The prospect of joining a new team — especially when it’s an early-stage startup — can feel exhilarating: you’re positive that together you will shape (if not outright change!) the world (and get crazy rich in the process). But letting yourself be carried away by the visionary ideas of a super charming founder without taking a step back and examining what you’re actually getting yourself into might be a risk not worth taking. You don’t want to find out after you signed the contract that all the fancy talk was based on fantasies rather than any tangible results or at least achievable goals.
“There is a difference between a startup failing and a startup designed to fail.”
For a short period of time, I was part of the startup scene so I know that it’s not the most stable of working environments: only 30% of small companies survive past their tenth year in the ever-changing, moody, and often hurricane-prone startup climate. But there is a difference between a startup failing and a startup designed to fail. While the first scenario will enrich you regardless of the outcome, the latter will only lead to frustration, sleep deprivation, and hair loss.
“The good news is that there is a way to identify the three common startup red flags before committing yourself to hours and hours of blood, sweat, and tears.”
During my brief encounter with the early-stage startup universe, I was actually not one of these unlucky, hair-loss-suffering ones; however, I witnessed a lot of disappointments and listened to bitter stories of those who ended up in a company that miserably failed to meet their expectations. These once-eager start-uppers have all agreed on one thing: the realization that you’ve been tricked into a promise of something that will never materialize sucks. The good news is that there is a way to identify the three common startup red flags before committing yourself to hours and hours of blood, sweat, and tears. The easiest method is to ask yourself the following questions.
1. Would You Pay for It?
Red flag: Hey, welcome to the team! Customers and sales? Sorry, we don’t focus on numbers here.
It’s not unusual for early-stage startups to be short on users paying for their products or services — it takes time to generate traffic to a website and a young company will be more concerned with product development and attracting investors rather than marketing and commission. If, however, there already are active users checking out what your potential employer has to offer, even signing up or subscribing, only to drop off as soon as a credit card is mentioned… well, that’s hardly ever a good sign.
Sure, the lack of paying customers can mean that not the product but the business model is at fault. In any case, you should try to find out as much about the startup’s current offer as you can — don’t just focus on the vision the company’s selling you! The product doesn’t have to be perfect (and if we’re talking startups, it most probably won’t be), but it should be good enough for you to be genuinely interested in it not just as an employee but also as a consumer. Ask yourself: would you pay for it? If the answer is no, you might, later on, find it hard to identify with the company’s goals and values — or even realize that you’re not the only one reluctant to open the wallet for a mediocre idea.
2. Is It Transparent?
Red flag: We are not like the big bad corporates — we’re like a family! We tell each other everything and every team member’s opinion matters!
Transparency in the company is what many startups try to sell their prospective employees. While that might sound absolutely marvelous, you should keep in mind that anyone can claim these things — but can they also prove it to you?
Try to ask the founder as many questions as you can before joining the team and see how they respond. Do they just highlight the ups without ever mentioning the downs? Do they avoid hard questions or openly admit to the challenges they’re currently facing? Do they try to find excuses for things that are not working well or are they taking full responsibility for the issues they experience? Do they shower you with far-fetched visions of expanding to ten different countries in the next few months or do they present a concrete plan that will help them achieve that goal? Sure, they probably won’t spill all the beans before you sign the contract, but if they claim that everything’s perfect and rosy, they are probably hiding some ugly truths.
3. Can It Fulfil Its Promise?
Red flag: Our products are sustainable, feminist, pro-LGBTQ, and single-parent-friendly. Oh, and if you ingest them, you will turn into a beautiful butterfly!
Some founders connect their products or services with a lot of popular keywords like sustainability, empowerment, or gender equality — if you listen to them for a long time, you will wonder why they haven’t saved the world yet. But is there any actual research-based impact the product has or at least might have in the near future, that would lead to such noble causes? Or is there just an arbitrary, wishful connection between the keywords we all like to hear and the startup in question? The rule of thumb says that if it sounds too good to be true… it most probably is just a marketing strategy. Stay critical and dig in to find out how exactly does the startup contributes to making the world a better place.
In short, if the founder seems so ambitious that he or she is borderline manic, it might be a sign of their huge ego — and that has already sunk a great number of businesses. Your time and energy are precious, so better leave that ship before you’re even onboard!