What questions to ask a startup before joining them?
I have a startup who's offering equity in exchange for coming on board their team to build out their marketing department. What questions should I be asking or seeing before jumping on board? I get it that there's always risk associated with a new venture, but I want to minimize it. How can I avoid spending a few years of my life with a company that was destined to fail before I even came onboard. Basically, my question is — what does a healthy startup look like and how can I understand it before joining.
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Recently, I was talking to a friend of mine who had recently joined a small startup. He and I shared our experiences of working at startups, both good and bad. It got me thinking about what questions I would ask if I were joining a brand new startup. Here are some things that come to mind.
Ask a lot about their product. Are they solving a problem? Are there other companies already solving the problem, if so how is the startup you are about to join different? What does the startup actually do?
The value proposition of their product is important as well. If you get an answer like “we help businesses grow faster” or something similar, ask what that means for specific situations e.g., How does this work with small businesses or people who have never used social media before etc. Ask specific use cases of their product and how they’re solving the pain points.
You’ll want to know how much funding they have, and how long it will last. Asking them how much runway they have is a good place to start. The answer should be at least more than six months.
Another thing you can ask is what their monthly burn rate is (how much money per month does the startup spend). Although this might seem like an obvious question, many founders do not know this figure offhand because it’s usually buried in financial reports somewhere deep in Google Drive!
Who are the investors and when’s the next round?
Equity is the percentage of a company you will own when it gets sold or liquidated. It’s also used as a way to incentivize employees by paying them in equity instead of salary. Vesting is the time it takes for you to earn your equity after joining the company. This can be anywhere from 2-4 years with typical companies and 6-8 years for startups (if you stay with them that long).
In general, founders start off with 20% – 30% of the company and then issue more shares as they raise more money through investors.
If the startup has already received outside funding and has an idea of how much money they need to get to profitability, then we want to know what our share of that pie will be when it happens. Ask them what type of vesting schedule they intend on using. Most startups don’t have a lot of extra cash lying around so sometimes offering more equity upfront in exchange for a lower starting salary would be beneficial for everyone involved!
The HR Stuff
You should also ask them how many employees they have, and what their roles are. Who have they hired so far? The number of people in a company can indicate how much work has already been done, which is important if you want to join a startup that’s already off to a good running start.
ASk about the co-founders. How many? How did they meet?
This will also tell you about the founders’ approach. For example, if there are only two co-founders and one is going full-time on the project while the other works somewhere else, then that’s probably not a good sign. Finally: How long have each founders worked together before starting this company?
The Working Environment
It’s important to know what your responsibilities will be, but it’s equally important to understand the nature of the overall work environment. It will help you determine if this startup is right for you and if it meets your professional needs.
To start, ask about the expected workload and responsibilities. How many hours a week do they expect you to work? What are your primary responsibilities? Is there room for growth?
Next, ask about the team culture. Do they have an open floor plan? Do people wear headphones while working or leave them on all day long? How often do employees interact with each other outside of meetings and general office banter (e-mails aside)? You want to make sure that this startup has an environment that fits well with yours because if not then it could cause serious problems down the road when things get stressful at work.
Questions for yourself
Before taking the plunge, it’s important to ask yourself a few questions. Are you ready to work long hours with passion? Does the startup’s idea or product excite you? If your answer is yes, then go ahead and apply.
As a person who’s constantly interviewing people, I must say If people ask me questions about the company, I’m very delighted to answer them. Don’t be afraid of asking critical questions.
The whole point of this is to figure out if the startup will be a good fit for you. Use this guide as a starting point to help you decide if the startup is good for you and come up with your questions. Think about what’s important for you and just ask.