How To: Decide whether or not to join an early-stage start-up
The next installment in our ‘How To’ series was authored by Isabel Yap — a writer, poet, ex-product manager at @guidebook and current MBA candidate @ HBS.
At a recent dinner I was standing by the cheeseboard, not-so-sneakily eating too many grapes and crackers, when a section mate approached and asked for advice. “My partner is thinking of joining a start-up,” she said. “I know you worked at one before. Do you have any insights that might help?”
I had a “life flashing before my eyes” moment. I’d spent the last 4.5 years working at an early-stage start-up — the company underwent its Series A two years after I started. It had been an utterly wild ride. I’d joined them as employee #25, and in the intervening years grew from a bright-eyed college graduate to something rather more battle-hardened. I had the best time. I had the worst time. And I learned a ton. It still boggles me how different my experience is compared to a lot of my peers here at HBS — the way I grew with the company, and the problems I engaged with, were incredibly unique.
However: start-ups really aren’t for everyone. When I say ‘start-up’ here, I’m referring to a real scrappy operation — not an Airbnb or Pinterest, although those certainly have many start-up like elements, but a place that is still finding its footing in nearly every way. (Think: Pied Piper of Silicon Valley season 1, edging into season 2.) Joining a start-up can lead to lots of heartaches and stress — and you won’t even get the glory of being a founder! Rather than giving an unqualified yes, I told my friend: “Well, here are some things for your partner to think about.”
1. What’s your appetite for risk at the moment?
Start-ups offer prospective joiners a lot of compelling reasons to come along for the ride. You get to chart your own path with a small group of likeminded, driven people, and you have the pleasure of not serving The Man. But with these great returns often come risks that are keenly felt in the short-term. Start-ups that have raised a lot of money can be very generous with their employees, but for smaller or newer operations (especially those which are bootstrapped), salaries are typically lower and perks (travel credit, free lunches, etc) less available. If you have other people to support, or debt to pay off, it might be difficult to accept a lower pay than what you might get at a more established firm.
The company’s survival might also be in question.
99% of start-ups will never hit $1M in revenue, and along the way there are usually scares where runway might run out, which is why companies tend to measure their burn rate obsessively.
The upside? Early joiners do often get a share in the equity of a company, which can lead to significant returns. Because you want these shares to be worth something, you’ll be extra-motivated to drive the company to success. I’ve also found that because start-ups can’t spend a fortune on perks, they’re more deliberate and considered about the perks they do invest in. Usually employees (read: you!) can significantly shape such investments, opting for benefits that truly matter to the workforce.
2. Do you like this problem?
When I was interviewing people for entry-level roles at my start-up, I would usually ask them, “Why do you want to work here?” I usually received some variation of “Because I want to work in a place where I’ll have impact” or “Because I want to join a start-up.” The problem with these answers is that, while they might be sincere, they aren’t specific to my company. You could say them to any other start-up, but I want to know what you liked about mine.
You should be interested in the space the start-up is operating in, and eager to tackle the myriad issues that will come up: competition, changing market dynamics, finicky customers, etc. I usually advise people looking to join a start-up to really dig into the product they’ll be working with. Even if you won’t be in a product-related function, you should give it a try and ask yourself whether you’d be proud to sell it. The product is likely to change over time, so understanding the overarching problem your company is trying to solve for (one might call it a “mission”) is equally, if not more, important. While it may not be your raison d’etre exactly, you should have enough passion for it to get you through the difficult days — of which there will be many.
3. Are you into your coworkers?
I know, the dating analogy is overused. But start-ups are small communities. My section at HBS is bigger than my start-up was, even at its peak number of employees. I am mystified when people (or cases) describe 200-person firms as “small.” When I first joined my start-up, everyone who was an engineer reported to our CTO, and everyone who wasn’t reported to our CEO. We worked out of a single room near University Avenue in Palo Alto, and after three days, I knew everyone by name. When I moved to London to help launch our EMEA operations, I worked on a three-person team. Because we had only one meeting room we had to take private calls on the rooftop or the stairwell.
Given the small company size, even if you don’t work directly with certain people, you’ll be interacting with them a lot. A single problematic person can have a significant impact on the entire company.
Usually a small start-up will involve a lot of the employees in the recruitment process. Take the time to get to know them and see if your personalities work well together. “Culture fit” is especially critical for start-ups. Every employee they add to the mix greatly affects the culture and shapes the foundations for all future employees. It’s exciting to be part of that, but you can save yourself a lot of friction by understanding the culture before you dive in.
4. Are you (really) willing to do whatever’s needed?
Some start-ups do away with formal titles entirely, but most will still give you something you can put on LinkedIn. Be aware, however, that your title is unlikely to represent the real scope of your work. You might be given responsibilities far greater than you expect — without a commensurate promotion. Similarly, you’ll probably find yourself in situations where ideally “someone more junior” would do a certain task — but because there isn’t anyone else to Do The Thing, that tedious task falls to you. This can be quite the humbling experience!
You might have to wake up in the middle of the night to take on a customer threatening to cuss you out. You might have to write blog posts or support articles even when that’s not your jam. You might have to order a coffee machine for the company kitchen and make sure the sink isn’t overloaded. When early-stage start-ups say they need a “flexible team player,” they really mean it. Luckily, almost everyone you’ll be working with has the same ownership mentality. That means less social loafing, and greater commitment to the company’s success.
And lastly: 5. What does your gut tell you?
Here’s an exercise I always like to suggest: close your eyes and imagine yourself at that start-up. Can you see yourself at your desk? Is the image sharp, and clear? (Maybe your desk has got a cute little succulent on it.) How does that image make you feel? Can you see the exciting future of this company? Are you eager to shed blood, sweat, and tears, elbow-to-elbow, with your peers? If you leave this visualization grinning, it looks like you’ve got an answer.
There’s always a chance things might not work out, in which case, you can certainly move. But I believe that the lessons you learn from a start-up will let forever, thus if you are so inclined: go for it. You might regret never trying, and making the start-up move will only get riskier as time passes. At the very least, you’ll gain some interesting stories to share (and perhaps the scars to show for it)…but I highly suspect you’ll get more than that.
P.S. My section mate’s partner ended up taking the role after all. It’s too early to tell how things will turn out, but I’m excited for them and their start-up journey!
How To: Decide whether or not to join an early-stage start-up
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