If you’re planning to quit your job and join a startup, read this first
Anyone considering a move into a high-tech startup—lend me your ears. I want to help you recognize the opportunities within the burgeoning startup space and provide practical tips on how to make the most informed decision about a transition that could profoundly alter your destiny, and that of your family, for generations to come.
If you’re weighing up leaving a cozy corporate life for the wild west of a nascent startup, or taking a leap of faith and putting all your eggs in the basket of breakthrough tech, it’s incumbent upon you to choose wisely and apply yourself from the get-go. As someone who has spent a career firmly entrenched in the startup space, and experienced the thrill of taking two companies public, I can tell you now that fortune favors the brave, and informed. The following can be considered a decision-making ‘protocol’ of sorts, a checklist of essential criteria to gauge before selecting your path.
Understand the risks
This shouldn’t come as a surprise to anyone, but most startups will fail. If you’re going to join an early-stage startup, the key is to give yourself the best odds of changing your destiny, and that of your family. Depending on where you are on the career ladder, the allure of startup life can be very enticing, and it should be. For the risk-averse, startup life will seem implausibly volatile, but for those who are energized by uncharted waters, by broadening their horizons, and pushing their limits, the startup space will provide fertile ground for you to thrive, albeit not without risk.
Statistics show, when you join a startup, there’s roughly a 1-in-20 chance that it will radically change your life. If you roll the dice and win big, everybody around you will stand to benefit. Speaking from personal experience, it’s immensely fulfilling and rewarding to know that many hundreds of people have changed their life arc because they chose to join me on my journey. But you must meticulously calculate the risks involved in your decision, with different permutations impacting different people, at different stages of life.
Let’s be clear, from the outset you don’t have a clue what you are choosing, so appreciate the fact that you’re somewhat in the dark. However, there are people in the know, people whose experience could be vital to helping you understand if the startup is the right fit for you. Seek them out.
When possible, connect with investors
Let’s start with the company’s investors. Identify them, reach out to them, and check out their track record. Leverage your network to get time with them, and if you succeed in doing so, ask quickfire questions. Get to the point. It’s your life, your time. Look them square in the eye, but don’t use rose-tinted glasses. You want an unvarnished assessment of the company’s potential growth pipeline, so ascertain if they would invest again. Don’t wait for the yes or no, but observe how long it takes them to say yes. How many milliseconds? How honest are they? Are they hesitating? If so, that’s a red flag.
Correspondence with investors will serve as a litmus test for project longevity. Seek to gauge the relationship between the investors and the founders. Are they singing from the same hymn sheet? Are there clear communications channels between investors and founders or cracks in the foundations?
Spend time with the CEO and founder(s)
If, following your investor correspondence you are convinced that the startup is for you, the next logical port of call would be the CEO/founder. This individual has a story—explore it. In my experience, I have rarely encountered CEOs or founders with a predictable life, who could be characterized as ‘normal’—by definition, they don’t fit the mold. But you want them to have that spark of madness that is constructive, that is being channelled in the right direction.
If they’ve never had a traffic violation and are universally adored—move on. These are not the disruptors and innovators you want to work alongside. Don’t chase boring. Chase bold. Listen to your gut. Ask yourself: Do you admire them? Do you trust their judgement? Do you appreciate their charisma? Do you recognise vision, tenacity, brilliance? Would you be proud to have them as a peer? If the answer is yes more often than not, you’re on to a winner.
Speak to employees
In addition to connecting with the leadership team, the startup’s employees will provide invaluable insights to base your decision upon, particularly if there are two founders or more. One of the biggest value killers in a company is when founders don’t get along, or when they don’t get along with the board. This is where gossip matters. How do the employees view the situation? You want them to be unflinching in their feedback. Is it a productive and respectful workplace? If not, perhaps you should tread lightly around your decision to join. Try to get a sense of the underlying energy, the company culture—that is what sets companies apart. For example, if an important work-related issue crops up on a Friday night, how quickly do people respond? How many people just wait until Monday? How much respect do they have for the urgency of the situation, for the immediate needs of the business?
Treat the interview like a date
Seriously. View the interview process through the lens of a date, and the startup as a prospective suitor. Do you feel chemistry? Do you think this could be a fruitful partnership, a long-lasting professional relationship with counter-dependency? Trust your instincts. However, before you go for the interview, do your own market research. Leave no stone unturned in your efforts to find out as much intel as you can regarding the competitive landscape and market trends. Find out what you need to know because you’re not in a position to play Cinderella.
Arrive at the interview armed with questions. If you pick up a sense of ambiguity around trends or competitors, that’s a major red flag.
Seek clarity on the business model
Before signing the dotted line, you need to develop a rigorous understanding of the company’s business model. If it’s a ‘winner takes all’ model, it’s a much bigger risk. Make sure the justification for the startup to exist is compelling. Who is the target audience? Are there prospective customers waiting for the project to be launched? Even if the company is in the very early stages of development, you want to see that there is a clear customer appetite: Would they pay for the service and implement it tomorrow? To properly determine if there’s a real market demand for the offering, ask to be a fly on the wall during a customer meeting.
When startups fail, one of the most popular excuses that gets thrown around is external market conditions. This is not always the case. There are signals, writing on the wall, indicators that reveal the health of a startup, or whether they are equipped to thrive long-term. If the company is on its toes, it can see ahead of the curve, anticipate problems, and address them before they become an existential threat. Some companies won’t have a chance from the get-go, because there’s already a critical mass of operators that own the market.
Finally, recognize the unique benefits of being part of a small group of people with synergy around creating value. That’s the joy of joining a startup. Dive in head first, and be available at any time. Don’t view yourself as an employee, but a partner. You will grow, you will learn, and you will challenge yourself in meaningful ways. But vigorous due diligence is a prerequisite to success, so my parting advice is to take the time to fully vet the opportunity.
Yuval Tal is managing partner at Team8.
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