In the last 20 years small businesses have created roughly 3 out of 4 net new private U.S. jobs. Here in Silicon Valley we refer to this class of companies as "startups". While the majority of Fortune 500 companies have flat or shrinking employment numbers right now, there are large numbers of small, newly created businesses adding additional headcount to grow their business. So even if you're working for a large company today, chances are many of the best opportunities for your next job will come from a startup.
Startups offer both the greatest opportunity as well as biggest risk for many individuals. It's extremely important to do your homework before interviewing with a small company that doesn't have a long, public track record. Of course the basic questions start with the reason behind starting the company, the amount of investment to date, current cash position, list of investors, etc. Here's a few less obvious questions worth asking the company founders and executive staff in your next startup interview.
1. "How many people who worked for you in the past are working here now?"
It's always a great sign to see that the founders and executive staff of a startup have some of their previous employees join them in their new venture. Conversely, it's a big red flag if a very experienced individual starts a company and can't bring a single former employee into their new company.
2. "Can I talk to a couple of your investors?"
While you should expect a sell job from the existing investors of any startup, it's still worthwhile to grill them on why they invested in the company, their view of the long term prospects of the business, and their evaluation of the current state of execution of the business by the existing executive staff.
3. "Can I talk to one of your customers?"
I once had the poor judgment to join a startup that sounded very promising, only to find out the first week on the job that virtually everything the founder/CEO told me about the state of the company was a lie. One of those lies was Sun and Cisco being existing customers of the company. They weren't customers, and as it turned out, the company didn't even have a working product! Of course this question only makes sense for startups that have a business-to-business (B2B) business model.
4. "Can I talk to some of your references?"
Several years ago a friend of mine recommended me for a VP of Product Development position at an early stage startup. Although I wasn't sold on their business model, I was really impressed by the founders and initial staff they hired. The CEO, one of the co-founders, volunteered to give me a set of references for him that I could check in order to help me consider joining them. I thought this was a great idea, and would recommend anyone interviewing with a small startup to consider asking for a couple of the founder or CEO's references.
5. "What is your average cost of customer acquisition?"
For small companies there's no better business metric to look at other than their growth rate of customers, and associated revenue. However this can be deceiving, as sometimes the way in which a small company achieves early traction on customers is not scalable. This is particularly true for business-to-consumer (B2C) startups although it is also highly relevant for B2B startups. Spending $100 to acquire a consumer that has a lifetime value of $15 isn't a business model that is sustainable.
Photo by drwhimsy
Posts
