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Ask HN: What questions should I ask a founder before joining a 10 people startup

6 points by mind_heist ↗ HN
Hi All - I have been working for a large storage/cloud company for around 4 years and currently looking for another job. I have been interviewing for a while & have been talking to a lot of small size startups too (less than 10 people).

What questions should one ask the founders before joining them ?

16 comments

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aaronbrethorst
What percentage of the company does my offered equity stake represent?
mind_heist
Hmm..thanks .. quick follow up... So would a company at any stage be able to answer this ? Do they decide things only after getting seed / Series A ? ..or are these things decided upfront ?
jtfairbank
So as an employee you would get stock options that are vested over a number of years, usually with a 1 year cliff. That means you have the right to purchase stock at a pre-agreed price (usually the current price - a discount). There are some important things to consider:

* You have to pay for the options. You can negotiate to add this cost into a yearly bonus or salary.

* You have to pay taxes on the options. This is a bit complicated- if you sell them within a year then you pay normal income tax. If you sell them after a year its long term capital gains. There may be some upfront tax concerns due to the difference in the price you paid vs. the amount the options are worth. Definitely talk to an accountant before negotiating so you understand this, and after you accept an offer so you don't mess up the taxes.

  * Most contracts specify that the options expire when you leave the company, so if you quit or are fired make sure to buy any options you want then and there.  Build in a grace period into your contract (i.e. I have 1 week after leaving the company to actually purchase any options I've received).

  * If you leave the company before a year is up, you don't get any options due to the 1 year cliff.

  * Companies will know what % of the fully diluted stock pool your options represent.  This pool includes all outstanding stock that founders or investors own, and options grants.  It can and will get diluted as companies raise money.  You'll never own less options, but the founders may elect to create more shares of the company to sell to future investors, which means you own a smaller %.  This is ok though- the idea is you own a smaller % that is more valuable due to the new investment and opportunities it allows the company to pursue.
dpeck
fully diluted percentage
MichaelCrawford
If your board authorizes more shares, will my options - or my stock, if I have exercised my options - be diluted?

It might not be such a bad thing if your stock gets diluted, if by doing so you attract the RIGHT KIND of investment. Unfortunately, VCs aren't always clueful.

mind_heist
Hmm .. I dont fully understand what diluted percentage is actually ? Looking it up ...
saluki
The social network offers a good example . . . http://www.youtube.com/watch?v=sPlzlVegfbA

I'd recommend having a lawyer review all your contracts, vesting documents, etc initially and any future documents you are asked to sign.

Keep in mind not many startups are a home run or a rocket ship so usually it won't matter but you don't want to be on the outside looking in if it does take off.

Good luck in 2015.

MichaelCrawford
How many shares are authorized?

How many shares have actually been issued?

Is this founder's stock, or from a subsequent series? (I don't fully understand how this works, but there are ways that one can have fewer benefits from different series of stock - Common Stock, Series A, Series B and so on.)

dpeck
Does stock come in the form of a restricted grant or options?
MichaelCrawford
Can you show me where I'll be sitting? (I once thought I'd get a private office, but was made to sit in - I swear I'm not making this up! - "The Boiler Room".)

A company of just 10 people wouldn't have a lunchroom. Before you accept an offer - preferably before you interview - explore the neighborhood around the office, to determine whether there are good places for lunch, or for coffee or beer, if that is to your taste.

I would not consider working for a big company unless they had a good lunchroom. It's not that I can't go out to eat, or bring my own lunch, but there's something about a lousy lunchroom in my workplace that I find quite depressing.

If I drive, can you cover my parking, or alternatively will you cover public transit?

Do you have an employee library? (Most companies don't. That is the essence of stupidity. There should be at least a few technical books, for the languages, tools, platforms and APIs you use.)

Have any of your products been reviewed in the trade press? (Better if you find this out on your own, but you might not be able to find the reviews. The products might have online reviews though.)

Don't ask in the interview, but search around for dirt on the company principles. Like maybe they robbed a previous company blind, then invested their ill-gotten gains in the firm you are interviewing with. I actually worked for one such company.

Do you provide on-the-job training? (Even if you have the chops to fulfill your job description, work will get uninteresting if you don't get to learn anything new on the job.)

Do you pay for conference tickets or travel?

mind_heist
Thank you ! I suppose going on-site to the company sort of solves most of these issues. But how would you go about finding the following ?

"Like maybe they robbed a previous company blind, then invested their ill-gotten gains in the firm you are interviewing with. I actually worked for one such company."

Is it just a background check on the founders ?

MichaelCrawford
If the founders might be well-known (as was the case at the company I worked at), they might have been discussed in the trade press, as well as the mainstream press like the Wall Street Journal.

Also inquire with their coworkers or subordinates at their previous companies. Possibly you would want to do that anonymously, say by using a pseudonym when posting to a message board to social networking site.

MichaelCrawford
While strictly speaking it's true that going on-site _can_ solve these issues, being on-site won't actually solve anything unless you pay attention to your surroundings.

In the "boiler room" case, I simply assumed I'd get a private office because everyone in the same hall as my manager had a private office. I simply assumed I'd be on that same hall.

Rather than explicitly asking about where you'd be sitting, what the lunch room is like and so on, perhaps it would be more diplomatic to request a guided tour around the facility.

It's quite common to be taken to lunch during job interviews. If that doesn't happen, maybe it's because the lunchroom sucks.

MichaelCrawford
"pay attention to your surroundings"

For example, on your way to the room where you will be interviewed, have a look at the expressions on the faces of the employees. Do they look happy? Or do they look like "lifers" or "wage slaves"?

Do you see any technical books out in plain sight? You might not see the actual library, if there is one, but you might see books on the desks of the engineers.

IpV8
What is their exit plan? Are they trying to sell the business soon or are they in it for the long haul? Who are the potential buyers and how are they making the company appealing to those buyers.
mswen
Ask them about their journey from pain-point and idea to where they are today. Listen carefully and somewhat skeptically to this story. Ask yourself, where do you get the sense that they are exaggerating or glossing over something. Ask about pivots in product and strategy. Ask about financial near-death experiences. As you probe this story try to get a sense of how the founders handle tough circumstances.

Ask about false starts with co-founders or employees that just didn't work out. Try to get a sense of how the founder makes tough choices and deals with interpersonal conflict.

Do I think the company will get traction and grow? If I am employee #7 and I can credibly see how this becomes a company with 100 employees then there is room for me to grow and succeed with the company.

When the pressure is on, how does the founder treat employees? Is he quick to sacrifice their interests for his own? Does he take responsibility or is he quick to shift blame?

Is there a good fit for my skills such that I can make a noticeable difference in technology and business outcomes for the company over the next couple of years?