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How to Choose a Startup to Work for by Thinking Like an Investor

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Re: How to Choose a Startup to Work for by Thinking Like an Investor

#21

Post by wolco »

davidw wrote: post #9
acconrad wrote: post #6

This is how I've approached joining the last two companies I've signed on with. In the hiring process I ask to speak with finance and the founders to see if the company has the legs to be a real rocket ship. Remember that an interview is just as much about them interviewing you as it is for you to interview them .

How likely is it that you as a potential employee get to see the books and know what's going on like that these days? Honest question; seems like it's a tougher thing to get access to than for a VC, but maybe I'm wrong.

They (founders),are use to showing investors so it has never been an issue.

Don't try the same with a small business. You will probably get kicked out.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#22

Post by xiphias2 »

,,It's also only by joining a successful startup early that you can get remarkably steep career trajectories, like Jeff Dean''

It's sad that Jeff Dean is the last example the article can give. When evaluating a startup as an investor, I see that while investors get great terms, employees get junk options. So until it changes, I'm just staying with big companies, thank you very much.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#23

Post by wolco »

Harj wrote: post #2

Rather than treating predicting startup success as an intractable problem, I think anyone considering joining a startup should act like a startup investor making a bet on how much the value of equity in that startup will grow over time. Startup investors do this for a living and that's essentially what you are too. You're investing your time and they are investing money.

Place multiple bets over the years

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#24

Post by lordnacho »

Probably one of your main considerations should be how you are left if the startup dies. There's plenty of good advice here about how to pick a startup that might succeed.

So there's a few considerations:

- Have you got some savings, in case it dies suddenly? You need to be able to pay rent until you find another job. Hopefully the startup is located near these other jobs.

- Does it allow you to build on existing experience? If you can claim you're in the same industry, you're not losing much (perceived) seniority by trying your luck for a bit.

- Does it give you an easy promotion? This is probably one of the main things a startup can offer. Just being able to add "Senior" to your name or "Team Lead" a few years before you would in BigCo might be worth it.

- Do you get to work with the tech that you want for your CV? You probably have an idea of what's hot to have on a CV, and a startup is relatively new, so maybe you can direct things that way?

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#25

Post by lifekaizen »

davidw wrote: post #9
acconrad wrote: post #6

This is how I've approached joining the last two companies I've signed on with. In the hiring process I ask to speak with finance and the founders to see if the company has the legs to be a real rocket ship. Remember that an interview is just as much about them interviewing you as it is for you to interview them .

How likely is it that you as a potential employee get to see the books and know what's going on like that these days? Honest question; seems like it's a tougher thing to get access to than for a VC, but maybe I'm wrong.

The article is mainly about revenue growth, and any startup should be willing to share top line revenue and growth rate.

A large reason not to share things is some info is sensitive, for example the share count is a useful number, while the full cap table with each investor’s pricing, terms, and contact info, and other employee grants, would be sensitive and might be more guarded. Same thing about total revenue versus the customer list.

More traditional advice is to ask about the fully diluted share count, so you can see what percentage the options would be, and of course the vesting schedule and purchase terms. Also I’d also ask about cash or runway, which is related to the ability to survive a rough patch.

I was CEO and founder of a YC funded startup and have some experience hiring at the seed stage. For me personally, I wanted engaged people and asking good questions was a positive sign.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#26

Post by jorblumesea »

Bad advice. You shouldn't pick a startup solely based off these criteria. You are a very minor investor that is the last to get paid. Investors can accept far more risk and reward, and care very little for things like whether the employees are happy.

Does the work look interesting? Will you learn new things?

Do you like the problem space the startup operates in?

How is the culture? Fit or not?

Will you be happy there?

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#28

Post by joshe »

dawhizkid wrote: post #19
sharkweek wrote: post #5

I worked at three startups before taking the current break I'm on - one I left before my stock was worth anything (would have paid out a small amount in an acquisition), another, the stock is now worth zero, and the third has a shot at being worth about a year's salary if current late-stage valuation is to be representative of a potential buyout/IPO (I'd say odds are alright this will happen). While I try not to thin…

IMO there's only two paths that really makes sense now when considering a private co. Either a) join super early (e.g. penny strike price) with a meaningful % of total company (at least 10 bps) OR b) join late stage growth co that offers RSUs over options (e.g. "Softbank" stage cos). Joining a "middle" stage co where you are offered expensive options is the worst, since you've missed out on the early upside and you t…

Sorry have to delete these, not comfortable with these comments sitting on the internet forever.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#29

Post by ryandrake »

dawhizkid wrote: post #19
sharkweek wrote: post #5

I worked at three startups before taking the current break I'm on - one I left before my stock was worth anything (would have paid out a small amount in an acquisition), another, the stock is now worth zero, and the third has a shot at being worth about a year's salary if current late-stage valuation is to be representative of a potential buyout/IPO (I'd say odds are alright this will happen). While I try not to thin…

IMO there's only two paths that really makes sense now when considering a private co. Either a) join super early (e.g. penny strike price) with a meaningful % of total company (at least 10 bps) OR b) join late stage growth co that offers RSUs over options (e.g. "Softbank" stage cos). Joining a "middle" stage co where you are offered expensive options is the worst, since you've missed out on the early upside and you t…

And really, only a) offers a meaningful shot at “getting rich”. A late stage growth company is not going to 100X its equity value in 5 years. No rank and file employees are getting f-you money there.

If there’s one thing I’ve learned after two decades in the industry it’s if you care about earning good money, you can either 1) gamble on the 0.01% chance that you picked the right startup or 2) get on to the Senior Executive track as early as possible. Then it doesn’t matter what company you join because they all pay their executives f-you money.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#30

Post by dawhizkid »

joshe wrote: post #28
dawhizkid wrote: post #19

Earlier quoted context omitted.

IMO there's only two paths that really makes sense now when considering a private co. Either a) join super early (e.g. penny strike price) with a meaningful % of total company (at least 10 bps) OR b) join late stage growth co that offers RSUs over options (e.g. "Softbank" stage cos). Joining a "middle" stage co where you are offered expensive options is the worst, since you've missed out on the early upside and you t…

Sorry have to delete these, not comfortable with these comments sitting on the internet forever.

That is not true. You keep whatever you vest (i.e. typically stay at a company at least 1 year). That is the same for stock options.

Typically companies that offer RSUs have achieved scale (your Ubers and Stripes of the world), so yes the upside is lower, but the "pros" are that it's more obvious to you what the value of the grants are and you don't have any cost to exercise them like with options. These companies know that because they are less liquid vs public cos that candidates are right to discount them, which is why they usually offer more than what you'd otherwise receive from a Google or FB.

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