This week’s NYT article on how employees sometimes lose out is a great read. Employees who like that might also like Hunter’s article from last week on (not) getting rich at startups. This is the follow-up I intended to write for the latter.
I talk to people looking for their next gig on a regular basis. It’s fun to match awesome people who don’t want to found companies up with companies who need awesome people. One question I get asked over and over again in various forms is, do you think I’ll get rich from startup X?
My first piece of advice for startup job seekers is that equity, all things equal, you can’t pick ’em. On a risk-adjusted basis, startups are likely to be about the same. If there is information that a company has significantly de-risked, it will be priced in. Despite the market often being very wrong, you are unlikely to outsmart it.
If you want to get rich, your best bet on a risk-adjusted basis is to join a profitable and growing public company. Google for short. Make $200-500k all-in a year, work hard and move up a level every 3-5 years, sell options as they vest (in case you joined Enron), and retire at 60, rich. This plan works every time.
Beyond the sub-market salary you’ll receive for joining a startup, there are no financial guarantees. Your equity is probably worthless. The whole damn thing might fall apart any time. The hours are long. A lot of shit won’t work right. Etc.
But, as far as I know, startups are the only way to get 20 years of experience in five. The reason to join a startup is because you are awesome, you’re willing to work hard, and you don’t want to wait 20 years to be making decisions that impact the business.
And if you go in with this mentality, even when startups fail, you succeed. If you put five years into building a company and team, you will end up with a great network of talented and motivated people, lots of first-hand experience, and often some management experience as well.
Worst case, your next step could be going into Google at the VP level it would have taken you 15 years to get to joining out of college to “inject some startup DNA,” and catch up on salary within a few years. Unless this internet thing is a fad, that job will always be there for you.
But for all that is good and holy, don’t join a startup for the fucking money.
Sundry advice on picking a startup:
Be clear on what you want. Do you want to join pre product-market fit, or post? Do you need a salary, if so, how much? Do you care about vertical or role? Location? Travel? Etc. Most people that end up in the wrong job didn’t think through what their ideal job was before looking.
Run a process. Most people fail at this. Startups are interviewing you, but you’re interviewing them too. Write down your criteria. Look at 200 startups, contact 50, do first interviews with 20, move forward with 5, pick between 2-3 good options. If you’re passive, or only talk to a few companies, you’ll be choosing between limited options. You can get 200 plausible startups in a couple hours.
Focus on good people/culture. Above all else, my observation is that when you find good people (high-integrity, smart, hard working, etc) and a compatible culture, you end up happy, even if the company fails. When you ignore suboptimal people fit because you think the product is sexy or you’ll make money, you end up sad.
Accept fair comp. Many people are unrealistic on comp. They want an early-stage experience with Google salaries. It doesn’t work that way, and startups often suck at explaining that. Talk openly with startups about what they can pay you, what they have raised, what your needs are, and what milestones will lead to higher salary. Keep in mind, you might be the first person to take a salary and the founders might have been working for two years. Sure, it’s a 50% haircut for you, but for them it’s a big chunk of their first round.
Expect to earn it. Some startups will hire a dev and call them CTO. That doesn’t make them a CTO. If you want to be a CXO, say so up front, but expect to earn it. Entering a startup is a lateral move with unlimited upside. Tell the startup where you want to be, and set milestones that give you what you want that make the company successful. Now you’re a CXO.
Discount the vertical. With a few role exceptions, what you’re actually making isn’t that important. Assuming the company is making something people want and you’re delivering a ton of value, most people can be as happy making enterprise cloud infrastructure as social networking tools. Business development is business development. Do it with/for people who do not suck.
Understand the basics of the business. You shouldn’t try to become an expert, but you can ask some basic questions. What is the valuation of the company, and what’s the valuation for your purposes? How much has the company raised to date? How much money does the company have in the bank, and what is the net burn rate? What milestones does the company need to hit to get to the next round?
This is good to know so you can roughly assess the business. But it’s also a great way to understand how you fit in. Can you help with the core problems the company needs to solve?
Bias towards transparency. Companies can’t be expected to share every single detail with employees, especially potential hires. But, in general bias towards companies that give employees info to make informed decisions You should, for example, know what per cent of the company you own. Trust is a two way street, and if the company lies to it’s employees, it’s hard to maintain that trust. Life is too short to watch your back inside the building.