Written by
Sam Huleatt
Date published
March 22, 2023
Below are questions to ask before joining a startup as an employee. You may not need to ask all of them, but these should be directionally helpful.
Quality of the Team (& investors)
- Have any of the founders had a previous, successful exit?
- Who will you report to?
- I think it’s best to optimize for rapid learning and ability to gain responsibility, rather than title
- Who are the lead investors?
- Look for high quality VCs. Also knowing which VC is on the board is helpful
Company Runway & Health
- What’s the current runway (number of months) and plan for next fundraise?
- 18-24 months of runway (including your comp) is ideal. Under 12 is a worry.
- Assume capital raises in this (tough) environment will take 10 months
- Given the company’s current stage, where is it behind?
- Helps showcase what the biggest existential threats and ability to introspect
- What are the company’s 1-2 top priorities? (could also ask for their OKRs)
- What was the company’s valuation at the last round (409A) — and given the current economy, what’s it realistically today?
- Helps to know how tough fundraising will be (avoid companies extremely under water, or soon-to-be)
Personal Comp
- IMO, it’s best to assume your equity won’t be worth anything, but later be surprised to the upside
- That said, understand what you own. Ask for your ownership percentage on a ‘fully diluted shares outstanding’ (fdso) basis. Equity grants are often presented on an absolute basis so you will need to know your relative ownership percentage (also see Compound’s calculator)
- Make sure you are on a ‘normal’ vesting schedule (i.e., 4 years or less)
- Ask how long the option exercise window is
- In modern times, 90 days is far too low - ask for several years
Other
- If fully remote, drill into culture and how often the team get together? How do people stay connected?
- Personally I have found 100% remote companies to have less success and higher turnover
- Often startups don’t have a ton of experience with implementing employee feedback systems. Ask what 1:1’s will look like and how feedback is administered. If new to startups you may want to research OKRs.
- It’s also smart to take initiative on developing a 30/60/90 plan, setting yourself up for success.
Resources:
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Thought exercise you could ask your hiring manager:
- Imagine 6 months from now and I'm really successful, what happened?
- Imagine 6 months from now and things didn't work out, what happened?