What you should consider before joining a startup (as a non-developer/founder)
I get a lot of questions about this topic as more and more people look to startups as potential employers post graduation. To be clear, joining a startup is very different from founding one (more on this in the future). And before we go into the due diligence checklist, let’s first define what a “startup” is.
What (roughly) counts as a startup?
Here’s where I see the rough spectrum of software companies:
Keep in mind that the above diagram is a highly approximate overview of various company stages and differ by industry (i.e. a pure technology play company needs less employees than a marketplace company). I consider startups being anything from early to growth stage (these are also the type of companies I have most personal experience with). Mature and Public are pretty much corporate or “big tech”. Late stage is a bit of a toss up.
Company Stage & Roles
What stage you join a startup is critical to your recruiting approach. Breaking it down, employee count (and growth) is important for seeing where you fit in the org (especially important for MBAs), funding is important to gauge run way and sustainability, and brand recognition and traction is important for the CV and whether your next job will perceive your role at said company to be legit.
For an early stage startup, you’ll probably join as PM (product or project) because the company is looking for 1) product market fit and 2) better product development processes. What about strategy roles? For early stage, that usually means market sizing and competitor analysis (i.e. typical business analyst/consulting work), but this is usually limited to project or internship basis.
You might be offered a “growth” position and you’re probably thinking that this is business development or marketing. Beware! That’s a red flag because often an early stage startup that’s pre-launch/MVP (that is before an initial product has hit the market) or immediately post-launch doesn’t need “growth”.
If they’re advertising the role, it could mean one of two things: 1) the company wants you to be the guy cold calling potential clients or gather user data in the field (equivalent of cold calling users) or 2) they’re trying to grow out their marketing/biz dev team prematurely, which means an unnecessarily high burn rate (eats into sustainability) and expect higher levels of team conflict (i.e. the devs will complain that the “business” folks aren’t doing anything and the marketing team will be bored).
Of course, things can differ based on the type of company. For example, a marketplace startup will need to get suppliers lined up, but this should be done by the founders anyways because things don’t need to be done at scale at this stage.
Remember, the sole purpose of the early stage startup is to find product market fit and if you’re not contributing directly to that either as a builder, project manager or use case validator, then you might be underutilised, especially if the company is pre-launch. Still, you’ll get a fancy title, but likely none of your mates have heard of your company. Oh and forget about the perks — you probably won’t get them until at least the next stage.
At the growth stage, assuming there’s some degree of product market fit, you’ll join as head or senior role in business development. strategy, or marketing because the company is now ready for expansion and things need to move towards order and process rather than the chaotic early stage days. This is where you get a lot of ownership and teach yourself the skills necessary for the job. But if you’re really passionate about your company’s mission (and you should be at this stage), you’ll do whatever it takes to make it work. Your Hacker News reading friends might have heard of you on TechCrunch and congratulate you on your latest round of funding.
At late stage, you’ll join those teams as a senior to middle role but still have higher growth potential compared to mature/public companies. This is the ambiguous border between being a startup and big company. The same business roles apply but you’re unlikely to get into product management without a technical background because they’ve probably got incumbent product geniuses that have successfully steered the ship for the past 5 years. But worry not since all your buddies think you’re cool because you’ve joined this hot “startup”.
Mature & Public Stages
The difference between mature and public is long term sustainability due to public markets accountability and scrutiny (example: Uber is mature but not quite ready or needs to go IPO because it’s still hemorrhaging money, amongst other recent woes), how long the company has been around and how structured it is. This is where the bulk of MBA’s recruit into because that’s what the business program was originally designed for — the corporate lieutenant and captain ranks and it’s the large companies that really need this management layer. By the way, congrats your mom will finally stop asking where you work.
Due to brand recognition, PR, size, and money, the further you go towards mature/public, the more competition you’ll face from your peers. Today, recruiting for the Five Horsemen (Google, Amazon, Microsoft, Facebook, Apple) isn’t much different from the structured recruiting you’d experience with consulting.
On the other hand, the further you go towards early stage, the more unstructured the hiring becomes. That’s good and bad. Good because if you know a lot about a particular field, you’ll have a higher chance of picking out the early and growth stage gems. Potentially bad because they have more specific needs (product/project for example) and won’t spend valuable resources on a “maybe good fit” hire.
Also, recruiting in this space relies a more on networking and knowing the opportunities when they appear or convincing the right people that you can bring immediate value. To summarise, networking and having an information edge are crucial for early/growth stage recruiting.
Three Overall Considerations: Think like a VC
Joining a startup is risky business — arguably even more so than investing in one because you’re essentially devoting your most valuable resource to the endeavor — your time. As a baseline, you should think like a venture capitalist and ask yourself about the market, team, and product (in order of importance).
What’s the big problem, user pain level, how pervasive is the problem, how much are people willing to try it or (better yet) pay for it, total and addressable market size, growth potential, other use cases? Is there a concrete target customer in mind? What’s the competition and what are users currently using?
As Andy Rachleff, cofounder of Benchmark Capital, puts it:
When a great team meets a lousy market, market wins.
When a lousy team meets a great market, market wins.
When a great team meets a great market, something special happens.
So really do your homework here. I have personally been trashed twice by the market in my early stage pursuits.
Founders & Team
Needless to say, the founding team is the cornerstone of the company. Do they face the same pain that they are trying to solve, do they have the background and experience to pull it off, how serious are they, how long have known each other and in what capacity (friends or colleagues)? How are their working dynamics, what are the strengths of each and do they cover each other’s weakness? What’s their vision and mission? What’s the balance of entrepreneurial grit (some can say stubbornness) vs flexibility and openness to market feedback?
Secondary to the founders is the existing team — do they have the right capabilities to execute on the vision or to at least deliver the MVP to start testing the market? If there is already an MVP, do they have enough resources to improve and rapidly iterate if necessary. How much do they value data and user feedback and, if post-launch, have the right analytical platforms and feedback channels setup?
Update: During a call I had recently with a friend who’s about to join a robotics startup, I realised that I forgot to mention that you should also note the investors who are backing the company in question. You’re going to feel a lot better with a Sequoia or YC-backed team than a startup funded by a bunch of rich guys who don’t know a thing about the space. However, remember that market is still king and one of the times I was burned was at a startup backed by a very reputable VC.
The reason why the actual product is last is because 1) the market always wins (see above) and 2) it’s natural for the product to iterate and evolve over time and 3) a superb team will eventually find the right solution to the problem.
That said, you should ask the following questions. Who is leading product or setting the overall product vision (hint: should be the CEO or one of the founders)? Is the product still in development? How many assumptions have been verified or derisked either before or post launch? How complicated is the solution? Is it overcomplicated (this is a huge problem for some startups) and if so, is there a simpler way to prove user demand? How compelling is the solution compared to the status quo and competition? Is it a completely novel approach or improves an attribute by at least an order of magnitude (performance, price, durability, service, etc)?
Assuming you’ve got a killer (potential) market, fanatical founders with a team focused on execution, and a product that’s designed to or has derisked key assumptions, there are a few more role-specific considerations.
Five Role Specific Considerations
In addition to the above, find out who you’re reporting to, influencing and directly working with. For example, as the product lead you might be reporting to the CEO, collaborating with the CTO or tech lead, and influencing marketing. What are their quirks and will it clash with your own working style?
Flexibility & Ownership
How much freedom do you have to figure out the solution and execute your work? For example, you’ll get frustrated soon if you have to get the CEO’s say for every little product decision, especially if the CEO is unreachable or busy fundraising. Do you have the option of working remotely, if that’s your style? Just remember ad hoc in-person communication is important for startups.
Will you be given enough resources for you to execute your solution? For example, if you’re a strategist or marketer, will you be given enough tech resources (i.e. dev time) and money to buy and integrate your proposed analytics platform?
This is a two way street — what’s expected of you and what do you expect to get out of this experience? What’s your deliverable and concrete responsibilities? What marketable skills will you gain from the role?
Finally, does the job pay you enough to support your lifestyle or pay off stuff like mortgages and student debt? How much equity are you promised and does it amount to anything substantial based on back-of-envelope calculations? The whole startup compensation matter is well covered by others so I won’t go much into here but keep in mind your location (cost of living and local benchmarks). Hop over to AngelList and look up what other startups in your city with similar funding and size are offering for particular roles.
There you have it — the collective knowledge from my experience as well as meeting countless people who work in or want to crack into this world.
Remember that as opposed to joining big tech, when you join an early or growth stage startup, there is next to no brand recognition (and therefore doesn’t hold much weight for future employers if the venture fails). This means you need to really gauge whether the opportunity indeed has rocket ship potential and if so, how long it might take to get there and if you have the capacity and motivation to carry it there.
That said, the best companies today were all startups once and behind each was a phenomenal, “gritty” group of people. Are you ready to be part of that team?
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