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