Career Strategies Dec 20 2010

Five Things to Consider Before Joining a Startup

By john shinal

Bored at your job? With companies such as Groupon, Twitter and Zynga making millionaires of some of their earliest employees, joining a startup can look like a great idea.

Yet the majority of such firms don't enjoy that kind of success. Expecting a life-changing payoff will likely to lead to big disappointment.

"Wanting to get rich quick is the worst reason to join a startup," said Mamoon Hamid, a principal with the venture capital firm USVP who helps portfolio companies such as Yammer find employees.

So what are the right reasons?

Hamid and others who recruit workers into young tech companies gave the following advice on what to consider before jumping into the startup game.



Follow Your Passion

Successful startup entrepreneurs are people who are passionate -- even obsessed -- about solving a problem. They want to hire people who feel the same way.

If you get an interview with a startup CEO or other top executive who does their hiring, be ready to explain why you want to leave your cushy job for one with longer hours and lower pay.

"A candidate needs to articulate what excites them about the opportunity," said Steve Kasmouski, a partner with Winter, Wyman who runs that recruiting firm's software technology group in Boston.

That excitement could come from either the technology a company is working on or the market they're attacking. Beware of trying to fake it, because people in the startup trenches know the real thing when they see it.

While enthusiasm in an interview is great, it can't replace a track record of employment or interesting side projects related to a company's mission.

Hiring managers want people about whom they can say with confidence "this is part of who they are," Kasmouski said.



Know the Compensation Landscape

While the relative bargaining power of workers has improved this year as tech hiring has picked up, people still need to have reasonable expectations about how much they'll be paid at a small company with limited resources.

One type of person that startups don't want is someone who thinks they are going to get the same type of salary, benefits and perks they enjoyed at a large, established company.

"You need to understand that it's a risk/reward payoff," said Kasmouski, who's been recruiting tech executives for more than a decade. "Startup hiring managers appreciate people who get that," he said.

For example, a vice-president of engineering who's making $250,000 a year at a large company may be able to get up to a 3% equity stake in a startup, but they have to be willing to accept a pay cut to $175,000 a year to get it, Kasmouski said.



Know the Company

A startup that has more than 30 or 40 employees and has raised multiple rounds of venture capital or angel investment is going to be offering a very different opportunity -- and compensation package -- than one that has less than a dozen workers and few (or zero) outside backers.

"The further down the road the company goes, the less equity there is to go around," Kasmouski said.

It also helps to know when the company has raised its latest round of funding, because such investments are usually followed by a surge in hiring.

And it doesn't hurt to know the competition. Executives or other experienced tech workers with a very specific set of skills may be attractive to multiple companies addressing the same market.

For example, while Groupon and its fast-growing workforce were in the news while Google held acquisition talks with the online coupon service, its rival Living Social was raising new funding.

A job candidate with some negotiating leverage who's seeking a vice president or senior director job at a more mature startup might be able to get a little than the normal compensation package, which typically would be in the low six figures and come with equity worth one-tenth of 1% of a company.



Be Flexible

Many startup companies succeed only after pivoting to attack a different market than the one they originally targeted -- or by finding gold in one they thought would be tangential.

Groupon, for example, began as a project to help users raise money for their favorite organizations, then exploded when it morphed into a social coupon site.

Similarly, in its early days Google was focused solely on giving users the most relevant search results. It was several years old before it hit on the idea of sponsored search listings, which now produce most of its revenue.

By nature, startups must be nimble to survive, so they need people who are adaptable as much as they need people with specific skill sets.

"We're interested in finding people who can solve problems that haven't been solved before -- or that we haven't thought of yet," said Julie Bellanca, director of marketing at Cleversafe, a Chicago-based startup that makes storage software.

Workers who require a lot of structure in their jobs may feel lost at a startup, while self-starters and mavericks may find the environment appealing.



Be Yourself

While it may be tempting to sell yourself hard to get a job, a poor fit can be bad for worker and company alike.

"A wrong hire early in the life of a company can be disastrous," said Peter Clarke, a partner with the executive search firm Heidrick & Struggles who recruits executives into startups.

It can be hard to extricate yourself from such a situation, because the work load of a startup leaves little time for seeking out new opportunities -- and because the nature of early startup work leads to close relationships among workers.

To avoid that pitfall, many startups like to hire people who are friends or former co-workers with current employees.

"Those people have some extra insight into what it's like to work there," because they know people who already do, said Clarke.

Job candidates who don't have that benefit should spend some time getting to know a startup's culture, either from online information or by socializing with workers there.

Write to John Shinal



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