January 27, 2005

11:25 AM

StartupFilter: What questions would you ask a startup you were thinking of joining? What questions would you ask yourself?

More about the startup: its a software company that has VC funding. They are just starting to create the product. There's less than ten people involved.

More about me: a corporate monkey who's looking for a change in life if possible but can stay put if that's best. I have a good job salary-wise right now, but I do not feel like I am moving anywhere with it. I have worked long hours in the past and am interested in the product being created. I felt the need to post anonymously because I have posted about my job here before.
posted by anonymous to (12 comments total)

I would ask this question: How will this company make money?

I'm still amazed that hardly anyone stopped to ask this question back in the heady days of The Dot Com Boom.
posted by Fuzzy Monster at 11:33 AM on January 27, 2005

1. Is your software built on open source platforms? Does it have a level of complexity that somone couldn't reverse engineer a good-enough alternative in less than a month?

2. Are you blogging? Is it to stay on the map, be transparent, better communicate with customers or some combination thereof?

3. What VC firm invested? What's their track record of their previous portfolio software firms?

4. What books best define your business philosophy? Is it Good to Great or Get Rich Quick?

5. Were your people a part of the dot com bubble? Did they learn their lessons from it?
posted by will at 11:37 AM on January 27, 2005

What is the exit strategy?
What are the fall back positions?
How will this company make money for the investors, founders and early employees is not the same question as 'How will this company make money', even in the post Dot Com era.
posted by yetanother at 11:41 AM on January 27, 2005

the only two questions i'd ask are:
- can i survive when it goes bust?
- will it be fun?
posted by andrew cooke at 11:44 AM on January 27, 2005

What's the management's track record for bringing innovative products to market?

What's the internal power structure? Are the marketers kept on a short enough leash to not promise the impossible?
posted by Zed_Lopez at 11:45 AM on January 27, 2005

Second the "How will this company make money?" and "exit strategy" questions. Also ask them about their competitors. I interviewed with a potential competitor for PayPal back in 2000. When I asked them how they felt about PayPal's growing lock on mindshare and what they planned to do about it, they bristled a bit and said "We're not afraid of PayPal. They're afraid of us." So I wasn't *too* disappointed when they made me an offer and then withdrew it...


Find out about the about the habits of the current developers. Do they work all night and crash on the couch? Do they document code? Do they think daylight is for sissies? See if those habits mesh with yours.

Ask about milestones that they may have in mind for the future. See if those seem reasonable to you.

Finally, compensation. I think there are three compensations for working for a hot startup: (1) fame if it goes big (2) fortune that can derive from stock/options if it goes big (3) the chance to meet more interesting people than you might at your average ISO-safe cube farm. If you don't see at least two of these strongly suggested (and for #2, that means a healty dispensation of stock/options to you *in writing* as part of your employment agreement with reasonable vesting terms/restrictions), don't go to work there. Startups are rarely salary competetive, and I've given 80 hour work weeks to more than my share of them on semi-solid promises that turned out to be more shadow than substance. On the other hand, I've also learned more, done more, and met more interesting people by working at startups than almost any other kind of work, so...
posted by weston at 11:45 AM on January 27, 2005

Maybe I'm wrong, but it seems to me that the questions posed here are questions which the VC firm would have been asking the software company. Assuming from the post that they are already funded, the answers to most of these are contained within the business plan.

Looking at this solely from the context of the original question, I'd ask for a copy of the business plan and see if my instincts suddenly heard alarm bells. And if not, then I'd look at it as any other job offer, with a bit more weight on security in the financial sense vs. a possible equity position in the future.

on preview, weston's entire last paragraph.
posted by TeamBilly at 12:13 PM on January 27, 2005

Regarding weston's compensation point #2- Unless you're a principal in the company, your options are not going to make you rich. Sure, there are exceptions like Microsoft, Yahoo, and Amazon, that have made a lot of people rich, but your decision needs to be based more in reality. I've worked at at a few startups, one that "made it" (HotJobs), a few that didn't- always in an important-but-not-executive role. I still need to work for a living- my HJ stock basically kept me afloat during the crash.

Odds are, if your potential employer already has VC funding, and you're asking about it on AskMe, you're not in the pool of people who are getting a significant share of the company.

Bottom line- don't take an offer that doesn't include a good salary. Options are a bonus, not standard compensation.

And yeah, ask to see the business plan.
posted by mkultra at 12:22 PM on January 27, 2005

I'd say go for it if the environment and work suit you, but I'd also qualify that and make sure you have enough savings to keep you afloat for 6 months or so. Layoffs at a startup can happen in a split second- so just keep that in mind.

Also, anything they might tell you about their funding should be taken with a grain of salt. Even if they have millions in the bank, you will still be downsized if you do not fit into their company plans.
posted by jeremias at 12:31 PM on January 27, 2005

Not to sound a discouraging note - an awful lot depends on the details, as discussed in posts above - but do keep in mind that venture capitalists expect the majority of their investments to go belly-up. All they need is a small percentage of big wins, or a slightly larger percentage of medium-wins (successful firms), to compensate for the majority of cases where they'll lose money. And they also can make money if a firm gets sold (even if much of the staff is then laid off, without ever getting anything for their stock options) or if the assets of the firm (software, patents) are sold instead of the firm as an operating business.
posted by WestCoaster at 2:47 PM on January 27, 2005

Asking the founders about the exit strategy is a great idea because it gives you a sense of whether they want to build a long-term company or if they are just looking for quick cash.

Also, if the founders are still running things, ask about their experience working with VCs in the past. A lot of people have difficulty the first time they have to deal with the VCs forcing them out of a CEO/President/CTO role. Friction between the founders and the VCs can cause huge trouble, especially if it leads to a revolving strategy/CEO/whatever.

If you are interested in the product, though, there is probably going to be nothing as rewarding as being able to actually put in effort that results in things actually happening, both in the product or in the company. Having an early say in architecture and process can be very rewarding, especially if you have been working in an environment where any minor change of policy requires 6 layers of approval.

The worst case is that the company folds, no one cares, and you have to find another job. And you know what? The cube-farm will still be there for you if you need to go back.
posted by babar at 9:48 PM on January 27, 2005

On preview - what everyone else said. Ask lots of questions, and you should get lots of answers. If they hold back, run. If they try to answer them all, but end up with a lot of "we don't know yet" type answers, that is a good sign. Most functioning businesses don't know everything, and a startup that is honest about what it doesn't know *might* actually have a chance of success.

After you talk with them (repeatedly) do a deep-down gut check. No group I've worked for that had a great story but left me feeling a bit uneasy ever amounted to much. I don't think I have any unique psychological intuition - I felt that they were disorganized, and they were.

The two and a half years I spent working at a large corporation look great on the resume, but represent close to zero knowledge gain. You learn at light speed in a startup, but your experience will be close to useless on the resume unless you use some buzzword technology or the company really hits it big.

Get some books on VC and startup companies. You will find that the successful VCs have a failure rate of close to 90%. When they are successful, though, it more than makes up for the losses. Keep this in mind, and start to think of yourself as venture-labor rather than just an employee.
posted by b1tr0t at 1:38 AM on January 28, 2005