Questions to Ask Before Joining a Startup • Hacker News Board

Re: Questions to Ask Before Joining a Startup

#21

Post by peterlk » Mon, Nov 26, 2018, 3:30 PM UTC

kodisha wrote: post #7

latch wrote: post #4

I've been thinking about low-friction options for getting a sense of the engineering quality. I don't think I'm alone in thinking that technical debt and bad software development practices are a top concern. Being quite senior now, I'd feel comfortable asking: 1 - To see their CI dashboard 2 - To see a sample of their production systems stdout & stderr 3 - Asking to review a recent non-trivial commit (with the person…

In scenario of: - If you get the money and opportunity to hire really senior/well known dev to lead your eng. team, would yo do it - Ummm no, we believe in our team, and their strong knowledge, there is no problem they cannot solve (or something along those lines) Run.

I think I understand what you're saying, but I think you're oversimplifying, and that would do a disservice to people who may be new to the job market. Just because someone is a big name doesn't mean they're the right fit to lead a team - some of the best engineers I've ever met have no interest in leading teams, but are very valuable to have on the team. Hiring well, and believing in the team that you've hired is important, and I think it's a red flag to see management churn.

To me, the red flags are absolutes. i.e. "Yes, we would absolutely replace our team lead because we only want the best" sounds like a toxic place, and it's not the kind of place I would expect to find (most of) the best engineers that I've worked with. And "No, we would never hire that person because our team is the best" sounds arrogant or naive.

Re: Questions to Ask Before Joining a Startup

#22

Post by harlanji » Mon, Nov 26, 2018, 3:30 PM UTC

5 years ago this would’ve been awesome, I asked all of this to 5 employers in SF. Now in 2018 Silicon Valley we’re treated like chattle as coders/lower so I don’t see the relevance of any of these questions beyond signalling. You can be laid off at any time and for no reason or because of prejudiced liars who want you off the team. Call me jaded, I’ve been screwed at almost every startup and told simply that the pattern is me and left to die on the streets. My #1 question is how we feel about lying, followed by how much I get paid per hour (no salary, no options).

Re: Questions to Ask Before Joining a Startup

#23

Post by [deleted] » Mon, Nov 26, 2018, 3:31 PM UTC

jpmoyn wrote: post #15

gesman wrote: post #11

Option piece is misleading. You own 1% of options and company is bought for $10m. Your payoff? Likely $0. He forgot to mention preferred shares given to VC’s with liquidation preferences that likely never disclosed to new engineers. This is what makes new engineer to sacrifice his salary for a possible liquidation even that likely either never happens or there is no money left for him after VCs took their xN ratios o…

Can you elaborate on why your payoff is $0 if you have 1% vested common stock in the company?

[deleted]

Re: Questions to Ask Before Joining a Startup

#24

Post by bognition » Mon, Nov 26, 2018, 3:31 PM UTC

jpmoyn wrote: post #15

gesman wrote: post #11

Option piece is misleading. You own 1% of options and company is bought for $10m. Your payoff? Likely $0. He forgot to mention preferred shares given to VC’s with liquidation preferences that likely never disclosed to new engineers. This is what makes new engineer to sacrifice his salary for a possible liquidation even that likely either never happens or there is no money left for him after VCs took their xN ratios o…

Can you elaborate on why your payoff is $0 if you have 1% vested common stock in the company?

Let's say an original investor bought 50% of the company for 5 million dollars with a 2:1 payout.

This means that on an acquisition the original investor gets a minimum of 2x their original investment. In the case the start up is acquired for anything less than $10 million the original investor gets everything.

Re: Questions to Ask Before Joining a Startup

#25

Post by weliketocode » Mon, Nov 26, 2018, 3:31 PM UTC

jpmoyn wrote: post #15

gesman wrote: post #11

Option piece is misleading. You own 1% of options and company is bought for $10m. Your payoff? Likely $0. He forgot to mention preferred shares given to VC’s with liquidation preferences that likely never disclosed to new engineers. This is what makes new engineer to sacrifice his salary for a possible liquidation even that likely either never happens or there is no money left for him after VCs took their xN ratios o…

Can you elaborate on why your payoff is $0 if you have 1% vested common stock in the company?

The thing is you don't have 1% of vested common stock.

When joining the company, you might be granted a set of options which are described as comparable to 1% of total shares, but the number is almost always effectively lower than that.

If the company does well, future funding rounds will lead to dilution of your ownership.

If the company does poorly, VC's will have liquidation preferences meaning that they get paid back first. This can easily bring your ownership down to 0%.

Re: Questions to Ask Before Joining a Startup

#26

Post by alain94040 » Mon, Nov 26, 2018, 3:32 PM UTC

jpmoyn wrote: post #15

gesman wrote: post #11

Option piece is misleading. You own 1% of options and company is bought for $10m. Your payoff? Likely $0. He forgot to mention preferred shares given to VC’s with liquidation preferences that likely never disclosed to new engineers. This is what makes new engineer to sacrifice his salary for a possible liquidation even that likely either never happens or there is no money left for him after VCs took their xN ratios o…

Can you elaborate on why your payoff is $0 if you have 1% vested common stock in the company?

The answer is hidden in your question: you own common stock. The investors got preferred stock. As the name implies, their stock has privileges. A common one is liquidation preference. They get their money back first, then the common shareholders get whatever is left.

For an extreme example, say the VC invested $10M for 10% of the company, and then the company doesn't manage to grow, and gets acquired for the same $10M amount. The initial VC gets the $10M back from the acquisition (they make their money back, no profit). Then there is $0 left, and the common shareholders (early employees and often founders) get nothing.

It's a contrived example, and there are many other complexities to such a deal, but you get the idea.

Re: Questions to Ask Before Joining a Startup

#27

Post by ironchef » Mon, Nov 26, 2018, 3:32 PM UTC

jpmoyn wrote: post #15

gesman wrote: post #11

Option piece is misleading. You own 1% of options and company is bought for $10m. Your payoff? Likely $0. He forgot to mention preferred shares given to VC’s with liquidation preferences that likely never disclosed to new engineers. This is what makes new engineer to sacrifice his salary for a possible liquidation even that likely either never happens or there is no money left for him after VCs took their xN ratios o…

Can you elaborate on why your payoff is $0 if you have 1% vested common stock in the company?

Charles Yu wrote a really great article about it here: https://medium.com/@CharlesYu/the-ultimate-guide-to-liquidat...

This is why a lot of folks from Good Technology got screwed. Valued at 1.1 billion .. sold for 425 million. Preference stack was skewed to investors + mgmt.

Re: Questions to Ask Before Joining a Startup

#28

Post by maddening » Mon, Nov 26, 2018, 3:34 PM UTC

I believe that equity is mostly SF thing.

One of my friends works in a startup in Berlin where he was offered equity as one of the founders (10th engender or sth like that). Chances that he will be able to liquidate them in foreseeable future is non existing.

Nobody else that I know was offered an equity, even though quite a lot of my friends work for well funded startups. I worked in some and nobody offered me anything else but a salary.

If I relocated near SF? Sure, there would be a possibility. If I was a rockstar and one of first 5 cofounders? Also yes, but I am not famous.

I am really skeptical about any such post, as I saw myself that some strategies that works in Silicon Valley do not work anywhere else and I am not into moving to the most spoiled IT region in the world.

Re: Questions to Ask Before Joining a Startup

#29

Post by alain94040 » Mon, Nov 26, 2018, 3:34 PM UTC

latch wrote: post #4

I've been thinking about low-friction options for getting a sense of the engineering quality. I don't think I'm alone in thinking that technical debt and bad software development practices are a top concern. Being quite senior now, I'd feel comfortable asking: 1 - To see their CI dashboard 2 - To see a sample of their production systems stdout & stderr 3 - Asking to review a recent non-trivial commit (with the person…

I disagree with your checklist. Assuming you are interviewing for a very early employee (first 10 at most), then all those are technical issues that you will be able to fix. That's not a problem, that's your job and you are good at it.

I would worry a lot more about the business itself. Does it make sense? Do you see a credible path to paying customers? And the most important of all: are the founders the right people to grow and lead this thing? Could be experience or passion (ideally they should score high on both).

Re: Questions to Ask Before Joining a Startup

#30

Post by itronitron » Mon, Nov 26, 2018, 3:39 PM UTC

+1 for finding out how much power individual board members have, although you may have to dig into the history of the startup, press releases, and ask rank and file staff members about recent events. The Board can easily kick out the CEO and anyone they hired without much notification.