Startups are notorious for being risky. Anyone can do a quick search to find several articles dedicated to startup horror stories. The company has run out of money, seemingly out of nowhere, and you show up for work only to find shuttered doors, an empty garage or warehouse, and no notice you are out of a job. If these sorts of stories interest you, I suggest reading this article by Jonathan Solórzano-Hamilton. He writes about his personal hellish experience that started at with a coffee shop interview and ends in high-speed police chase. Not kidding.
I am lucky enough to have some in my network who are running successful start ups, and I asked their opinion about what questions to ask in a job interview. I want to pass along this information to help anyone avoid their own horror story.
High burn rates usually mean high overhead costs and expenses. For most startups, this is a huge red flag. Startups usually are not raking in the revenue month after month and the high burn rate usually means they are bleeding cash, fast. There can be valid explanations for high burn rates, and you should ask additional questions to determine if it is a signal for poor growth in the future.
If the company went through one round of funding but is having trouble getting investors for subsequent rounds, this is usually another red flag. There are many reasons investors shy away from additional funding rounds, and it's imperative that you understand why. It could be as simple as a particular investor does not have the available capital at that time, which is no fault of the startup. But it could be a good indication of other more serious problems. Investors may not have faith in the business model, lost trust with the founder(s) or can see market trends that make the product obsolete or redundant.
Funding should be something to consider when it comes to negotiating your salary. Likely, the startup will offer you less than market rate and will supplement your income with stock options. But you may never see that money in the event of an exit. Say the company has raised $500 mil over 6 rounds of investing. That means there are six different rounds of investors that get their money before you see a dime.
One thing to note, if the interviewer does not know the answers to these questions, and/or refuses to get you answers, run. If the company is not being transparent with you, they are likely not being fully transparent with their current employees, and in general, it is a bad sign for future growth.
This is slightly tied to the burn rate question in that you are probing what the main revenue source is for the company and if the product is viable. If the company has some recognizable names as customers, that can bode well for the growth potential for the company. Additionally, if the company has a few smaller, loyal clients, and has a clear plan for growing the customer pool, there is still lots of growth potential and can signal a healthy company. Customers also signals that people see a use for the product and are actively implementing or engaging with it. All of which are great signs for future growth.
If they do not have current customers, it opens the door for a whole other host of additional questions. Is there a clear marketing strategy in place to attract and retain customers? How has the company been defining revenue in lieu of customers? Is the current source of revenue viable for long term growth? No customers can be a red flag, but its up to you to ask those follow-up questions to know if you should run from the interview or stick with the company while they get those first crucial clients.
More importantly, and selfishly, you are trying to suss out how the position you are interviewing for fits into the bigger picture and health of the company. For example: Say you absolutely hate customer facing positions, the company relies on customers using their product, and you come to find out that a majority of your work will be troubleshooting customers' concerns. Not only will you be unhappy with your job, but the company's revenue will likely suffer from a poor customer experience.
For most startups, there is minimal management staff. The companies are usually small, and everyone pitches in to help. In these scenarios, product design decisions often come from the CEO, CTO or another Founder directly. Hopefully, they value collaboration and expect input from their team. Some don't. Employees and businesses alike can thrive in both these structures, and both have their own pros and cons. It is more about personal preference.
But like everyone else at the company, these high-ranking individuals also wear many hats, and will often be unavailable to answer questions from the product team(s). In these scenarios, it is important to know what the decision making process is in their absence. This will help to prevent bottlenecks and allow for the continuation of fast decisive action.
If there is not a structure in place and the interviewer cannot answer this basic question, it likely is a signal for more substantial organizational issues. These scenarios of inaction likely bubble up more frequently, which could lead to unnecessary frustrations at work and create a less than ideal company culture.
Founders often have a clear vision and general direction they want to drive the company. While this is not the only factor in success of a company, it can help you as a prospective employee get a better glimpse into the company's future. Often times, this question can help illuminate the end goals or the exit strategy that the Founders envision. If say the barometers of success are all goals that could be achieved within a year, it may signal that there is a desire to be acquired sooner rather than build a robust stand-alone company. This, again, does not mean that the company is a dumpster fire, and you should avoid them. It might just mean that this may not be a long term position you will have 5 years down the road.
This is a key question that not only helps to suss out what success means at the company but also can give you a snapshot of the company culture. A company that finds its customers expendable and does not value retention may have the same mindset for its employees. This is not always the case, but asking more probing follow-up questions can help decide if this is the company for your work style. Do they value employee engagement such as hosting company-wide events or continued education opportunities?
When you leave the interview, you should have a very clear understanding of the customer story and company culture. If the company does not have a clear mission statement, this can also indicate that they have more serious structural issues that, again, can lead to a frustrating and disorganized work environment.
This may seems like a pretty basic question that is redundant given the decision making process question. But this is a separate issue entirely and should always be asked. More often than not, a developed company will have a clear hierarchy where the junior role directly reports to a senior dev, CTO, CEO or another Founder. It helps to know who exactly will be available to answer questions and will be reviewing code that will be pushed forward to the product. A developed company structure often is setup for long term company growth and help ease the growing pains from a small company to a medium sized company. I have heard stories where startups hire only junior devs without a senior dev or experienced team lead. This more often than not turns into a complete sh!tshow as the Founders naively think that a large team of cheap labor will get the company up and running. Be wary if this is the scenario you are stepping into as a senior dev because it may be incumbent on you to clean up the mess the Founders created.
Again, this is a super straight-forward question, but one that can highlight issues within the product. There is plenty of debate about whether TDD is overrated or overused. So do not write off the company if they do not have a testing framework currently in place. Most startups have tight budgets that make getting a product out the door crucial to stabilize the revenue stream. In this case, testing frameworks are often costly and cut from the initial product design. All this means is that you need ask follow-up questions. How do they know their product works and how does the product team find issues prior to customers pointing them out? It may be that they do unit testing and have plans to build out a testing framework once the company has the available capital to do so. Who knows, you may be the person that leads this effort.