I found these questions to be pretty interesting
https://medium.com/@therealpankaj/interview-questions-to-ask...
How to Choose a Startup to Work for by Thinking Like an Investor
71–80 of 154 posts
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#72Earlier quoted context omitted.
This is about my career. 8 startups, earlish employee at 6. 1 mediocre IPO, and 1 very successful IPO. The rest basically failures or zombies that made me no extra money. Probably a little more lucky than most.
Tons more lucky than most. My last startup job misclassified me when funds got tight. A friend of mine who joined later never got paid (good luck filing a wage claim in WA state if L&I’s system still thinks you’re a contractor).
Perhaps also luck, but I’ve managed to have a spidy sense for when things are going the wrong way, and got out / moved on before it got that bad.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#73> It's also only by joining a successful startup early that you can get remarkably steep career trajectories, like Jeff Dean, Marissa Mayer or Chris Cox.
The number of people with these sort of "career trajectories" is vanishingly small. This reminds me of what Phil Greenspan wrote (2006?), mocking the college student's career evaluation process:
"I can't decide if I want to be a scientist like James Watson, a musician like Britney Spears, or an actor like Harrison Ford."
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#74Even top VCs need a portfolio of companies to produce a return. If you asked a VC to bet a whole fund on a single company :) and these are people who's full time job is to pick companies
Yeah, a key strategy for investors is to diversify, and that's exactly what startup employees cannot meaningfully do.
Startup employees could pool their risk by creating their own shared investment fund which held all their shares/options in trust and spread out the winnings. The reward would be far less but more predictable. I doubt many would have the foresight to commit to something like this.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#75Earlier quoted context omitted.
If you're employee 1, you should be getting 1% or north of that. If you're employee 13 you're probably getting 25-50 bps if you negotiate.
Outside of a very senior employee #1, I think the point is that even achieving a unicorn valuation does not guarantee extremely early employees much wealth, at least more than you'd get going down a more traditional big co path.
If you are picking lottery tickets I would agree with you. What I think the point of the article is, is that investors aren’t picking lottery tickets and neither should you. Given 1000 startups to choose from, your EV is negative as compared to working for BigCo. You can’t work for 1000 startups, though, and investors don’t invest in every startup asking for money either. They’re selective and expect that this process will result in positive returns over simply putting the cash in public tech stocks.
Can you narrow 1000 companies down to 20 that have a better than average chance of success? Sure you can! And you should, and you shouldn’t treat the options as worthless.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#76Earlier 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…
I wouldn't consider 10 bps (0.1%) meaningful. Early stage is very, very risky.
Depends if it's pre- or post-product/market fit.
Joining a startup that's overwhelmed with demand for its product - particularly if you can see the usefulness of this product yourself - is usually a good move even at 0.1%. Joining a startup that's still iterating on the product (and maybe has a couple customers but just lost a big one and they have to work really hard to sign the next one) may be a bad move even at 10%, because there's a good chance that equity will be worthless.
The article doesn't really mention it, but a great question to ask any potential employer is "What are your biggest problems right now?" Scaling is a great problem to have, because it indicates lots of demand and has solutions that are relatively well-known in the industry. Customer service is a pretty good one - it shows that the company has customers who care enough to want service, and if the CEO is willing to admit this is a problem it'll probably get fixed. Hiring, code quality, internationalization, testing, service outages, brain-dead tech stack, anything that's specific to the problem domain itself - these are also pretty decent problems to have as long as the CEO is attentive to them. Unhappy customers or staff turnover is a caution - you should dig into this further to see why they're leaving, and if it looks like the problem is solvable. Same with financing - many hot companies run low on cash at various points, and you only need to make sure the company isn't going to die, but if the company loses more money than it makes on each transaction that's a huge red flag. The biggest problems (particularly for an engineer) are anything to do with sales, marketing, partnerships, or "growing the business", because the root cause of this is often that customers don't really want what you're making, and nothing short of a major pivot fixes that.
As a side bonus, asking this question is often a big positive signal for the hiring manager, because it shows you're serious about solving problems rather than just collecting a paycheck.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#77Earlier quoted context omitted.
I wouldn't consider 10 bps (0.1%) meaningful. Early stage is very, very risky.
Depends if it's pre- or post-product/market fit. Joining a startup that's overwhelmed with demand for its product - particularly if you can see the usefulness of this product yourself - is usually a good move even at 0.1%. Joining a startup that's still iterating on the product (and maybe has a couple customers but just lost a big one and they have to work really hard to sign the next one) may be a bad move even at 1…
Yes, I agree. I was assuming "pre-market fit" "few or no customers." In this case, 0.1% is hardly worth the risk.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#78Best risk-reward is VP or SVP level at Series C or D company which gets you options for 1-2% of the company... switch every 18 months to diversify and build a portfolio but negotiate 10 year exercise window on your options when you leave rather than the standard 90 days. Thousands of execs doing that around Silicon Valley working through Daversa and other executive recruiters (who themselves get $85K-$100K per execut…
I can't upvote this comment enough. The bottomline for risk keen candidates is to get in with founder's equity and risk averse (and experienced, of course) to work with a headhunter to maximize your chances of building wealth.
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#79Earlier quoted context omitted.
Yeah, a key strategy for investors is to diversify, and that's exactly what startup employees cannot meaningfully do.
Startup employees could pool their risk by creating their own shared investment fund which held all their shares/options in trust and spread out the winnings. The reward would be far less but more predictable. I doubt many would have the foresight to commit to something like this.
Neat idea, but how would you choose who qualifies to join?
Re: How to Choose a Startup to Work for by Thinking Like an Investor
#80TripleByte is a hiring agency with a financial interest in placing people with startups of all sizes and financial states. This information should be taken with a grain of salt.
And in my experience they focus solely on tech IC candidates, which is not for everyone.