Questions to ask before joining a startup

By Hugo LassiègeJan 19, 202317 min read

That’s it, you have an offer from a startup on the table, but you don’t really know what to think about it.

Yes, because between the myth of the toxic startups run by big megalomaniac and the fantastic adventures of unicorns that impact millions of people there is a gap and you don’t want to fall on the wrong side.

And, if you have experience of traditional companies (does it really exist elsewhere?), you don’t know how to evaluate the company that is trying to seduce you.

Let’s talk about it.

Startup definition

Before even we begin, let’s agree on the definition of a startup.

And so, as I am the author of this post and I do what I want, I will take this definition:

startup: young company, which experiments on a new market, therefore risky, and requiring large technological investments. They are often characterized by big growth, whether organic (the number of people working in them or the number of users) or financial. It reinvests all its capital in its growth constantly. This capital can be income, but also, very often, external funds that have been raised from investors.

It’s a bit long, but it allows me to exclude:

  • small business that claim to be startups just by their size. There is a technological risk and growth criterion to be respected
  • small and medium IT consulting companies who like to take advantage of the startup trend to disguise themselves. They do not invest anything in a technological product and do not navigate in an unknown and risky environment.
  • scale-ups that have found their model and are in the acceleration phase. Even if they still share many points in common with startups (strong growth, risk, massive need for capital, etc.) I’ll talk a little about scale ups, but it is important that you make the difference between the two when signing.

Questions to ask to yourself

Before even evaluating the startup, there is a small phase of introspection to do on yourself to know if you are ready to work in a startup.

A startup, by definition, is a small company and it’s risky. The good point is that you don’t get bored, and you have to learn a lot of jobs. We become by nature a five-legged sheep because the means are limited so we have to fill the gap constantly.

For my part, I really like this part of autonomy, of the unknown, of permanent renewal, of the absence of humdrum.

But I understand those who see it like a constraint.

A startup is the permanent illustration of the expression “getting out of your comfort zone”. And the sentence says what it means. Are you ready to get out of comfort?

Personally, having tested boredom in certain large companies, my answer is yes. But this answer is personal and no one should have its word on it.

Especially since this answer will undoubtedly vary over time. We may not answer the same thing depending on age, financial or family constraints.

A second point, which is a corollary to the first, is adaptability . Working in a startup means accepting that the company is experimenting. And who says experimentation says regular priority changes.

A startup is also a company that grows quickly, when it works. And who says growth says permanent reorganization.

Reorganization, because there are new people and more specialized people arriving, because the work that is done at 2 can no longer be done in the same way at 10, and the list is not exhaustive.

If change is stressing you out, this may not be the best environment.

By experience, on Malt, every 6 months, the organization had to be reviewed. We change our offices every 18 months! Every year, there were more new employees than old ones at the end of the year.

A final but crucial point, does the company’s mission inspire you? It seems obvious, but I still know people who have been convinced by a company and then regret working in a sector they don’t like. We can make concessions, but it’s difficult when it’s the total opposite of your own values.

Ok, let’s say you’ve gone through those questions and you’ve received an offer from a startup. Now let’s see what to look for on this company.

The founders

I’m going to give you some info that you may not know. When VCs decide to invest money in a seed-stage startup, the first thing they look at isn’t the idea itself, it’s the founding team.

Everyone has ideas, none of which are 100% original. What will make the difference is the execution and it is linked, at the beginning, to the founders.

You should apply this criterion. If you are not convinced by the founders, it is very bad start. If you don’t imagine yourself working with them on a day-to-day basis, move on. As much as you will never or rarely meet the management team in a company of more than 1000 people, in a startup they are your first colleagues.

Ask yourself, what have they done before? Do they seem legitimate to you on the core business of the startup? If you go to their offices, how do they seem to behave with their colleagues?

Now, trust your gut.

The financial health of the company

It may not be the most appealing chapter, but it’s actually one of the most important.

I said it above, in startup you will learn a lot. And one of these learning is financial culture, because as much when you go to take up a position at Societe Generale, Axa or Carrefour, you don’t tell yourself that the company can close the next day, as much in a start-up, it is possible.

And besides, even if the product vision is incredible, the company can break its neck at any time. It is part of the uncertainties to accept. I invite you to ask some questions for the following reasons:

  • it shows your curiosity and it is a good point in your favor during the interview
  • it is important in any case to understand the financial model of the startup. If you don’t understand the model or find it too complicated, how will you be motivated later?
  • it allows by asking these questions to see the level of transparency of the company. In startup, the company makes little or no income. You shouldn’t be surprised. So we will mainly focus on two notions which are the minimum to know :

Monthly Burn rate: this is the amount “burned” by the company every month, i.e. when it spends more than it earns money Runway: this is the number of months before it runs out of money Not all companies will share this data with you. And personally I find it a shame because you are going to take a risk and you should be able to have a minimum of visibility over the next few months.

Then we can go further and I invite you to do so. Already try for yourself to understand the financial model of the company. And then in an interview, validate your assumptions. The questions will vary if it is B2B or B2C.

In B2C, I would seek to know how they acquire customers. Is it a viral product, or does it works by affiliation, or something else? I would seek to understand what is the mass effect necessary for it to be profitable, how many people signup each month on the product and is this linear or exponential.

I would like to understand monetization, addressable market size, competitors, how the startup stands out against them.

In B2B, the questions are similar (acquisition, competition, value proposition) but it is also true that the notion of mass is less strong. For some cases, a single customer can bring back hundreds of thousands of euros and the hardest thing is to close the first one. So the absence of a client is sometimes normal. But beware, from experience, sales with very large companies or institutions are complex and long. This is a very perilous bet for a startup.

In the case of a scale-up, it earns income so you can dig a little deeper and retain the following vocabulary

  • Turnover (turnover), sales revenue: the sum of the company’s sales
  • GMV (Gross margin value), TV (Transaction value): the sum of the transactions carried out
  • CM (contributive margin): the revenue generated for each sale, removing the variable costs
  • MRR: monthly recurring revenue (especially in SAAS)
TIP

Example; The difference may not seems that big between turnover and GMV but let’s illustrate it in a simple way.

On Airbnb, for example, you pay 100 euros a night in accommodation.

Of these 100 euros, 90 go to the host, 10 to Airbnb.

The turnover for Airbnb is 10 euros.

The GMV is 100.

TIP

The CM (contributory margin) is a good indicator because it makes it possible to verify that the company has a healthy financial model. Basically, when the company spends 1 euro (on marketing, sales costs, etc.) does it earn more than the euro spent? If the CM is negative, it’s a bad sign. Ask how it has evolved over time and what is the short/medium term vision for it to improve.

culture and values

What is culture again?

I like the following two definitions:

  • culture is the sum of practices (from the Netflix book — No rules rules)
  • culture is what happens when doors are closed (unknown origin)

Let’s take concrete examples,

  • if the startup communicates its figures on a regular basis, we can say that it is transparent.
  • if the founders are all from a business school, it is more likely to be a service-oriented culture than a product one

In any case, culture is not at all or nothing, it is a cursor.

Culture as a cursor

Culture as a cursor

And it’s a multi-dimensional cursor. Each element of culture adapts in relation to the other. Example: speed can conflict with transparency, or quality or… whatever.

Culture as a cursor with multiple dimensions

Culture as a cursor with multiple dimensions

Culture for many is a somewhat overrated term, not very concrete. It’s surrounded by marketing fallacies.

And yet, make no mistake, culture, especially in startups, is very concrete and for me it is an element that you should understand during interviews.

The greatest risk is to arrive in a company whose culture is totally at odds with your expectations.

For my part, I take a few examples, I think I would like to find a techy culture, collaborative, remote, rather soft leadership, oriented, with a good ambition and without a cult of pressure.

For a startup, it’s rare that they formalized its culture in writing. If not, just ask how they handle some situation.

If the culture has been written down somewhere, ask for concrete examples that illustrate each point of it. Fun little test, ask the non-founders to see if it’s a common view or if it was just written by the founders.

If, for example, the company tells you that kindness is part of its values, ask how this manifests itself in practice.

On the other hand, I give you a piece of advice, do it wisely.

I remember an interview where the candidate only asked me questions about the remote and nothing else. It doesn’t send a great signal, I don’t want a candidate to choose my company just because we’re remote. I wish he had also asked questions about the mission, the revenue model, the tech etc…

You will probably have several people to meet during the recruitment process, find out about each person you will meet to target your questions a little about their daily lives and therefore detect the elements of culture that you want to control.

As we are talking about culture, sometimes it is also interesting to check the consistency between the ambition of the company and its culture.

It’s not something you can easily detect in an interview, but rather after a few months in the company. But sometimes it jumps out at you :)

Do you know the saying: “culture eats strategy for breakfast”?

Culture cannot be decreed, it comes from practices. So all top down strategies can totally fail when the culture (bottom up) is contradictory.

For example, a very risk-averse culture will not work on a product that requires a lot of innovation and regular pivoting.

A culture based on face-to-face, physical decision-making and highly centralized recruitment in a large city will have a lot of trouble with an international deployment strategy. Etc…

And in these two specific cases, it can be detected in the interview as a candidate.

The technological credibility

In the definition I gave above, a startup is a company powered by tech, a product. So I can tell you that judging the technological credibility is a big priority. Do you trust it?

First criterion to me, does the company have a technical partner? Is there a co-founder capable of translating the product vision into a technological vision?

In the event of a negative answer, all is not lost, but this is a bad start. What was their strategy for laying the first bricks?

If the answer is that the whole product was developed by an external agency and your job is going to take over all of that, be very suspicious. Even more if no one from this agency has decided to join the adventure.

We are in a situation where the founder was unable to convince a technical partner and the employees of the agency themselves were not convinced to continue.

Possible alternative, the whole product was developed by trainees, or juniors, but who have been changing every months. Here again, what I am highlighting is not a possible concern about the quality of the product code, it is rather a concern about the management of priorities.

Launching a “tech” startup without investing in the tech in question is surprising, at best…

However, despite what I have just said, I also understand that money is key and that it is very difficult to hire at startup. I also understand that finding the perfect partner or first tech lead is very difficult. But that is precisely the role of the CEO. If the situation lasts for more than a year, it is a bad sign. He failed to convince on his product vision.

It can also hide a very control freak CEO who don’t know how to work as a team, who absolutely seeks to protect his idea. This is not necessarily better than the first situation.

It’s up to you to make up your own mind, but keep these signals in mind.

Now let’s see the case where there is a technical partner, or at least a tech lead in place.

You can look at his linkedin profile and his past experiences. If you are experimented, do not hesitate to interview him or her as much as he or she will interview you (wisely of course).

Here are some questions that should be answered during interviews.

  • Does the tech lead have a real decision-making role or does the CEO make the technical decisions and the tech lead only acts as an executor? (big big red flag)
  • Will I learn with the team in place?
  • What am I going to bring? What is expected from me?
  • What is the tech vision? How are we going to build the product in the next 3 months?
  • What is the typical profile of people already recruited? Am I going to meet them? (the opposite is strange)
  • Do you deploy several times a day? How do you do ?
  • What is your typical daily life?

On the other hand, be careful, a startup is a particular environment, do not expect a company with a huge amount of resources. And in the resources, I include the available time.

It’s interesting to understand how the team works, its methods. But don’t expect to find the same level of maturity and investment as a mature business. Do not rush if the team in place tells you that it does not use a specific tool (which they probably cannot afford) or that it spends little time on some practice. Rather judge their pragmatism and their ability to be inventive with their constraints.

Here I will give you my personal criteria. Personally I would try to understand how they recruit. I would be suspicious of a very junior recruitment without any senior apart from the tech lead. For me, this reflects an underinvestment in tech, which is a bad sign.

It can also reflect the inability of the tech lead to know how to recruit stronger than him or her, either out of fear or because he or she does not inspire confidence.

In a more anecdotal way, I would see with an amused eye a strict application of Scrum methodology in this kind of environment. It’s not eliminatory, but I would find it quite unsuitable in such a context and it could hide a certain lack of maturity related to the previous points.

I would try to understand if there is turnover. A high turnover in a small team hides something.

Salary

To some of you it will come as no surprise if I say that a startup doesn’t equal big salaries. Others, on the contrary, have read a lot of articles on salary inflation in startups and expect astronomical figures.

Let’s be clear, the inflation mentioned above concerns scale-ups, not so much startups except for a few rare exceptions.

In a startup salaries are very close to those that can be found on all the general benchmarks on the market: talent.io for example.

In summary you will have proposals in the market, but not above the market. It is not the best solution to earn a lot of money and therefore not the main motivational lever.

A lot of people join startups because they want to start a product from scratch, not get bogged down in crazy bureaucracies, get super close to tech and product decisions, just have impact.

Having fun at work is priceless (everything is relative, huh…).

However, there may be a link between a startup experience and a financial impact in the future.

First point, the stock options. Many startups will offer you some and it’s rather a good thing. I’m not going to give you an article on stock options, and it may vary depending on your country. Stock options remains a bet, it should not be an excuse to lower the salary very clearly below the market.

In some cases, the gain can be very significant, I invite you to read the success stories listed by Pragmatic engineer.That’s all I wish for you.

Second point, a start-up experience is very formative. A few years in a startup, as long as it lives that much, is going to give you skills that are highly valued elsewhere. It’s also a treadmill to scale-ups. You will monetize this experience on your CV, as long as you spend more than a few months there.

(A CV with multiple 3-month experiences is not very salesy, however).

If the startup is growing well, your own job evolution can be very fast and you can claim jobs with funny titles elsewhere.

Don’t be naive though, being “Head of engineering” in a team of 10 will not make you become “Head of Engineering” in a Scale-up of 1000 people. But your experience will open doors.

Little things to know in bulk.

  • No need to ask if there are profit-sharing agreements. A startup does not make profits, so it cannot distribute them. Naive, but I got the question.
  • The classic start-up advantages are work from home policy or at least a certain flexibility in time management, the choice of your equipment. People can be very imaginative on this topic. On the other hand, a startup often doesn’t have dedicated HR, which would be surprising at this size, so no one to take care of the more advanced stuff.

Trust your gut

At the end of the day, it’s not about you finding the perfect business, it doesn’t exist.

Given the size of a startup, arriving in the first employees you will have an influence on the way it is built. So it’s up to you to choose what is vital for you, and what can be accepted as it is.

Once you’ve asked the right questions, trust your gut.

At worst, you’ll have to look for a new job again in a few months. Today anyway, we are lucky to be in a favorable position to do so.


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Written by Hugo Lassiège

Software Engineer with more than 20 years of experience. I love to share about technologies and startups

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