Be Sure to Ask These Questions During Your Startup Interview
Will your hard work and technical expertise be rewarded if you jump to a startup? Or will you be out on the street looking for a new job in three to six months? A recent study by Dallas-based bankruptcy law firm Allman Law found that more than 90 percent of all tech startups fail. The 10 percent that succeed have a few things in common. Primarily, they provide a service in high demand, are generally created by educated tech professionals and are flexible enough to shift with changes in the climate.
Naturally, it’s important to explore these areas when you meet with the founders. Do your homework and ask these questions to determine whether the opportunity is worth the risk.
Is the Business Plan Viable?
Determine whether the company’s business strategy is logical, achievable and flexible enough to survive the ramp up period. Understanding where a startup is in its lifecycle can help you assess its progress and chances of success.
- What’s your plan for the next six months and five years?
- What’s your target market?
- Do you have paying customers? If so, how many? If not, when do you plan to launch a beta test or start shipping product?
- What’s your revenue model?
- How do you intend to reach new customers?
- Who’s your biggest competitor and how do you compare?
- How are you monitoring customers’ needs? Have you made changes based on their feedback?
- What’s your exit strategy? Do you plan to go public or sell the technology you develop?
Is the Company Financially Stable?
You’ll need an in-depth understanding of the company’s financial health and backing to assess the risk. Be careful if the founders are unwilling to share financial information.
- What’s your current financial status? How big is the profit or loss? When do you expect to turn a profit?
- How are you being funded? What are your investors’ expectations?
- When is your next funding round and how long is your runway? (Runway refers to the amount of time a company’s cash and projected revenues will last.)
- What was the company’s post-money valuation after the last round of funding? (This refers to the value of a company after an investment has been made.)
- Have you sold equity to an investor? (Founders do better when they have skin in the game.)
- Do you regularly share financial updates with employees?
Is Management Capable?
Teams of two or three founders are the most likely to succeed while lone entrepreneurs are the most likely to fail. A small team has more collective skills as well as the ability to bounce ideas off each other and share the workload. Also, successful startups replaced one of their founders and added new board members within the first six years.
- Tell me about your background and the backgrounds of the other founders. Are you equal partners? Have you added or changed owners?
- Why did you found the company?
- What’s your management philosophy?
- What are your vision, mission and goals?
- What’s been the biggest challenge so far and what do you need from someone in my role?
- Who’s on the board and how long have they been here?
Will You Like the Environment?
One of the main reasons to join a startup is the opportunity to work with cutting edge technology. Don’t assume that you can wear flip-flops everyday or bring your dog to work.
- What is the culture and work environment like?
- How big is your team and how is it distributed?
- What are your near-term hiring plans? Are you short professionals with critical skills?
- What’s the structure and hierarchy like?
- Who will I be reporting to and can I meet the team?
- How will my performance be assessed?
- Tell me about your technology platform.
- Tell me about the development pace and methodology.
- Are you open to considering changes to the technology stack or new ideas?
How Much Will You Earn?
To assess the risk/reward quotient for your contributions, dig into the compensation structure and what you stand to make based on a range of likely scenarios. Note: Equity plans and taxes vary and they can be complex. For specific advice, consult a tax advisor or accountant before signing on.
- Will I be asked to sign an employment agreement and may I see a copy?
- Does compensation include salary, bonuses or equity? Percentages of each?
- Are you offering stock options or restricted stock?
- May I see a copy of the bonus and/or stock plan and the vesting schedule?
- How many outstanding shares exist?
Of course, working for a startup carries risk. But by asking these questions and carefully weighing what you learn from the answers, you can minimize your exposure – and gain the greatest reward if the company succeeds.
- Plan Your Finances Before Joining a Startup
- How Investors Will Impact Your Company’s Culture
- Biz Stone’s Lesson for Everyone Who Works for a Startup