Startup Job Offers And How To Interview Founders

Let’s set the stage: You’ve always wanted to work at an early-stage startup that is growing exponentially. So you’ve done your research and figured out a startup/product that you’d be passionate about. You have already interviewed with them, and they like you so much that they have made you a job offer. When I refer to a company in this article as a startup, they are an early stage startup that employs fewer than 75 people, has recently found a product-market fit or is in search of one, and has not passed beyond raising series A funding.

A job offer from a startup is no different when compared to any other employer or big corporation. Startups, like any legitimate business, need to follow labor and employment laws. Almost every startup offers equity compensation in addition to cash-based compensation. Due to the competitive hiring market nowadays, most venture-backed, high-growth startups offer market-rate salaries in addition to a slew of other benefits.

Startup Equity

Mostly startups offer equity-based compensation in two forms — stock options or restricted stock units (RSUs). To dig deeper into the differentiation between these two, read this essay on this topic by Andy Rachleff.

While evaluating a job offer you should ask the value of the existing stock options. Generally stock options are vested over four years with the first year as a cliff. However, your equity is nearly worthless* unless your startup has an liquidity event like IPO or acquisition. In the case of an acquisition, you are not always guaranteed a financial windfall.

To cite from Meebo’s founder Elaine Wherry:

“Founders don’t pocket the incredible dollar figures in headlines. It’s possible for an acquisition in the hundreds of millions to leave nothing for the founders depending upon how much has been raised, how much was allotted to employees, the number of founders, whether the exit included stock or cash, and the liquidation preferences.”

This is the case with founders who generally hold significant chunk of equity.

What’s in a Title?

Startups tend to have some creative job titles. However, most employers take startup titles with a grain of salt. So an impressive title, while nice to have, is probably not going to give you huge mileage on your way to career growth. Thus I’d recommend not getting too hung up on your job title. You should focus on how you can make the most out of the job, as your actual experience there will be the most valuable asset you walk away with.

To quote Sheryl Sandberg:

“If you’re offered a seat on a rocket ship, get on, don’t ask what seat. I tell people in their careers, ‘look for growth.’ Look for the teams that are growing quickly. Look for the companies that are doing well. Look for a place where you feel that you can have a lot of impact.”

Interviewing Founders

Remember, your interview is a two-way street. In all likelihood, you’ll most likely interact with at least one founder during your interview process. I have created a list of questions that you should consider asking founders during your interview process. It will help you understand founders’ thinking, overall business health and the startup goals.

Fun fact: venture capitalists and investors ask founders almost all of these questions while evaluating a startup opportunity for investment. If you don’t get to interact with the founders during interviews, then you should insist on it. If that is not possible due to logistical reasons (like travel) then you should ask the following questions to someone from higher management.

Finance. The following financing-based questions will give you an idea about how the startup is financed, and what its current valuation is:

• How much money have you raised to date?

• How long do you plan to keep it bootstrapped?

• Did you get any institutional investors (venture capitalists) in the last round of financing?

• Was it a party round?

• How long will this financing last?

• Do you have any plans to become cash-flow positive before the next round of financing?

• What was your startup’s valuation during last round of financing?

• What valuation do you expect during next round of financing?

Personnel and culture. The following personnel and culture questions will help you better understand the culture and employee growth strategy of a startup.

• How big is your current team?

• How many people do you plan to hire this year?

• What is the breakdown of numbers in terms of departmental roles (i.e. how many people work in engineering/product, sales, customer support, operations, and marketing, etc.)?

• What is the culture of your company?

• What kind of culture do you plan to build going forward?

Customers/users. If the startup is not growing fast enough while burning through a lot of money, then you are better off staying away from them. Customer/user acquisition and startup growth will help you to understand the overall health of the business.

• How many customers do you have? For consumer-oriented startups, this could be daily active users (DAUs) or monthly active users (MAUs).

• What is your current growth in terms of customers/users/revenue?

• How do you acquire new customers/users?

• What is the cost to acquire each user/customer?

• What is the churn in your business?

• If the cost to acquire a customer is larger than the long-term value, then why are you spending so much money on customer acquisition?

Goals and milestones. Every company has milestones and goals. Ideally goals and milestones should be quantifiable. You should be pushing founders to provide answers that contain measurable data in case they give vague answers.

• What are your company’s most important goals in this financial year?

• Are you on track to achieve them? (If not, then why aren’t you?)

• As a founder, what do believe to be the end goal for this startup?

• If Facebook/Google/Apple come along and make you an offer, will you sell?

• Who are your competitors?

• What is your competitive differentiation and your advantage?

• Have you achieved product/market fit?

• How big is the market opportunity for your business?

Miscellaneous

• What is the vesting schedule?

• Is everyone on the same vesting schedule?

• Why should I join your startup?

• What is the vision for this startup?

*In the case where your company is one of those rare unicorns you can potentially sell your stock on the secondary market if the management allows it.