To join or to RUN?

intern under cover

If equity or options is included in your compensation, then in some sense you're an investor. Therefore, look for the same things that investors look for. Ask a lot of questions, particularly as you go higher up the chain in the interview process, make sure you believe in the product and the leaders ability to execute. If they can't give you a clear vision and confidence in the company, then take equity and pride considerations out of the offer. There are still other reasons to take a job (salary, networking, etc).

Got to copy this from other thread as it's related:

December 10, 2014 at 4:11 pm

You can’t check indicators from a startup other than the CEO. If you may be employed by a startup, at “startup conditions” (wage like peanuts but equity promises), you must be hired by the CEO, so you can talk to him/her directly and frankly. You can ask anything: if the CEO promises you equity in exchange for hard work at low wage, you need to know all relevant elements to make your own risk/reward assessment.If the CEO does not tell you, walk out. If you are not hired by the CEO, walk out, this is not a startup, it’s just a low wages company.

Remember: you wouldn’t be inquisitive in front of a fortune 500 CEO: he has nothing to prove you. But a startup founder is a guy or girl who must convince you, because he/she must be trusted by you. You can ask what you need to trust them. If you don’t, it means you need any job at any condition.

December 10, 2014 at 11:24 pm

Thanks for your advice.

” If the CEO promises you equity in exchange for hard work at low wage, you need to know all relevant elements to make your own risk/reward assessment.”

When I asked about all the relevant elements he didn’t reply to my email. I was kept on hourly salary for another 6 months and then they decided not to renew my contract despite massive funding they've just got. How awful to be treated like that. I wish there is a law that protects workers from bad practice and exploitation.

I only wish I left right back when he didn’t come back on that mysterious offer and save my last 6 months, but then I was hopeful. Total time and money waste.

In my last attempt to join a startup I did ask many Qs about IPO etc…but they kind of didn’t like that sort of Qs as it felt like I was there only for the big bucks.

I have no idea where is the balance in all this. :-(

December 11, 2014 at 12:33 am

I understand your confusion. When I gave this advice to speak up with the startup CEO, it is based on my experience. I worked as an employee in 3 startups, and I am now a startup CEO (but I didn’t hire anyone yet, my startup is too young). In the 3 startups where I worked in the past, I always had been hired by the CEO and had opportunity to talk. Retrospectively, I didn’t talk enough with any of them. In one case, the CEO was a crook and I simply lost a few months of my life (plus a few weeks to swallow my anger). If I talked more, I would certainly have avoided that. In a second case, the CEO was not in the startup for the money, and it was a very good experience. I didn’t earn lots of money, but I had my fair share and it was enough to live. But I learned lots of good things, about technology, people, and myself. I didn’t talk enough before getting hired, but this CEO talked much to me so I didn’t have to check anything. The third one was here for ego and money, and I certainly should have talked more about his future plans. He was not dishonest, but I was not enough aware of his projects to avoid disappointment. I can’t blame him about white lies, because I failed to ask. I should have.

Your remark about giving the feeling you are there only for money if you ask something is correct. All is in the way you ask. If I am hiring someone, and if he asks me lots of question about what will be in the package for him, of course I will wonder if he is there only for the money. Your questions must be fair, and balanced. You can say: “If I do this for you, I can commit to, what is the value for you ? What would you pay me ?”. If you are honest and self confident, you can commit to objectives and be payed based on objectives you can choose yourself. I think any startup CEO would like to pay for guaranteed results. It is easy to know what you are ready to pay for anything. But if you ask money without giving reasonable guarantee you will provide value for money, you won’t be hired. Because when you don’t have that much money, you avoid taking large bets.

If you are really confident, you can ask this to a CEO: “If I create the product which makes you a billionaire, how much will fall in my pockets ?”. Some CEO will answer very seriously this is your job and you are already paid for that. Other will talk about glory, personal satisfaction… But some will answer if can do that, you would be wealthier than them. Or you would be the boss.

In all cases, it will be an interesting chat and you will know more about each other. Isn’t it the main goal of an interview ?

You can have large ambitions about money. If those ambitions are for yourself only, you should never work for a startup. But if you are ambitious for all the people working with you, for the whole startup, and you just want your fair share, your ambition is a good asset from a startup CEO’s point of view.

Whoever wrote this long reply - I WANT TO THANK YOU!

You need to be more clear what the situation is. Are you a visible percentage equity holder or a paid employee, or both?

If you're to be a visible percentage equity holder, you need to think like an investor as noted above. However, the advice noted above is far too generic.

As an investor, you need to take into consideration a lot more than just being a paid employee. For example, what is the cap table, and what is your position in it? This is important because it not only tells you where you stand in the corporate power structure, but who is above you.

The who is important because gives you not just a set of names which you can then research their strengths/weaknesses/past behavior, but a better idea on whether the investors and/or founders are smart or dumb money. Smart money are investors who have gone through the full process - ideally who have worked hand in hand with companies to get those to success. This involves not just mind share, but also the understanding and ability to invest in successive rounds if needed. Think marriage, with you as the dependent.

You also need to really look hard at the product. What is the competitive situation as you see from your own research vs. what the founder/CEO/hiring folk tell you? This is important because it is one key way which you can tell when companies are smoking crack - i.e. have unrealistic views of themselves and/or the world around them.

As an employee - your concern is more about your employment contract and stability. Does the company have enough money in the bank to burn through the months or years in your contract? What are the past habits of your executives - do they slash and burn when things get bad right away?

None of this is comprehensive, but if you are thinking more than the usual 20-ish Ruby on Rails programmers, this gives an idea of what you should be thinking about when considering a startup commitment.

Q - could a big round of investment indicates that company is worth it?

Or better be careful as sometimes before actual changes and real growth happened, there was nothing but pain pain and slowness to endure?

(management changes could be slow and damn painful)