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When to join a startup
- petercooper 11y agoYes, I'm missing the point (and I did enjoy the post!) but this: After 5 years, the company has raised £100m at a £1bn valuation. Has any recent British tech company/startup ever had such a raise? (Boo.com did but that was 99.)
- deleted 11y ago[deleted]
- retube 11y agoSkyscanner just last week
- tomblomfield 11y agoFunding Circle has raised a total of $300m since 2010
- cm2012 11y agoIs some of that funds to make loans with, though?
- iss 11y agoFarfetch and Transferwise have raised more than $100m and both have valuations of more than $1bn.
- oddsockmachine 11y agoAnaplan just reached $1bn
- randomname2 11y agoNot a UK company, right?
- iss 11y agoThis is a really great article. I've been asked several times about the right moment to join a startup, but truth to be told, it really depends a lot on your expectations. Do you want to join a super early stage company and do whatever is needed or do you prefer to join a funded and work on a very specific role. Important questions here: 1. What are your expectations? 2. Are you a generalist or a specialist? 3. Do you want to work in a small room with two or three guys with a pay check? 4. Do you want to join a more established startup, but have less impact? Make sure you understand the pros and cons of each option!
- Disruptive_Dave 11y agoHere's another overlooked tidbit: There's a good chance your skill set that was so valued in a 3-person early-stage startup will be significantly diminished when it turns into a 10-person, funded machine. Generalists are awesome when you're scraping your way through experiments and the "do whatever you can think of to increase sales this week before our investor meeting next Thursday" type stages. But I've seen those generalists left out in the cold when it comes time to focus and scale.
- untog 11y agoI'm not sure generalists ever run out of things to do. Sure, specialists may take off segments of the work to focus on, but generalists are still valuable.
- TuringNYC 11y agoFrom what i've seen, i'd agree with the parent. Specialists come in, often with MBAs, create their own empires. Generalists who helped build the company/process get layered with greater amounts of meaningless work, often making less than the inbound specialist.
- patio11 11y agoI've seen those generalists left out in the cold when it comes time to focus and scale. A particular subclass of this problem: the person who heads up your (pick a department randomly) Marketing from e.g. your seed round through your Series B is a) likely to be young and on-paper unprepared to run a Marketing department with 10 direct reports, b) likely to have a perceived lack of gravitas, c) likely to lack industry connections. Your VC fund and/or senior management may decide to bring in someone More Appropriate For The Role when you need a Director of Marketing. This presents a dilemma: what happens to the person who built your entire marketing strategy when someone has just been brought in to own the entire marketing department going forward? Is new person going to report to them? No, that's an obvious non-starter. Are they going to report to new person? A surprising number of people would prefer to not have perceived issues with the existing team (most of whom were, after all, hired by the existing employee) deferring to that person rather than their new titular boss. This is a time at which you either pray you are listed as a founder of the company or the founders are willing to go to the mattress for you, because otherwise the outcome is "Thanks for your service; best of luck in your next job."
- k__ 11y agoJoin if they give you what you want. Same as with every company... Want to work from home? Ask them. Most normal/bigger corps won't let you do this. A Startup probably will. It's also good if you like green field projects, haha.
- KarlFreeman 11y agoThese are great definitions of the stages of a "startup" but I'm missing the point here? Also, at some point, does a startup not become a company?
- flashm 11y agoA startup is always a company, but not really a 'business' until it's making a profit.
- noarchy 11y ago>A startup is always a company, but not really a 'business' until it's making a profit. So is a newly-opened mom & pop grocery store, then, I guess. But that kind of business isn't likely to generate blog write-ups.
- kristianc 11y agoPG describes a startup as a company 'designed to grow quickly.'
- clay_to_n 11y agoAccording to Steve Blank: "A startup is a temporary organization used to search for a repeatable and scalable business model." This is the best answer I've seen. Most startups are companies, and most startups are businesses. Graduating from a startup to a business doesn't make that much sense. But when your identified customers, product, and business model are repeatable and financially stable for the company, you aren't really a startup anymore.
- flashm 11y agoThis should be titled 'When to join an externally funded startup'. It's a whole different ballgame if you join one that's actually making a profit and doesn't need someone else's cash. Get in as early as you can, if you like the idea and can see it's got longevity.
- pc86 11y agoI think you're referring to a business, not a startup. The definition of "startup" has been tranformed into basically "a business that is primarily based on a website or mobile app," which it is not. Startups rely on fast growth. If you have a very narrow market or your end goal is $200k/yr in profit, you are by definition not a startup. If you're actually a startup, you should not have any profit in the beginning. You should be pumping that money back into the company and seeking external funding in order to pour gasoline on the fire. There's nothing wrong with having a business instead of a startup (personally I prefer the bootstrapped business route) but to say that it's a startup is not accurate.
- flashm 11y agoI don't think there is a definition anyone will agree on for 'startup' in this context. You either have a business that makes money, or you don't.
- dTal 11y ago>The definition of "startup" has been tranformed into basically "a business that is primarily based on a website or mobile app," which it is not. Only in the Hacker News / Silicon Valley echo chamber.
- golergka 11y agoI seem to learn the same lesson again and again from all the press about startups and my own experience (both as an employee in many and CEO/Founder in another). If you join the startup for the money (doesn't matter if you mean salary or equity), you're going to have a bad time. But if you expect to get experience, career and professional growth out of it, you can get pretty awesome results regardless of how successful startup turns out to be.
- facepalm 11y agoSo after your startup experience, somebody will shell out the big bucks to pay for your experience and professional growth? Or is it just that you can write more deep sounding blog articles in the future?
- dmichulke 11y agoIf you're asking whether companies pay more for you as an employee, I don't think so. Sometimes I even get the feeling that they like you less because you might be a threat to management (since you typically ask them about IT and the business aspects of what they do) But if you ask whether they give you more money because you are now in another relationship with them (consulting?), then absolutely, yes.
- eli 11y agoI'd be wary of employers who seem uncomfortable answering questions about the business side of the company.
- delphinius81 11y agoSame. If you get the impression management feels threatened by your skills and experience, it is not a place you should work at. Management should recognize what you can bring to the company at an individual and corporate level and groom you for a tech/business leadership role. If a company isn't prepared to do that, then they probably just want to use you.
- noir-york 11y agoGreat article. Best time to join: either as a founder, or post the Oracle acquisition! If you're going to take a risk, may as well maximise the risk/reward and be (co) founder. In the mean time enjoy a well-paying job you enjoy in a space that you'd like to disrupt; learn on the job, build your network, then leave to found the startup that will disrupt your previous employer...
- stanislavb 11y agoCould it be more precise!? :)
- cdnsteve 11y agoGreat read, I especially liked the mum references.
- ehartsuyker 11y ago> one two-hundredth, or 0.005% of the company I'll take the former, please.
- extesy 11y agofull quote: "one two-hundredth of a percent", which is indeed 0.005%.
- tomblomfield 11y agoThere was an early typo - fixed now.
- codingdave 11y agoCoding jobs have about a 2 year half-life. If they have enough funding to pay you for 2 years, regardless of whether or not they succeed, then it is as stable as any job, so just take the paycheck and do the work. Any job that doesn't have 2 years of reasonable stability need to be evaluated by your passion for the project. Do you want to take on personal risk because you believe in the project? Are you willing to lose money over it? Are you willing to lose time over it, and be broke at the end? Does this project improve the world, and do you want the work to be done even if you do not personally gain from it? Positive answers to those questions may lead you to join up. But if you join a startup because you hope to get rich from it, you are gambling. There is nothing wrong with that choice, but you should see it for what it is - gambling your time for a small chance at future money.
- vonmoltke 11y ago> Coding jobs have about a 2 year half-life. If they have enough funding to pay you for 2 years, regardless of whether or not they succeed, then it is as stable as any job, so just take the paycheck and do the work. This may be true in SV and a handful of other areas, but it is far from universal.
- kriro 11y agoThere are a ton of programming jobs that have a much longer lifetime. There's plenty of "lifers" in the business software or infrastructure software worlds for example.
- codingdave 11y agoYes, there are, which is why i used the term "half-life". But if you are the type to be a lifer at a job, you don't need advice on when to join a startup in the first place.
- hectormalot 11y ago> part of me imagines a group of MBAs sitting around watching Justin Timberlake play Sean Parker, thinking that actually a billion dollars would be pretty cool. My experience is that MBAs looking for money go into corporate roles, not startups. Around me it have been the more idealistic ones that join or start a startup, and for very different reasons than getting rich. e.g. feeling that they can be more valuable here than in corporate, wanting to create something new, etc. (all the normal reasons for start-ups, MBAs are no different) disclaimer: I have an MBA, and I did apply to Mondo (did not work out, but no hard feelings), and I usually don't daydream about making a billion dollars
- mpdehaan2 11y agoGenerally, fairly accurate. One word of warning - It would be nice if most startups became happy "CEO-on-Forbes" unicorns at round C, but not all do. I've seen a startup take a handfull of millions into Round F. Which is of course, rather much the flunk round. And a lot of very health companies continuing to raise many small series rounds. I think most people know this - but don't equate funding stage or amount of money raised with startup success. A better gauge would be paying customers and while you can't often get a feel for burn rate, find out as much as you can. All being said, I've had some good educational times on slowly sinking ships too. Sometimes the product is a little bit ahead of it's time.
- neilk 11y agoThis is more like "what it's like to join a startup at various stages". Perhaps the implicit lesson is to match what you're looking for to different stages? In any case, this is changing all the time. The seed-stage startup in 2016 might be three or four people from all over the world, working over Slack.
- ltbarcly3 11y agoThe first day (actual founder) or the day before the papers are for the A round are officially signed. These are the actual and only correct answers. If you are the founder you get the best deal overall on expected value. If your offer is generated before the A Round closes, you can negotiate equity at a pre-A-round valuation, but you are never exposed to any pre-A-round risk, and you can negotiate a post-A round salary that is contingent on the round closing.
- heurist 11y agoWhat would you say is a good amount of equity for being an early engineer (effectively technical lead) at a seed-stage startup? I'm at my first and don't know if I'm being compensated fairly, though I do enjoy the work greatly.
- birken 11y agoDepending on your skill level relative to everybody else, probably 2-5% would be a good range, though it also would depend on what your salary is. Less than 2% and either you are being paid a lot or you aren't that important to the team (or you are important and are underpaid).
- dpeck 11y ago2-5% seems high from what Ive seen, can you name any startups that were successful with early engineer(s) near the top of that range?
- birken 11y agoSure, at Thumbtack my initial offer was towards the top of the range to be the first hire there (I actually negotiated for less equity and more money, but they wanted me to take more equity... oops!). Worked out pretty well.
- mpdehaan2 11y agoI think 1% to even 0.5% is pretty likely - at which price maybe you might have to accept something maybe 15-20% below market. I would love to see early developers at this stage get 2-5%, though I think that would be hard for some to push all the way through (past the CEO if applicable, board who has to sign off on the cap table and doesn't want the option pool to be too low too soon, etc). But would it be fair if you are good and putting in that much work? Hell yes. But likely you're good, and hopefully the work/life balance isn't that lopsided either. Are you going to get it? Unlikely.
- charlotteley 11y agoThe decision of joining a startup should not be money return. It is a gamble. You use your stable salaries in return of dream and success. Pursue a dream is always expensive but when you get old, you will have a story to tell.
- Fuffidish 11y agoI joined as second employee after angel funding (seed stage) and a few months before the first VC funding and got about 0.5% equity. After a series C this went down to less than 0.3%... I didn't know anything about stock options before joining, don't you think I should have negotiated for more? This article says I should have got about 3% when I joined
- aadamov 11y agoSpot on our trajectory for the last two years