When To Join

People have different risk preferences.  They have different costs and opportunity costs that they have internalized.  That’s why there are supply and demand curves. I have seen some interest from people in “stable” jobs thinking of joining a startup.  It doesn’t matter why they want the change.

We herald the founders of startups, but rarely do we give accolades to the early joiners.  Without them, the startup wouldn’t make it.  They are critical to the success of the startup and the reason I am writing this is I’d like to see more Midwestern people start to look at the startup ecosystem and really think about how they can play a role in building it.  They can also help themselves in the process.  The problem for many is lack of understanding and lack of knowing when to join.

When should you pull the trigger?

You will have to do your research.  Most people chase the giants.  The time to join Uber is not now.  It was three to five years ago.  I also think it pays to move to a company in your vertical.  If you aren’t in healthcare, probably not smart to target a healthcare company.

Go one sites like Term Sheet or Crunchbase and see where a company you might be interested in got their last funding round.   If you are unfamiliar with what venture financing looks like, the progression looks loosely like this:

Seed——>Series A——->Series B——>Series C——->Series D——>Series E——->and so on.

At seed, there isn’t a lot of top line revenue.  At Series A, it’s growing but you can figure on top line revenue of $100k per month or more.  Revenues should be growing at a very good clip for any company you look to join. I like this post by Brad Feld to think about revenue.  It’s a nice principled way to look at it rather than hard and fast rules.

When you think about salary, don’t expect typical corporate salaries.  You are going to get paid but the earlier you join the startup the more you will be paid in equity.  That comes with an option package.  You’ll want to know the strike price of those options, and the last post money valuation.  That’ll let you do the math on how much that package is currently worth and how much it could be worth.

Responsibility varies by company and stage.  One thing we do is advise early stage startups to hire for their needs.  They don’t need to find a high priced rockstar to fill a role when a less expensive person will do.  The game is just to get to the next stage.  Obviously, at earlier stages people tend to wear more hats.  It can be more chaotic.  If you are a person who thrives on existing processes already being installed, the early stage might not be fore you.  But, if you are a person who likes process and likes to install the process, early stage might be perfect for you.

Early stage startups always need development and engineering talent.  The thing that is almost universally underestimated in early stage startups is sales and having a sales process in place.  Segmentation of target markets is also often underestimated.  If you are a good sales person and understand how to structure a sales department and how to segment a market, you might find a lot of interesting opportunities for yourself in the startup world.

Of course, startups can fail.  Because of the psychological endowment effect we overvalue the failure, and undervalue the successes.  Keep that in mind as you search for a startup gig.