I recently spoke with the CEO of a decently early-stage startup. He had people on his advisory board and people in his team with interesting backgrounds. One was even one of the higher-ups at Disney. He was an author who I assumed was decently accomplished, he wasn’t starving but he wasn’t JK Rowling. His app idea was going to “revolutionize” the publishing industry. He was going to give an equity stake to the developer he picked, He had a CTO already lined up who was just waiting for the funding to hit and all he needed was a competent app developer to come in and make the product. He had marketing channels and access to large events. I decided not to pursue this “opportunity” after 45 minutes of talking with this guy. Why? Doesn't this sound like the opportunity of a lifetime? If you someone who has had any experience with startups in the past, some of the things that I mentioned should leave hairs standing up on your neck and give you an uneasy feeling. I want to talk about why in this article.
If you have read or listened to my first post on how I landed my first 100k job at 20 years old, part of getting that job was having experience working at a startup I joined. I advocate for those programmers that need the experience to land a 6-figure salary job to join a startup and take whatever equity they think is fair. They would gain more than enough technical experience and know-how of the overall business, making them ready for that job. I also advocate that this startup could work out and you could find yourself making 7 figures in a few years. This is statistically unlikely, but this article should help you put yourself around the right people, who not only will make you smarter but will drastically increase the odds that the company will work out.
Joining as a founding developer is hard. You have to make the entire product and many times a lot of the technical growth and marketing stuff. You deserve compensation for your efforts relative to the amount of risk you are taking on, and should not be sold into doing it by many of these slick CEO types. They think they are the center of the universe and everyone who doesn't bow down to their company and do whatever they say is somehow “missing out” on some ground floor opportunity. While it is true that joining apple or Microsoft when it first started made the initially members millions, that is usually not the case. Here are some red flags to watch out for when talking with startups to join.
Red flag number 1:
Does not disclose equity/payment structure upfront.
This one is most important as getting into the other red flags doesn't matter if you not getting compensated. This is not to say they are to say how much you are getting paid in the first 5 minutes of the meeting, but if you are not clear of the payment in the first hour of talking with them, you are getting taken advantage of. There is a certain breed of self-centered idiot out there that wants you to build Facebook for dogs for 1% of the company. They also want you to work weekends, get their dry cleaning, and let them go on dates with your wife. Sound good? Run the other way the second you feel this type of entitlement.
Red flag number 2:
No good answer to the question “What is the plan to repeatability get business/ customers”
This is the second most important. If your business cant gets customers you are building worthless software. The CEO should have a decent idea about where they are going to get customers, what market they are targeting, and what their advertising and customer acquisition plan looks like. If there is an answer full of holes and no real thought put into it, question them. If they can't give a good answer, ask them how they plan to solve that problem. If you get the impression that this person is unable to solve that problem, time to leave the meeting.
Red flag number 3:
“The total market is literally billions, if we get just 1% of that we will be making 100 million dollars per year!”
Markets that are so large like this typically are “red oceans” or markets where the competition is so strong that breaking in is near impossible. A good example of this is the auto industry (only Elon musk could do it).
Red flag number 4:
We are making facebook for dogs we want a website, iPhone app, android app, and iPad app. Can you have that ready in 2 weeks?
Startups that are asking the world of you are not places you want to join. You want them to guide product decisions, but not give crazy deadlines or put unrealistic expectations on you. If they get mad at you for not being able to deliver the world on a silver platter, run the other way.
Red flag number 5:
Our competition is literally no one!
If you are going into a market where there is no one else, congrats. You are either discovering the next gold rush or entering a barren desert where there is no competition, and no customers to compete over. Markets that are smaller with no competition usually are promising, inversely if someone said their market is 1 billion dollars and there is no competition, run the other way. A very good example of a small market company is PayPal, which originally solved the problem of payment for eBay sellers( a very smaller market back in those times).
Final thoughts:
Startups are a great place to meet interesting people and gain experience as a software developer. If you are self-taught, joining a smaller startup for a year or two is a sure thing shot to gain the experience needed for high paying positions. However, if you're like me and want to optimize your time to its fullest use, you will want to at least have a chance of hitting it big with this company. These red flags that you will now know to avoid should ensure you don't join a ship that is destined to sink. But even if it does, just remember that's experience!
I did a podcast about this topic where I get into this too, feel free to check that out here:
View: https://youtu.be/kSHmQBE8eVI
Thanks for reading and good luck!
Zack
If you have read or listened to my first post on how I landed my first 100k job at 20 years old, part of getting that job was having experience working at a startup I joined. I advocate for those programmers that need the experience to land a 6-figure salary job to join a startup and take whatever equity they think is fair. They would gain more than enough technical experience and know-how of the overall business, making them ready for that job. I also advocate that this startup could work out and you could find yourself making 7 figures in a few years. This is statistically unlikely, but this article should help you put yourself around the right people, who not only will make you smarter but will drastically increase the odds that the company will work out.
Joining as a founding developer is hard. You have to make the entire product and many times a lot of the technical growth and marketing stuff. You deserve compensation for your efforts relative to the amount of risk you are taking on, and should not be sold into doing it by many of these slick CEO types. They think they are the center of the universe and everyone who doesn't bow down to their company and do whatever they say is somehow “missing out” on some ground floor opportunity. While it is true that joining apple or Microsoft when it first started made the initially members millions, that is usually not the case. Here are some red flags to watch out for when talking with startups to join.
Red flag number 1:
Does not disclose equity/payment structure upfront.
This one is most important as getting into the other red flags doesn't matter if you not getting compensated. This is not to say they are to say how much you are getting paid in the first 5 minutes of the meeting, but if you are not clear of the payment in the first hour of talking with them, you are getting taken advantage of. There is a certain breed of self-centered idiot out there that wants you to build Facebook for dogs for 1% of the company. They also want you to work weekends, get their dry cleaning, and let them go on dates with your wife. Sound good? Run the other way the second you feel this type of entitlement.
Red flag number 2:
No good answer to the question “What is the plan to repeatability get business/ customers”
This is the second most important. If your business cant gets customers you are building worthless software. The CEO should have a decent idea about where they are going to get customers, what market they are targeting, and what their advertising and customer acquisition plan looks like. If there is an answer full of holes and no real thought put into it, question them. If they can't give a good answer, ask them how they plan to solve that problem. If you get the impression that this person is unable to solve that problem, time to leave the meeting.
Red flag number 3:
“The total market is literally billions, if we get just 1% of that we will be making 100 million dollars per year!”
Markets that are so large like this typically are “red oceans” or markets where the competition is so strong that breaking in is near impossible. A good example of this is the auto industry (only Elon musk could do it).
Red flag number 4:
We are making facebook for dogs we want a website, iPhone app, android app, and iPad app. Can you have that ready in 2 weeks?
Startups that are asking the world of you are not places you want to join. You want them to guide product decisions, but not give crazy deadlines or put unrealistic expectations on you. If they get mad at you for not being able to deliver the world on a silver platter, run the other way.
Red flag number 5:
Our competition is literally no one!
If you are going into a market where there is no one else, congrats. You are either discovering the next gold rush or entering a barren desert where there is no competition, and no customers to compete over. Markets that are smaller with no competition usually are promising, inversely if someone said their market is 1 billion dollars and there is no competition, run the other way. A very good example of a small market company is PayPal, which originally solved the problem of payment for eBay sellers( a very smaller market back in those times).
Final thoughts:
Startups are a great place to meet interesting people and gain experience as a software developer. If you are self-taught, joining a smaller startup for a year or two is a sure thing shot to gain the experience needed for high paying positions. However, if you're like me and want to optimize your time to its fullest use, you will want to at least have a chance of hitting it big with this company. These red flags that you will now know to avoid should ensure you don't join a ship that is destined to sink. But even if it does, just remember that's experience!
I did a podcast about this topic where I get into this too, feel free to check that out here:
Thanks for reading and good luck!
Zack
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