Wise Startup Blog

After the explosion of the Internet and the countless IPO success stories, everyone wants to invest in the next Google, and everyone wants to work for the next Google. Problem is, Google’s are extremely hard to come by, and there are very precise distinctions between startups that are destined for greatness or destined for the deadpool.

7 Questions To Ask At Your Startup Interview

For those of you seriously considering the hectic, crazy, and extremely frustrating life of working for a startup company, I wanted to share with you my experience from working at 2 startups since graduating 2 from college 2 years ago.

1. What is the exit strategy?

For those of you looking for fame and fortune, you need to be extremely clear with your future employer exactly what you’re looking for and exactly what their plans are.

Ask the CEO or whomever you’re speaking to what the roadmap is for the next 3-5 years. Are they hoping to bring the company to an IPO like OpenTable? Are they hoping to get acquired by Google like YouTube or perhaps they’re trying to build a lifestyle business like Fog Creek or Craigslist.

If you don’t get the answer you’re hoping for, things may change, but changing your CEO’s vision is a lot harder than simply finding a company that fits your goals better.

2. What is the financial situation of the company?

This can be a very testy issue, and you should only ask this question at the appropriate time. Financial information is kept close to the vest and you may be required to sign an NDA prior to discussing any sort of financials in any detail.

That being said, the overall financial structure of the company is very important for you to understand if you’re going to devote yourself to this company. Is the company funded internally by cash flows? Is the company venture-backed? Any plans for outside financing, venture capital, etc?

Ideally, the startup should have enough cash on hand to support operations for at least 6 months, as you never know when a recession could smack you in the face and leave you with a pink slip 1 month after starting your new job.

3. What are your past employees doing now?

A good testament to the type of culture of the company is how they treat current and past employees. Are there a number of employees who left on bad terms? A good CEO should be interested in helping and encouraging their employees, and if the CEO is keeping in touch with past employees, it says good things about your prospects for growth in this company.

In a startup, the culture and relationships are all you have. When the chips are down, the team has to come together and triumph despite huge obstacles, and having a strong culture where you know your CEO cares about you and your future helps to build the relationships needed for a great startup to develop.

4. What is the business model?

You shouldn’t shy away from this question, and even if you have read about what the business model is, you should ask what contingencies there are in the business model.

Often times great businesses don’t figure out their business model until the company has been up and running for a number of years. Adwords was an interation that came out of Google, and Twitter, despite massive usage, still hasn’t implementing any sort of business model (and when they do, I’m fairly confident it’s going to be very profitable).

5. What version is the technology?

One of the most fundamental mistakes people make (myself included), is not fully understanding the state of the technology. When I was working at Grooveshark out of college, we have a 0.0.0 piece of technology. It wasn’t for 1.5 years until the technology was finally to a Beta stage.

If you are working at a 0.0.0 company, your expectations, your promises, and your life are going to be extremely different than if you’re working at a 3.0+ version of the software.

Products later in the life cycle are going to have less hiccups, but much bigger and differently challenging problems.

6. Where do you see me in 1 year?

Startups are all about dreaming, and to keep yourself motivated everyday, you need to keep this dream in your mind.

Ask your CEO where he sees you in 1 year. Are you going to be leading the development team? Leading the sales team? Still learning the ropes? Startups are all about moving up the ladder very quickly, and if you’re going to be hit with a glass ceiling because you don’t have an MBA from Stanford or Harvard, this may not be the company for you.

7. How does the stock option plan work?

The biggest mistake young people like myself have made is not getting a clear enough picture of the stock option plan. A startup differentiates itself fundamentally from a Fortune 500 company in that the employees own some or all of the company.

If you work at a startup, and don’t receive any sort of equity or stock options, you are absolutely wasting your time. You are receiving a sub-par wage, working ridiculous hours, and devoting your entire life to a company for nothing of true value in return.

Any startup that does not have a firm grasp on stock options or the plan for distribution may not be the place for you. Granted, at very early stages, setting up an ESOP can be quite expensive (up to $50,000), and it doesn’t make sense to have a true stock option plan, so in cases when you’re very early on in the company, the CEO should give you a letter of intent giving you a general resolution to give you stock options at the time the company brings on outside equity, etc.

Having worked at 2 startups, I have had my share of ups and downs, and have learned quite a bit about myself and found all of my experiences extremely beneficial for my career. That being said, I’ve made a lot of mistakes, so hopefully you can learn from my mistakes.

Let us know your best questions to ask a startup in the comments.