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What to look for in a startup

What to look for in a startup

What to look for in a startup

Go work for a startup! If you work in technology, chances are you've heard this advice, or you've thought about it on your own, or you're already working for a startup. In any case, I've noticed that there are tons of questions on Quora and Reddit and various other sites with people wondering how to find the "right" startup to join, which usually seems to actually mean "how do I choose a company that's going to make me rich." That's a little narrow-minded maybe, but it's reasonable to wonder how to find a company worth joining.

After my own journey at Tableau (which I joined when it was still a tiny company), I've had some time to recollect on what made my experience there worthwhile from a career perspective, and consider the reasons why the company as a whole was successful, or at least vastly more successful than most new companies. I've summed my experience into 3 evaluation criteria that I plan on using whenever I'm looking at a startup to join. Just to be clear, although financial success (stock + IPO) is a big component of this, I'm looking at every aspect of the experience. For me, there's no point in working someplace I'm miserable or working with people I don't respect, even if it means I'm missing out on a potential windfall.

I should also note before I start that when I say startup in this context, I am talking about pre-IPO companies that are still relatively small (0-200 people, less than $50m in revenue). I guess the AirBnbs and Ubers of the world are startups, but they really aren't the same as what I am talking about here.

Are they "good people"?

One of the things that struck me when I interviewed at Tableau was how humble and nice everyone was. Even though I was the lowest person on the totem pole, the CEO made an effort to spend some time with me, ask about my passions outside of work, understand me as a human being, etc. After I started, the CFO, CMO and other high level folks made similar, and what I felt were truly genuine efforts to get to know me, welcome me, and integrate me into the culture of the company in a very non-condescending way. It's not that the senior leaders are all that matter, but in a small company, culture starts from the top down, and at Tableau in 2009/2010, the humble, friendly vibe was in full effect from the C-level to the streets. 

While in the process of leaving Tableau (long story... but basically things change over 7 years), I had the opportunity to interview at 3-4 startups at a similar 50-100 person size. The first thing I asked myself after the interviews were over was "Are these good people?" The signs are easy to read if you look for them.

  • If you are junior, did more senior people ask to meet with you? Did they treat you respectfully? More importantly, did they talk to their colleagues respectfully? Did people ask about you as a person outside of work?

  • Were your interviewers trying to make you fail, or giving you the opportunity to succeed? I find that the tone of questions (even the SAME question) can quickly betray someones attitude, and by extension the type of culture they are a part of. You can give someone a tough interview with a respectful and/or friendly tone.

  • I always ask this question: "Tell me about your favorite colleague here, and what about them you try to emulate." If they look at you with a blank face, or confusion, or disgust, then get out as fast as possible. Good people in good cultures never have trouble thinking of people they want to compliment. It's also a great way to get people to be a little more real with you, which brings me to:

  • Did they ever break out of "interview mode" and give you a glance into who they really are? If you felt like you were running the gauntlet the entire interview, without any free flowing or genuine conversation, it may be difficult to connect with your potential future colleagues.

  • What's the vibe? Do you hear people laughing in the office? Not that they need to be, but were they at least talking or working with one another?

  • This one is more personal to me but I always like to say a joke, or something sarcastic (not negative, just lighthearted). If no one laughs, nods, or generally betrays that they have a soul, then it's not a good sign.

All of these questions can be easily dismissed because they're soft questions, and hard to answer. Trust me though, these are the most important questions you should be asking if you plan on spending 40 hours a week... or 80... with these people. More importantly, good people treat their customers right. Good people work hard, and help each other be more successful. And yea, good people are way more fun to have happy hour with. 

If you're honest about seeking the "good people", chances are you'll have to cross 50% of the companies you interview with off your list. It's frustrating, but it's worth it.

Are the customers in love with the product?

Dismiss for a second how "cool" the product is, how smart the engineering team is, how much experience the CEO has and find a customer. Look for a video on YouTube, a case study, anything that has customers speaking about the product. 

How do they talk about it? Look for them to say things like "life changing" and "transformational". There's a big difference between people who like a product and those that love it. Customers who love a product talk about it without being prompted, they describe the effects it has had on them personally, and the positive changes it's brought about in their lives. To them, the product isn't any set of features or functionality, it's a seamless package of good in their lives. I always think of this video from Tableau when I think about this criteria, take a watch and consider whether the company you're interviewing with has customers that feel this way about their product. 

Admittedly, I am seeing this through a B2B lens but it's true in a way for consumer stuff too. 

If the company is "pre-revenue", as they say, then make sure to ask your interviewers what their alpha test customers say, or how the product will affect customers beyond features and function. If you can't find any customer evidence and you know that the company has revenue, that's a bad sign.

In most cases though, you'll find some videos or case studies and the customers will just be "meh". Meh customers don't usually come back and buy more. They flip to the nearest competitor the moment they have the slightest problem, or when a competitor offers them 5% savings. Meh customers cannot ever build an important company. On the same token, it's hard to think of a wildly successful company without amorous customers. People LOVE Amazon Prime. People LOVE Google, and Apple, and Nordstrom. 

It's your call, but if they're not getting any love from their customers, their not getting my love either. Realistically, only 25% of companies have customers that truly LOVE their product. 

An opportunity to invest in

Yes, money matters. If you're working at a startup you should be getting equity, and if you do then the success of the company is more than directly relevant to the amount of money you take home. Any company you choose to work at should be a company you would kill to invest in. By that I mean if you had the money and opportunity, you would not just be willing to invest, you would actively seek it out. So what makes a good investment?

  • First of all, there's a great team. Smart, creative and experienced people build great things, and they think of new things to build too.

  • ... and they've already built a great product. You've seen the customers, but use the product yourself and see if it's something special. If you don't have the knowledge or chops to determine if it's special, then you need to ask someone who does, or educate yourself enough to tell.

  • Does it pass the 1 in 10 test? Any company worth investing in or working at should have the potential to drive $1b in revenue within 10 years from your start date. Do the math, if it's hard to make that work out, then the potential for your gains will always be fairly limited.

Although it's hard to know exactly, I imagine that only 5% of startups would pass this final test.

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