We get it. Working at a startup is an exhilarating journey, one that will always keep you on your toes – nimble and agile. Be prepared for long hours, rapidly changing job descriptions, and frequent tweaks to product/business model. It’s definitely not for the faint-hearted or those who want a stable, rigid job. Having said that, working at a startup will definitely force you out of your comfort zone; you’ll have a whirlwind ride, but you will learn, adapt, and innovate.
But it’s not always fun and games. Startups fail, and fail often. And just by raising VC funding doesn’t mean a startup is primed to make it big – many well-funded companies have also gone under. Before you accept a job at a startup be prepared to ask yourself some tough questions. That way you’ll know what you’re really getting into.
1. Do you believe in the startup’s vision?
“Making the world a better place” and “solving problems” are two of the most overused phrases in startup lingo today. It doesn’t take a genius to figure out that any promising company is predicated on understanding consumer needs and preferences. Successful businesses identify problems, develop solutions, and execute ruthlessly.
You should dig a little deeper. What exactly is the company trying to achieve? Does its potential future excite you? Can you see yourself putting your firm’s needs before your own? It doesn’t matter if your area of expertise is in product, business development, or marketing. The crucial thing to take away is whether you believe your work in the company will lead to something meaningful and rewarding.
2. What’s the track record of the CEO?
Admittedly, this question is a little difficult to crack. You’ve probably never worked with the founder before, or don’t know him/her intimately enough to understand how they’ll behave when leading a team. But there are ways to find out.
Searching through the founder’s LinkedIn profile should give you an idea of their career trajectory so far. What leadership roles have they previously occupied? Do they have a prior track record of successfully building and scaling companies? Has this particular startup been through an incubation cycle at a well-known accelerator? Answers to these questions should give you an idea of the founder’s ability to manage teams.
Another way to know more about the culture is through searching on Glassdoor. See what former employees had to say about the company, and how they rated their time there.
This is important because startups don’t operate on rigid hierarchies. Even if you don’t report directly to the CEO, there will be times when you work with them closely. And, at the end of the day, they’re the ones primarily responsible for success or failure – which impacts you directly.
3. How much funding and runway does the startup have?
This is important because, at the end of the day, you need to get paid and you need to be reasonably confident of the future of the company. Very few startups will be cash-flow positive, but that’s not necessarily a point of concern. What you need to know is how much money they have in the bank, what their last funding round was, and what their burn rate is.
Most of this information will probably not be public knowledge so it’s best if you bring it up during the interview. If a company has US$5 million cash in hand but is spending (burning) it at a rate of US$500,000/month that means it can, theoretically, only last for 10 months before running out. Don’t be afraid to bring up these questions with your prospective employer – if they have a high burn rate then ask them what they’re doing to mitigate the risk. At the end of the day, you want to join a company that knows what it’s doing.
4. I’ve been offered equity. Now what?
One of the strongest motivators of working at a startup is the likelihood of gaining a percentage of the company. A large multinational is already a publicly-traded company, so if you want a piece of the pie, your best bet is the local stock exchange. Employees at startups are, however, regularly offered equity stakes. That way you can take true ownership of the firm, and potentially gain a cash windfall if the company goes public.
But there are usually conditions attached to equity stakes. There will probably be a “vesting schedule”, meaning the equity will not be given to you all at once but in small portions over time. For example, if you’ve been promised an equity partnership of 5 percent, then it’s likely that a part of it will be apportioned for each year you spend at the company. There’s also the possibility of a “cliff”, meaning if you leave the company before a certain period of time, then your equity partnership will not be handed over as well.
When offered equity at a startup to tempt you to join, it’s important to discuss these terms and conditions before jumping in.
5. Will the startup facilitate my learning and development?
This is an important point to consider, especially if you’re just starting your career. Large corporations usually have budgets for employee training, allowing them to take courses or participate in conferences if it’ll help with their professional development. Startups usually don’t have that luxury but can offer flexibility in job roles to help with practical knowledge and on-ground training.
Before accepting a startup job, be sure to ask whether you’ll be allowed to explore other areas of interest. Some of the most successful startups today (read: Google) encourage employees to pursue projects of personal interest but not all companies are born equal. One of the reasons you want to join a startup is because of the multitude of roles you could potentially delve into, so be sure that your employer is on the same page.
If most of these points resonate with you, then congratulations! All that is left is formalizing the paperwork. Do insist on a proper job contract that outlines your terms and conditions, compensation package, and equity options clearly. This could either be in physical copy or a PDF file emailed to you.
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