10 Questions to Ask Before You Work at a Startup

So, I’m not really a fan of lists. However, I was asked by my barber to write a list of questions about what I ask startups before I say “Yes” to a job offer.

  1. How long have you been in business?:
    The reason you need to ask this is because it relates to the funding of the company. If they don’t have funds, you don’t have a job. A few of these other questions will hopefully enlighten you to this same theme – their economic stability.
  2. Are you operationally profitable on a monthly/quarterly basis?:
    Now, we’re immediately getting into questions the company doesn’t really like to answer, so they might start getting nervous. However, it’s an important question to ask, especially if they’ll answer it for you, because if they are operationally profitable you’re probably picking a company who at least can run without more funding if it needs to. Sometimes, they’ll even tell you when they expect to be operationally profitable if they are not. Beware, though. I’d tack on about 6 months to a year to any estimate they give you. Remeber, they want you to work for as little as possible to keep their overhead to a place where they could become profitable.
  3. What is your monthly burn rate?:
    Now this one, they probably won’t tell you, but it’s worth a shot. These numbers are very important to investors, VC’s, angels, etc. So, why shouldn’t it be to the employees? Most likely, if they’re a tech firm, they’re offering you stock options, so you should know this at some point. If the burn rate is high for your industry, be very very careful. For most tech firms I’ve interviewed with or worked with, $50k for a 10 person team is probably about as high as you want to go. That’s definitely not bootstrapping it, but hopefully that money is going into primary activities that are helping make sales.
  4. How many people are employed at the company?:
    If they don’t give you the burn rate, you can try to estimate it by asking this one. Start looking around, too. Are they using chairs that are from Goodwill or Target? You might be ok then. They are at least trying to bootstrap somewhere. If they’re Herman Miller chairs, I’d be wary. Those chairs, although I’d love one, do not lead to sales.
  5. What are the executive’s backgrounds?:
    Now, this one is a bit trickier. You’re asking this question to evaluate the executive/management team. It’s typical to do due dilligence as an investor, which means you should do the same as an employee. Are they good managers? How long have they been with the company? Why were they brought in (if they aren’t the founders)? How long have they been with the company (the more recent they’ve come in, the more rocky the boat is)? Evaluate them.
  6. Are the original founders still with the company? If not, why?:
    This probing question is designed to hopefully show some cracks in the rock of promise you’re calling your future happiness at the company. If the founders were ousted (from this or any other previous company), it’s good to at least attempt to divulge that info early on. Why did they leave? Who took their spot? If they’re 5 years old and have new execs, but still keep the founders around… you’re probably looking pretty good. Anything else and you’ll want to ask some more questions. Try to get to the bottom of how they managed the company. It affects the culture you’ll be working in.
  7. Have there been any major changes in executives, management, or founders since the start of the company?:
    Again, we’re evaluating the stability of the company. From what I’ve seen so far, at least one major shake-down occurs in the first 5 years of a company’s run. If it hasn’t yet, hold on to your hat. If it has, why? Did the company go after (and maybe get) VC or angel funding? If so, did they put in place a new person or team? Those are good things (except beware of the funding… that means they are in debt. They need to show growth if they are in debt).

These are most of my starter questions, what do you ask before you start or invest?

[tags]startup, young companies, questions, web 2.0, web2.0, dot com, management, executives, employment, jobs[/tags]

Update:
This post was submitted to ProBlogger’s Group Writing Project / Competition for Lists

Nate Ritter lives in the Pacific Northwest (U.S.), popularized the #hashtag and creates web applications for a living. He also does miles and point hacking to enable cheap travel for his family. More here →

2 Comments on "10 Questions to Ask Before You Work at a Startup"

  1. Josh Maher says:

    You forgot expectations….. some startups really want 100 hours per week, others are fine with 40-50

    http://joshmaher.wordpress.com/2006/08/14/top-ten-reasons-you-should-not-blog/

  2. nate says:

    Sweet comments! Thanks for all of them.

    Josh: Yes, expectations definitely should be added to the list. However, by definition, you can probably expect to put in more hours than you would in a 9-5’er. But, yes, that would be a great question to ask!

    Chris: Absolutely!

    Everyone… thanks for posting your lists too.

 
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