Tips for Joining an Excellent Startup Company
When I was in college I interned for some very large corporations and swore to myself that I would never work for gigantic companies ever again. I hated the lack of purpose and direction in my internships and I also did not like the layers upon layers of bureaucracy. So when I graduated college I decided that I will work for a startup. I did join a small profitable startup and met a group of extremely intelligent people and worked with them for over a year. Since then I have joined a couple more small private companies and I have learned a lot about startups and I would like to share my experience here.
1. Have Realistic Expectations - Lets face it, not everyone who joins a startup can become a millionaire because 90% of startups fail. If you are a lowly rank and file employee like me it is also pretty hard to become extremely rich off the option grants . It does not mean that it is impossible to profit handsomely off a startup if you choose well and join early. I have seen a few of my coworkers run off with hundreds of thousands dollars worth in company stock because they have been with a company for many years. Since startups are usually small, you can also expect to have less benefits than larger companies. For example, I have never had 401k matching, but I have an extremely flexible work schedule to make up for it.
2. Find a List of Startups - Recently a great site called VentureLoop.com appeared and it lets you search for positions at startups. The job postings are mostly posted by the venture capitalists that are funding the startups and instead of going to each venture capital company's page you can search it all at VentureLoop. Other methods of finding names of startups include networking, or search for lists of companies that received venture funding. Lists of these are sometimes published in newspapers and business journals. Once you have a list of names you can start narrowing down the companies you want to target.
3. Research and Estimate the Current Value of the Company - If you want to get rich off of pre-IPO stock options, it is best to have an idea how much the company you would like to join is worth right now. Some friends have asked me what I thought of Facebook, which is touted as one of the hottest companies in the Valley right now. I told them that I thought the valuation is way too high at $15 billion . The way stock options work is that your strike price is whatever the last valuation of the company is as determined by the company's board or a sale event. So if anyone joined Facebook now they would have a very high strike price. Then again, Facebook may be pumped up some more. Generally, when you receive an offer from a startup you are able to ask how many shares of stock are outstanding and how much each share is worth. However, if you are just doing research on your own, you can only estimate the company's valuation from news clippings.
4. Research the Company's Product - This is one of the most important things you can do. The first startup I joined is really excellent in terms of working environment, but I was not interested in the product at all. Even though the product is profitable I did not feel a connection to it. So if you are interested in a startup, you should see if you would actually buy the product. If the product is available to try then by all means get a copy and play around with it. Since the product is something you will work with day in and day out it is important that you like it. You should also have a good idea of whether or not the product would sell and if you have faith in the company's product, then it is a good sign.
5. Research the Company's Competition - It is best to join a startup that has no competition at all. That means they have a fresh idea and they are the leader in the marketplace. However, it is very rare to find a company like that and the barrier to entry for many startups is very low. If you do find a company with competition you should see if the competition is doing better. Generally, you want to join the leader of the pack because there is more of a chance for the frontrunners to survive.
6. Try to Get an Interview - So you have your sights set on a great company, do you have an interview? The best way to get interviews in startups is through networking. Look up the company name in LinkedIn and see if you find anyone you know. Otherwise, look on the company website directly and submit your resume. You can also call the company and just ask if you can speak with someone. There is not always a position available, but it does not hurt to try.
7. Negotiate Your Offer - If you happen to get an offer from an excellent startup, congratulations! All the startups I have joined have been quite selective and have had fairly difficult interviews. Now you must negotiate your offer at least once. I did not know this when I just graduated college but apparently just by asking nicely you can often get more stock options or more money. The worst thing they can do is say they can not offer you any more, but usually a company that has just put you through eight or nine rounds of interviews really want to hire you. They have used up their precious resources to interview you and they would not reject you just because you asked for a better offer.
8. Work Hard and Play Hard - Startups are places where everyone have to wear a lot of different hats and do more than just the job description. There are times where you have to work fairly long hours, but there is often free drinks and food along with it. Some companies even have game rooms for people to spend time. I have met a lot of fun and young people in the startups I joined, and there are always opportunities to play.
Right now I am still working for a startup, and I am enjoying it very much. One thing I would like to stress is that if you are young you will learn so much more at a startup as opposed to a large conglomerate with 200,000 employees. You will learn to do things efficiently and become more independent. The downside is that there may not be as many training programs or perks like pension or paid maternity leave. However, there is always the dream of the IPO.