Of course, everyone should trust their gut, so if you feel something's not right, it's probably not a good fit. I'm not going to go over everything you should be looking for in an employer or even in a startup, just some warning signs that might make you think twice about what might otherwise sound like a good opportunity. On the other hand, if you're running a startup maybe these are some things to avoid. If anyone has any strong objections to these or good stories, I'd love to hear them.
1. Wacky Titles
Startups that have too many VP and C-level titles floating around are just asking for the smack-down. Who's going to do the work if everyone thinks they're an executive? Titles like SVP and EVP are silly at a startup, and a giveaway that there's been some serious shuffling or some really big egos are involved.
It's generally wrong for people to have multiple titles too. Ever met a CTO/VP Engineering or CEO/CTO? Yeah me neither. At least, I've never met someone who needed to have both of these titles. This is generally a sign of some wildly narcissitic personalities.
If you're the CEO, just be the CEO! If you're highly technical and drive the technology vision of the company, people will get it without you tacking on the CTO title.
2. A Billion Outstanding Shares
Most startups should have fewer than 50 million shares outstanding. If you get an option grant for a million shares and you're employee 25, something is funky. Maybe the CEO got his cousin from Omaha to be their lawyer or there's been some serious messing around with the cap table. Either way, it's a sign that something is amiss.
3. Lack of Technical Leadership
In my definition, to call a company a tech startup, there must be some significant technology that gives you an advantage. Just using technology isn't enough (who doesn't have a website these days?) This means there MUST be a technical founder in a startup. If you're outsourcing the all the technical work, your company probably isn't a tech startup.
It follows that an "idea guy" who "just needs to hire a few engineers" probably isn't running a tech startup. If you're the first technical employee at a startup, you're either a founder or you're a sucker.
4. A Large Number of Ex-Employees
With social networks like LinkedIn, it's easy to get a rough idea of how many people work at a given company. Of course, not everyone in the company is going to be on LinkedIn, but if a large number of people are former employees this is a really bad sign for a startup as there probably aren't that many employees to begin with. Maybe there were layoffs, which isn't a great sign, but it probably indicates a serious retention (i.e. leadership) problem.
5. An HR Department
After a certain point, all companies need someone in charge of hiring just to deal with screening, scheduling, and general process, but most startups don't fall into this bag. If the company in question is a 5 person shop and they have someone outside the core team calling you, there's something wrong. The founders or at least the hiring manager should be doing the bulk of the hiring early on - including phone screens. I think this applies up to about 50 people.
Recruiters are generally non-technical and aside from process-pushing offer little aside from their network of contacts. If you're just looking to have resumes keyword-scanned then maybe you should consider a basic mail filter. When budgets are tight this is one area you shouldn't feel bad about skimping on. Hiring is one of the main things a startup must get right, but contract recruiters aren't the way.
I actually once had a very non-technical recruiter try to give me a technical interview (including coding) over the phone. That's a REALLY bad sign.
6. Too Much Big Company Blood
There's an old joke about General Managers from a certain very large software company who think they've "built" a billion-dollar business who then fail spectacularly at starting a company when they no longer have that big company business card. Well, it's not a joke.
Startups require resourcefulness and a rolodex of enterprise customers isn't enough. People who are too far removed from doing actual work and haven't worn more than one hat are unlikely to be successful in an environment where this is a serious prerequisite.
I'm not saying that no one at a big company can succeed in a small company, but in my experience success is rarely transferrable between the two.
7. Zero Transparency
The interview is a try-out. It sets the stage for how things might work on a day-to-day basis. If your questions about funding, outstanding shares (save this for after the interview), and the general details about the company's plan go unanswered ("It's not our policy to disclose that" is the usual response), is there going to be any openness when you work there?
This one is pretty generally applicable to all hiring, but given the small size of a startup there can't be a lot of secrets and if the atmosphere is secretive to start with, how much worse will it be when the company is bigger?
If it's your company, bear this strongly in mind. "Stealth-mode" is generally unecessary and more likely harmful to your startup (and calling it stealth-mode calls you out as a noob). You may not be ready to go as far as some in how open your startup is, but consider what radical transparency can do for you.
8. Marketing Stunts
Startups need to be cash conscious. The ones that are spending money on large booths at conferences, television ads, or huge launch parties might be fun to work at, but they likely won't be around in 6 months too.
9. Too Much Money
One of the biggest threats to a startup is running out of money. But too much money can kill just as easily. VC-backed startups can find themselves in a position where there investors are trying to drive growth by pumping money into the company. Unfortunately this usually backfires.
The first thing that happens with too much money is too much hiring. You start hiring a lot of people in sales and marketing to drive revenue, and while you may still be hiring people to do real work, the weight from the top starts to push down on everything else. The focus on hiring can take away from the drive to get actual work done which means your company is going nowhere fast.
It's easy to start losing discipline when the money is flowing around, so while that $50 million looked like a lot of money when you were 20 people, when you're 100 it's nothing. Consultants, free lunches, massages, and junkets expand to use it up.
10. Lack of Focus
When the CEO says "We're going to be bigger than Google!" and you can tell he really believes it, you should:
1. Kindly thank him for taking the time to speak with you.
2. Leave the building.
3. Never speak of this again.
It's great to have a big vision and try to get others excited about it, but a startup really needs focus (What's the minimum viable product?). You can't take over the world without building a few forts first. If company management won't even engage you in a realistic discussion of the challenges the company will face, it's going to be an uphill battle.
Posts
