During periods of billion dollar valuations, working at a startup appears sexy, hip, and very alluring. However, most professionals do not realize the sacrifices that will be necessary and they underestimate the risks associated with startups. As an entrepreneur, it has taken me time to realize that not everyone is suited for the long grind, regardless of the potential return. The average startup that goes public takes 8 years to develop, slightly shorter than the average length of a marriage in the US.

For people that are transitioning from the corporate world to a private company, it is usually best join a startup that is well funded and further developed, which diminishes the "shock." Most people have a very difficult time going from a structured environment to a new startup at the incubation phase.

When you join a start up, you can forget about the following large company luxuries:

  1. Someone to clean your coffee mug everyday
  2. An assistant to schedule every meeting and organize your calendar
  3. Business class tickets on long haul flights
  4. An expensive office
  5. 50 people on your team

Similarly, it can be hard for a startup CEO to find experienced recruits that are suitable for the startup environment. As a startup CEO, you want teammates that are as committed to the same vision and are willing to take the same risk and make sacrifices.

I recently met with a very smart startup CEO that understood that he needed to recruit a more seasoned manager to compliment his skills. He made an offer to a very accomplished corporate executive; I asked him why his new hire hasn't started. He is waiting for the funding to close. I asked whether he needs the income. No, he just wanted to make sure that it was secure. It became quite clear that the young CEO was about to make a classic mistake in hiring a seasoned executive who was conditionally committed.

So what should you expect?

  1. If the person will not join before the next round of funding is completed, it could be a sign that they are not the right person, especially if they have previously been successful and can withstand a lower salary. Search for the skill set that will help the company over the next 24 months with startup experience.
  2. Are they willing to meet with investors before they join the company? You want teammates that are willing to roll up their sleeves and be your partner.
  3. Are they requesting a salary greater than $150,000? Most VCs believe that there is a correlation between a lower current compensation and success. You want the management team to earn enough to be able to cover expenses but not too much so that the upside from the stock options is less meaningful.
  4. Did they ask for an excessive amount of current compensation and very little equity or stock options? When hiring from a large company, some employees will want the same base salary as they are earning and tend to request too few stock options.
  5. Did they ask where the office is located? The days of offices are over; most startups have cubicle arrangements to promote openness and teamwork.
  6. If they ask what time everyone goes home or for the vacation policy, they might not be the right fit.

Get ready to roll up your sleeves and get to work....

Published on: Oct 7, 2014