If I can pick and choose any start-up to work for, I’ll pick … Part 1

September 30th, 2008 · Comments

I’m starting a series on how to evaluating promising startups from a employee perspective. But, before I talk about any specific companies, I’d like to talk about the framework I use to select the companies.

It’s impossible to predict a startup’s success and failure because there are so much uncertainties. Even the most successful venture capitalists have very low hit rate.

However, I believe that as an employee, you should examine a number of factors that could significantly reduce your risk of working for a start-up. You might not make it big, but you should protect your down side.

I have known too many people who gave the best years of their career to start-ups, and in the end, they got very little reward. Every start-up claims they have earth-shaking technological breakthroughs, talented management teams, and cool work environment. But, the reality is that for an average employee, you get little stock options, you’ll work your butt off, and it’s likely that you’ll get little reward in the end.

If you’re looking to join a start-up, you owe yourself to carefully evaluate the risks, and manage your career. Your goal should be "I’ll do all I can do to help grow and make this company succeed. But, if the company fails, I need to make sure I would still have grown my career significantly, and I’m better positioned for my next job."

You need to evaluate a start-up from the perspective of how it will benefit you in term of career development, personal happiness, and personal finance. And that’s the basis of my framework.

In the next post, I’ll describe my framework .

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Tags: Start-up Success

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Ted Howard 10/02/2008 02:16 PM 1 point
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I just joined a startup and struggled through many of these issues. What it came down to for me was two things: due diligence and career.

I would have preferred to perform due diligence just like a VC would. However, no startup would give a potential employee the same access to their company as they would give to a VC, so the ability to evaluate a startup is limited. See how much information you can get during your interview process, but don't get rude about it. Once you have an offer, try getting a little rude and explaining why. Ask about their runway ($ in bank), revenue, future hiring plans, etc. Ask what the biggest concerns of the board and the CxO's are.

As for the career portion, I find that many engineers often give only lip service to planning their careers. Take into account your own desires, your vision of your own future, and your estimate of the future of technology. Picture yourself laid-off in six months' time. What accomplishments will you list for the last six months? Will potential employers care about this work? I don't have much 'scalable services' work on my resume, I expect that to continue to be a valuable item for employers, and that influenced my decision. Career planning is not an easy thing to do, and I don't claim to do it well. Much like project planning, estimate it and then revisit it every month.

On pure compensation numbers, I just saw a post on Adam Martin's blog about CxO compensation.
http://t-machine.org/index.php/2008/10/02/salaries-for-startup-directors-executives/

AskTheVC has useful posts.
http://www.askthevc.com/blog/archives/compensation/index.php

Ted Howard

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