How to choose the right startup to work for?
There are plenty of choices when it comes to working for startups. And although every founder claims that their startup is changing the world, in reality, it can actually change your world.
Working for a good startup can rocket your future into a successful career. A bad startup can set you back for a while.
Over 80% of startups fail and it’s not pleasant for both the founders and the employees. So you need to exercise caution when deciding on which startup to work for and pick a winner, similar to how investors pick startups to fund.
Similar to how investors invest in several companies, you must also keep an eye on a few startups which you feel are interesting. Because you never know, if the startup you are currently working for suddenly makes a successful exit or if the startup crashes, you need to be ready to move into your next gig.
So how to choose a startup to work for?
First, the startup must have a good story or mission statement. The story should talk about why the startup is doing what it’s doing and how it solves a genuine problem. But only a compelling story is not enough. You want the startup to have a good story as well as strong indicators for success which we are going to discuss next. If you find a start‐up with both, you will have a better chance of getting good outcomes and fulfill your life personally, professionally, and financially.
Here are five criteria I would look at to find the best startup fit for me and one that’s likely to succeed as well.
Team of people who share your values
Most VCs look at the founding team when investing in startups because they believe that people are the most important. When looking at the team, see if there is a grand mission which everyone in the team is geared towards, the ability to build great products, and the ability to sell. A team that has any of these missing will get into trouble sooner or later.
Do the company’s mission and values align with values that are important to you?
When you get a chance to the people in the founding team, look at their past experiences, their successes, and failures. And most importantly, Does the CEO inspire you. ?
Company culture is the heartbeat of the company. Observe the culture. Do people in the company feel happy, excited, and energized to spend 8-12 hours doing what they do?
Does the startup fill a big market need?
Most startups fail because they don’t make products people need or want. There’s no point joining a company with 3 Ivy League founders, building cool technology that is not solving a problem.
Many startups spend millions of investor dollars building nonsense, all in the name of nifty technology. And then, end up shutting down the company after a year or two.
So how do you know that the startup is actually building something which users and customers think is cool? Here again, you have to put on the VC hat and do your own research by talking to a few people and ask them if they use or would use the product.
Finally, look at the competition. If it’s a novelty product, and there is a need for the product, it’s a no brainer. Join that company. If there’s competition, which is a good thing as it proves market demand, see whether they are competing head-on with giants like Google, Amazon, Facebook, and the likes. Because it’s hard to compete with the big guys. But if the competition is in the form of other small startups and companies, then you need to understand the game plan. When looking to join a company, make sure you understand their competitive advantage over others, and how they plan to win.
A great product
Do you believe in the product the startup is making? Before you apply, use the product and try to play with the product. Do you believe in it? Would you purchase, use, or recommend it? You don’t necessarily have to be the target customer for the product, but you need to understand who the target customer is and whether they will enjoy using the product. Because in the end, you will represent the startup and its products. So you need to be proud of what you are making.
Pay attention to how users and customers react when they are presented with the product or service. Read customer reviews if you can find them. Talk with employees to get their insights about what the company has to offer. With a little time and energy, you’ll be able to find out how well the product or service delivers on its core value proposition. If you can’t get behind the product with enthusiasm, move on.
Synergy between the candidate and the startup
Startups are supposed to grow fast along with the people in it. Choose a start‐up where you can make an instant impact, and grow into a larger role. It’s best to choose a start‐up that’s in it for the long‐haul and working to build a great company.
If in the interview they’re already talking about an exit, then that’s your cue to exit the interview.
What you’re trying to do is find a strong enough start‐up where you can stay long enough to help build a great company with lots of happy customers and employees, while developing your own expertise and leadership skills along the way.
If your interview with the founders reveals that everyone is focused on looking for a quick exit of the business, rather than building and growing the strongest possible company, then the exit will never come. So you know that the founders don’t have a grand plan for the startup and it’s a startup you should avoid.
Financial runway
Choose a start‐up that has a long enough runway for it to get off the ground. That means there’s enough money to go from development through marketing and launch and pay its people well along the way. If the startup doesn’t have enough money to fund the salaries of their employees for at least 6 months, that’s a straight ’No’.
They might try to lure you with stock options, but you need to get at least a minimum salary so that you can meet your bare minimum needs. And if they can’t offer that, then it would be risky to join such a startup, unless you believe that the startup is doing something truly disrupting.
Money is the lifeline of the business. And without it, even with a grand vision and great tech, the startup may crash soon.
During an interview, ask questions such as, “How is the start‐up funded? What’s the five‐year plan? How long is the runway? How tight is the budget right now? How many people are working and how is compensation distributed among cash and stocks?”
Find out where the money is coming from. Is it bootstrapped or are venture capitalists behind it? Who has skin in this game? The answers to these questions will give you a good idea about not only the funding but whether the leaders are inclined to tiptoe around the financials. If they lean toward vague answers, it would be hard to feel confident about their ability to be upfront about the company’s health in the future.
Those are the criteria I use to evaluate start‐ups. It’s best to choose a startup that has all these 5 qualities. But rarely that will happen. Because if a startup already has all these qualities, it also means that there will be a lot of competition in getting hired in such a company. In the end, it comes down to your beliefs about the company.
FAQ – Choosing the Right Startup to Work For
- Why is it important to be cautious when choosing a startup to work for? Choosing the right startup is crucial because over 80% of startups fail. Working for a failed startup can have negative consequences for your career. It’s important to exercise caution and pick a startup with a higher chance of success to avoid setbacks.
- What should I consider when evaluating the team of a startup? Look for a team that shares your values and has a grand mission everyone is geared towards. Assess their ability to build great products and sell them. Missing any of these qualities can lead to trouble for the startup in the long run. Also, pay attention to the CEO’s ability to inspire you.
- How important is company culture when choosing a startup? Company culture is vital as it sets the tone for the working environment. Observe if people in the company seem happy, excited, and energized about their work. A positive company culture can contribute to personal and professional satisfaction.
- How can I determine if a startup is addressing a market need? Startups often fail because they create products that people don’t need or want. Assess whether the startup is building something that solves a genuine problem. Research, talk to people, and gauge if potential users or customers find the product valuable.
- What role does the product play in evaluating a startup? Belief in the product is important when considering a startup. Use the product and try to understand if you would purchase, use, or recommend it. Even if you’re not the target customer, you should be proud of what the startup is making. Look for customer reviews and talk to employees for additional insights.
- How can I assess the synergy between myself and a startup? Choose a startup where you can make an immediate impact and grow into a larger role. Look for a long-term perspective, as the goal should be to help build a great company. If the founders seem focused on a quick exit, it may indicate a lack of vision and commitment.
- How important is the financial runway of a startup? The financial stability of a startup is crucial. Ensure that the startup has enough funds to sustain its operations, including paying salaries, for at least six months. If the startup can’t provide a minimum salary, it might be risky to join unless you believe in its disruptive potential.
- What questions should I ask about a startup’s financial situation during an interview? Ask about the startup’s funding sources, the five-year plan, the current budget, and how compensation is distributed between cash and stocks. Understanding where the money is coming from and the leaders’ transparency about the financials is essential.
- Should I expect to find a startup that meets all the criteria? Finding a startup that meets all the criteria might be challenging, as it would likely have intense competition for hiring. While it’s ideal to aim for a startup with all the qualities, it’s important to align your beliefs with the company and find the best fit within the given options.
Remember, choosing the right startup involves careful evaluation of factors such as team, company culture, market need, product, synergy, and financial stability. Consider these criteria to increase your chances of finding a successful and fulfilling startup to work for.
