career guide: questions to ask before joining a startup
best practices from Sri Batchu, David Apple, Nikunj Kothari, Claire Butler
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The next play career guide is our attempt to find you the best possible answers to your questions. We did that by asking some of the most talented people we know — people like Sri Batchu, Claire Butler, Nikunj Kothari, David Apple and 30+ others — for their help in providing thoughtful responses.
Quick disclaimer before diving in: you should read the below as ideas and perhaps some suggestions but NOT prescriptive advice. There’s more than one way to live your life, and so our only advice is that you should think for yourself (if you want 🙂).
“What are the questions or types of questions I should ask a startup before I join? How do I spot red flags?”
So much startup-focused career advice focuses on picking a winner: finding the startup that’ll exit for $1B+ and leave you with a life-changing pile of cash.
Only issue is, you probably can’t.
Picking a winner is difficult. Most startups fail. And even the best venture capital firms, powered by experienced partners and teams of analysts, only pick successful startups <20% of the time. To compensate, VCs diversify into dozens of investments.
You, the job-seeker, cannot mirror this approach. You can only work at one company at a time. And your odds of correctly identifying a winner are, as we have established, very low.
So how should you choose? How can you be sure you are making the right decision?
Instead of just trying to pick a winner—something even the best VCs cannot do most of the time—start by weeding out the losers.
Spotting a fake business is surprisingly straightforward. You can try to pay attention to these red flags.
Misaligned product-market fit:
One way to check if a company has product-market fit is to talk to customers. How do customers discuss their experience? Are they telling their friends about it in a positive way?
Problems sometimes arise when startups act like scaled companies (e.g. huge payroll budget, large offices, etc.) well before they have achieved PMF. This is because “pre-PMF,” all that really should matter for the company is identifying what PMF would look like. Smaller teams are often better for this process as it is easier to steer a smaller ship.
Startups can be hard to analyze because success generally follows the power law, where a very small percentage of companies create most of the value. These outliers tend to have unusual qualities—that is what makes them outliers. Beware of sheep in wolves’ clothing—the companies that talk a big game and have nothing to show for it.
Operators are just undiversified investors. So you need the ask the same types of questions an investor would and keep your bar high. In my view, quality of company matters more than title or initial scope or comp -- the latter 3 you have more agency on and can change more quickly. Understand the TAM, unit economics, and track record/strength of the team. — Sri Batchu, CMO @ The Realreal
Low velocity: Velocity is speed multiplied by direction. Is the startup increasing their velocity? Do they have clarity of direction?
All startups have problems—the question to ask yourself is whether or not the startup is making progress against the correct problems.
Are people on the team being productive? You can figure out who at the company is productive by asking them how they spend their time and what they get done. People tend to talk about what they are most proud of, and their answers can be revealing of their definitions of progress.
As a measure for velocity, you could also ask yourself: what has the company done in the past month? If I waited another month before joining, how much more would they get done?
Do people at the company—especially the CEO—know what progress looks like? Do people work backwards from a vision, or are things retroactively cobbled together?
If, in your interviews, you notice people shy away from sharing details, we suggest you get curious and ask lots of questions so you can see if people really have clarity or not. Do people really know what they are talking about? Do the details make sense? Are they being reactive or proactive with their answers?
It is very common for companies to get caught up in distractions. Ask people who work there how they spend their time. How closely do those activities tie to what you think is important? Things like press and fancy offices can be useful, but if that is all the company talks about, as opposed to their product and customers, something may be wrong with the priorities.
Beware of being distracted by shiny objects like high private market valuations that are often not indicative of true enterprise value being built.
Good people are leaving: Change is very common for growing startups. But is there a systemic issue with good people leaving the company?
Ask yourself: why are the good people leaving? Conversely, is the business not growing as quickly as it should be? Are people there afraid to make changes? Are the co-founders arguing often? Are there certain teams doing a lot of complaining? (Note that bad people leaving may actually be a sign of positive change).
You will likely find that the quality of the team to have an outsized impact on your experience working at a company.
If you are focused on the early stage, there's basically three things that matter (in order): a) people b) market c) product. Most people look at this in the inverse order. I'd spend a lot of time assessing if these are the right people you want to work with - are they the right people for this market - and are they building something truly important? — Nikunj Kothari, Investor at Khosla Ventures