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Beyond the Offer Letter: Questions Every Startup Candidate Should Askby@bhavdeepsethi
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Beyond the Offer Letter: Questions Every Startup Candidate Should Ask

by Bhavdeep SethiMay 15th, 2024
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One of the most repeated question I get is: how do I evaluate whether I should join an early seed stage startup. Embarking on a journey with a startup is akin to taking a leap of faith. While there's no guarantee of success, conducting due diligence can significantly mitigate risks. Having been in such a position couple of times myself, I wanted to share the framework I use that may help you make your decision.
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One of the most repeated questions I get is: how do I evaluate whether I should join an early seed-stage startup? Embarking on a journey with a startup is akin to taking a leap of faith. While there's no guarantee of success, conducting due diligence can significantly mitigate risks. Having been in such a position a couple of times myself, I wanted to share the framework I use that may help you make your decision.


For a quick background, the first startup I joined after my undergrad, MIME360, was acquired by Flipkart to build out its digital store. The four years I worked at Flipkart, it went through a hyper-growth phase to become India's biggest eCommerce company. After doing my Masters in Computer Science from Columbia University, I was fortunate to find another set of high performers with TellApart. TellApart ended up being Twitter's biggest acquisition, and I was fortunate to be part of that journey too.


After spending 6 years building ad products at Twitter, I wanted to get back to early-stage companies, which led me to join Frec as a founding engineer. Frec is a fintech startup, democratizing complex financial instruments which were previously accessible to a wealthy few. Unlike MIME360 and TellApart, where I was very early in my career and also just at the right place at the right time, Frec was a very intentional decision.


I had worked with some of the other founding engineers before, so I was confident the team was capable of executing. Josh McFarland (TellApart founder) was the lead investor from Greylock, so that was another huge vote of confidence. When I spoke to Mo Al Adham, the founder of Frec, his thoughts about the team and product-market fit complimented mine, and I was convinced I was making the right decision.


Given my prior experience with small and medium-sized start-ups, some of my friends/colleagues reach out to me to help evaluate a startup they’re considering joining. Joining a new company is a big step, both personally and professionally. Making an informed decision is much easier with public companies since a lot of resources/metrics that you might need are already available like revenue growth, median salary for your role, opinion of current and past employees, etc.


Such data is generally not available for most startups, especially the early-stage ones (pre-series B) which makes it quite a risky prospect. We know start-ups are inherently hard, and while there is no guarantee of success, you can definitely mitigate some risk by doing your own due diligence. Most start-ups are aware of this and are willing to share information with potential employees within reasonable limits.


It's essential to remember that joining a startup is not just about being hired; it's a mutual exploration where you are interviewing the company as much as they are interviewing you. Before saying yes to joining a startup, it's crucial to have a clear understanding of what you aim to gain from the experience. With the hope that it can help others as well, I am sharing some of the things I considered when making my decision to join Frec.

Product

Understanding the product is fundamental as it forms the cornerstone of the startup's existence.

  • What problem are you trying to solve? What positions you to best solve this problem?


  • Do you have product-market fit (PMF)? If not, what does PMF look like to you? In other words, what metrics will convince you that you've attained PMF?


  • Who are your primary competitors, and what differentiates you from them?


  • What is the biggest pain point for your product/customers right now?


  • Who is the target audience?
    • As a side note, it always helps if it’s a product you believe you will actually use (now or in the future)

Company

Evaluating the company's overall health and trajectory is vital for long-term commitment. You don't want to join a company for 6 months for it to run out of money. These questions will help evaluate the health of the company and what are their plans for the next 1-2 years.

  • What's your burn rate and what are your future funding plans? Alternate: What is the current runway?
  • How much is the current revenue (if any)? Future plans for revenue streams?

Team

The dynamics and cohesion within the team can significantly impact your experience and success within the startup. Even if there is no financial success, you can still gain a lot by working with a high-performing team.


  • Has anyone already left the company, and if so, why?
  • How do you facilitate onboarding for new team members?
  • How do people collaborate and resolve conflicts within the team?
  • What is the company’s policy on remote or flexible work?
  • How often do people work from the office? (This might have a significant impact on your decision as well. Early in your career, you want to work with people in the office as much as possible)

Founder

Understanding the vision and leadership style of the founder(s) can provide insights into the startup's direction.

  • Is this the founder’s first startup or do they have previous exits?
    • Note: Founders with previous exists (IPO/acquisitions) have done it before and know the recipe well.


  • For solo founders: Why do it solo considering the percentage of success from solo founders is less? How does the founder brainstorm ideas?


  • For multiple founders: How are conflicts resolved, and how are decisions made?

Investors

The motivations behind investor backing can shed light on the perceived potential of the startup from a third party.

A lot of times startups will let you talk to their investors too. If you’ve already cleared the interviews, then they'll try hard to sell you. You should research the quality of investors backing the company, their past bets, success rate, etc.

  • Why did the investors choose to invest in the founder/company? Are they betting on the team or the product?


  • What does PMF look like to them?

    • Hopefully, it’s aligned with Founders vision


  • Is the press related to the investment?

Role

Clarifying your role and expectations ensures alignment between personal growth and company objectives.


For technical roles, understanding the technological landscape is crucial. A lot of times I’ve seen engineers burnt out by simply using bad tools for the job.


  • How does my role contribute to improving the product?
  • What does success look like in this role, and how will I be measured? Alternate: Who is your ideal candidate?
  • What is the technology stack?
  • What processes are in place for planning, testing, and code reviews?
  • What is the on-call rotation like? How is deployment managed?


As you might have noticed, we're intentionally skipping compensation/benefits in this set of questions, since it can be a post on its own. Not to mention startup compensation gets really complex with ISOs, options, PPU, 409a evaluation, strike price, exercise price, etc.


Another aspect not covered that might be crucial to you is immigration-related questions in case you need a work visa. Remember, this isn't meant to be a comprehensive list. You might care about some criteria more than others. By asking the right questions and delving deep into various aspects of the startup, you can make an informed choice that aligns with your career goals and aspirations.