Interested in joining a startup? Evaluate it like an investor.
Important questions to ask when navigating the startup hiring process
Over the last year, many large tech companies, from Google to Meta to Spotify have laid off large numbers of employees, leaving a huge swath of talent looking for jobs, many of them considering joining a startup. As someone who has done a lot of startup hiring over the years, this got me thinking about how I’ve been in a position to be able to help friends and colleagues think about the most important questions to ask when considering joining a startup.
As a founder, I hired hundreds of people, and the questions below are some of the best questions that people asked when considering joining my startup. About 5 years ago, as more friends were navigating the hiring process at startups, I pulled together a list of those questions that I think any prospective hire at a startup might want to consider asking before taking the job.
My philosophy and the philosophy of some of our best hires: evaluate a job opportunity at a startup the way an investor might.
Sure, if a company has received outside capital from great investors, that’s a great signal, but the questions outlined below can help you make an informed decision about what level of risk you’re comfortable taking.
Even if you’re not investing cash, you are investing your time, and time is the most precious asset any of us have to offer. If invested well, it has the potential to bring you big upside.
The most important questions to ask fall across four categories:
Founder Vision: Who are the founders (what is their experience/background) and why do they believe in what they are building?
Openness to Ideas: Are the founders curious people who are open to new ideas and feedback?
Current Status and Future Outlook: Where is the business today? Where do they see this business in 5 years? How big do they think this could get?
Market Opportunity and Risks: What are the founders and/or company leadership’s hypotheses about the market opportunity? What do they believe the biggest risks are?
It goes without saying that even with the answers above, you should do your own homework on the market, opportunity, and founding team, but these questions are the most important because they will tell you a lot about the vision for the company. For a venture backed startup, big vision is key because it tells you what the organization is working toward.
But vision isn’t the only thing that matters. Vision without strong execution will leave a startup without a leg to stand on and that’s why the additional questions outlined below can help provide you with some more color / detail on how a startup is thinking about achieving its vision.
The list below is comprehensive but having a general understanding of the mechanics of the business, the offer you receive, and how the business is growing will give you some good information about whether joining a particular startup is worth joining. When navigating the job search process in the startup world, it’s important to note that joining a startup comes with a larger level of risk then joining a more established corporation, but approaching it the way an investor might allows a potential hire to think through that risk in a more calculated way.
Other Questions to Consider
Customer Acquisition
What's been the most effective channel for finding customers?
What's the cost to acquire a customer? (Seed Stage and Later)
What is the lifetime value of a customer? (Seed Stage and Later)
How long does it take to onboard a new customer?
Business Model / Growth
What are your margins? (I.e. what percentage of revenue are you actually taking home)
What is the expansion or scaling strategy?
Are you profitable? If not, what's the path to profitability?
What's your ARR (annual recurring revenue)?
Gross Revenue?
Net Revenue?
What's your runway? (How much money/time do you have left until you run out of cash)
What's your pricing model?
What's the sales cycle? (B2B startups)
What percentage of your revenue comes from your biggest customer? (B2B startups)
Competition
Even if there are no other direct competitors, who else could build or has built something similar? How are you building defensibility?
If you’re a marketplace, is disintermediation a risk? If yes, how are you solving for it?
Governance / Company Culture / Ownership
How would you describe your company culture?
What is your hiring and compensation philosophy? (Equity vs. Cash)
Who is on your board? (Although, you may be able to look this up online-- but if you can't look it up online I would ask and then research the people and see if they have subject matter expertise)
How are board seats divided up? How many board seats are there?
Who are the largest shareholders?
What's the exercise window for shares? (Standard is 30 days, but many startups have extended this window to multiple years)
What are the shares outstanding?
What is the strike price?
What is the vesting schedule?
What is the current valuation?
How many rounds of funding have you raised?
When will you raise the next round?
What are you most worried about as a leader in the organization?
What is the board most concerned with?
Shruti Shah is a partner at Symphonic Capital. She is a seasoned operator, angel investor, and Fractional COO and previously worked as an EIR at SVB and Nike. She was also the founder and COO of YC Backed Move Loot - a used furniture marketplace.
Special thanks to Sydney Thomas for editing this post.