Considering leaving your comfortable, albeit decidedly dull, 9 to 5 with a steady salary and benefits for what is in all likelihood a reduced salary, worse benefits, and the job description of at least five regular positions? Great! Welcome to early-stage startups.
Why would anyone undertake this endeavor? Because you want to push yourself. Because your boring 9 to 5 is boring. Exhaustingly boring. (You’re so chronically bored that the routine 12 hour days will actually be refreshing because they’re full of stimulation, challenges, and a rare form of camaraderie that I assume is also forged in things like military boot camp.) And, perhaps the biggest and most real reason: if your bet is right, any temporary salary or sanity reductions will result in an astronomical payday. So long, groveling for 1% annual raises. Hello, vested equity.
In order for that rainbow bubblegum unicorn dream to manifest, though, you must pick your startup wisely. They are not all created equal, and with more than 70,000 of them in the United States, there’s also a lot of them. Just like any normal job, you spend your time slogging through applications, groveling for a chance to prove yourself, and convincing yourself that this is it. But there’s no perfect way to know what you’re getting until you actually start working there. There are warning signs, though, and once you’ve ridden the ride a few times, they become obvious.
So, in the spirit of immaturity that is one of my absolute favorite things about working in early-stage startups (before there’s even a HR role in the company), let’s play a childish game to talk about the very adult implications of different types of startups (with bonus interview questions!).
Kill: The Investor-Only Model
Investors aren’t an absolute necessity to startups, but they are common and do make some things easier. This is written about well by people much more experienced than me, but rest assured, if you work at a startup, there is a good chance outside money will come in, whether from angels or VCs, crowdfunding or your mom.
Eventually, this investment will turn into something wonderful: customers! Customers are people that give you money in exchange for your product. Neat, huh? Sometimes, though, startups exist without customers. While every startup has a pre-revenue phase, and many raise successful seed rounds and go on to attract and retain those delightful customers, some continue raising money with no customers at all.
Typically, pre-revenue startups raise a seed round because they’ve proven to investors there’s a product with tremendous commercial potential if enough capital is raised and allocated appropriately. In the worst-case scenario, there is no product, there is no commercial potential, and yet investors are still somehow convinced to continue providing funding.
Find out if you’re about to enter into one of these Investor-Only startups by asking a lot of detailed questions during the interview. These should cover topics including:
- What are your buyer personas and ICP?
- What type of feedback have you collected from alpha and beta users?
- What’s your go-to-market strategy?
- Have you pivoted the focus of the product since you started? If so, what changed?
Not every early-stage startup will have perfect answers for all of these (it’s the nature of building something), but they should have enough of an answer that it sounds like they’re trying to create a product people want.
If they don’t have strong, well-thought-out responses based on work the founders have done up until that point in time, that’s a definite 🚩. Congratulations, you may have just found a super money laundering scheme.
Fuck: The Second-Time Founder
Joining a startup with founders that already had a successful exit is like dating when you’re in your 30s: people know what they want, they’ve been through the painful phases already, and have a healthy amount of distrust in the romantic notion that everything will end up okay. I’m sure that’s why they say sex is better in your 30s (do “they” say that? who are they?), and that’s why jumping into a steamy tryst (metaphorically) with the second-time founder is worth your time.
Like with any other startup, a second-time founder doesn’t guarantee success. (There’s actually only one thing that does 👇 for spoilers.) But it’s a good starting place. We all learn from doing, and failing, and second-time founders are some of the most hardworking, determined people on the planet. They failed a lot. And then they succeeded.
Sometimes, a second-time founder is cashing in on a repeatable business model in a different vertical market. Other times, they’re solving a pain point they suffered through during their first startup and now have an opportunity to solve. Second-time founders have a lot more data, a lot more money, and a lot more impatience. They’re really fun to work for, honestly. You’ll benefit from their experience as well, and it may feel a bit more like a traditional gig than working with a first-time founder.
Some questions to ask during an interview:
- What lessons did you learn from building your first product?
- What do you want to do differently this time?
- What do you see as your biggest obstacles to success? Engineering, marketing, funding?
- Can you give me a financial roadmap of what you see happening from Seed to Series A?
This should be an easy conversation with a strong explanation of fundraising and expected runway. The product may or may not work; nothing is guaranteed—not even at giant corporations—but after working there, you should learn a lot and come away with solid experience. You’ll level up your career way faster than at that stupid 9 to 5.
Marry: The Product-Market Fit
This is The One. 💍 Prepare to enter a long-term relationship when you find a startup with product-market fit. What exactly is product-market fit (PMF), you ask? Legendary entrepreneur, VC and Twitter rabble-rouser Marc Andreessen explains:
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account.
In stark contrast to the Investor-Only Model, the PMF startup will be on fire. Everyone will be crying hysterically, but they will be happy. It’s strange.
I can’t speak for everyone, but I think most people* that start businesses, whether a gluten-free bakery or a disruptive software company, do so for a few reasons:
- They have a personal, emotional stake in what they’re doing
- They’ve struggled with the lack of the product in the market for long enough
- They’ve received enough external validation to believe it has widespread appeal and
- It keeps them up at night and there’s no other option remaining but to do it
Hopefully, these are the secret ingredients for PMF. And even if you’re completely right, there’s still the chance you launch too soon or too late to be successful (read: Zero to One). But if this is your foundation, and there’s a clear path to PMF, you’re going to get a lot further than everyone else.
Questions to ask during an interview if you have a strong belief that the product has market fit:
- What are the main things you’re looking for in this role to make the company a success?
- Have there been any unsuccessful features so far, and how did you find out they didn’t align with PMF?
- What else are you hoping to learn from your early customers, and how will that inform the product roadmap?
- How can I get equity?
Sometimes PMF comes from completely bootstrapped first-time founders; other times, it’s an experienced team backed with a ton of capital. Focus less about what the company looks like and more on what the product does, what your research tells you about the potential market, and your gut on if this is a team that can make it happen. Then join, and hold on to your butt. It’s going to be a wild ride.
*Most people does not include money-laundering startups with no product.