4 Things That You Need To Know Before Joining A Startup Company
Joining a startup company becomes a major consideration for fresh graduates in Indonesia (and the world in general) these days. While your parents probably won’t stop encouraging you to work for the government (SOE or ministries) or big multi-national companies, we believe you will start to apply for the tech startups soon.
Reid Hoffman, co-founder of Paypal and LinkedIn plus the host of Master of Scale once said “Startups are like jumping off a cliff and assemble an airplane on the way down”.
Therefore, we are encouraged to write this story to give a substantial heads up to the fresh graduates or professionals from other industries who want to join this rocketship.
Please note that you still need to check basic information such as the role and criticality to business, current manager, company’s growth and attrition rate, brand values, etc.
1. Stages of Startups
Stages and culture are arguably the essential part that you need to check first before you join. There are several ways to look at the stages, but we want to talk about the funding stages. At the same time, culture may also play a role in deciding how the company behaves, regardless of its funding; that’s why we put them together.
If the startup is still in the seed or angel round, they still try to build the minimum viable product (MVP) to validate their ideas. In this stage, there’s no way they already think about an ideal accounting or HR system or sophisticated data and BI team to keep track of all the information. In exchange, they allow you to experiment range of initiatives inside. Also, note that you may work with fewer resources so your role can be stretch into multiple activities; check with the company’s expectation to you.
If the startup is in the late stage, it might start to become less agile inside. Things begin to feel like working in a big corporation with layers of approval whenever they decide. On the other side, they think about your gym allowance or pay for your internet during the WFH. Also, note that you may work with more people hence your scope of work will be more manageable but probably less exposure to different things.
Understanding the stages and culture will help you get a sense of what you will face inside. It will help you to know whether you want to be in that particular challenges and opportunities.
2. Founders and Investors
Research from multiple top universities, such as Harvard and Stanford, shows that founders are the most critical factor early-stage VC consider and remain on top factors for other VC stages when they want to make the investment decision. If VC, who want to put their money, weigh the founders that much, you also need to do the same thing.
Several checkpoints to know about the founders are their academic background, professional working experiences, networking, family business, and side projects. It would be best if you saw whether the founders have what they need to build the company. You also need to ensure that the founders are focus on building on the current business rather than split its focus to multiple projects or businesses.
Investors are also crucial because of these two reasons. First, investors thoroughly assess the founders before putting the money, so knowing reputable investors invest in the company means the company has a good prospect. Second, checking the investors makes you understand their latest funding round, and it gives you a sense of their financial strength. You may also notice whether their investors are likely to provide emergency funds when the company went south and need to be rescued.
3. Business Model and Competitors
You need to understand the startup's business model by analyzing what they are trying to do and what problems they are trying to solve. Next, you should seek facts to validate whether the problems exist or not. While doing it, analyze whether the company solves it sustainably or burns investors' money to make people transact without changing behaviors.
On top of that, check whether similar business models in other countries such as the US, China, or other markets. Synthesize whether the business model makes sense to be implemented in Indonesia (or the country where you live, assuming you’re not Indonesian). When doing that, check for competitors that also do similar business models or solve similar problems. Does the market is crowded or not?
Checking this part will help you understand whether the company can sustainably grow, which is vital for people looking for a place to work for years ahead.
4. Red Flags
As just like every company, there are some red flags that you need to check before you decide to join a startup company. Some red flags might intersect with what we wrote above so that you won’t surprise.
First is the founders' ego, whether the founders can balance being the most intelligent and the most humble person in the room. The balance is essential for employee relationships and extended to customer relationships, which means being customer-centric.
The second is leader exit, whether any cofounders or leaders leave the company abruptly. Exits are usually due to conflicts between top management and sometimes include investors. Thus, check if any leaders leave the company after joining for less than six months or cofounders who stepped down without any notice.
The third red flag is reputation, whether the companies have ever been discussed negatively in Ecommurz, Ridehaluing (back when we’re active), Taktekbum, or others. While you have to be critical to assess what people share, at least it’s a red flag that you shouldn’t ignore. People might mention long working hours, stretched responsibilities, bad managers, amongst other issues.
Bottom line
All the points above are critical for you to check before you join a startup, regardless of the reasons you join. Remember that as much as you thoroughly check everything, it won’t guarantee the startup’s success. The least that you can get is knowing what you are entering, aware of the pitfalls inside, and knowing what you get for things you endure.
Just like looking for a partner, there are no startups with no weaknesses. Startups are young companies that are trying to disrupt established industries that have been around for years. The agility of people inside is what makes them able to wins over existing market leaders.
