Ever considered joining a start-up? Let me tell you, it’s one heck of a ride! It’s exciting, scary, and risky all at once, but the opportunities that come with it are amazing. I’ve been through a few, and when having a chat with a friend recently, she’d asked me to share my experiences to help others who might be considering diving into the start-up game. So here we are….
As with each game, it has its own set of rules. It’s not always ping pong tables and beer fridges at work; by playing by these rules, you’ll be introduced to a world where you can honestly 10x your growth, and you’ll hustle harder than you ever have before. It’s a risk – you either win big or lose it all if the company doesn’t succeed.
With companies currently making redundancies left, right & centre around the world though, (regardless of if they’re start-ups or ‘stable’ established enterprises), it’s safe to say there’s no guaranteed “job stability” to be found anywhere. So how do you make sure you’re making the right choices, or rather, taking an informed risk when considering joining a start-up??
For me, it’s about asking the right questions and negotiating for what you need in order to be comfortable with your decision, and what you’re willing to sign up for. Having recently taken up an offer in a Series A start-up, let me walk you through what my process was in evaluating my next role.
1. First up research the company
Well, that’s a given I hear you say? Sure is! However, with start-ups especially, you’d want to go one step (or 5 steps) further than just researching the company website or their LinkedIn. What does their funding look like? Their growth potential? There’s lots of websites you can use to research which investors they have signed on to help them grow. Take a look at what other companies those investors have backed recently; are they successful companies? Deep dive into their history and rounds of funding they’ve achieved. Do you believe in the product or service they’re building? Do you see a need for it in the world, or a market demand for it? Who are their competitors and have they differentiated themselves enough to succeed in the market?
These may not be typical questions you’d ask in a job search, but you’re not joining a typical 9-5pm company. You need to believe in the product just as much as the Founders themselves if you’re going to be in the trenches building with them, and helping make them a success story! Ask them all these questions in the interview! Interviewing is 100% a 2-way conversation!
2. Understand their growth plans and financial health
One of the most important factors to consider when joining a start-up is the company’s financial stability. Although many start-ups have the potential for rapid growth, and talk of 10x or 50x growth on their way to become a unicorn, there is also a significant risk of failure if those plans don’t work out. Ask more detailed questions around financial health! What does their revenue stream look like? How are they projecting growth? What’s the projected runway and capital they have available?
While many start-ups have the potential to grow rapidly, there is also a significant risk of failure. Before accepting a job offer, it’s crucial to do your research and evaluate the company’s financial health. Look deeper into their funding history, revenue streams, and projected growth. Make sure you understand the company’s burn rate and runway; which refers to how quickly they’re spending their available capital and how long they have until they run out of funding. They may not offer up all the financials and exact numbers, but I’ve found most founders are pretty open with their projected runways and roadmaps. They’re looking for invested people to join them, just as much as you’re looking for an invested organisation for your own growth.
Regardless of whatever role you’re interviewing for, always make it a point to understand the commercials of the company. Understanding how they’ve made their money will help you navigate your way around once you’re in and identify ways to help them grow.
3. Evaluate the Founders
Now this would be one of the most important factors that could make or break the start-up. Get to know the Founders! What are they in it for? What’s their mission? What’s their driver?? Is this just a money-making scheme for them? Do they want to be a unicorn, and are so passionate about being one that they forget about their people and purpose? Or do they genuinely care about making a difference in the world and will stop at nothing to achieve it? There’s a mix out there! So be wary that not everyone is in it for the right reasons or may not have the same purpose as you. This is a make-it or break-it factor for me. It’s one I’ve learnt (albeit the hard way), to use as a red flag to evaluate any role in my career moving forward.
Be clear about what you’re looking for and why. What’s your personal driver and does it align with the Founder’s? Get to know what makes them tick and how they see this company eventuating. Some of the questions I remember asking in my Founder interviews were around their expansion strategies, what they saw their biggest pain points, or shortfalls were, and most importantly, what were their priorities if push came to shove and there had to be cost cuts? Had they planned for this and how would they approach this? Put them to the test. They’ve got as much, even more, to lose if this doesn’t succeed. So, if they’ve not thought about the consequential aspects of a downturn, then there’s red flags to be noted before we even proceed.
Personally, I’ve even walked away (happily) from a company after hearing a Founder say, “We don’t have any pain points at all or shortfalls, everyone loves working for us and they wouldn’t EVER leave!” – either they’re very naïve, delusional about their employees, or genuinely have never spoken or engaged enough with their employees. Either way my trust and hopes for transparency, as well as hopes to join the company disappeared as soon as Zoom ended. Being transparent and understanding that not everything is going to be hunky dory in the beginnings, and being OK with communicating that to your teams, is one large sign of a great leader.
4. Equity & Salary
I’ve left the best one till last because, to be honest, this one’s a doozy to cover! There are so many things to be aware of during salary negotiations, and understanding what equity means for you is definitely a big one! A lot of the time you may not get a full disclosure on salary in initial conversations to be honest. With startups, they’re most likely evaluating you, your skillset and potential growth within the company whilst trying to figure out salary bandings – some may not even have one and evaluate as they go along the process. It’s all dependent on what stage of growth they’re at. Most offer equity as a drawcard.
There are different types of equity on offer depending on the company and stage of growth. Common types of equity include:
- Stock options: A stock option is a contract that gives you the right to buy a certain number of shares in the company at a set price.
- Restricted stock units (RSUs): RSUs are a promise to give you a certain number of shares in the future, usually on a vesting schedule.
- Restricted stock: Restricted stock is actual stock that is subject to certain restrictions, such as a vesting schedule or performance requirements.
TLDR: All equity is essentially Monopoly money until an event happens.
By an event I mean, the next Raise, Exit or IPO. Until any of these occur and you have the opportunity to sell your shares, what you’re holding onto in equity ‘money’ equates to zilch. It is, for all intents and purposes, the intangible belief you’re showing in the company, growth, its product, Founder, or all of it put together. Which is why I’d mentioned earlier about stepping into something only if you believe in the product and mission wholeheartedly.
As much as people say (and working in Talent Acquisition, I’ve heard MANY people say this), “the money doesn’t really matter to me, it’s the growth that I’m after”, you need to be SUPER comfortable making that call, and understand that sometimes it may mean a lower salary for the short term – in order to reap longer term benefits. Also be comfortable with negotiating equity!! If you feel like you’re being undersold on the salary – call them out on it!! Sharing from recent, personal experience, calling out that an offer that was severely under market rate (even for startups), and providing the market data to correct this, was empowering not only for me, but for others that would come after me!
We all have day to day financial obligations, so figure out what you’d be comfortable with as a minimum salary base and negotiate equity on top of that. If the company is well-funded and you’re a key player, you may be able to negotiate a larger equity package, or negotiate for more stock options or RSUs, or a shorter vesting schedule. Ask – you won’t know until you do. But know the option to negotiate is definitely there!
Is a start-up for me then?
Joining a start-up can be a rewarding and lucrative career move, but in order to taste the rewards, you do need to put in a lot more work throughout the recruitment process.
Come prepared with a clear understanding of your value and the market rate for your skills and experience. Do your research on similar roles at comparable start-ups and ask your networks. They’re a wealth of information!
Personally, I’ve relied on many of my colleagues, friends from other start-ups, Founders and my professional networks, for information and advice to make sure I’ve made the most informed decision possible for myself. Lastly, make sure you’re prepped for start-up life, because it doesn’t just end after you get the job, that’s where the real work begins!
As Richard Branson once said, “Start-ups are like rollercoasters, with their share of ups and downs, but the thrill of the ride is what makes it all worthwhile.”
