Questions to ask founders when joining a seed-stage startup
If you are dedicated to building a business from scratch as an early employee, know what you are getting into before joining.
After four years trying to get a big idea off the ground at a seed-funded startup, I am back on the interview circuit. When I was interviewing with my previous employer, I had very little context on how to evaluate the founders or business. Since then I have learned a tremendous amount about the management of startups, and I would like to begin sharing my knowledge with the startup community that has been so beneficial to me throughout my journey.
My first post in this vein, and most relevant to those interviewing, is a list of questions focused on the evaluation of seed-stage startups. They will help you gauge the maturity of the business. By no means is this an exhaustive list and you might not need answers to all of them prior to joining. All of these questions are entirely reasonable to ask a founder, especially in a pre-product market fit startup, and the founder should provide straightforward and honest answers. Some founders might want an NDA in place prior to answering questions about revenue or customers (which is fine but read carefully, should be scoped around a potential business relationship), and some customers prefer their names not be shared (in which case a general description of the customer should suffice, but be sure you are discussing real, paying customers).
The goal is not to eradicate risk, but instead to make wise decisions about where to invest your time and energy. Consider any misrepresentation you discover after joining a red flag and explore better opportunities.
If you have suggestions for additional questions, or would like clarification on anything, please respond in the comments.
Business
- Can you (founders) tell me about your background in your industry?
- Why did you start this business?
- How did you connect with your investors and what inspired them to invest in you? (Pay close attention to investor quality — look for prior exits in/around the startup’s space)
- What are your revenue streams?
- What is your pricing model?
- What is your average MRR over the last three months?
- What are your average monthly costs/expenses? COGS, burn
Customers
- Who is your target customer, and why? (For pre-PMF, you want an answer that sounds too precise)
- How many customers do you have?
- How long have you had them?
- What are they paying for?
- How much are they paying?
- Who is your oldest customer?
- How are you acquiring customers?
- How are they responding to your product?
- How do you research your customers?
Product
- How much of what you have on your marketing site has been built? What has yet to be done?
- Can you show me your product?
- Who are your primary competitors?
- Who is the leader in your space?
- Who are the biggest players in your space?
- Are any specialities standing out for you?
- What is your growth strategy and how might your strategy fail?
- What parts of your product are closest and furthest from the ideal in your vision?
Team
- How has your team changed over time?
- Which employees have been around longest?
- Can you describe your working relationship with your employees?
- (If remote) What tools and processes do you use to stay connected with remote employees?
Code (questions for tech lead)
- Have you been tracking code quality?
- What development tools do you use?
- What version control do you use?
- Can you describe your stack for me?
- How is your software organized?
- How do you approach testing?
- What is your deployment process?
Equity (when discussing compensation)
Equity is complicated and you should try to understand your equity compensation as fully as possible. Do your research and understand what you are getting. Other resources explain much more thoroughly than I could, but at minimum you should understand the percent of equity your options represent, current strike price, vesting schedule and whether everyone else is on the same schedule, and liquidation preference.
