STARTUP JOB

high c o nv ic t io n, ha nds-o n seed inv est o r s

Spend a few hours browsing content stop to consider the process, it can actually
about startups, and one thing becomes be both incredibly nuanced and
painfully obvious: There's a TON of it. surprisingly difficult for even the most
And while plenty of it does a great job plugged-in tech startup veteran. At
addressing the most common question I NextView, we think a lot about hiring and
receive as a seed VC (how to secure talent placement, both informally through
funding), the second-most common our networks and formally through systems
question I get seems almost entirely we've developed to support our portfolio.
missing from the clutter of content: As a result, we often hear questions like:
How can I run a smart process
to find my next (or first) startup job?
How do I identify promising startups?
How do I evaluate and optimize
specific opportunities and offers?

Most people in the startup world aren't

founders, but most written advice is for
At first glance, it's easy to assume this them. So this resource is dedicated to a
is a problem strictly for "outsiders" -- group that's just as important:
people who are new to startups and
want in on the action. However, if you
 C O N T E N T S

A B O U T T H E A U T H O R

P artner, NextView
@d avid beisel
D a vid B e is e l is a c o -f o u n d e r a n d p a r t n e r a t N e xt Vie w
Vent u r es, a seed VC ba sed in B ost on a nd N ew Yor k . He
h a s b e e n f o c u s e d o n e a r l y-s t a g e t e c h s t a r t u p s h is
e nt ir e c a r eer , bo t h a s a n e n t r ep r en eu r ( s u c c e s s fu l exit
of his email market ing c ompany t o About .c om) and
vent u r e c a p it a list ( VP a t Venr oc k , P r inc ip a l a t
Mast head). David holds an MBA from St anford and
a t t e n d e d D u k e u n d e r g r a d . He a l s o f o u n d e d a n d l e a d s
t h e B ost on Innova t or s G r ou p , B ost on' s long e st -
r u n n in g , l a r g e -s c a l e t e c h s t a r t u p c o m m u n it y e ve n t .
START WITH WHEN
I want to work for a startup. Its a common

statement, but a startup can be very different

things. The primary dimension on which startups

differ is stage: Two people in a garage is definitely

a startup, but so is a 30-person company growing

with a second round of financing ... and so is a

250-person company preparing for an IPO.

Thus, the first decision, and the most critical

decision, of what type of startup to join is based on

the current growth stage of the company. This

selection is the most personal and subjective one,

as its based on a persons motivations for why

they want to be a part of a startup in the first place

(as opposed to just getting a job at XYZ company).

Maybe you want to make an impact, work better in

smaller teams, get excited about cutting-edge

technology, have aspirations of becoming a

founder and/or a startup CEO, etc.

Unfortunately, this juncture is where most people

make a critical mistake that derails their search...

The biggest mistake people make when accepting a startup job:

In a Series A or B startup, the only means, join an extremely embryonic team.

thing de-risked is the financing -- and Of course, many people have current
even then, the risk is only removed in income requirements that prevent them
that one area for 6-12 months. from joining the earliest-stage team
possible; hence, reality dictates that this
But here's the truth of the matter: rule be amended from "as early as possible"
At this stage, the company still hasn't to "as early as you can stomach."
figured out product-market fit yet. As
an employee joining them, you bear But if your stomach feels queasy reading
nearly all the same risk as the founders any of the above, it really makes sense to
but with an order of magnitude less jump ahead to a much later-stage startup...
compensation, recognition, and
influence. So both "morally" and When the growth train has already left the
financially, it's far less rewarding station: What I mean by this is that the
despite the massive risk that, yes, is startup is already on track, generating real
still present. revenue, rapidly growing (and hiring), and
is clearly destined to be some type of
I believe there are three much more success. It's unclear if it's going to be
opportune times to join a startup: either a "win" or a "monster win," but a
reasonable outcome is somewhat assured.
1. As early as you can stomach.
In other words, the growth train has left
2. When the growth train has the station and is heading towards an
already left the station. actual destination, and it will get there
3. When there's a truly unique whether you're on board or not. Of course,
ability to learn, collaborate you're going to make an impact (that's one
reason why you're joining a startup after
with specific people, or work
all), but the company is already moving
in a special situation. forward with its own inertia. And if you're
not ready to be a founder soon, this is the
Let's take a quick look at all three...
best stage at which to join a startup.

As early as you can stomach:

Yes, it's larger and doesn't have the same
For some, the stereotypical two-
feel as "those early days," but the benefits
founders-in-a-garage stage is the
of joining this profile company outweigh
ultimate allure ... but they're not ready
that fact:
just yet to be one of those couple
founders. If that's you, push yourself Learning: You'll be in the pole position
hard to ask: Why not found something to see how a successful startup ticks.
now? If the reason is the need for an Financial gain: With an outcome
initial idea, a specific skill set, or time probable, there's a likelihood of a nice
to develop a potential customer or payday (though certainly not a life-
professional network, then the right changing one).
answer is to find a role and company Startup credibility: Unless you're a
which fits that need so that after a few founder, people rarely remember when
short years, you're ready. Typically, in its lifecycle you joined a company ...
that won't mean joining a seed-stage just that you were there. If this company
startup. is already perceived a success then --
bing! -- now so are you.
If the reason you aren't ready to found Startup "mafias": Post-exit is when most
something is that you want to learn the magic of new startup formation happens.
playbook from others, then by all You're in prime position to join in.
So, if you plan to be a founder, then as Its easy to craft a story to cite one of
early as possible is the way to go. If these three cases as present in your
that's not in your future -- especially if search, but the real test is convincing
it's not within the next few years -- yourself that its actually true.
then joining a later-stage startup offers
many more benefits. You simply don't Regardless of what stage startup you
want to get stuck in the middle, with join, the choice should be just that
most of the risk but almost none of the something which you choose. It should
upside. Of course, there's an exception: be a deliberate selection based on
criteria that youre optimizing your
Learning and working with special career around, as well as the potential
people or in a special situation: of upside. It's not, as joining a Series A-
Going very early or very late is the or -B startup often implies, a desire to
right approach 90% of the time. The find the safest startup to join.
exception to the rule is just that
when there is an exceptional In the end, you should be joining a
opportunity in the in-between. startup because of your excitement
about the role, the situation, the
There are situations where you have a company itself, and the opportunities
chance to work with someone ahead with the chance to change the
renowned in the industry. There are world ... not as a hedging strategy.
other cases where perhaps you have a
special skill set that would apply very Getting all of this straight is no small
uniquely to the available role. Or task and is entirely worth doing, but
maybe, given your prior experience, the process is just getting started from
you have a unique perspective to here. The next challenge at hand?
determine whether a startup has Making sense of a vast list of startups
already been (or will be) de-risked in a that grows seemingly every day. We'll
way that others may not fully realize. tackle that next...
CUTTING THROUGH
THE STARTUP NOISE
Whether its early or late, there is always a certain

set of startups within a particular ecosystem that

is generating all of the talk in the community.

On the early side, its often caused by repeat

founders coming together again or perhaps early

runaway traction in a young company that

generates buzz. For later-stage startups, it can be

caused by a high-priced financing round, tipping

the scales on widespread adoption, rapid hiring, or

credible information on successive revenue-

growth quarters.

But remember: while heat is often a good indicator

of an attractive startup, its neither a necessary

nor a sufficient condition to finding the right

startup to join.

Think of heat as a sign outside a restaurant, not

the menu ... and youre looking for the right dish.

There's one specific approach I'd suggest, and it all

comes down to how you network and run diligence

on various companies. Let's explore that next.

 The right approach to guide your search:

You want to cover as broad an area as Look back at all of the companies which
possible, but be very targeted when have announced financings.
talking to people within the startup Scan tech blogs, newsletters, and Twitter
ecosystem or utilizing resources in it. for announcements being made in your
geography and target stage of growth.
Here are some dos and don'ts to help: You're looking primarily for rounds that
feature new outside investors announced in
the past quarter. These startups are hiring
DO: almost by definition as a result.

Pick a specific vertical or theme. Use specific job postings on company sites
For instance, maybe you're interested in or job boards as a starting point.
education tech or on-demand models. Look If companies are actively posting positions,
through a specific lens at all of the startups there are good things happening at the
within your geography, and network your startup. So even if the role posted isnt a fit
way to anyone within those companies to find for your skill set, youve still identified
out their hiring pace. companies which are hiring broadly, so
there may be a role for you. And they're
If it sounds like theyre hiring generally, then more apt to meet for coffee to discuss.
now is the time to be more intentional about
who you talk to in that company. At first,
youre just looking for early indications of DON'T:
success, but you'll want to get more serious
after if the signals and hiring pace align with Dont ask a venture capitalist, Are there
your goals and status. any job openings in your portfolio?
Its too generic and wont ring any bells.
Ask startup service providers about which of Instead, ask a VC which company in their
their clients are getting the most traction this portfolio is hiring the most people right
year. now, and other, more specific questions.
Talk to lawyers, accountants, commercial
bankers, consultants, and similar. These are Dont waste too much time looking through
people who are plugged into the scene, and a VCs portfolio page.
they can of course connect you to many The good are interspersed with the bad and
startups generally, but the more specific the ugly. There's just no way of knowing
request, the better. without more context.

Once you reach a service provider, you should Dont tell people youre a great "business
ask questions about their favorite startup with mind" looking for a technical team with an
XYZ model that interests you, or which has idea/product which needs business acumen.
the most experienced CEO, or which has the This is a surprisingly common approach,
best investor at board meetings, and so forth. but it almost never leads to anything real.

At the end of the day, as with any networking Once you narrow to 6-12 companies, you
attempt, remember one thing above all else to can start targeted outreach for intros.
ensure you get positive, productive replies:
Above all else, remember youre joining a
startup because of the excitement and
Specific questions spur upside that comes along with it more than
just getting another job. So systematically
ideas. General inquiries making a list with some of the strategies
above shouldnt be a chore but rather a
get lost in the shuffle. fulfilling exploration of whats out there.
SELECTING THE
RIGHT STARTUP
Evaluating a startup as a prospective employee is

tough. An investor can actually create an

information advantage, as companies are required

to be fully transparent about everything before a

VC invests. Additionally, they might also get

exposure to a given startup's competitors and the

nuances of a specific industry niche.

But as a prospective employee, you are limited to a

few interactions. And it can be difficult to get the

truth behind a startup's promise and vision.

During your process, there are two sides of the

coin while evaluating various startup jobs. On one

hand, youre joining a startup for the upside. So

most of your thought process should involve

understanding the companys market and business

plan in executing toward a grand vision. But on the

other side of the coin, you still want to

evaluate risk, albeit in a different way than you

would with more established companies.

Next, we'll explore the two sides of this coin, as

well as some questions you should ask.

HEADS:
You're joining a startup for the upside.

This isn't just about financial upside but also Employee count is the strongest (though
the upside of making an impact in an not a perfect) proxy for managements
organization, working in small teams with and investors outlook on the business.
other exceptional people, and building Startups often hire ahead of growth, or at
cutting-edge technology. So you want to least predicted growth. This translates
learn more about that grand vision as a result. into a viable company, a healthy work
environment, and future internal
Is it shooting for a big market? Does it have a opportunities.
truly transformative innovation? Are there
exceedingly inspirational leaders in the Financial figures and projections are
company? helpful indicators, certainly, but they are
often a distortion of the full picture,
When there are unique and strong external especially early on in a companys cycle.
and internal tailwinds which can push a And depending on what level position
startup forward, there is more opportunity youre applying for, the company may not
and overall upside for all employees. be that forthcoming with detailed
financial information. So the growth in
employee count (or lack thereof) directly
signals the opportunity and trajectory.

TAILS:
You're still hoping to learn the truth about a
startup's potential risk and trajectory.

The other side of the coin in evaluating a

startup opportunity is to assess risk and VC brand names matter, but only as a
mitigate downside. general indicator of company promise,
not the reality.
This approach is similar to that of a venture
capitalist, but unfortunately, you likely dont If a brand-name VC is an investor, it
have all of the access and information that a means that at one time, one single
VC does. partner at the firm saw enough promise
in the venture to make a bet on it. But
So what is a prospective employee to do? The know that it doesnt mean that a company
only way to truly beat the unfair advantage a is doing well right now.
startup has in information is to join a company
with people or in an industry you already It's also important to note that there are
know. If that is the case, then you have many reasons why a lower-tier VC brand
information and knowledge that the typical would be an investor in a company that
candidate does not. does indeed show real promise: prior
relationships the firm had with the
Ideally, you'd start with a situation that plays entrepreneur, specific domain
into your own background knowledge of a expertise/understanding of a sector,
market or of certain people. capital requirements for the business, or
other dynamics around the round (price,
Of course, this isn't always possible. And even hustle, etc.).
when you know an industry or a team well,
even the best situation on paper can be Additionally, the timing of the last round
different in reality when it comes to startups. is important to know. The closer you are
With that in mind, here are a handful of to joining a company to its last financing
questions which you can ask to gauge the event, the more recently validated it is by
financial health, opportunity, and promise for a investors. But note that the value of your
startup you find interesting... financial upside is also less as a result.
Even if a startup is successfully Any of these four events is an indicator
executing, it could still face a cash that the startup has faced some
crunch if it is not yet profitable. difficulties in the past and may not be on
Employees should ask to find out how track moving forward.
much longer the company will ride
without the infusion of another round If one of them has occurred, prospective
capital. How much are they actually employees should seek out as much
spending per month? What is the CEO's information as they can the context of
thoughts on that rate? Does it feel high the situation. After all, there are
to him or her? And what is the plan to exceptions to the blind assumption that
mitigate that burn in the medium term? If these are a black mark (e.g. a founding
it's fundraising, what milestones are CEO stepping aside to make room for
needed to make a compelling case to veteran management could be an
investors? indicator of successful growth; a change
in product direction or market focus
While the actual answer to this question could require a flat round, etc.)
wont necessarily provide a definitive
answer about the ability of the company However, if any of these issues have
to access both cash and additional arisen, it is a signal to you to dig deeper
capital, it will open up a discussion. into the health of the business.

Of course, you should evaluate a potential startup job opportunity just like any other:
Think through both the role itself and the business to the best degree possible. The
answers to the above four questions can help uncover specific company issues (and
opportunities), as well as read the tea leaves about whats really going on there.

What was your headcount 6 months ago,

and what will it be in 6? In 12?
Who are your investors,
and when was the last fundraise?
What is the company burn rate,
and what is its cash on hand?
Has the company ever had a down, flat,
or inside round? Any prior CEO changes?
NEGOTIATING YOUR
COMPENSATION
Startup compensation packages and subsequent negotiation routinely create confusion among

employees. It's critical that you understand how to address two key figures: salary and options.

Nearly all startup employees receive a number of options -- an ownership stake in the company.

*
The first thing you must learn from the company:
the number of fully-diluted shares outstanding

The details surrounding stock options are often complex and confusing for non-financially-

oriented individuals. It is best for employees to understand as much as possible about their

options, but the first place to start is to ask how many outstanding shares there are. From that

point, you can calculate the percentage of the company you'd own and better gauge the

magnitude of this part of your compensation. It's more important to know what percent of the

total pool you own than the number itself. The number of shares you receive (e.g. 10,000) is

utterly irrelevant without knowing more numbers -- and it's usually up to you to ask for them.
If youre an order of magnitude off, then you But despite your imperfect information
have a severe set of mismatched expectations about where there might be some wiggle
(either based on a lowball offer from the startup room in the offer, there is a simple guide
or based on your overly large ask). This isnt you can use to focus any negotiation of
starting a relationship on a solid footing. your offer.

Im continually surprised by how many The following matrix lays out a general
employees fall into the (often deliberate) trap of strategy. Note which dimension you
when a startup says, Well take you on for six should push during your negotiation, and
months and re-evaluate your compensation level keep in mind the inevitable gray areas in
then. between them.

Even when this is offered in earnest because of a

unique situation or an individual coming in with
a largely undefined role, inertia usually sets in
and leaves the employee fighting an uphill battle
after those six months. GO FOR CASH GO FOR EQUITY
VC-backed startups Your salary will be
At a board level, VCs and other members dont have standard equity brought to market
like to see someone recently hired already ranges and rarely standards as the
receiving new options or a salary raise after a deviate. Plus, early company grows, but
short period of time. That six-month trial period on, the risk-adjusted this opportunity is
was likely never communicated. And even if it outcome of your your major bite at an
was, theyve forgotten it already, believe me. The equity is rather low. equity piece.
boards bias will be to spend those resources on
hiring new talent or to retain those who have
worked hard at the company for longer.
GO FOR EQUITY GO FOR TERMS
A startup only has those two compensation The company's Push on cash + equity
levers to pull in any offer negotiation (salary and salaries are now at but bring up other
options). Both are limited resources, but its market level. Youll terms (e.g. vesting
opaque how truly limited they are to you, the have more luck acceleration,
prospective hire. pushing for equity, severance) which can
which is more likely affect the long-term
On the equity side, each startup has a fixed option to be valuable too. upside/downside.
pool from which theyre drawing. It could be
running low or it could have been recently
refreshed, but its not necessarily the right
signal within a negotiation to ask about this Keep in mind that these are general
figure. guidelines, and many exceptions will
inevitably arise. But hopefully this can
On the cash side, every startup will sing a song serve as directional.
about being cash-strapped, and some of them
really mean it. The best proxy for how a startup Finally, remember that star employees
views its cash spending is to just look at its office will be "re-greened" (granted additional
space. Are you in a dingy warehouse where the options) during the course of
CEO sits on the floor with the rest of the employment. That said, it will always be
company, while also lacking an administrative on a new vesting schedule and rarely
assistant? Or is the CEO in a corner office in a close to the amount of your initial grant.
multi-story building with a nice view and an Whenever you leave a startup, youll be
admin who answers calls and books travel? leaving some equity on the table.
by Tim Devane, P rincipal, NextView - @tdevane

Be Responsible & Explain

Equity to Every Employee
When someone goes to work for a larger corporation or public
company, the compensation package generally includes an annual
salary, a performance bonus or commission plan, 401(k), and health
insurance. When someone goes to work for an early startup, the
compensation package generally includes an annual salary, health
insurance, and, instead of fixed-cost performance upside, a
a percentage of unvested options to purchase equity in the company. Of late, Ive encountered numerous
potential startup candidates and newly hired employees who have no idea what their equity means. Ive noticed
this for years and experienced it myself but Im disturbed at the frequency now and so am compelled to
write about it. To be frank and direct:

It falls on the hiring company to thoroughly explain equity options to their new employees. The concept is a
nuanced one that, unless theyve spent a career in startups or studied econ, new hires wont have a basis of
relevant knowledge from which to draw. Often avoided because they take time and could make an offer
package seem less attractive, these discussions ought to be mandated so employees arent joining a company
with a blanket pulled over their faces.

Whats frustrating to me is that the true value of equity often seems to be skipped over when a company is
presenting a comp package. The common statement Ive heard from candidates is, They told me Im getting X-
thousand or tens of thousands of options. Full stop. To the uninformed, 25,000 shares or 150,000 shares or
even just 5,000 shares can seem like a lot when your only reference is the stock market.

When joining a startup, the common refrain from everyone on the team is, "Were in this together to create
something new, amazing, and big." The reasons behind this sentiment are many. A literal one is that everyone
sacrifices the security of more money for the opportunity to build a profound idea from scratch and, maybe,
share in a potentially tremendous financial outcome. Given that reality, it is either a shady sales tactic or
unintended blunder for startups not to explain exactly where each new employee stands in that potential share.

This is not an argument for circulating the entire cap table or compensation calendar. Everyone deserves his or
her privacy. But in an industry in which early employees can make a massive difference in a companys success
or failure, startups owe it to those individuals to be sincere, transparent, and thorough in discussing equity.
Dont go suckering someone into thinking theyve already made it on the day they sign their offer letter.
 JOIN A
STARTUP