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Joining a startup is risky. I know that when I decided to join one as a first employee over a decade ago that I chose the job consciously over two other companies that were “further along” because I was young and single and had no children to look after. At least that is what I told myself. The rationale was “I might as well take the risk now, because I probably will not be able to assume the risk later on in my life.” All these years later, I’ve simply found new ways to convince myself to take the plunge.
I have had good experiences and I have had bad experiences. Through it all, I have gained a much clearer understanding of the most important attributes to index for when selecting a best-fit organization. What made me think of this was a conversation I had with a younger alumnus from my alma mater, Roxbury Latin, who had some questions for me about what he should prioritize when possibly leaving his current role for a new opportunity. I decided it might be helpful to build a list. For most of my blogs, I do not write these lists in any particular order. In this case, I am intentionally writing in order of most important to least important. Here we go:
- Leadership
Leadership makes or breaks a startup, period. I have been a part of a company that had the product market fit and perfect timing in a hot industry but sank itself due to having a very bad leader who was dishonest with themself, their leadership team, and their employees. In retrospect, it is very sad to think about this.
I was also a part of an organization early in my career that pivoted multiple times and achieved an exit worth several hundreds of millions of dollars to a very well-known organization because the founder was a visionary who had surrounded himself with very smart people and capable leadership. In fact, I distinctly remember being angry about one of those pivots. I had just graduated from college and I felt personally insulted at the time that I could have been misled into taking a job doing a certain thing only to have the company decide on a whim to do something else entirely. This was obviously naivete on my part, and I was wrong. Smart leaders pivot. Stubborn leaders grind their product and operations into the ground trying to do the same old thing that is not working.
Leadership is critical in startups for many reasons, but the most basic reason is expectation setting. I have been around a lot of young founders who think whatever they are doing is the next hot thing. It is their baby. They act accordingly. They think they can 5x this year, 10x next year, and they set unreasonable valuations on their businesses that force the company to try to grow much faster than it actually can.
Good, experienced leaders know this ruse. They set realistic expectations. They ground their expectations in reality. In math. There is a science to the way they set their goals. They do not take money from investors who have unrealistic goals. And frankly, even if they do, they know when to push back.
I cannot emphasize how crucial this is. If you can find a leader who has been in the seat before, it is worth its weight in gold. They will know all the little nuances of how to run their business and they will have learned from any previous hiring mistakes. Their ego is out the window and they are practical about how they think. Index here first.
- People
If leadership is number one, it stands to reason that the rest of the group is number two. I would start with the entire leadership team and then work my way around the organization. And yes, it absolutely matters outside of the scope of whatever team you are joining. What I mean by this is that you should not just join a company’s sales org because you like the people in the sales org. If everyone in the Customer Success team is not up to snuff, then all of the deals you close may churn and you may end up with trouble selling more deals, if the company even survives long enough due to its churn problem.
When you are interviewing for a role, you have a right to meet people throughout the organization. They are going to back-channel on you and talk to people who know you, so you are within your right to do the same thing with them. So do it. Figure out who you are getting in bed with. It’s critically important to make sure you are working with a talented team. And again, I would index based on experience. If you are working with proven winners, you are vastly increasing the odds of winning.
But the most important thing about people is actually wildly straightforward: a big part of your happiness is not even about success. It’s about enjoying who you spend time with. If you work with people you do not like, it makes the job less enjoyable. If you work with people you like – or even strictly people who you learn from – that is a huge win in many ways that go beyond whether or not the company succeeds.
- Total Available Market / Industry
This may be surprising as number three, but the reality is that product market fit is kind of irrelevant if you have product market fit in an irrelevant or small TAM industry. Ultimately, if you are joining a startup, you are placing a big bet. If you are going to place a big bet, why place it on something miniscule?
I would place TAM into two categories. The first is the literal TAM. How big is the total available market? If you really sold to the entire market, how big of an outcome would that be for everyone involved?
The second part is also important, and that has more to do with how relevant the TAM is today. Are there lots of Venture Capital firms pouring money into the industry you are joining? If so, that is a very good sign. It means that a lot of other people have done their due diligence and come to the conclusion that there is big money in the space. When a lot of intelligent people are agreeing about the potential of a specific concept, you can consider it de-risked in many ways.
- Product Market Fit
There is no scaling any business unless you have product market fit, period. But the reason why I put this after TAM is because you can always iterate on your product based on feedback you get from clients, and you fundamentally need to be in a market with a solid TAM if product market fit will ever matter whatsoever.
Ask yourself this: would you rather have product market fit in an irrelevant industry where dramatic changes would be necessary to make the risk worth your while (i.e., completely pivoting into a different TAM) or would you rather have no product market fit within a large TAM, where you are at least talking to the relevant people who can help steer you to the gold mine?
The answer is self-explanatory. But the fact still remains that product market fit is very important. You would prefer not to pivot if you can avoid it, and you want to have to rely on product as little as possible to make fundamental changes to its core thesis in order to succeed. Speed is important in startup land, and you want your product and engineering team focused on feature enhancements and new products, not completely re-doing the existing product so that you can decrease churn.
- Investors
Investors are critical to the success of a startup. I have been around investors who were very hands off to the detriment of the company, and I have been around investors who were very hands on, hosting webinars with the company and helping to broker introductions to potential leads, many of whom were LPs in the investment firm. The latter scenario was very useful for me as a sales leader, and I would meet bi-weekly with the aforementioned investor to help refine the sales strategy.
Hands-off investors are not necessarily bad either. Typically investors will be very up front about what their value add is. For some, it is strictly the capital. Others will offer introductions and networking opportunities. And yet others will be hands on with go-to-market strategy. Whatever it is, you just need to understand what that relationship looks like and whether you feel the investors are actually credible.
Where investors can really be detrimental to a business is when the relationship between the founder and the investors is fractured due to some misalignment in expectation setting. When the investors are overly bullish due to a founder not having the restraint to properly frame the business when raising capital, all hell breaks loose.
There are certainly many more attributes of a startup to index for beyond these five, but I would say with a pretty high level of confidence based on my personal experience that these are the ones that matter most to me.
Jeff Kirchick 