Inspired by @UrAssIsSaaS 's great thread ( https://bravado.co/war-room/posts/comprehensive-guide-for-moving-to-a-startup ) I wanted to provide an alternate perspective.
It's important to remember that 90% of startups fail.
I say this not to be overly negative, but as a reality check to those evaluating gigs at startups. Especially people earlier in their career. Startups LOVE to "prey" on naive employees by selling them a dream of equity and ringing the bell on Nasdaq. 99% won't make it...
Having worked at several failed startups (along with two that have exited -- one IPO and one acquisition) it's important to spot the red flags and know when to bail.
I'm about to leave a startup after 3 months because despite buckets of money from prestigious VCs they're bound to fail.
Here's what to watch out for...
1) Burning through cash -- Swanky offices are great for impressing candidates and potential clients, but all that La Croix adds up if you're not bringing in revenue. One startup I worked at leased a HUGE office based on their growth plan, only to end up subletting space to several other companies and converting their office into a co-working space after 6 months. Frugality (especially with other people's money) is a virtue.
2) No proven product/market fit -- Do they have customers? Are their customers friends and family? VC connections? Have they proven there is demand for their product with potential clients? Lots of ideas sound great on paper, but if no one is willing to pay for them you're gonna have a bad time. I learned early on that if prospects reaction to your demo is "this is cool" then you're fucked. No one buys "cool" products. They buy products that address quantifiable business pain in a differentiated way.
3) Shaky business model -- What is their plan? Hustle 24/7 ain't a plan. Someone with real world experience should have a spreadsheet that models everything out and shows how they'll make money. Huge red flag is the business model isn't codified or if they seem to pivot every 6 weeks. Even bigger red flag if they're under-selling themselves and bringing on clients who are costing them more than they're worth.
4) Shitty founders -- For the most part, you want to find an executive team who has done this before. Inexperienced founders make a lot of mistakes, and if the product is their "baby" they're often shut off to feedback or criticism. If they think they're the smartest person in the room, that's a bad sign. The successful founders I've worked with are intellectual, humble, and tend to be quiet. The failed founders I've worked with find every opportunity to tout their brilliance and insist their success is inevitable.
Hope you enjoyed my screed!
Am I missing any other red flags?
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