Making the decision to join a startup company isn’t always easy. It’s regularly repeated that 90 percent of startups fail, which forces the question: Am I prepared to take the risk? After all, when you accept a startup job offer, you’re making a bet on a company that might not be around in five or 10 years.
But that risk could pay off. Billion-dollar brands like Facebook, Apple, and Amazon started small. Just 20 years ago, taking a job at Netflix would have raised eyebrows; Blockbuster was the safe alternative. Fast-forward to 2014, and all remaining Blockbuster stores shut down. Netflix, on the other hand, has surpassed 238 million paid subscribers as of the second quarter of 2023.
“This is why it’s so important that you as a founder, joiner, or investor know how to identify high-quality startups,” says Harvard Business School Senior Lecturer Jeffrey Bussgang in the online course Launching Tech Ventures, “and know what key questions to ask for each of the business model components.”
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DOWNLOAD NOWStumbling into opportunities to join the next Netflix are rare, but these examples serve as a reminder that saying “yes” to joining a startup could change the trajectory of your career. You never know if and when a company could take off. It might be worth making a bet.
Ultimately, reaching that “yes” decision comes down to answering a variety of tough questions. Some you need to ask yourself, while the others you should pose during the interview process.
Check out the video below for questions to ask before joining a startup, and subscribe to our YouTube channel for more explainer content.
Questions to Ask Before Joining a Startup
Before you’re seated across from a startup founder, there are a few questions you need to ask yourself to ensure you’re making the right decision.
Here are four questions you should ask yourself before joining a startup:
1. Can I Afford This?
Depending on when you join the team or how well the company is performing, you need to acknowledge a hard truth: You might not always get paid on the standard schedule. Geoff Donaker, the former chief operating officer at Yelp, says you should prepare to survive a three- to six-month period with no salary and assume your equity is worth zero.
You might also face a reduced salary for the first few months if the founder used alternative funding sources. For example, bootstrapping can limit staff salaries based on how much the business makes on a monthly basis. According to Launching Tech Ventures, this can be an effective financing option for companies that don't need a large investment upfront.
While this might not be the case, having the right resources and savings in place could make the overall startup experience a little less stressful.
2. What Can I Learn?
If you’re going to take the risk, you want to ensure it pays off not just financially, but professionally. In a startup environment, it’s rare to focus solely on one or two tasks. With a small team, you typically need to wear multiple hats—and that can be rewarding because it often translates into having more autonomy over what you learn.
Are there skills you can gain in this role that could advance your career and better position you for your next job? If so, now might be the right time to join the team.
3. Who Are the Founders and Do I Believe in Their Vision?
Understanding the founders and their backgrounds are crucial. Some factors to consider include:
- Is this their first startup?
- Are they new to the industry?
- How do they approach innovation?
- What’s their vision for the company?
The answers to these questions will determine how they run the organization. For example, if this is their first startup, are you confident they can successfully and strategically guide the business through uncertainty?
You’re entrusting these people with the next stage of your career, and will likely spend more time with them than you will your friends and family. You need to trust and believe in their vision.
Founders also set the tone and culture of the company early, and their decisions have a trickle-down effect.
“As a founder, if everything goes right, you're really just creating the vision of the world that you want for you, your friends, your family, and all the rest,” says Anna Palmer, co-founder of XFactor Ventures, in Launching Tech Ventures.
If your values don’t align with the founders’, consider it an early warning sign that the road ahead could be rocky. It's also important to remember that startup culture is inherently different from corporate culture, and you should evaluate whether it’s right for you.
Related: 4 Questions to Ask the CEO
4. Where Is the Industry Headed?
If you’re concerned about job security, analyze the industry you’re operating in. If you work in hospitality, for example, there might be more growth opportunities at Airbnb than a regional hotel chain.
Examine your industry’s future and whether the startup you’re joining is tackling a big challenge or worthwhile opportunity. More than 2 million new healthcare jobs are expected to surface by 2031, in large part because startups have forced the industry to evolve and adapt. Are similar opportunities emerging in your industry? Is your prospective company poised to make a significant impact?
Questions to Ask During a Startup Job Interview
If you feel comfortable with your responses to the first four questions, you should proceed with interviews. Next, consider which questions to ask during the interview process to better understand the company.
Here are seven questions you can ask during an interview to determine if this is the right startup for you.
5. What Are the Company’s Values?
If the company’s values and vision can’t be clearly articulated, it’s likely there’s no roadmap in place, which poses an added risk. Some startup employees are expected to work 50 to 60 hours per week. When you commit to those hours, you want to know what you’re driving toward and believe in the guiding principles every employee should, ideally, share.
6. What Is the 30-60-90-Day Hiring Plan for this Role?
This question is particularly important when you’re in a new position. Before accepting a startup job offer, it should be clear how the company envisions your role, where the priorities are, how your responsibilities might evolve, and the ways in which you can meaningfully contribute.
What’s listed in the job description might not necessarily be the reality, and you don’t want to run the risk of accepting a job offer only to realize the scope of the role isn’t fully defined and there’s no room for growth in the company.
7. What Does Success Look Like in This Role and How Will I Be Measured?
To further clarify your role and responsibilities, follow-up with this question. It’s important to remember: You were hired for a reason. Whether to solve a particular business problem or launch a new division of the company, it should be clear what “success” means in your role. Will you be evaluated against the overall objective or smaller, predetermined milestones?
Also, who’s responsible for determining “success”—your direct manager, the founders, or the company’s board of directors? This should also be clear to ensure your goals and values align with the appropriate decision-makers.
8. What Are the High-Level Team Structures? How Do Teams Collaborate?
This question can also help determine the role you’ll play in the organization and how you might partner with others outside your department. A company that operates in silos can be problematic; there’s bound to be inefficiencies and miscommunications. If you’re interested in learning more about the company culture, understanding how and if teams are encouraged to share ideas and collaborate can speak volumes.
9. What Is the Current Runway, and What Are Your Future Funding Plans?
Talking about money can often feel uncomfortable, but it’s reasonable to discuss when you’re interviewing for a startup position. Knowing the company’s runway, or the amount of time it has until it runs out of money, says a lot about how sustainable the business is, but also the strength of the management team. Plus, the longer the runway, the greater your job security.
If the runway is less than a year, you should ask about future funding plans. Is the company trying to raise capital? If so, what types of investors are the founders looking for or working with?
Some possible sources of funding include:
- Venture capital (VC)
- Bootstrapping
- Friends and family
- Angel investors
- Incubators and accelerators
“The VC industry has gained prominence in recent years—yet still remains behind the scenes,” says Bussgang in Launching Tech Ventures. “Despite being a small industry of a few thousand professionals, VC-backed companies account for 77 percent of market capitalization, and over 90 percent of research and development spending.”
Some hiring managers might not want to reveal their funding plans, but sidestepping the question could prove just as telling. You can gauge their level of transparency and if they see you as a core team member.
Related: 4 Benefits of Joining a Startup
10. What Is the Company’s Exit Strategy?
An exit strategy is the founders’ plan to eventually sell ownership of their company. If you’re joining a startup, it’s important to know what you'd be working toward and confirm that your timeline aligns with the company’s goals.
Common exit strategies for businesses include:
- Acquisition: When one company buys most or all of another company’s shares to gain control of it
- Merger: When two existing companies unite into one new company
- Initial public offering (IPO): When a private company issues its first sale of stocks to the public and can start raising capital from public investors
An exit can impact your career trajectory. Although an exciting step in a startup’s growth, these transitions can create job insecurity and uncertainty among employees, leading to decreased morale as organizational changes become imminent. Understanding the founders’ planned exit strategy and timeline can mitigate the negative effects.
11. Has Anyone Already Left the Company? If So, Why?
This question might also feel awkward to ask, but can indicate any systemic issues in the company or weaknesses in their business plan, as well as help you gauge the company culture and the skills or traits the founders look for in employees. It might also uncover the truth about the company’s sustainability. For example, if they’ve experienced significant turnover, was it because they made financial cuts and had to eliminate several positions?
You could also zero in on your specific position. If the role existed before, consider asking why the person left. What challenges did they face?
Evaluating a Startup's Potential
By asking these questions, you can gain valuable insight into a startup’s potential and approach the opportunity with an open mind while exercising caution.
Understanding a startup's value proposition can help you gauge its ability to meet market needs. Is their target audience defined, and is the company solving users' pain points better than the competition? Once you have the necessary information, you can explore the opportunity further and decide whether to take the leap.
Deciding to Join a Startup
There won’t be one right answer to several of these questions; each person has their own list of non-negotiables. Maybe you’re willing to take a pay cut to work alongside seasoned founders, or perhaps you won’t take the job without the promise of equity. Either approach is fine, but you must determine your walk-away point; what’s the bare minimum you’ll accept?
Ultimately, the questions you truly need to repeat are: Do I care about the mission? Do I believe in the product, service, or founders? If those answers are “yes,” you might be closer to a decision than you think.
Do you want to better understand the ins and outs of entrepreneurship before joining a startup? Explore our online entrepreneurship and innovation courses to position yourself to succeed in today's dynamic market. Not sure which is the right fit? Download our free flowchart.
This post was updated on September 8, 2023. It was originally published on October 26, 2018.
