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Questions to Ask Before Joining a Startup

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Re: Questions to Ask Before Joining a Startup

#61

Post by hycaria »

tudelo wrote: post #14
ryanmercer wrote: post #2

(I think it's hilarious I'm being downvoted for making a factual observation...) It amazes me how different startup culture, and tech culture in general, is from the rest of the country. ---- Every job I've ever worked at: Relocation expenses? hahahaha Equity? haha we'll wave your brokerage fee to buy as our stock purchase program but if you wanna sell, you'll be paying brokerage fees. Responsibilities? You'll do wha…

Hmmm, I think relocation expenses are pretty standard, but not as high as they may need to be if you need to break a lease or something like that.

Any idea of the average (for the personal part of it) ? For a EU to US move ? With like 5 years of experience ?

Re: Questions to Ask Before Joining a Startup

#62

Post by SkyPuncher »

jasode wrote: post #8

>It is also important to note that early employees experience more dilution events. An example of a dilution event would be raising another round of funding. This is another reason why joining a company early should offer more equity. I disagree that it's important to note that early employees experience more dilution events. I know you're trying to educate but this type of advice unintentionally misinforms people an…

> I have no idea why dilution attracts so much verbiage that's out of proportion to its mathematical importance.

Emotions.

It's the same reason why many SMB owners get caught up in the 50/50 vs 49/51 split (when there are other, better ways of resolving the voting right aspect) or squabbling over a couple of percent in an investment deal.

Logically, the differences are trivial, are likely to be diluted out anyways, and ultimately matter little compared to other factors.

Emotionally, it feels huge. It "feels" like you're giving something up. On a pizza, "50%" is better than "10%" because it's clearly more of the pizza. Same with many tangible things in life.

Re: Questions to Ask Before Joining a Startup

#63

Post by blktiger »

weka wrote: post #50
seibelj wrote: post #42

The only valid reasons for working at a seed-stage / series A startup: You are a founder. They are working with a technology or in an industry that you specifically want to work with and it is very hard to work on it professionally, and doing side projects are infeasible. You need experience and you have no other option to get experience. You are getting a significant title bump that moves your career forwards. Inval…

> You need experience and you have no other option to get experience. This was me and I paid for it. Right now I'm on week 8 of 30 hour weeks. It sucks.

30 hour weeks? Don't most people work 40 hour weeks? My first job I worked 60 hour weeks for basically 2 years straight (average, we'd work a ton of hours for a month, then work normal for a week or two, then back up to a ton of hours) and I should have started looking sooner. Instead I waited until I was burnt out and got fired. Only took me two weeks to find a newer, better job where I didn't work more than 40 per week and with a significant pay increase.

Re: Questions to Ask Before Joining a Startup

#64

Post by nlh »

jasode wrote: post #54
PacifyFish wrote: post #34

Earlier quoted context omitted.

I disagree. The most common way to predict payout is to compare to other companies' exit valuations. E.g. "Oh, company X got acquired for $250 million. We do something similar. If I own .025% of the company, I'd make $62,500 if we exited at that valuation. Cool." It's important to be aware of dilution events so that you realize when you accept the offer that your .025% will be more like .008% if you're lucky enough t…

>It's important to be aware of dilution events so that you realize when you accept the offer that your .025% will be more like .008% But you're repeating the same error of prioritizing the wrong thing: dilution. What employees ultimately care about is their wealth calculation: shares_multiplied_by_price . Example of the type of math people actually care about: 0.008% (because dilutions) a $1 billion company is $80k 0…

You’re entirely (technically) correct. The issue is that side-effect often comes into play because employees like to calculate potential future outcomes, and that’s done based only on overall company value (since that’s one of the only data points that’s available from past acquisitions).

I’m sure you get this and I know the psychology of what an employee might hope for shouldn’t be relevant, but unfortunately it is.

(For those who don’t fully get this - what I mean is that folks often look at a potential outcome and say “other companies like this have been acquired for $1-2B vs $100B, so if I’m being given 1% at $10M my stake could be worth $10M!” When in reality after dilution, that stake might only be worth $2M, which is a very different outcome after 5-10 years of hard work at below market salaries.)

Re: Questions to Ask Before Joining a Startup

#65

Post by rangersanger »

Major Omission: People

Ask yourself-

Do I trust the founders?

Can I have healthy debate with the founders?

Will my feedback be considered by the founders?

Am I compatible with the founders?

Are the founders compatible with each other and are they able to work together constructively?

Re: Questions to Ask Before Joining a Startup

#66

Post by owens99 »

Waterluvian wrote: post #13
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 the context of a startup, I would expect almost all of those to be disappointing. But maybe that's what you're hoping to see. In my opinion, if you're a start-up and you've got all those boxes checked, you're possibly doing the right things in the wrong order, and that's a red flag for me. What I hope to hear are responses like, "so this is how we're doing CI. It's awful, almost non-existent. But that's because at…

This.

As I always say, "If you are building a startup, over-engineering is a far bigger sin than creating technical debt."

Re: Questions to Ask Before Joining a Startup

#67

Post by jimmy1 »

aw1621107 wrote: post #52
weka wrote: post #50

Earlier quoted context omitted.

> You need experience and you have no other option to get experience. This was me and I paid for it. Right now I'm on week 8 of 30 hour weeks. It sucks.

I thought standard work weeks were 40 hours (at least in the US)? Are your work weeks normally shorter?

40 hours is the target. In practice, most salaried employees work around 50-60 hours a week -- more if you count checking and responding to email after work / pager duty / etc

Re: Questions to Ask Before Joining a Startup

#68

Post by convolvatron »

jasode wrote: post #8

>It is also important to note that early employees experience more dilution events. An example of a dilution event would be raising another round of funding. This is another reason why joining a company early should offer more equity. I disagree that it's important to note that early employees experience more dilution events. I know you're trying to educate but this type of advice unintentionally misinforms people an…

most companies dont ever reach billion dollar evaluations. say they get sold for a reasonable $100M after 4 years. my 1% stake as a founding engineer should gross me $1M (house money). but since there were 3 rounds I generally end up with car money.

I've been through this several times, and ended up with car money or nothing, and I dont think I'm alone. a warning to fresh grads that they may not end up retiring after spending years of putting in time and a half seems in order.

Re: Questions to Ask Before Joining a Startup

#69

Post by pcpcpc »

I'd also ask questions to get a sense of the "soft skills" of the founders or whoever will be managing you. It's a truism, but "people quit managers, not companies."

There are tons of resources online for questions to ask, and I think the company/viability questions from the post are good, but I would add to them some of these types of questions:

How you will be managed/evaluated and the mission of the company: https://www.themuse.com/advice/8-questions-most-people-dont-...

How your founder/manager will navigate conflict, which is inevitable: https://www.thebalancecareers.com/interview-questions-to-ass...

Re: Questions to Ask Before Joining a Startup

#70

Post by kapilkale »

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…

Always ask about the preference stack. You'll rarely discover anything interesting, but if you do, it'll completely change how you value your equity grant.

https://angel.co/blog/liquidation-preference-your-equity-cou...

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