking winners. So if you limit your choice to YC companies then you're going to have a much lower chance of joining the wrong company. I say that from some bias as being a founder of a YC company, but also because I've met many of the founders of other YC companies, and it's just crazy how many of them are awesome and trustworthy.

One small thing.

Interviewers leak. Sometimes they start on anecdotes. Anecdotes are solid gold. Give some of your own if it seems appropriate.

I've turned down lucrative jobs because of the "hilarious" anecdotes of a CEO changing his mind weekly.

I'm surprised skill development hasn't come up (or if it has, that it's not more prominent - I might have missed it in the scanning.)

This might be your first startup, but it likely won't be your last - and the skills you get from your first startup will affect the jobs you'll be able to land and the projects you'll take on in the future. So the most important factor is the details of what you'll be doing and how much doing it will make you a better programmer.

If you optimize for the startup's overall potential but spend your time there doing stuff you think is trivial, you're going to be really unhappy if the startup doesn't work out. If you optimize for challenging, enjoyable work that turns you into a programming badass, if the startup doesn't work out, you're still going to be a badass.

You should (primarily) think like an investor. You are investing your time after all. For example, look at the questions that YC asks during interviews.

And then you have to think a lot more about the team/culture fit since you will spend way more time with the team than any investor.

Get to know the people. I personally feel that these traits trump everything else if you're keen on growing as a person and professional:

  - Vulnerability (openness)
  - Forgiveness
  - Passion (for both the company and life as a whole)

It's hard to find cut-and-dry questions to determine these traits. Try to talk about what these people love to do, even if that's outside of their craft or the company.

  - What was their first job?
  - Where are their "people" from? (Family, ancestors)
  - What do they dislike most about their industries culture?

Although the answer doesn't matter, these questions can expose a lot of a persons personality and history in a short amount of time.

My top advice would be to go for a company that is doing something a little different from the rest. Do you really want to put your blood, sweat, and tears into developing the 1000th photo sharing service? Find a company that is pursing something unique and interesting and that seems like it has real business potential.

Make sure the founders / executive team are on the same page. Make sure they have the same vision about what they are looking for in a new employee. If you pick up on signs that they are not quite in unison then your time working at their company will probably not be happy.

Ask yourself what is so special about the founders. What special skills or knowledge do they bring to the table that will crush the competition? If you don't think they have an edge then don't join their team. Try to find founders with some type of deep domain expertise.

As an employee you are investing your time in a company. Ask yourself if you want to work day in and day out with the people who are interviewing you. If you get a bad personality vibe from the people you're talking with then don't join. All personal conflicts will get blown up in the pressure cooker startup atmosphere.

Take this into consideration: remember that all that glitters is not gold. The odds of success are decidedly not in your favor at a startup. Startups are the trendy thing to do (especially here on HN) but know that they have their downsides just like any other company. Often times the downsides to startups can be particularly brutal. Good luck!

Think like an investor and a normal job seeking employee when making these decisions. Is the idea going forward and the equity going to be worth a lot eventually. You might not be throwing $100k their way but you're investing your time, which has value, in the startup. The thinking like an employee is just like any other job hunt, find a place you want to work and will be happy there but be ready for layoffs, crashes, etc like any business can face.

Things to consider: -The leadership, is it someone you want to work for and if multiple people do they get along with one another. -How much you believe in the idea, if you're not all to crazy about the ideas you come across in your job search then you may be better off applying for a more stable company. -Their funding, if they are funded that makes it easier for them to pay you continuously. -Their offer to you, the questions that matter with this is how much of both cash and equity will you be receiving, how much you believe in the idea and what you believe that stock will be worth later on, and what your base salary is. If you're not head over heals in love with the idea and whole heartedly believe it's the next big thing with the original founder already having done market research/testing to prove that customers want the product then don't be the technical cofounder of a 'potentially' successful company.

Most people here have had good advice. The only thing I would add is that there's a difference between vision and delusion. Visionaries have a strong and clear focus, but are grounded enough to recognize the merits of their competition and work within the ecosystem that customers / users already enjoy. Delusionaries pour scorn on their competition (or even claim to be so revolutionary that they HAVE no competition), and try to create a walled garden or vendor lock-in with zero install base. Even Apple made iTunes for Windows.

My first job out of college was at a startup. The founders were reasonable people who were heavily influenced and invested in by a delusionary, who saw their company as a vehicle to realize his "vision" of how technology should work. As a result we never really managed to grow beyond a couple of million in revenue, and that mostly from what amounted to R&D outsourcing from large firms with technically naive execs. Said delusionary repeatedly vetoed our attempts to make our product more relevant to a wider range of customers since it would compromise his vision. I bailed out of frustration, and a year later one of our customers just outright bought the firm to acquire the founders. I heard the delusionary was very satisfied with his exit. :p

Review HN "Who Is Hiring?" and see what resonates with you: http://news.ycombinator.com/item?id=4323597

If the question more is "What startup might be successful?", team is important, fundraising helps a lot and your instincts are frequently correct.

1. Trust - Do you trust the cofounders to bring in the team necessary to build the machine that is the business?

2. Culture - Is this a culture where you can grow?

3. Belief - Do you clearly believe the value proposition the company is trying to build?

4. Pay - Will you be comfortable at that pay for ~3 years while you help build the machine?

5. Investment - Will the equity trade be worth your time, roughly ~4-10 years?

If you can answer the questions above, you'll be way ahead of most people when evaluating startups. These are the things that went through my mind when I ditched a larger company for a little unknown startup at Pier 38 which now has become +100 people with an amazing product. I haven't left and its been 3 years. I still trust, believe, and comfortable enough to keep moving along.

First figure out for sure just what you are you looking for out of a startup. Personally, my reason for wanting to work for a startup compared to a large corporation is to get to have more influence and work on a wider variety of interesting problems across different domains. And you can get that without needing to be in a business that has potential to grow to a billions of dollars valuation. But if you're interested in maximizing your chances for crazy sums of money while you're at a time in your life that lets you take risks (and there's nothing wrong with going after that, just don't make plans around an assumption that it'll happen), that'll drive your search in a different direction.

On a related note, how do I evaluate a startup from the inside? I'm currently interning there, but its my first internship, so I have little basis for comparison besides my friends experiences.

What happens when you make a mistake? How do your manager and peers react?

I haven't made any mistakes yet as in I'm working on a completely new project - I haven't interacted with any of the pre-existing code at all, so I haven't had any chances to screw something up. When I'm done, I'll merge my project into their codebase and that'll be it.

Hm, I ask because it's a good way to see what type of learning environment it will be. Maybe pay attention to how the people around you are treated after a mistake is made.

I did make a mistake on a personal note and my boss was very relaxed and fair about that. In general, people don't seem to have any problems helping each other out at all. Now that I think about it, its a great work environment, and the CEO has a very good track record too. Also judging from our funding and customers, we're going to do well! Guess that answers my questions then :p.

Any startup should not just plan how to make money, but also test if their idea is feasible. As someone stated, working for startups carry a much higher degree of risk (mostly because you would be working for less $$$ and the difference you are 'investing').

It would probably be a good idea to ask yourself - are you willing to invest in this company? If you are, is it for giggles or a future?

I'd also say if you are looking to join a startup, pick one that is incubated (ex. ycombinator, google umbono etc.)

A tl/dr version would be

1. Runway - how much runway do they have until they run out of money assuming revenues will not increase (which of course they should)

2. Culture - does it seem good? Good gauge - are people there even when they don't have to be.

3. Compensation - does it pay enough to make your comfortable and have upside in stake? If so, raises don't matter as much, make your own raise by adding value to your stake.

As an employee, a person contributes time, full-time. IMHO, time is the ultimate investment. Something, that cannot be recovered or bought with money. OTOH, an investor puts money and some of his time. Huge difference. If I were to join a startup, I would be thinking, do they deserve my time? Is it worth investing your time?

There is no magic way to tell. Go with your gut, keep some of these lists and advice in mind, but ultimately if you have some opportunities on the table, just pick one and don't look back. And don't be afraid to walk away if you start to feel unhappy. "I'll just stay here until ______" is just an excuse.

Only two things are important.

1. Do you believe that their first product/service is going to be really popular if they do it right?

2. Can you want to live and work with the current company?

If the answer to either of these is no, or even meh, politely disengage and find something else.

Think hard about your appetite for risk. As companies scale up the work and character and risk profile changes, roughly with each order of magnitude of employees. The same company a year and 10 people later may suit you better.

In my opinion you should choose the one you most like, the one where you really believe in the idea.

The most important point in an startup is the team, the idea can be marvelous but without the perfect team... it's just shit

Above all these helpful hints ..this quote should ring true #passion

"When people are financially invested, they want a return. When people are emotionally invested, they want to contribute."

@simonsinek ht: @danmartell

1. Do you and the team share the same passions?

2. Can you live with these folks 24/7?

3. If things go south do you feel like you were better for the experience?

Hey how's this going for you? would love to hear your thoughts after all the comments in the thread.

Thanks for asking this!

Perhaps what not to use as an evaluation?

From the perspective of wanting to get paid for your work, you will want to consider the same things that investors do because the company won't be able to pay you if they run out of money. Do they have a product that people will pay money for? That's the key question.

Another is: Will they actually pay you. or does the contract they give you talk about "binding arbitration"? That's a huge red flag of a failing company looking for a way to cheat its employees and is doubly bad for a woman or minority jobseeker since she would not be able to sue them for sexual harassment or racist promotion practices. If you care about the company obeying the law on any matter affecting you, you will want to retain your right to sue them in a court of law.

An employee stock plan might be seen as another sign of poor financial status since companies in poor shape will look to their employees as a last-ditch funding source. However, this conclusion is more coincidental than automatic. Many healthy startups have an employee stock plan and getting into one early can make you rich if the company strikes it big.

You will want to be paid by the hour, rather than a salary, so they cannot work you more than 40 hours a week without paying you overtime.

As for the company culture, you may be able to get a sense of it by simply keeping your eyes open. Is there a dress code or are people in T-shirts? Is everything neat and tidy or do people have toys at their desks? These are things you can see for yourself. As for the core principles, you can simply ask.

You will also want to consider whether you will be happy and productive in the position, and if you can see yourself making a positive contribution to the company and its customers.

This advice is mostly awful.

If 'retaining your right to sue them' is at all a factor in your decision, you should be working for a big company.

If you want to be 'paid by the hour' and/or receive overtime, freelance or work for a big company or work in a unionized occupation. At a startup, your equity is your only overtime pay.

Reply on news.ycombinator.com