She started the conversation by saying: "Before we talked about the details such as COBRA, your last check, vacation balance, etc, we want to find out why you’re leaving the company. We’re not like our parent’s generation who will stay with the same company for their whole lives. We understand people will change jobs. But, we want to understand why you are leaving so that we can do a better job to retain employees".

I knew I would be asked this question. I had rehearsed my replies before I came to the meeting. I was quite frustrated at certain aspects of my work, and that’s why I was leaving.

However, I did NOT want to burn any bridges. And HR was not the place to express my frustration and speak my mind. To understand the dirty secrets of HR, I highly recommend you to read Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them .

So, I replied: "I really enjoyed working at Company X. I’m very grateful for the opportunity I was given. I’m leaving largely due to career development reason. I found an opportunity that allowed me to do something that I was really passionate about. My decision to leave really has more to do with the next opportunity, and has less to do with Company X. I really like everyone here. I’ll remain to be a shareholder."

The HR manager then asked: "We understand that most people leave because of career development reasons. But, there must be some reasons that triggered your decision to leave. What can we do better?"

This was a tricky part — I wanted to provide an honest answer, but again I didn’t want to burn any bridge. So, I framed my answer this way:

"Our Company has been growing for the past couple of years. I’m very fortunate to be part of this growth. As a result, I plan to remain as a stockholder. As a stockholder, based on my understanding of our business model, product, technology, etc., these are the three things that will keep me awake at night." I then listed 3 things that I think the company needs to improve in light of rapid growth and the challenge of scale the business. I focused on describing the challenges, and never mentioned a single person’s name.

The HR manager was satisfied, and went on to explain COBRA, final pay check, etc. to me.

It was an amicable exit interview. I didn’t burn any bridge, but still provided the company some feedback to improve.

How is your exit interview experience? Any story to share? I’d love to hear from you.

A few days later, I saw a job ad by a head hunter on Craigslist. It was the same job description, but the employer name was hidden.

I emailed, and within 2 hours I heard back from the head hunter. He didn’t think I had all of the required experience and background, but he wanted to at least chat with me.

One thing led to another. I eventually interviewed with this company and got an offer.

The head hunter had been working with this particular employer for many years. When he passed a resume to the employer, they would at least take a look. The head hunter has an established relationship with the employer, and he was able to get my resume to the right person.

This is extremely valuable. If I ended up taking this job, my pay would be lower because the employer had to pay the head hunter a commission. However, I would not have gotten the job at first place if I didn’t get help from the head hunter.

You probably have heard that “we’re in the internet age and recruiting are done online” — I wholeheartedly disagree with such statement — it’s not true that head hunter is no longer valued.

Fundamentally, recruiting is a people-based process.  Relationship matters a lot. When you get a call from a recruiter next time, be nice to him or her. A good recruiter is like your personal salesperson, who will work tirelessly on your behalf, promote your brand, and help you get to the next level.

Related posts:

• Don’t work for the same company for too long
• Job Hopping is good for you: Career Lessons from Lane Kiffin
• It does NOT hurt to ASK

• Get The Job You Want, Even When No One’s Hiring: Take Charge of Your Career, Find a Job You Love, and Earn What You Deserve
• Guerrilla Marketing for Job Hunters 2.0: 1,001 Unconventional Tips, Tricks and Tactics for Landing Your Dream Job
• What Does Somebody Have to Do to Get a Job Around Here! 44 Insider Secrets and Tips that Will Get You Hired

• Job offer #1 was from Andersen Consulting (now Accenture), a large professional service firm.
• Job offer #2 was from a medium sized, publicly traded enterprise software company. This company had about 600 employees, and just went public a few years earlier. It was a pioneer in the Customer Relationship Manager (CRM) space.
• Job offer #3 was from a hot startup called Silicon Valley Internet Partner. It later changed its name to Viant and went public during the dot com bubble.

I was really confused. I wasn’t sure which job I would take.

Andersen Consulting dangled a lot of carrots in front of its recruits. It offered the most money, and launched a full-court press. Right before my final exams, they sent me a "final pack" of snacks, stationeries, and other goodies. It was certainly a nice gesture and made me feel that I was wanted.

The enterprise software company was in a very high-growth market segment. The pay was average, but there were a lot of growth potential.

Silicon Valley Internet Partner was "hot"  and "yuppie" — a lot of young professionals left large consulting firms to join the company. They paid the least amount of salary, but they offered attractive stock options. I remembered that I was invited to a happy hour event. One of the managers was telling me that he left his job at Sun Microsystems because he felt that he could potentially make millions of dollars instead of hundred of thousands of dollars from stock options.

I was a naive, ambitious, and inexperienced college graduate. I really didn’t know which opportunity I should pick.

Should I go with the brand name, higher salary, training and development program of a large company like Andersen Consulting?

Should I follow the foot steps of many peers to dive into the dot com world?

At that time, I didn’t give too many thoughts to the medium sized company. I felt that it’d be either a large company or a startup. The medium sized company was less attractive.

I ended up joining Andersen Consulting because I wanted to have a big company brand on my resume. They paid me the most, which would help me pay off my college loans faster. I wanted to get more big-company experience before I jumped into the startup world.

I spent a little bit over a year at Andersen Consulting. Great experience. But, I realized that consulting wasn’t for me. But, I needed to figure out what to do next. I knew that I didn’t want to be a developer — I didn’t like to sit in a cubicle from 9 to 5. I wanted more human interactions. I wanted a role that was at the intersection of business and technology. After talking to a few people, I felt that product management might be a good career choice for me.

However, I didn’t have any experience in product management. I called up the medium sized software company. I told them that although I didn’t take their job when I graduated a year ago, I was still very impressed by them. I wanted to work for them, but in a different role. Instead of being a software developer, I was very interested in becoming a product manager.

They offered me a job as Associates Product Manager, working on a very technical product. I didn’t mind the highly technical nature of the job — it gave me the opportunity to get into the door of product management.

After this company was acquired by a large software company a year later, I jumped ship to a start-up.

So, my career path after college was big company to medium sized company to start-up.

Did I purposely "manage" my career to work that way? Not at all.

Would I recommend recent college graduates to follow my path? Not necessarily.

Let me share with you a few observations.

I still think there are a lot of values to work in large, established companies for a few years. I never regretted my decision to work for Andersen Consulting because it gave me great training and exposure to many things. By joining a big company, I might have missed the opportunity to become very rich — for example, one of my classmates joined Geo Cities, and made a truck load of money. But, I think luck played a big role in my friend’s path to rich. If you take a long-term view on career, having a few years of solid experience at a well-run large company is a worthwhile investment of your time and energy.

With that said, I do think that there is a group of people who simply cannot function in large companies. They will get really frustrated because they cannot put up with the big-company processes and bureaucracy. If you belong to this group, then by all means go to work for a small company. However, I think you should have minimum requirements for the small company you’re going to join:

• The people at the startup should be smart. You must feel that you respect them and you can learn from them. 
• The company has some paying customers for their products.
• You have seen their product or service, and you feel it’s useful and have a market.

All other considerations are secondary comparing to those 3 criteria. I think as long as you work for a startup that has smart people, has a product that people actually pay for it, and a product that you think has a market, you’ll be able to learn something that’s valuable.

Don’t be overly concerned about stock options and which venture capital firms are behind the startup. As someone who is fresh out of college, you will get very few number of shares of stock options. And even the most prestigious venture capital firm has probably one home run out of every ten investments.

One type of companies that is overlooked by a lot of people is medium sized companies. I define "medium" as companies that have a few hundred to a couple of thousands employees. They might be public companies, or they might be late stage private companies. They have grown to a size that they have put in some processes and structures. At the same time, they’re still fairly entrepreneurial.

Medium sized companies don’t have the prestige and brand recognition of large companies, and they lack the "cool factors" of start-ups. However, I think medium sized companies are sometime the best employers. It’s an overlooked group of employers.

One big advantage of medium sized companies is that they’re growing rapidly, and therefore there is a lot of opportunities for smart, hard working, and successful employees. At the same time, because of established product, processes and sales force, your risk is limited.

If I can re-start my career, I probably will choose to join a medium sized, high growth company.

Related posts:

• Career Reflection #1: First Job After College — Andersen Consulting (now Accenture)
• Don’t get stuck
• The first time I cried at work
• Your relationship with your parents have a lot to do with your career success

Excellent resources:

• The Leap: How 3 Simple Changes Can Propel Your Career from Good to Great
• The 5 Patterns of Extraordinary Careers: The Guide for Achieving Success and Satisfaction
• The First 90 Days: Critical Success Strategies for New Leaders at All Levels
• Your Next Move: The Leader’s Guide to Successfully Navigating Major Career Transitions

They share one thing in common: they have been laid off by their previous employers. But, instead of feeling bitter about the experience, they’re using it as a turning point to find something better and more fulfilling. To certain extent, the layoff is a wake-up call they have been subconsciously waiting for a long time. It’s time to make some changes, and pursue a career path that they truly have a passion for.

I totally respect and admire what they’re trying to do — although the job market is tough and they are without jobs, they still want to make sure they find the right jobs, not any job.

Quite a few of them have been focusing on making transitions to other functional area. For example, a system engineer wants to become a DBA, a PR professional wants to get into business development, and a enterprise sales rep wants to become a product manager.

They’re all very talented individuals. I have no doubt that if they’re given the opportunity, they’ll successfully make transitions to their new roles.

But, everyone of them, without an exception, has hit a wall in their job search process. They had phone interviews and even informal coffee chats with potential employers. In the end, the conversation boiled down to "we really enjoyed talking to you. We’d love to have you. But, at this point, we want to hire someone who has done similar things before."

This doesn’t surprise me at all. In this economy, employers are tightening their belts. They cannot afford to hire an unproven commodity. They want to hire experienced people who can hit the ground running, and start adding value to the company’s top line and bottom line immediately. 

We all have our ideals, and our vision for the perfect job and career. But, we have to face reality. It’s virtually impossible to look for a new job and make a career transition at the same time in this economy.

For folks who’re interested in making a career transition, the best time to think about it and prepare for the career switch is while you’re still employed. In fact, if your desired job function is available in your current company, that’s the best place for you to explore career transition.

I wouldn’t say it’s impossible, but it’s very hard to switch to a different job function while you desperately need a job to feed yourself and the family.

Throw away any romantic notion you might have about finding your passion and your dream job at the same time while you’re unemployed. Those are definitely worthy goals for you to pursue. But, do that after you get a steady paycheck. While you’re unemployed, your number one priority is to get a job. You can then figure out ways to pursue your passion and make career transitions. (The only exception is that you have the financial means to last for a long time without having a job. If you have that luxury, then feel free to pursue your own course of action. But, I think for most professionals, they need to get another job in three to six months, if not sooner.)

To get a job, the most important advice I can offer you is to leverage your existing strength, background, and experience. During interviews, your job is to show the hiring company that because of what you have done in the past, you’ll be able to immediately add a lot of value to the hiring company. You’ll be hired if you can convince the employer that the ROI of hiring you is tremendously positive.

Related posts:

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• Are you interested in a lot of different things, but not sure what exactly you want to do about your career?
• From laid-off dot com worker to medical doctor

Excellent resources:

• Your Next Move: The Leader’s Guide to Successfully Navigating Major Career Transitions
• Escape from Corporate America: A Practical Guide to Creating the Career of Your Dreams
• Career Renegade: How to Make a Great Living Doing What You Love

His employer was a recently funded start-up when he joined the company as a contractor. He performed well, and was soon hired as a professional service consultant.

Jimmy had great customer facing skills. Customers loved his work. He won an excellent employee award two years after he joined the company. He was doing great.

On the 3rd year, Jimmy then married and started a family. He didn’t want to travel as much as he used to be. So, he talked to his manager, and made a transition to in house software development. He was still working on the same product that he was implementing at client sites. He now worked on adding new features as well as maintaining the software.

On the 4th year, there was a disruptive change in the market. The product Jimmy has been working on started losing market share. It was still used by a sizable number of customers, but its growth was starting to level down.

On the 5th and 6th year, the product was becoming obsolete. It was clear to everyone that the company would soon end-of-life the product.

Jimmy was the only person who was working on this product. He felt threatened a little bit. But, he was waiting for his green card. If he moved to another company, he would have to apply green card again.

Jimmy could try to move into a different role. But, he had been settling nicely into his existing role — he was the expert in the product. He had a lot going on at home — with two little kids, he had to spend a lot of energy on the home front. He enjoyed the familiar work that he was doing everyday — it afforded him flexibility to balance work and life.

On the 7th and 8th year, the company kept losing customers. It’s apparent to everyone that in 12 to 18 month, the product would no longer be supported.

At that time, there was plenty of rumors that the company would be acquired by a large company. The employees might finally see an exit event. Although it wouldn’t make Jimmy a millionaire, it would still mean a healthy amount of cash.

Jimmy wanted to wait until the exit event took place. His plan was to cash out, and then looked for another job.

On the 9th year, the economy took a dive. None of the acquisition rumors became reality. The company had to raise another round of funding. Employee stock options were further diluted.

The good news was that Jimmy finally got his green card.

But, his product was no longer offered. His job was eliminated. He was laid off. He was very disheartened by what had happened to him. He had a lot of fears about what would happen next. He hadn’t looked for a job for 9 years. A lot of the stuff he worked on were very specific to the particular company and product — in other words, they’re not very transferable.

Don’t let yourself get into similar situation.

If you work in high tech industry, you should be ready to switch job every few years. The industry changes too fast.

Don’t let yourself get too comfortable.

You need to continue to renew your knowledge and skills.

It is very risky to place all of your bet on a single employer.

Until an exit event actual happens, it’s just a rumor. Expect the unexpected when you plan your career moves.

(Disclaimer: This post is based on a true story, but details have been changed slightly to protect confidentiality.)

Related posts

• Job Hopping is good for you: Career Lessons from Lane Kiffin
• Don’t get screwed! Stock option questions you should ask before you join a start-up
• How to convince employers to hire you even though they don’t have job openings

Excellent resources

• Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them
• Career Warfare: 10 Rules for Building a Successful Personal Brand on the Business Battlefield
• The 5 Patterns of Extraordinary Careers: The Guide for Achieving Success and Satisfaction

Since I’m neither a USC Trojan fan nor a Tennessee Volunteer fan, I’m fairly indifferent about Lane Kiffin’s move from Tennessee to USC. From an ethical standpoint, I didn’t like how Lane Kiffin made empty promises to the Tennessee community and then bailed on them.

But, I have been fascinated by Lane Kiffin’s career moves. At the young age of 34, he is coaching a top college football program with an annual salary of $2 million. Two years ago, at age 32, he became the youngest head coach ever in the National Football League (NFL). In the past four years, he had switched jobs three times:

• In 2007, he quitted the offensive coordinator position at USC and became the head coach at Oakland Raiders. He had 5 wins and 15 losses as the head coach of Oakland Raiders in a little bit over a year.
• In 2008, after he was fired by Oakland Raiders, he became the head coach of Tennessee Volunteers, a major college football program. He finished his first season at Tennessee with a modest record of 7 wins and 5 losses.
• In 2010, after only one year at Tennessee, he quitted his job again and became the head coach of USC Trojans, one of the most high-profile coaching jobs in college football.

Lane Kiffin is a job hopper. He hasn’t won anything as a head coach. But, he kept getting high profile jobs with excellent pay.

I took a close look at Lane Kiffin’s career moves. Like him or not, I have to say that Lane Kiffin is very strategic in making career moves while managing the down-side risks. Let me share with you a few lessons I learned.

First, Lane Kiffin made bold moves with limited risks. When he was hired by Oakland Raiders, a lot of people were saying that he was doomed to fail. He had never been a head coach before. He had never coached in the NFL. All his previous experience was in college. He was hired by one of the most difficult, and hated owners in professional football, Al Davis.

I think Lane Kiffin was very smart in making this move. He knew what he was getting himself into. The chance for him to succeed in Oakland was low. But, this moved significantly raised his profile in the public. A 32-year old college offensive coordinator without any prior head coaching experience were hired by Al Davis? He must be really good. Although Al Davis was very controversial, he had a history of giving young coaches a chance. For example, he hired the legendary John Madden when he was young and unproven. John Madden led the Raiders to a super bowl.

Although Lane Kiffin was unproven as a head coach, there was a PERCEPTION that he was really good. The hiring by Al Davis further "validated" that perception in public eyes.

On the other hand, because Al Davis had reputation for being difficult and frequently firing head coaches, Lane Kiffin had low risk. If he was fired, the public would be very sympathetic to him. The press would put a lot of blame on Al Davis. That’s exactly what happened two years ago. Under Lane Kiffin, the Oakland Raiders had some improvements, but still had a bad losing record. He lasted for a little bit over one season.

But, the firing didn’t damage the Lane Kiffin brand much. He was soon hired by Tennessee. Some people bought into the perception that he was a great young coach. And they blamed Al Davis for Lane Kiffin’s failures.

Second, Lane Kiffin has surrounded himself with a very experienced team to put him in a position to win. When Lane Kiffin was hired by Tennessee, he was under a lot of pressure to deliver. Tennessee was part of Southeastern Conference (SEC), which is the most competitive conference with several college football powerhouses such as Florida, Alabama, Georgia, etc. As a young coach with little head coaching experience, Lane Kiffin knew that he needed help. He hired his Dad, Monte Kiffin, as the defensive coordinator for his team. Monte Kiffin was widely regarded as one of the greatest defensive coordinators in NFL history.

When Lane Kiffin made the move to USC, he brought with him Monte Kiffin, and recruiting coordinator Ed Orgeron. Ed was known as a power recruiter, who was the National Recruiter of the Year in 2004. So, Lane Kiffin essentially hired two superstar assistants when he took the job. He put himself in a very good position to win.

Third, Lane Kiffin increased his odd to succeed by moving into a less competitive environment. The Tennessee Volunteers is part of the SEC conference. That means Lane Kiffin will need to beat Florida and Alabama each year to just win the SEC before his team even gets a chance to compete for national championship. That’s going to be extremely difficult. The PAC 10 is also a competitive conference. But, USC is a notch above everyone else in the conference. It’s much easier for Lane Kiffin to lead USC to win the PAC 10, and then play for the national championship, as opposed to try to win the SEC every single year.

In summary, there are five lessons we can all borrow from Lane Kiffin’s job hopping play book:

• In the short term, perception is reality. Try to cultivate a public image that you’re the smart guy with enormous potential. Someone will offer you big job with big salary.
• Make bold moves, but protect your downside. 
• Surround yourself with smart and experienced people who will compensate for your weaknesses and help you succeed.
• Put yourself into the most conducive environment for wining.
• Experience is overrated. Perception will tramp lack of experience.

Am I being too cynical in writing this post? Well, I think one day Lane Kiffin will have to prove himself as a successful head coach. I do think he is in a pretty good position to do so. Only time will tell.

Let me finish this post with a quote from Benjamin Graham, the legendary author of The Intelligent Investor:

"In the short run, the market is a voting machine but in the long run it’s a weighing machine".

The same applies to the job market: in the short term, the market is a voting machine based on perception of your potential. In the long run, the job market is a weighing machine that will count what you have done.

Related post:

• Sometimes all you need is one class to jumpstart your career
• Sometimes all you need is one class to jumpstart your career
• Don’t get screwed! Stock option questions you should ask before you join a start-up
• The good, the bad, and the ugly of management consulting

Excellent resources:

• Career Warfare: 10 Rules for Building a Successful Personal Brand and Fighting to Keep It
• Who Gets Promoted, Who Doesn’t, and Why: 10 Things You’d Better Do If You Want to Get Ahead
• The Hard Truth About Soft Skills: Workplace Lessons Smart People Wish They’d Learned Sooner

So, I have sold many copies. I wrote the report because I wanted to help people. I included my contact information in the document — I asked readers to contact me if they have any question or feedback.

It turned out that about one out of every ten readers took my offer and contacted me.

Let me give you one example.

Felix was one of the customers who contacted me right before his second phone interview with Amazon.com. He asked me via email if I had any additional advice for the particular position in the particular group he was applying. I happened to have some information about the particular position.

Later, when Felix was preparing for his onsite interview, we emailed each other again. I gave him some additional pointers.

When Felix got his job offer, we talked about compensation negotiation and relocation package.

Finally, Felix moved to Seattle, started working, and took me to lunch.

There are a lot of people who want to help you. There are a lot of companies who want to hire you for your expertise. There’re a lot of retailers/suppliers/service providers who’re willing to give you a discount to get your businesses.

You won’t get anything if you don’t ask.

It costs you nothing to ask. And you will have a lot to gain.

It does NOT hurt to ask.

Similar products from GeekMBA360 Publishing:

• How to get into top MBA program after layoff
• How to become a product manager
• How I negotiated with auto insurance company to settle total loss and get $1,000 back

I’m 32 year old. I’m currently first-year student at a top MBA program. I got a 750 on GMAT. I’ve founded a non-profit organization.  I was promoted twice at work before I went back to school. I’m currently the president of a student club.

But, I’m really depressed.

As  you know, it’s really competitive to get a summer internship now. My dream is to become a McKinsey management consultant. It’s simply the most prestigious job in the world. I have wanted to work for McKinsey since I was five years old.

But, McKinsey’s job application asked me for SAT and my undergraduate GPA in addition to my GMAT score and graduate GPA. It’s too late for me to do anything with my undergraduate GPA, but I was thinking about re-taking the SAT since I had a mediocre score when I was in high school. But, it would take quite a bit of time for me to prepare for SAT, probably signed up a Kaplan class. Would you recommend me to re-take the SAT? Please advise. "

Thanks in advance,

Jerry

Okay. Let me confess first. I made up this letter. But, I can guarantee you that the content of this letter was absolutely based on actual conversations I had with people.

I attended business school during the last recession. Internship recruiting in Fall, 2002 was incredibly difficult. People were looking for every edge they could possible have to improve their chance to get an internship offer from their dream employers.

Several people told me that they were really concerned about their qualifications because they had low SAT scores. They were thinking about re-taking it. They wanted to do everything in their control to improve their chance with employers such as McKinsey, Bain, Boston Consulting, etc.

When we had mock-up interview practices, we were told that we needed to demonstrate passion. People were taking the "passion advice" very seriously. The investment banking and equity research wannabes were starting saying to interviewers that they had a calling for stock market since they were five years old. Just like Warren Buffet, they started picking stocks when they were in elementary schools.

The consulting wannabes were talking about how much they loved problem solving, and how they conducted their thinking the McKinsey way. That’s how their minds were wired by mother nature. They were born to work for McKinsey.

My examples might be exaggerating a little bit, but not much. After talking to many investment banking and management consulting wannabes, I can tell you that most of them didn’t get into banking or consulting because they had a true passion for these two professions.

They got into these two lines of work because 1) they could potentially make a lot of money 2) they would have the flexibility to make lateral moves to other career paths down the road 3) they didn’t like what they did professionally before business school. They wanted to do something different.

I also don’t understand why employers such as McKinsey and Google cares so much about candidates historical academic record.

San Francisco Chronicle recently ran a very interesting article: Google Talent Search: Error 502? Google has come out to dispute some of the statements in the article, which was included in the "Update" section of the article. I encouraged you to read this article and form your own opinion.

This reminds of an excellent talk given by Tom Siebel at Kellogg School of Management. Here is my favorite quote from his talk:

"You graduate from one of the best business schools on the planet.

Once you get out of here, it wouldn’t make any difference at all.

There is no correlation between business success and grades, test scores, or the schools you graduated. None. "

Here is the entire video recording of Tom Siebel’s talk. (You can hear the aforementioned quotes at about 9 minute 30 seconds mark.)

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• How my friend Caleb became a legend among wall street junior analysts
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Excellent resources:

• How to get a job at amazon.com: A definitive Guide
• How To Become A Product Manager
• The 5 Patterns of Extraordinary Careers: The Guide for Achieving Success and Satisfaction
• The Leap: How 3 Simple Changes Can Propel Your Career from Good to Great
• Go It Alone!: The Secret to Building a Successful Business on Your Own

In this economy, a lot of start-up are struggling. VC firms have the upper hand in negotiation. In a lot of cases, the deal terms are very unfavorable to existing stock holders as well as employees.

The problem is that in a lot of start-ups, the senior management teams are not very honest and upfront about stock options. Even in the case of massive stock dilution, senior management teams would still get some incentives unknown to the rank and file employees. Senior management team’s interests are not necessarily aligned with employees’ interests.

If you’re considering joining a start-up, or you’re working for a start-up now, you should have answers to the following questions.

1. How many shares of stock options have been granted to you? What’s the total number of shares outstanding in the company? Based on these two pieces of information, you can calculate roughly what % of the company you own. What matters is the percentage, not the absolute number of shares.
2. What’s your strike price?
3. How many rounds of financing has the company had so far?
4. As a whole, what % of the company is owned by employees?
5. In the most recent round of financing, what’s the liquidation preference for the investor? What’s the preferred participation (2X? 3X? or more?) for the investors? These two things could be really damaging for the employees. They allow VC to “double dipping” when the company is acquired.
6. How much cash does the company have on hand?
7. What’s the company’s burn rate?
8. What’s the company’s total revenue, profit, and net cash for the most recent year? What’s Year Over Year growth rate for these four metrics. How does the growth rate comparing to similar companies in the industry?
9. Is there any public company comparable to the private company? What kind of revenue multiple does the public company has? What kind of P/E ratio does the public company has?

If the company refuses to reveal above information to you, you should think hard if you want to join them.

Start-up is hard work, the risk is high, and probability of hitting a home run is very low. You deserve to know the facts and make an informed decision.

Play hard ball. Make sure you know what you are getting yourself into.

Related posts:

Is starting a company in Silicon Valley stupid?

Like many things in life, Management Consulting is not as good as some people think, and it is not as bad as some people think. Overall, my view on Management Consulting is more positive than my view on investment banking.

I tend to discourage people from getting into investment banking, but occasionally I would encourage people get into management consulting if I think they can benefit from the training and industry exposure brought by management consulting.

Management Consulting is a very loosely defined term. It could mean many different things. For the purpose of this article, I’m going to narrowly focus on "strategic consulting firms" such as McKinsey, Boston Consulting Group, and Bain Company. These are the three most well-known firms in this space. Other well-known firms include Monitor, Mercer, Mars, LEK, etc. There is also a growing number of "boutique strategic consulting firms". "Big 4" consulting firms such as Deloitte, PWC, Accenture also have strategic consulting practices.

The Good

I know many former and current management consultants. I can say that overwhelming majority of them are bright, intellectually curious, and communicative. It’s fun and easy to carry a conversation with them.

Management Consulting firms have very competitive selection process. They tend to hire analysts from only the top undergraduate programs, and hire associates from only the top business/law/graduate programs. So, almost all of the consultants are "academically smart". If you’re the type of person who enjoys an academic, intellectual discussion with your colleague, I think management consulting provides a better environment than most other industries.

Over the year I have also developed a very health respect for the professionalism of management consulting professionals. When I was working at one of the aforementioned management consulting firms, whenever I called a colleague, he or she would always return my call. Whenever I asked a question in the firm’s knowledge base, I could always expect someone answering my question. Whenever I set up a meeting, my colleagues would show up on time. I’ve never experienced this kind of professionalism since I left management consulting.

I joined a management consulting firm fresh out college. I was a computer science major in college. I was not as "polished" and "business ready" as some of my classmates. Management Consulting provided me great training. I learned how to interact with clients. I was exposed to several industries, which really helped me figure out what industries I wanted to work in the future. I also traveled a little bit since I had to work for different clients at different locations. I was young and single, so I really enjoyed the travelling experience.

However, I do want to say that business travel gets tired after a while. I was fortunate that I only worked in management consulting for a little bit over a  year, so traveling never wore out on me.

The Bad

Have you wondered why management consulting exists? A mentor of mine once told me that "management consulting firms exist largely for political reasons".

This is a very profound statement and it is very true.

When large companies need to make controversial decisions such as cost cutting, layoffs, or strategic changes", instead of taking on all of the responsibilities (and potentially blames), it’s "wise" for the senior management team to bring in outside "expert management consultant" to provide 3rd-party opinions/recommendations. It makes the decision more "legitimate", and help reduce senior management team’s risk (i.e. you cannot put all of the blame on me — it was recommended by McKinsey.)

Of course this is not the only reason that management consulting firm exists. But, it’s a very important reason. And that’s why I quitted management consulting.

I worked at several client projects. At each client site, I’d spend a few months there. But, I was never really part of the company. I was simply going in, doing some research, making a few presentations, and giving some recommendations. I never saw my recommendation being implemented. I didn’t feel that I was making any impact — I didn’t see tangible results.

I started questioning myself — how did I know my recommendation was correct? It was my first job out of college. Many of my seniors in the project team had been in consulting for their whole career. They didn’t have the from-the-trenches operational experience. They were all very smart and quick-study. They could learn a lot about a company in a very short period of time. But, sometime I felt that we were like a group of medical school students who had studied medicine for two years but had never operated on any patient. But, we were making recommendation about how to do surgeries. There were a lot of assumptions, modeling, and intellectual thought experiments.

The Ugly

Similar to investment banking, management consulting firms have a reverse pyramid organization structure. Analysts and associates are at the bottom of the pyramids. They’re asked to work long hours. In term of career progression, you’re either "up or out". Certain number of people will become managers, principals, partners, etc. If your time is up and you don’t make to the next level, you’re out.

It’s less an issue for entry-level analysts since you’re expected to go back to business school to get your MBA after working at the firm for a couple of years. But, once you’re an associate, your career path is "up or out". That’s a lot of pressure. It could get quite political and demoralizing.

Also, I’ve found that some management consulting professionals have developed an "elitist mentality" over the years. They tend to be really good student throughout their lives. They attended really good universities. They then went through a very competitive process to get into McKinsey, Bain, BCG, etc. After working in those firms for a year or two, although they might not like the intensity and pressure of management consulting, they felt that their employers were the most prestigious companies in the worlds. They simply felt that there wasn’t much option outside of the management consulting firms. Basically, they stuck. They didn’t like their jobs, but they felt that it’d be "a step down" to switch to a non management-consulting company.

My advice for those folks is simple: Management Consulting is just a job. It’s no more or less prestigious than other corporate jobs. Focus on your true career interest. If your heart tells you that you no longer like your management consulting job, then look around. Don’t let the "prestige factor" prevent you from trying something new and different.

What do you think?

I’m interesting to hear from all of you – do you agree or disagree with my view on the good, bad, and ugly of management consulting?

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Recommended reading

• The McKinsey Engagement: A Powerful Toolkit For More Efficient and Effective Team Problem Solving
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