Disclosure: I worked for various "startup" companies starting in 1991 through 2005. One got bought by a large company and made me some money, but not a life-changing amount. Some others variously went into "zombie" mode. One got bought by a company that simply milks the existing customer base for support revenue. One failed outright.<p>That said, when the first company was bought, there was a product that the buying company didn't want to continue to support. Some friends of mine made an agreement to take over that product, and started a company to do so. They never grew the customer base that much - it was a niche product. However, they were able to continue to work together as friends, have decent paychecks with 100% company-paid insurance, and after about 15 years, sold out to a company for enough to allow for comfortable (not rich) retirements. This was all on purpose and was discussed frequently by them - "Do we want to grow, or do we want to enjoy what we're doing, have some free time, less stress, and remain friends?"<p>I've always thought that was a FINE model for a company, if you can pull it off. I always wanted to work there (did some consulting for them), but they could never grow quite enough to hire me. Ah, well. :)
Reading the comments on this an post and many others about compensation and payouts makes me feel like I'm losing my mind.<p>I grew up in a lower-middle-class house where both my parents worked for the postal service. Both parents worked strange and/or long hours and they performed very physically demanding work. I can remember several cases of them being out of work because of injuries. We were never poor but we never had extra. Meaning we always had food and cable television but rarely went out to eat or went on vacations.<p>I took a major liking to computer programming and pursued that as a career since high school. I find it unbelievable that I make a good living off of doing a job that I find really enjoyable and plus I make great money doing it.<p>My first job out of college I started working for a major manufacturer of PC's and printers and I started off with a higher salary than what my dad was making at the time, $65,000. I thought I was rich and set for life.<p>Working in the software industry makes me feel like I'm on another planet, I'm just excited to keep getting a paycheck every two weeks and then I read discussions about people chasing lotteries or trying to pull in 250k with bonuses.<p>I don't think it's bad to maximize your earning potential but the figures and mentality around feel so foreign to me. All that to say it's just a weird experience going from rural Oregon to the software industry and see the massive difference in lifestyle and the relationship people have with work.
#6 Have a crystal ball that can predict the future. Since the success of a startup is often based on unpredictable changes in markets, technology, or world events, even if you follow all of the other steps here to avoid a zombie startup, you may end up in one. And you may avoid a startup that was really onto something.<p>Okay, so I am being a little satirical. But honestly, if it was so easy to pick winners, VCs would invest in far fewer companies. As an individual trying to pick the winner, you have close to zero probability of being right.
Rather thin and worthless article, not really deserving of what looks to be on its way to a 100 comment article.<p>Very first sentence:<p>> People tend to underestimate the financial opportunity that startups represent for early employees.<p>um, no, absolutely, emphatically not. This article is written by a person whose job is headhunting for startups. So off the bat, the bias is off the charts.<p>It's exactly the opposite. People (employee candidates) tend to <i>overestimate</i> the financial opportunity, both in value and likelihood.<p>> But being good at picking which startup to join as an employee means, in part, being as diligent as an investor.<p>Diligent sure, but nowhere does the article explain such diligence, and anyway investor diligence is not anything like employee diligence.<p>All the points have flaws, but one general theme stood out, that they are pushing equity vs salary.
This seems well intentioned, but it strains credulity on a couple fronts:<p>1. This article is referring to VC backed startups, which generally speaking 9 of 10 die. Are you going to statistically better at picking a winner than a VC (consider also that you aren't diversifying your investment as you only work at 1 startup at a time).<p>2. While transparency is indeed key, there are levels. It's unlikely any company is going to be so radically transparent as to tell you the details you'd need to actually determine their financial fitness going forward.<p>Consider that Telltale Games last week managed to both hire a new developer, move them across the country and then call them into a meeting to let them know that they'd be let go along with most of the rest of the company in a massive layoff. That's a lack of transparency as to what is happening _within_ the company.<p>3. VC backed startups are just inherently volatile. I worked for a YC company that raised between $75-$100 mil (keeping it vague) and they were more or less insane: just weird unforced errors and oddness and Steve Jobs complex. They recently closed as their round failed due to a combination of IP theft, "Trump trade issues" and inability to execute in the face of more advanced competitors.
It's often not just one thing that pushes a startup from "rocket ship" to "zombie", it's everything.<p>4. Being an early stage employee (non-founder) is a rough spot. Typically you're taking less on salary because of "generous" equity. However, you're also expected to work founder hours. As liquidity events have diminished, so have opportunities to actually cash out.<p>All that being said, I'd still encourage people to work for a startup, but to do it on their own terms: to learn, to get a new experience, to try and set yourself up to do your own creation. Please just don't rely on picking a rocketship.
But here in the real world outside of the HN Silicon Valley bubble, most would be statistically better off working for a company with a mostly guaranteed combination of salary+guaranteed stock over a known vesting period that is competitive with the market.<p>If the company is private, negotiate for a salary that’s competitive with the market.<p>“Competitive” doesn’t mean that everyone is going to move to SV and work for a FAANG.
Here is my opinion on why you should join a startup (or any company for that matter) in order of descending importance.<p>1. You like the people, and they like you.<p>2. You like what the company is doing.<p>3. You need a job.
Best risk adjusted returns come from late stage startups - Series C or D typically - for VP level roles that get 1% grants ($4-$10m value over 4 years). Highly de-risked.<p>At year two or three the company will also likely top up the equity if they want you to stay... just negotiate a 10 year exercise window, so you're not writing a check on your way out the door.<p>For whatever reason, why individual contributor equity grants fall off a cliff after Seed or Series A, the VPs remain relatively constant even as the value of the company goes up 20-50x while risk plummets.
Now that I've got quite a bit of experience behind me, I've started to become very attuned to "savior-seeking": somebody (or a group of people) who underestimated how difficult building a business was going to be and is now underwater, desperate for a lifeline. Although I (sort of) sympathize with the position they're in, I also know that I don't have the magic that they expect, or the 24/7 availability they're going to need, to dig them out of the hole they've put themselves in.
The first sentence...<p>> “People tend to underestimate the financial opportunity that startups represent for early employees.”<p>I would laugh if it wasn’t so sad.
Late comment though I'm not sure if point 2 about awards and press coverage is true. Surely you can't spend all your time on marketing but you still need to gain traction somehow? I would like to see some opinions on this.
It might be more interesting to write a post about how to exit a zombie startup once you've joined one, or how to determine the zombie status from the inside.
They make joining a startup seem like it's supposed to be a get rich quick scheme.<p>Focusing on how someone can buy shares at low price and sell high kind of only selects for one kind of company -- the VC funded company whose entire goal is either an IPO or an acquisition.<p>What about the startup that has no plans for acquisitions nor IPO's, and is not in the business of giving out shares to employees, yet can pay their employees great competitive wages with benefits?<p>Most startups fail. Opting for equity that might be worth more tomorrow at the expense of liquid cash today doesn't sound much different than buying a lottery ticket and hoping you picked the right numbers.<p>Why not look at the offer at face-value instead? Is there decent pay? How much BS will I have to deal with? Is there opportunity for career advancement (if I care about that)? If I have to leave, will I be more competitive in the marketplace? Will I have a life outside of work?
What are the big drawbacks of joining a zombie startup? What should I look out for?<p>I'm currently considering an offer from one that basically ticks every checkmark on the list, so I'd love to know what is bad about it
These are all great points but they assume you have the financial freedom and the understanding that you'll actually get offers which gives you the freedom to pick the perfect startup for you.<p>Most of the time, in reality, I've had to pick from one or two while my savings are quickly dwindling.
While it's true that you are unlikely to hit it big as a startup employee, I think the article misses some of the real reasons to not join a zombie startup. I worked at one many years ago and the problem was there was no place to take your career. The stock wasn't going anywhere, compensation was lackluster, the company wasn't going to expand, and thus the only way to get a promotion was to sit there and build personal connections, IE: not based on merit, rather on drinking buddies / nepotism / etc. The career challenges - responsibility, technology, etc were not great. So, it was a good place to be an alumni in terms of connections, but there was no other benefit.
The article makes a couple of references to "public actors":<p>>"Business angels investing with strong tax incentives, universities or companies filling up their marketing brochures and public actors who aren’t betting their own money at all are a couple examples. So don’t settle for “We’ve raised a Series A”: Ask with whom and look them up.<p>If you see that the money raised just comes from public actors, ..."<p>Could someone say what is a "public actor"? I am not familiar with this term.
Let us cut off an underlying assumption of the article - that only rocket ship startups with massive exits are worthwhile places to work. That simply isn't true. A long, slow, stable growth of a bootstrapped company can still give a lucrative exit because there is no dilution. You also can be a multi-millionaire with simple saving and investments, no "exit" needed. Non-funded startups also can produce less stress as you get profitable and nobody is pushing you for a billion dollar exit. You can decide as a group if you want to push for something larger or just enjoy the ride and have more time with your family.<p>These are not bad things. As was mentioned in a few threads over the past few weeks, nobody lies on their deathbed wishing they had done more work and spent less time with friends and family.<p>While VC-driven startups can give you a large exit, so can playing the lottery. Don't fool yourself into thinking this is a guaranteed get rich plan. By all means, try it if you have the time and energy and enjoy the work. But if you don't have the passion and energy for VC-funded startups, then admit that to yourself and do something else.
is it just me or does the link to their website not work? Is a non-functional website a good or a bad indicator?<p>Edit: www works, <a href="https://thefamily.co" rel="nofollow">https://thefamily.co</a> doesn't...but the link in the post points to the second one.
Zombie startups can hurt people in more ways than just a lack of a big payday.<p>I joined a zombie startup. I wasn't there for the quick money or the get rich quick scheme or anything like that. Yes, the potential of a payday was part of the equation, but I joined because I hadn't been at a startup in 15 years and I was in a place in life where I had alignment on motivation, financial stability, ability, and desire to contribute. I went in wanting to work hard, do great things and have a lot of fun in the process. If there were great financial rewards that would've been great.<p>So, it's not all about the money. I lost a year of my career working at this dump that turned out to be a zombie. And it's a facepalm now, but all the warning signs were there: great coverage in the press, awards, prizes and so forth, a continuous source of funding through VCs and private investors, lots of customers, etc. I didn't see the warts until it was too late.<p>It wasn't until a few months in that I realized that it was operating like a comfortable place to just put in 8 hours a day for most people. The bureaucracy was worse at this 200 person company than it was at the large company I'd left.