Over the last 10 years, movies, television, and the news media managed to paint a dramatic, rather seductive picture of startup success — a quick rise to the top; much more sensuous and sparkling than messy and chaotic. Founding or joining up with a fresh, brand new tech startup team is an exciting possibility — but it’s also risky, demanding, and much more difficult than it looks on the Internet or TV.
We’ve brainstormed with you about the ideal profile of the remote worker and freelancer –and what we’ve found is that the makeup of a brand new startup member is a completely unique role in itself. While some remote workers thrive in a dicey, fast-paced, uncertain environment like a new startup, some freelancers work much better with an established remote work team or corporate organization. There’s nothing inherently preferable about either one; instead, it’s about what you’re willing to get yourself into.
Almost every freelancer that signs on to a fresh startup fails to understand that money will not be flowing in regularly at the beginning — or, perhaps, for a good while. The story you’re told is that original or founding members of a tech startup may benefit greatly from a low employee number and quick success, but that’s a best-case scenario — and like attorney television commercials tell you, one person’s circumstances of success will not likely apply to everyone.
In reality, for most startups, the first several months to several years is all about risk, hard work, negotiation, faith, and patience. That’s why it’s important to consider your financial options at this early stage.
Should I Ask for Equity?
According to Harvard Business School, 90 percent of startups don’t make it from seed stage to true VC funding. Therefore, equity investment in a seed stage startup is even more risky than equity investment in the VC stage. Don’t be fooled — both are risky. Depending on the circumstances, negotiating equity may be worth your time, but it’s not for everyone. Make sure you understand the fine print, take every statement with a grain of salt, and talk to an attorney if you’re unsure.
In these uncertain times, it’s also a good idea to make sure you have another source of income or savings set aside ahead of time until the startup begins earning its own money. As the usual rule of thumb goes, it’s a bad idea to rely on credit cards only. Companies like Airbnb managed to do it, but it’s not recommended, as no one can be 100 percent certain that their product will blast like off like theirs did.
Most experts, including those who have started and run successful startups before, suggest scaling with responsibility and being cautious about thinking too big too fast. Small is cheap — and that’s usually good news at the beginning of a startup. Make sure your entire team is on the same page in regards to your scaling philosophy.
And what about investors? About six months ago, our team took part in Startup Week, where many teams that were promoting their startup and looking for investors didn’t even have a product yet. That’s an interesting approach! You usually don’t need millions of dollars to start something — sometimes you just need a good partner who will help you plan everything — and don’t forget — it’s pretty important to start with a good product first.
All in all, when it comes to investors, your team needs to be prepared with the answers to some important questions ahead of time — because your prospective investor is going to ask them, too. Is your company unique? Do you solve a problem that other companies can’t solve? Is there a market opportunity? Can you scale the organization in a way that will make the investors some money? If you’ve answered no to any of these questions, hold off on any kind of search for an investor until you refine your product and plan.
Fresh as a Daisy?
Finally, consider that your brand new, fresh tech startup life will likely leave you looking and feeling a little less crisp than desired. Yes, you will work more than eight hours per day when you join a new tech startup — and this will probably be the case for a while. In fact, some freelancers work at their regular place of employment while starting their startup in their home office or garage on the weekends and evenings. Others supplement their income with large or long-term projects while they also work on the startup itself.
We’ve told you that the freelance life is supposed to be flexible — and it certainly is, in general, when you get into a groove or already work for an established company. At a fresh tech startup, expect to grind, with the possibility of no work-life balance in the beginning. You must also stay immensely positive at this point — and hold onto the hope that your startup idea will work out, as the only thing in your pocket. Ask Virgin’s Richard Branson or billionaire entrepreneur Mark Cuban — you must have the mindset to grow your startup so you don’t go insane and sabotage yourself and your team. The right outlook, no matter what’s going on during a given day or week, is crucial!
If you’re still in, by all means, join that fresh new tech startup — reach for the stars, but be ready to work harder than ever before to get there! If you take the time to understand the financial and personal implications of your decision, you’ll be more prepared than ever to start delivering your star product to the people who need it.