So there you are, pounding the pavement, sending out resumes and going on interview after interview with no job. Then your BFF texts you about this great new startup they’re working for. They have parties every Friday, wear shorts, tees and sneakers to work, and take two-hour lunches. Best of all, they’re all gonna be millionaires when the startup goes public. So what are you waiting for?
It sounds tempting, but before you leap into joining a “hot” new startup, you may want to take a sobering look at who they are and what they’re actually offering. Note too, that in spite of a mini-boom in Silicon Valley, a recent study by Simply Hired.com found that only 4 percent of college grads indicated a preference for joining a startup. This speaks volumes about what college grads are looking for these days, and that’s job security—more than pay or benefits.
Of course, if you’re a risk taker, the kind of person who laughs at danger and has already tried winged skydiving, you won’t be dissuaded by what the “crowd” is doing. You’ll want to join a startup because, even though you’ve got your whole life ahead of you, you follow the “life is short” mantra. If that’s you, there are some guidelines you might want to follow before you join a startup:
Make sure the startup’s properly funded
The stats on venture-backed high-tech startups are not good. Many fail in the first year, others don’t make it to year five. So make sure that the startup is well-funded, growing and stable. At the very least, you want a job that will be around for at least four years.
Check out the startup’s business plan
Have an accountant or attorney (or both) go over the business plan. Make sure it’s clear how the startup plans to make money, where the profits are and other pertinent financials. Evaluate the startup’s leaders and their investors. Do they have a track record of success in other ventures?
How will they pay you?
Most startups won’t have a lot of cash, so make sure you understand exactly how, when, and how much you will be paid. If they offer you all equity and no cash, it should be during the company’s infancy, and you should be “titled” as a founder with the same rights as other founders--a board seat, voting rights, stock options, etc. If you don’t get a salary within six months, that’s a red flag. Look carefully at stock options and grants (you own 100 percent of the sales price). And don’t overlook the vesting schedule (when you get the stock). If you’re not vested when you leave or the startup is sold or goes bankrupt, you get zip.
Finally, make sure their social agenda follows yours
Is the startup just out to make a fast buck? Or do they have a social agenda, one that dovetails with your concept of social responsibility? Are they interested in your passion or simply your contribution to profits?
There are many things to consider before you leap into a start-up. Make sure you do your due diligence!